Sonida Senior Living announced it added eight seniors housing communities and two management contracts to its portfolio. Sonida’s portfolio now consists of 70 communities. Including the two new management contracts, Sonida’s operating portfolio is now comprised of 82 communities. The growth also comes on the heels of the 160% increase in its share price in the first six months of 2024.
The company executed two separate joint venture investments acquiring eight seniors housing communities in attractive submarkets within Sonida’s geographic footprint. The transactions include 790 independent living, assisted living and memory care units. The acquired assets consist of private-pay communities with newer vintage constructions and/or material renovations within the last 10 years and are in mid-to-large metropolitan areas.
The first transaction includes the recapitalization of four seniors housing communities in major metropolitan markets: San Antonio, Texas (two), Austin, Texas (one), and Atlanta, Georgia (one). This brings the total number of Texas owned properties to 19 and represents Sonida’s entry into Atlanta, strengthening Sonida’s Southeast presence. The four assets comprising 324 units and a wide variety of amenities were built or redeveloped on an average of seven years ago but have not yet stabilized since the pandemic. Sonida will operate the communities on behalf of the JV with Palatine Capital Partners.
The assets were recapitalized at an implied valuation of $34.7 million, or $107,300 per unit. The transaction was financed with approximately $21.8 million of mortgage debt from the existing lenders. At stabilization, the investment is expected to deliver double-digit NOI yields. Sonida, as a 51% owner in the JV, contributed $6.4 million in initial cash equity to the transaction.
The second transaction, with JV partner KZ Family Ventures, includes four seniors housing communities with 464 units in the Cincinnati, Ohio, Cleveland, Ohio, Kansas City, Missouri, and Louisville, Kentucky markets, bringing the total number of Ohio properties to 13. And although the first Sonida-owned community in Kentucky, the Louisville asset complements Sonida’s regional cluster in southern Indiana and Cincinnati.
The assets were all recently constructed with an average age of five years old but have not stabilized due to under-management and leadership turnover. The JV acquired the portfolio for $64 million, or less than $140,000 per unit and closed on an all-cash basis with the intent to assume moderate leverage post-close. At stabilization, the transaction is expected to deliver double-digit NOI yields through both occupancy and margin improvement. Sonida will operate the assets for a market fee.
Sonida, as a 33% owner in the JV, contributed $22.3 million in initial cash equity to close the transaction. Upon the JV assuming moderate leverage post-close, a majority portion will be returned to Sonida.
Lastly, on June 1, Sonida commenced management on two additional properties in Minnesota and Wisconsin for one of its REIT partners. Sonida intends to achieve near-term occupancy recovery. The management contracts have a five-year term with extension options at the owner’s election. In Q3:24, Sonida expects to assume management of one additional community owned by the same REIT partner.
