Sonida Senior Living (NYSE: SNDA) has recently raised $47.75 million in private equity to fund a purchase of debt and further invest in its existing portfolio.
Conversant Capital, Sonida’s largest shareholder, is among the contributors to this funding. The capital will be used to reposition Sonida’s balance sheet and make enhancements across its portfolio, including programming and potential acquisition opportunities.
According to CEO Brandon Ribar, this capital raise marks the first time Sonida has raised capital to build the company and play offense, reflecting the company’s excitement in a market where creativity and capital availability are crucial.
By repurchasing debt at a significant discount, Sonida is creating immediate equity value while retaining the assets in its portfolio. This move follows Sonida’s recent restructuring and marks a strategic pivot to growth mode.
The first tranche of $32 million has already closed, with a second tranche of $16 million set to close pending shareholder approval. Additionally, a portion of the proceeds were used to purchase seven of Sonida’s remaining loans with Protective Life, representing 52% of the outstanding debt.
Sonida’s debt restructuring with Ally Bank resulted in a 9% reduction in total debt and an annual debt service savings of $3.2 million, leading to a total debt of $580.7 million as of February 2nd.
Over the last 12 months, Sonida has seen margin improvements, positioning the company to focus on revenue growth and operational scalability. Furthermore, discussions with a private equity sponsor to acquire a majority interest in a four-asset portfolio are underway, potentially reinforcing Sonida’s Texas footprint and resulting in a “double-digit” stabilized cap rate.
