Sonida Senior Living ended the first quarter with significant momentum toward its growth goals and swiftly moved into growth mode in the second quarter, providing a “clear line of sight” into further growth opportunities in the near term, according to President and CEO Brandon Ribar.

During a first-quarter earnings call on Friday, Ribar said that the Dallas-based senior living owner-operator continued improving its core portfolio in the first quarter. Occupancy was 85.9% for the quarter, a 200-basis-point increase from the first quarter of 2023, and the company implemented an average annual resident rental rate increase of 7% on March 1, signifying eight consecutive quarters of rate increases. 

Additionally, the company’s Magnolia Trails memory care program continued to produce “exceptional outcomes” for residents, Ribar said, delivering a year-over-year occupancy increase of 750 basis points, from 80% in the first quarter of 2023 to about 88% in the first quarter of this year.

A new level-of-care initiative implemented in several Magnolia Trails locations focused on expense management to reduce labor costs, the company said. 

“With new operating protocols across recurrent care level assessments now firmly in place, and with the enhanced programming and oversight provided by a chief clinical officer hired in October, we believe Sonida is well-positioned to match revenue with the underlying cost of care,” Chief Financial Officer Kevin Detz said. 

Sonida’s underperforming communities continued to accelerate their recovery, Sonida reported; they achieved occupancy improvements of 240 basis points over the previous month and 130 basis points of margin expansion over the fourth quarter of 2023. Ribar said that focused digital marketing efforts and capital expenditures were key drivers of the improvement.

Investment pipeline

In a Thursday press release, Sonida announced the recent closing on the purchase of a 100-unit assisted living and memory care community in Macedonia, OH, increasing the company’s Ohio portfolio to 11 properties. The acquisition, which closed May 9, after the end of the first quarter, is part of Sonida’s strategy to upgrade and modernize its portfolio through densification in its current markets, according to the company. 

Sonida also reported that it is finalizing two joint ventures to buy eight communities that include more than 750 units combining independent living, assisted living and memory care offerings. The locations align with the portfolio’s geographic footprint, creating further density in Texas and the Midwest, according to the company.

The company also has pending operating management contracts with three new communities scheduled to transition to Sonida on June 1. 

Sonida currently operates 72 senior living communities in 18 states, including 62 owned communities and 10 managed communities. 

During the second half of the year, Ribar said, Sonida will target buying more properties outright or through joint venture partnerships.

“The increasing default rates and level of non-performing loans across the market, in addition to the absence of interest relief to date in 2024, continues to generate a robust pipeline of growth opportunities,” the CEO said.  

Personnel investments

Just prior to the earnings call, Sonida announced the appointment of Max Levy to the newly created role of chief investment officer, as well as the appointment of Lily H. Donohue to the board.

Levy is transitioning to Sonida from his role as a principal at Conversant Capital, the company’s largest shareholder. Levy will step down as a member of the Sonida Board of Directors, a seat he has held since 2021, to assume his new role effective June 1.

Donohue, president and CEO of Everstory Partners, most recently was CEO of Holiday Retirement.

The company also created an Operational Excellence Department to support transitions, training and portfolio-wide performance initiatives. The team is focused on integrating portfolio initiatives and best practices into newly transitioning communities. Ribar said the team is composed of operational, clinical and sales experts with a track record of driving recovery in underperforming communities.