Sonida Senior Living has seen year-over-year revenue growth that is “surpassing industry trends,” President and CEO Brandon Ribar said in a press release issued in conjunction with Tuesday’s third-quarter earnings call. 

On Tuesday’s call, Ribar said that the Dallas-based senior living owner/operator is “approaching the end of an exceptional year for the Sonida recovery story.”

Heading into the final stretch of 2023, he said, Sonida’s leadership team is focusing on maximizing the performance of its portfolio and aiming to approach the key target of 30% net operating income margins.

“We believe operational improvement to deliver all-in cash generation in 2024 is critical to establishing an attractive investment profile for Sonida,” Ribar said. 

Revenue from residents for the third quarter was $59.1 million, compared with $52.5 million in the third quarter of 2022. That’s an increase of $6.6 million, or 12.6%, year over year. According to the Dallas-based operator, the increase in revenue was primarily due to increased occupancy and increased average rent rates.

“This strong financial performance combined with our improved debt structure has Sonida firmly positioned for strategic expansion within the marketplace,” Ribar said. “As we close out the year and prepare for 2024, we look forward to bringing our signature programs and services to more seniors and to pursuing new avenues of growth and shareholder value creation.”

Sonida reported last month that it had finalized a previously announced comprehensive restructuring of its loan modification agreements covering all 37 communities with Fannie Mae mortgages.

“As previously discussed, this modification significantly improves the company’s long-term debt structure and run rate liquidity. Specific terms of the debt modification on all 37 Fannie Mae loans include extending loan maturities to December 2026 or beyond, deferring required principal payments for a minimum of three years, and permanently abating a portion of interest for the 12-month period ending in June 2024,” Chief Financial Officer Kevin Detz said on Tuesday’s call.

The restructuring will result in almost $40 million of cash savings over the revised maturity dates, he said.

Additionally, Ally Bank agreed to temporarily reduce the minimum liquidity requirements for 18 months.

“On the equity front,” Detz said, our largest individual shareholder, Conversant Capital, provided an equity commitment of $13.5 million to further bolster operating liquidity.” 

Operating expenses were slightly higher in the third quarter of this year compared with a year ago. Expenses were $44.5 million in the third quarter of 2023 compared with $43.1 million in the third quarter of 2022. That’s an increase of $1.4 million, or 3.2%.

“The increase is primarily due to a $2.2 million increase in labor and employee-related expenses and a $0.3 million increase in computer software/internet costs, partially offset by a reduction in real estate taxes of $0.4 million and $0.7 million in other expenses,” the company said.

Third-quarter general and administrative expenses were $8.6 million, compared with $5.9 million for the prior year quarter. The $2.7 million increase is primarily due to a $1.4 million increase in transaction costs due to a loan modification and a $1.2 million increase in stock-based compensation expense from the prior quarter “due to forfeiture credits in connection with executive personnel changes,” according to Sonida.

Sonida reported a net loss of $18.4 million for third quarter, compared with a

net loss of $13.7 million in the third quarter of 2022. A non-cash impairment charge of

$6 million related to one owned community was a major factor affecting the higher net loss, the company said. 

The company reported third-quarter adjusted earnings before interest, taxes, depreciation and amortization of $9.3 million compared with $4.4 million for the same quarter a year ago.

Sonida had $3.6 million of unrestricted cash on hand as of Sept. 30.

“Our future liquidity will depend in part upon our operating performance, which will be affected by prevailing economic conditions, including those related to the COVID-19 pandemic, and financial, business and other factors, some of which are beyond our control,” the company said.

For additional coverage of the Sonida Senior Living earnings call, see McKnight’s Senior Living.