Dallas-based Sonida Senior Living saw the highest occupancy in the history of its same-store portfolio and made “considerable” progress on its other growth initiatives, too, in the second quarter, President and CEO Brandon Ribar said Monday.
In the second quarter, revenue, community net operating income, resident rates and occupancy all experienced accelerating gains, Ribar said during a second-quarter earnings call.
Sonida’s same-store portfolio of owned communities averaged 86.2% occupancy for the quarter, with June occupancy at almost 87%, the CEO said. Average occupancy for the second quarter improved by 220 basis points year over year and 30 basis points from May.
“The occupancy gains reflect a growing trend of strength across each of our operating regions and the ability to drive recovery in our underperforming communities,” Ribar said. “The second half of the year has shown continuous positive momentum, and portfolio-wide occupancy of 90% is our next significant goal.”
The company reported a 19% decrease in resident move-outs from the first quarter to the second quarter, even after instituting a 6.3% annual average rate increase across the portfolio. Ribar said the March 1 rate increases contributed to 8.4% year-over-year revenue growth for the quarter.
Second-quarter resident rent rates increased 2.7% from the first quarter, and 9.4% compared with the second quarter of 2023. Level-of-care fees increased 5.4% compared with the first quarter due a new memory care pricing structure. Discounts and concessions continued to decline.
Second-quarter expenses were 140 basis points lower than the 2023 annual average, Sonida reported. Labor costs are down 320 basis points compared with the second quarter of 2023 and down 240 basis points from the first quarter.
Nine communities acquired
Sonida continued leaning into its strategic expansion goals, acquiring nine senior living communities outright or through joint ventures to further densify its presence in existing markets as well as enter new markets across Texas, the Southeast and the Midwest. Ribar said he was encouraged by the company’s progress in the first half of the year and remains focused on providing value and care to residents.
From April to July, the company expanded its geographically clustered footprint through acquisitions in Ohio and, as part of a JV, in Texas, Ohio, Missouri, Kentucky and Georgia. From June to August, the company expanded its management portfolio with three communities that are transitioning to Sonida from a real estate investment trust partner.
More investments planned
Looking ahead, Ribar said Sonida has a “clear line of sight” into additional investment opportunities in its regionally focused real estate portfolio. He said Sonida’s corporate structure as a “pure play” senior housing operator, owner and investor differentiates it from the rest of the industry.
“The Sonida platform, with its differentiated approach to operating, owning and investing in senior living communities positions the company to meaningfully capitalize on near-term market dislocation by layering on value-creating external investments designed to further enhance shareholder return, reinforced by the powerful trends of a growing senior population against the backdrop of an extended slowdown in construction activity of new properties,” Ribar said.
The “secret sauce” of Sonida’s operating model, he said, is in the way it uses its local and regional leadership teams, as well as its central support systems. As an owner, operator and investor in its communities, local leadership defines the budget and commits to performance, the CEO said, adding that the company also can reinvest dollars into its own communities to meet performance goals.
“We think of ourselves as a creative investor in the space, which you can see in the different types of joint ventures we completed in the early part of the year and also in our ability to restructure so much of our outstanding financing,” Ribar told McKnight’s Senior Living. “We think about it as if we were investing our own money into a company, and that allows us to be a very successful owner and operator.”
The company invested more than $12 million across technology- and community-based projects that are expected to positively affect performance in 2025, he said. Specifically, Ribar said, investments in falls prevention monitoring systems and employee motivation systems are expected to improve the resident experience and simplify care models.
In its independent living communities, Sonida also has continued to develop opportunities to tailor program offerings and activities to the interests of residents while extending resident length of stay, the CEO said. “It’s facilitating their enjoyment in the living environment while also creating the types of activities that are more interesting for seniors entering into the space than 10 to 15 years ago,” he said.
Leadership gains
Throughout the second quarter, Ribar said, Sonida experienced continued improvement in staff retention at the community level and promoted several executive directors to regional leadership roles as the company completed its recent acquisitions.
Sonida also introduced an “operational excellence team,” led by its chief clinical officer, that is focused on integrating new communities into the company by training people on Sonida best practices and technology support systems. The team is composed of operational, clinical and sales staff with experience in improvements in underperforming communities.
