Sonida (SNDA) Q3 2026 Earnings Call Transcript

DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Investor Relations - Megan Caldwell
• President and Chief Executive Officer - Brandon Ribar
• Executive Vice President and Chief Financial Officer - Kevin J. Detz

TAKEAWAYS

• Net Loss Attributable to Common Shareholders -- $34.3 million, or $0.72 per share, including a $4.4 million loss on debt extinguishment related to the repayment of a bridge facility.
• Normalized FFO -- $0.46 per share, reflecting the underlying performance of the expanded portfolio following the CNL Healthcare Properties merger.
• Adjusted EBITDA -- $46.8 million, an increase of 26.2% year over year driven by occupancy growth and margin expansion across the platform.
• Same-Store Weighted Average Occupancy -- 88.6%, a 200-basis-point increase supported by healthy move-in activity and consistent execution by community teams.
• Same-Store SHOP NOI -- $52.0 million, representing 15.6% growth year over year on a pro forma basis.
• Same-Store SHOP NOI Margin -- 31.8%, an expansion of 32 basis points as the company absorbed fixed and semi-fixed costs across a larger revenue pool.
• Total SHOP NOI -- $55.3 million, a 17.2% increase year over year reflecting gains in both core and recently acquired communities.
• Same-Store RevPAR -- $5,413, a 4.6% increase driven by successful rent renewals and the execution of a market rate strategy.
• Same-Store Resident Revenue -- $164 million, a 7.3% increase reflecting higher occupancy levels and durable price increases.
• Labor Costs -- 41.3% of revenue, a 90-basis-point year-over-year improvement due to a staffing model focused on higher-quality team members and real-time data alignment.
• Incremental Flow-Through -- 63.3%, meaning more than 60 cents of every incremental revenue dollar converted to net operating income.
• Acquisition Capital Deployment -- $250 million, the expected total for 2026 excluding the CHP merger, with all funds projected to be deployed in the second half of the year.
• Recent Acquisitions -- $150 million, covering seven communities and 620 units at an average cost of $242,000 per unit.
• Acquisition Pipeline -- $98 million, currently under contract as the company pursues newer vintage assets in suburban markets.
• Digital Marketing Lead Generation -- 30.6% increase, in same-store communities owned prior to 2026, as search visibility and call tracking enhanced inquiry volume.
• Portfolio Optimization -- 14 communities, identified for sale because they no longer fit the long-term strategy due to scale or margin profile, representing 2% of total NOI.
• ATM Equity Sales -- $68.6 million, raised at a blended price of $39.18 per share to fund identified accretive acquisitions.
• Total Debt -- $1.7 billion, with a weighted average rate of 5.78% and 83% of the total debt either fixed or hedged.
• Net Leverage -- 8.1x, at quarter end, with management targeting a near-term range of 6x to 6.5x driven by NOI growth and capital recycling.
• Food Costs -- $7.44 per resident day, held stable through centralized culinary leadership and group purchasing organization power.
• Level of Care Revenue -- 7.8% increase, as real-time data allowed for more accurate alignment of pricing with the specific care requirements of residents.
• Occupancy Benchmarks -- 58% of same-store communities, now average above 90% occupancy, up from 47% in the third quarter of the previous year.
• Ally Term Loan -- $380 million, a five-year facility priced at SOFR plus 1.85% that was used to repay higher-cost debt and extend the maturity profile.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Detz stated, "Q3 is seasonally the most challenging for margin flow through. The third quarter carries 1 additional day of labor, 2 holidays, and our 2 highest utility cost months," noting these factors negatively impact sequential comparisons.
• Detz noted that net leverage increased to 8.1x from 7.8x in the prior quarter, which was "primarily driven by the seasonal impact on Q3's adjusted EBITDA as compared to Q2."

SUMMARY

Sonida Senior Living, Inc. (NYSE:SNDA) reported significant portfolio expansion and operational gains during the third quarter as it integrated assets from the CNL Healthcare Properties merger while executing a disciplined acquisition strategy. Management stated that the company remains focused on leveraging its proprietary SPIN business intelligence platform to drive operational efficiencies, particularly in labor management and care pricing. The company reported that it is implementing new internal frameworks like Sonida Collections to standardize resident experiences and optimize pricing tiers across its growing portfolio. Financial results reflected strong occupancy gains and margin expansion, supported by a mix of organic growth and the stabilization of recently acquired communities. Management indicated that the balance sheet was strengthened through a $380 million term loan and the strategic use of an at-the-market equity program to fund accretive growth.

• Management reported that the first 14 communities transitioned from the CHP portfolio delivered 33.2% year-over-year NOI growth and 600 basis points of margin expansion.
• The company increased move-ins from digital sources by 13.6% following targeted investments in digital marketing and lead tracking systems.
• CEO Ribar stated, "Early returns are encouraging with retention among executive directors, exceeding 90% to date."
• Management identified eight noncore communities from the CHP merger for sale and expects these transactions to close in early 2027.
• The company invested in centralized culinary leadership to implement chef-led menus tailored to specific service tiers across the portfolio.
• Management announced plans to introduce full-year 2027 guidance during the fourth quarter earnings report to provide a framework for evaluating financial performance.

INDUSTRY GLOSSARY

• Acuity: A measure of the level of medical and personal care assistance required by a resident.
• ATM (At-the-Market): An equity program allowing a company to sell shares directly into the secondary market at prevailing market prices.
• FFO (Funds From Operations): A non-GAAP measure used by real estate companies that excludes depreciation and gains or losses from property sales.
• NOI (Net Operating Income): A measure of property profitability calculated as resident revenue minus community-level operating expenses.
• RevPAR (Revenue Per Available Room): A metric calculated by dividing total resident revenue by the total number of available units.
• RevPOR (Revenue Per Occupied Room): A metric reflecting the average monthly revenue generated from each occupied unit.
• SHOP (Senior Housing Operating Properties): Properties where the owner maintains operational control and bears the associated financial risks and rewards.
• SOFR (Secured Overnight Financing Rate): A broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.
• SPIN: Sonida’s proprietary business intelligence platform used for real-time monitoring and analysis of community-level data.

Full Conference Call Transcript

Operator: Hello everyone. Thank you for joining us and welcome to the Sonida Senior Living Third Quarter 26 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press *1 on your telephone keypad to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Megan Caldwell, Investor Relations. Megan, please go ahead.

Megan Caldwell: Thank you, operator. All statements made today, November 5, 2026, which are not historical facts are forward looking statements within the meaning of federal securities laws. The company expressly disclaims any obligation to update these statements in the future except as required by law. Actual results or performance may differ materially from forward looking statements. Certain factors that could cause actual results to differ are detailed in the earnings release that the company issued earlier today, as well as in the reports that the company files with the SEC, including the risk factors contained in the annual report on Form 10 k.

Please see today's press release for the full safe harbor and forward looking statements which may be found in the form 8 k filing from this morning or at the company's Investor Relations page found at investors.sonidaseniorliving.com. As previously disclosed, the company completed its acquisition of CNL Healthcare Properties Inc or CHP on 03/11/2026.

Unless otherwise specifically noted or the context otherwise requires, the financial and operating results we are discussing today and that are included in our earnings release and presentation represent the combined company on a pro forma basis for any period presented in which we did not own CHP for the full period, including CHP as if the acquisition had closed on the first day of that period. We believe this pro forma information provides a meaningful method of comparing the performance in the combined business over historical periods.

This pro forma information giving effect to the CHP acquisition has not been prepared in compliance with Article 11 of Regulation SX, does not reflect the actual results we would have achieved had this CHP acquisition occurred on the first day of the applicable period and may not be predictive of future results. Please note that our GAAP financials reflect CH results from the closing date only, and our third quarter 26 financials reflect CHP for the full period without any adjustment. See the disclaimer slide in our presentation for additional information about the preparation of and the limitations associated with this pro forma financial information.

In addition, unless otherwise specifically noted or the context otherwise required, the financial and operating results we are discussing today and that are included in our earnings release and presentation are presented at share or on a basis that reflects the company's proportional economic stake in its JVs. Please also note that during this call, the company will present non GAAP financial. For reconciliation of these non GAAP measures to the most comparable GAAP measure please see today's earnings release and presentation. If you would like to follow along during today's call, you can find Sonida's third quarter 26 earnings presentation in the Investor Relations section of the company's website.

In addition, we have included supplemental earnings information within our presentation consistent with prior quarter releases. I would now like to turn the call over to Sonida's President and CEO, Brandon Ribar.

Brandon Ribar: Thanks, Megan. Good morning, and thank you for joining our third quarter 26 earnings call. This quarter's results reinforce the positive momentum we have experienced all year. Steady pricing and occupancy gains that are translating into margin expansion and meaningful earnings growth across the platform. Same store weighted average occupancy reached 88.6% up 200 basis points year over year, supported by healthy move in activity and consistent execution by our community teams. Same store SHOP NOI grew 15.6%, and margin expanded 32 basis points to 31.8%. Incremental flow through was 63.3% meaning more than 60¢ of every incremental revenue dollar converted to NOI.

Across the total portfolio, including both SHOP and net lease, NOI grew 16.1% year over year to $63.3 million Normalized FFO was $0.46 per share, and adjusted EBITDA increased 26.2% year over year to $46.8 million. These results reflect the strength of the team we have built and the systems that support it. Our operating team continues to absorb new communities without compromising performance in the existing portfolio. And our proprietary SPIN business intelligence platform provides timely visibility and actionable insights into each community. As we execute on our growth strategy, we are increasingly focused on leveraging our proven operating playbook culture, and leadership team across a larger, higher quality portfolio.

Over the past 3 years, we have been highly selective in our acquisitions, outside of CHP communities we acquired during that period average approximately 8 years in age and we believe our portfolio compares favorably across the sector. Our communities are primarily located in strong suburban submarkets of primary and secondary MSAs with favorable demographic trends and limited new supply. We focus on communities in affluent, growing areas where our assets are among the strongest competitors in their markets. Our objective is to continue improving upon our diverse portfolio of high quality real estate capable of delivering sustainable, long term growth across the entire platform. Our CHP integration continues to progress well.

To date, we have identified and are advancing on plans for 43 of the 54 SHOP communities, This includes those that have transitioned to Sonida's operating platform, have set transition dates, and 8 noncore communities in various phases of the sales process, which we expect to close in early 2027. Completing the remaining transition while sustaining our growth trajectory is a top operating priority to close the year. Further differentiating our avenues for inorganic growth, we recently acquired a small operator with a regional brand in the Southeast. We also entered into a letter of intent to acquire a large minority ownership stake in a second CHP operator, a multigenerational family owned operator.

If completed, we expect that investment will expand our geographic reach and give us exposure to a growing management company with established third party revenue streams and off market acquisition opportunities. In both cases, our operating capability and strategic fit rather than the price we were willing to pay that gave us access to opportunities that we believe will create long term shareholder value beyond our initial underwriting of the CHP merger. We view Sunita as bringing together 3 capabilities, a best in class operating platform, a high quality owned real estate portfolio, and strategic third party partnerships.

We continue to refine our approach to acquisition communities with more meaningful recovery opportunities where we believe operational improvements leadership changes, and reputation rebuilding can create meaningful long term value. Drawing on both our successful integration track record and our SPIN data intelligence, we now identify recovery needs earlier in diligence which has shortened stabilization timelines and improved early stage performance in these communities. Our experience over the last 3 years directly informs our capital allocation strategy as we pursue opportunities where we believe operational execution can drive outsized returns and where we can deepen our regional density to unlock synergies across our cluster markets.

Despite recent interest rate volatility, the senior housing sector's needs based and demographic driven demand continues to support fundamentals. In the medium term, higher interest rates should further challenge capital formation for new development and will likely extend the runway in which we face limited supply. Our target investment profile remains consistent. Strong submarkets high quality physical assets, and situations where our operating platform can drive improvement and deliver outsized returns on invested capital. We continue to execute on that strategy during and after the quarter. We closed 1 acquisition during the third quarter and 6 additional communities subsequent to quarter end.

Bringing our recent acquisitions since closing the CHP merger to 7 communities and 620 units for a combined purchase price of $150 million. Or $242 thousand per unit. With an average age of approximately 9 years, these are well positioned in amenitized communities in growing suburban markets with favorable demographics and established health care networks. Where our operating platform and local market knowledge can accelerate NOI growth. As part of our ongoing portfolio optimization strategy, we completed the sale of 2 noncore communities for aggregate gross proceeds of approximately $23 million 1 during the quarter and 1 subsequent to quarter end.

These transactions continue our recycling of capital into assets better aligned with our long term strategy and demonstrate sustained buyer interest in all of our assets. Despite a higher interest rate environment. Looking ahead, acquisition pipeline remains active and deep with $98 million under contract. Including acquisitions closed to date and those currently under contract are on track to deploy $250 million of acquisition capital in 2026. Excluding the CHP merger. Given the timing of the merger's close in March of this year, $250 million will be deployed in the second half of the year. This is the fastest pace of deployment in our history. Achieved while we continue to integrate the CHP portfolio.

As Kevin will discuss in more detail, we have funded our 2026 acquisitions through cash on hand, availability under our revolving credit facility, and by raising $70 million of equity at over $39 per share on our ATM. This is consistent with our approach of raising equity only to the extent the acquisitions provide a significant incremental return as measured on an unlevered IRR basis to our then prevailing share price. Sustaining an accelerated growth rate and continued successful integration requires a culture centered on accountability, empowerment, and service while giving local leaders autonomy to run their communities.

We expect our community leaders to be present and visible, engaging with residents daily, and building the trust that is foundational for a successful community. We want our teams focused not just on completing tasks, but on creating resident experiences that support satisfaction, renewals, referrals, and over time, pricing power. As we have scaled, we have invested deliberately to sustain that culture through enhanced team member incentive programs, a competitive wage philosophy, and leadership development. With a larger portfolio, our focus now is on building not only stable leadership in every community, but exceptional leaders that meet Sonida's standards.

This year, we expanded direct training for executive directors at our central support center while increasing the cadence of in person on-site training across our communities. Early returns are encouraging with retention among executive directors, exceeding 90% to date. We have also aligned incentives across the organization. Our executive team and community leaders are measured against the same performance goals. Which ties decisions made in each community to the results that matter for the company as a whole. This includes the opportunity for top performing executive directors to participate in our annual equity compensation program.

Combined with the real time visibility SPIN provides, that alignment equips local leaders with the ownership and information to act and holds every community to a common operating standard. That foundation positions us to take the next step, Since joining as chief operating officer earlier this year, Anton has introduced a set of operating initiatives designed to build on the strength of our platform and drive the next phase of revenue growth and margin expansion. I want to highlight 3 of them today. The first is Sonida Collections. An internal framework that organizes our communities into tiers. Each with defined standards for dining, amenities, care, and activities.

The goal is to ensure that the experience in every community is aligned with its price point, and the value it delivers. Dining is an early example. We have made a significant investment in our corporate culinary leadership and our menus are now chef led and supported centrally, tailored to each collection. The result is a meaningfully elevated dining experience across the portfolio, delivered in a way that reflects what residents value at each price point Enhancements to our assisted living and memory care programs will follow. And we look forward to sharing more on that work in the coming quarters. Second, we are strengthening our sales and marketing engine.

We continue to increase our investment in digital marketing, and have streamlined the systems and processes our sales teams use to respond to leads with the goal of shortening the time from inquiry to tour to move in. Sonida's digital marketing is generating a growing share of our leads. As stronger search visibility makes our communities easier for prospective residents to find better call tracking shows us which listings are driving inquiries. In our same store communities owned prior to 2026, digital leads increased 30.6% year over year, and that interest is translating into occupancy with move ins from digital sources up 13.6%. Third, we are building toward a more granular data driven approach to rate setting.

Drawing on data from across our operating platform to better understand pricing and capital investment at the unit level. We intend to begin rolling out this approach in 2027. Each of these initiatives reinforces the others. are defining the experience, filling our communities with residents who value it, and pricing to reflect that value. Combined with the staffing discipline built into our operating platform, we believe they form a clear path to sustainable revenue growth and margin expansion. Acquiring communities is only the first step. The harder work is integrating them while strengthening performance, preserving the resident experience, and maintaining a consistent culture.

That capability, together with the initiatives Anton and his team are advancing, a high quality asset base and a deep acquisition pipeline positions Sonida well for the next phase of growth and gives us confidence in our ability to deliver durable per share value creation for our shareholders. With that, I will turn the call over to Kevin J. Detz to walk through the financial results and balance sheet in more detail.

Kevin J. Detz: Thanks, Brandon. Before turning to the results, I will note that across the industry, Q3 is seasonally the most challenging for margin flow through. The third quarter carries 1 additional day of labor, 2 holidays, and our 2 highest utility cost months. July and August. That context is important for any sequential comparison to Q2. Now turning to slide 19, our same store portfolio delivered another quarter of strong operating gains. Brandon referenced the 88.6% weighted average occupancy for the quarter, which has steadily pushed up during the year. The share of same store communities averaging above 90% occupancy increased from 47% in Q3 last year to 58% this quarter. While the share below 80% declined from 26% to 21%.

And, notably, 5 communities moved into the 95% to 100% range during the quarter. We believe the gains across each of our occupancy bands demonstrate the robust demand for our product and support the sustainability of our rent renewal and market rate strategy heading into next year. As of September 30, our same store portfolio includes 111 communities. Representing more than 85% of the total SHOP portfolio on a unit basis. Our non same store portfolio includes 27 communities that are repositioning held for sale, or recently acquired. And our triple net lease portfolio consists of 15 communities leased to third party operators.

Earlier this year, through our continuing portfolio optimization, we identified 14 communities that no longer fit our long term portfolio strategy, because of market position, scale, or margin profile. These communities represent approximately 2% of total company NOI and we expect their sale to be accretive to the company's overall margin. The 2 sales Brandon referenced earlier also had a deleveraging impact. We anticipate completing the remaining community sales during the fourth quarter and first half of 27, and we plan to recycle the net proceeds into additional community acquisitions over the same period. Same store RevPAR increased 4.6% year over year to $5.41 thousand per occupied unit. Which combined with higher occupancy lifted resident revenue 7.3% to $164 million.

Operating expenses grew a modest 3.8% allowing $7 million of the $11 million increase year over year and resident revenue to flow down to NOI. Bringing same store NOI to $52 million for the quarter. The continued stabilization of our 2024 acquisition cohort also contributed to same store margin expansion. 5 of those 19 communities are now at 95% or higher occupancy. And another 6 are sitting between 90% and 95%. As more communities move above 90% occupancy, our fixed and semi fixed cost base is absorbed across a larger revenue pool, and incremental revenues flow to margin at a higher rate. Moving to total portfolio results on slide 20. Total SHOP NOI increased 17.2% year over year $55.3 million.

Weighted average occupancy improved 180 basis points to 87.4%, reflecting gains across our stabilized core alongside continued lease up at recently acquired communities with lower starting occupancy. The 120 basis point gap between total and same store occupancy reflects the additional lease up opportunity within those communities. Outside of SHOP, our triple net lease portfolio $8 million of lease income which included an annual fiscal performance based rent payment of $600 thousand earned during the quarter. Our recent acquisitions continue to follow a consistent playbook. Building density in markets where we already operate and targeting communities where platform can capture operating upside.

The third quarter, we closed on a 2016 vintage community in Florida with 107 assisted living and memory care units. Acquired out of receivership for $14.7 million, or $137 thousand per unit, the community offers meaningful upside from a planned renovation and operational overhaul. The 6 additional communities that we acquired subsequent to quarter end are also newer vintage assets. Completed between 2013 and 2022 in growing suburban markets supported by established health care networks. These 6 acquisitions include a 3 community portfolio in Orlando and Suburban Atlanta. Bringing our Metro Atlanta footprint to 9 communities. They also include 2 assisted living and memory care communities in Florida, and a class a independent living community in Washington.

All 7 communities will be reflected in our non same store portfolio beginning with fourth quarter reporting. On the CHP integration, we have transitioned management of 19 of 54 shop communities as of November 1. The first 14 onboarded communities of which all but 1 are included in our same store portfolio, delivered year over year NOI growth of 33.2% and NOI margin expansion of 600 basis points. These results largely reflect the starting point of this initial group, which entered 2026 with below portfolio average operating metrics, and significant recovery opportunity. Through the transition, our focus has been sustaining that recovery through staffing aligned to resident needs, community level rate management, and the purchasing scale of our platform.

All supported by SPIN. Are pleased that these communities continued their recovery trajectory post transition without meaningful operational disruption. Because the remaining CHP communities generally begin from a stronger operating base, we expect more moderate growth as they transition. With the value driven by consistent execution and integration onto our operating platform. We see the same pattern from our 2025 acquisitions, which remain in non same store today. Since the fourth quarter of 25, our first full quarter of ownership, occupancy at these 4 communities has risen 22 percentage points. From 53% to 75%, NOI margin has improved from -1% to 15%.

This reflects the complex turnarounds we are equipped to tackle, and it is how we create value on acquisitions. With considerable runway still ahead, these communities are positioned to deliver meaningful year over year NOI contribution when they enter the same store portfolio later in 2027. More broadly, total SHOP NOI margin reached 29.1% in the third quarter, up 240 basis points year over year. The 80 basis point decline from 29.9% in the second quarter reflects third quarter seasonality that I referenced at the beginning of my remarks. We will now move to slide 21. Same store RevPAR held steady from the second quarter. As expected between renewal periods.

Importantly, the in place rent increases we implemented this year have proven durable, underscoring the pricing power of our portfolio and the quality of care and service our teams deliver. Private rent revenue grew 8%, and level of care revenue increased 7.8% as SPIN's real time data enables us to align care pricing more accurately with the care each resident requires. Together with monthly community level rate reviews and the staggered timing of legacy CHP renewals, these levers show us where the remaining rate upside sits and how to capture it. Turning to slide 22, Labor efficiency remains a key contributor to margin expansion. Labor costs were 41.3% of revenue in the third quarter.

A 90 basis point improvement from the prior year. The full improvement came from direct labor while contract and other labor were flat on a combined basis. Labor as a percentage of revenue increased from 40.6% in the second quarter in line with the same seasonal trend I explained earlier as there is both 1 additional day of labor and 2 holidays in Q3. We view the year over year improvement as durable rather than cyclical. Our staffing model is designed around fewer, higher-quality team members, an approach that improves retention, and reduces the cost of turnover.

SPIN enables us to match staffing precisely to resident needs, using real time acuity and care hour data to deploy the right people at the right time rather than overstaffing to cover uncertainty. Our executive directors manage per resident day labor targets that are banded to occupancy and acuity. And they have the autonomy to act on SPIN data at the community level with incentives tied to their own community results. Importantly, SPIN grows more powerful with scale. Every acquisition and transition enriches the dataset that informs our operating decisions. Giving us a compounding advantage over less institutional operators. Non labor costs also remained well controlled.

Our culinary investments paired with GPO purchasing power held food costs to $7.44 per resident day. Locked in energy rates help mitigate utility cost increases amidst a severe summer. And finally, our self insurance program backed by third party stop loss coverage continues to evenly spread and derisk claim loss risk across the broader portfolio. Taken together, RevPOR for the quarter increased 1.1% year over year, while RevPOR grew 4.6% over that same period. The consistent widening of RevPOR and RevPOR spread of 350 basis points this quarter has been the primary driver of our same store margin expansion this year.

Just as important, we expect that operating profile to our non-same-store portfolio as communities continue to stabilize and flip into same store. Turning to slides 24-25, we made measurable progress on the balance sheet during the third quarter. In August, and as discussed last quarter, we closed $380 million, 5-year term loan with Ally Bank. Priced at SOFR plus $1.85, the loan came in 80 basis points inside the prior Ally term loan. Proceeds fully repaid $170 million bridge loan and the prior Ally term loan, reduced borrowings on our revolving credit facility by $70 million, and extended our maturity profile. Net leverage was 8.1x at quarter end.

Compared with 7.8x on June 30 primarily driven by the seasonal impact on Q3's adjusted EBITDA as compared to Q2. We remain on track toward our near term target of 6x to 6.5x driven by NOI growth, free cash flow, and capital recycling. As of quarter end, total debt stands at approximately $1.7 billion at a weighted average rate of 5.78%, with 83% of total debt either fixed or hedged, and borrowings under our revolving credit facility representing nearly all of the unhedged variable rate debt. 98% of our total debt matures in 2029 or later, and 42.1% matures in 2031 or later. Before extension options.

Our 7 recent acquisitions were funded primarily through cash on hand, borrowings on our revolving credit facility, and supplemented by opportunistic ATM sales. With no significant near term maturities, limited floating rate debt, and meaningful capacity in a revolving credit facility our balance sheet is well built to withstand today's rate volatility. And our growth strategy does not depend on rate relief. At quarter end, $80 million was available under $455 million secured revolving credit facility with $125 million committed. To date, we have $68.6 million of equity under our ATM program at a blended price of $39.18, per share to fund identified acquisitions, which we expect to be accretive to free cash flow and NAV per share.

Between cash on hand, revolver capacity, disposition proceeds, and free cash flow, we have ample liquidity to fund the pipeline Brandon outlined. As previously described, we will continue to opportunistically equitize the pipeline as we pursue accretive acquisitions, However, the flexibility of our balance sheet means we are not reliant on the equity markets to execute on our pipeline, and we will not issue equity at levels that are dilutive to shareholder value. As we have discussed previously, the progress we have made integrating CHP alongside the continued stabilization of recent acquisitions has significantly improved our visibility into portfolio performance and earnings growth.

As a result, we expect to introduce full-year 2027 guidance with our fourth quarter results to provide investors with a clear framework for evaluating our operating and financial performance. I will now turn it back to Brandon for closing comments.

Brandon Ribar: Our third quarter results show that the work we have done over the past several years is paying off. We have a high quality portfolio, a platform that consistently converts occupancy gains into margin and NOI growth, and a leadership team with the continuity to execute our strategy as we scale. Those strengths position us well for 2027 and beyond. As we capture the significant remaining opportunity within our portfolio and integrate $250 million in high-growth acquisitions completed or expected to close before year end. I want to thank our team members across every community for the care and commitment they bring to our residents and families each day.

Their work is the foundation of everything we have discussed this morning. We look forward to sharing more, including our full-year 2027 guidance when we report fourth quarter results. Operator, we are now ready to open the line for questions.

Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press *1 on your telephone keypad to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please standby while we compile the Q&A roster. Your first question comes from the line of Ronald Kamdem. With Morgan Stanley. Ronald, your line is open. Please go ahead.

Ronald Kamdem: Hey, great. Thanks so much for the time. Look. First question is just thinking about the occupancy growth year over year and the RevPAR growth. Year over year, looked like a slight decel versus last quarter. I guess I would just love to hear some commentary about just high level what you think those levels of growth rate should be going forward And how you think about when you are underwriting acquisitions, what assumptions go into that as regarding occupancy and RevPAR. Hope that made sense.

Brandon Ribar: It did. Thanks, Ronald, and good morning. Couple of things I would say. We are seeing really good progress in the occupancy growth in some of the newer communities that we brought on board over the last couple of years. And so we feel confident that as we head into the end of this year, have seen continued improvement in October and we will work really hard towards the end of the year. And then, as we issue our guidance early next year, expect to see continued occupancy growth that is consistent with what we have seen over the last couple of years. So we feel like there is still plenty of upside in the portfolio.

A lot of progress in the communities that we have. Have bought over the last year and a half, really. That we are continuing to see opportunities as we integrate the communities from the CHP portfolio as well as the ones that we have recently purchased into the operating platform. I think the same holds true on the rate front. it is been a good couple of years, and we are gonna continue to push really hard to see the value that we are we are creating for our residents really fall through to the rate growth, and we are also seeing upside opportunity in those new communities we brought on board.

Not only from past practices and what we are going to bring to the table with our SPIN platform. But I also think the opportunities to grow things like level of care and other ancillary revenues is something we are going to be highlighting and targeting in 2027. So I think we. it is imperative that those assets we purchased as well as our those that we have had prior to 2026 you will see that good sustainable rate growth that is in line or above where we have been. Your next question from the line of Rich Anderson with Cantor Fitzgerald.

Operator: Rich, your line is open. Please go ahead.

Rich Anderson: Thanks. Good morning. So on the integration front, you said 43 of 54 sort of in. Sort of had been advanced into, you know, a plan I think 8 of those are noncore sales and the rest transitions to Sonida's operating platform. First off, do I have that right? Yes or no?

Brandon Ribar: Yes. And that includes the couple of acquisitions that we have referenced of the operator.

Rich Anderson: The small stake, and this is just maybe for my own recollection and maybe for those that are listening The 19 million of third party management fees at CHP just flows through. To the pro forma synergy column there. I am curious why that is the case if you are transitioning operators to your platform. Why would that. Why would the 19 not go down?

Brandon Ribar: I would say that when we initially came out with that, our expectation was that we wanted to wait and see until we were seeing those meaningful savings and understood the savings. And we have consistently said that we feel like that 19 million which is 5%, we feel like we can be running at the 3% to 3.5% mark on a stabilized basis. So that was not built into our assumptions around the CHP integration. But we still feel confident that is the upside opportunity from the number you referenced.

Rich Anderson: Okay. So even though you have already transitioned some, you are just playing your cards conservatively. Is that the way to think about it?

Brandon Ribar: Yeah. I think that, you know, 1 of the impacts that we saw in terms of just the sequential EBITDA change from Q2 to Q3 is timing of the integration of those assets and investing in the G&A to support them. So I think we wanna have a really strong, kind of run rate management structure in place and be able to provide that again in early 27 so that people can see the savings on that 19 million. Integrated into our run rate G&A.

Rich Anderson: Okay. So the 19, even though it is a different shade of blue, is sort of your G&A, or a lot of it is your G&A.

Brandon Ribar: Some of it is not. But is that right? Like, some of it is-- yeah. It assumes it assumes it is flat and provides the opportunity for upside when we come in under that. Okay.

Rich Anderson: Good. And then for 11 of the 54 that have not-- are not in this quote, unquote advanced stage, what is the plan there and the timing there if you can comment, or is it still a TBD?

Brandon Ribar: Those communities are with 2 managers. They are with 2 really, really strong managers of ours that we have had a strong relationship ever since and even before we acquired the assets. I think we are working with them and to kind of finalize that solution. And expect that we will be able to announce what is going on with those remaining communities. On our next call. You know, with, you know, what. Whatever solution ultimately we land on, whether it is a strategic relationship or it is the internalization of those assets into the Sonida platform in total. Okay.

Rich Anderson: And just. Let me just finer point on that. So you referenced 2 that are long term relationships Those are different managers than these 2 for the 11, or is it-- or are they the same Just to. just for clarification.

Brandon Ribar: Yep, those are different. Okay, fair enough. Okay. Thanks so much. Thank you.

Operator: Your next question from the line of Wes Golladay with Baird. Wes, your line is open. Please go ahead.

Wes Golladay: Hello, everyone. Can you talk about the opportunity set to acquire operators, and what do you get? Is there an immediate benefit from adding scale? Building clusters, plugging them into SPIN? Just trying to see what you get from buying the operators.

Brandon Ribar: Yeah. Immediate benefit comes from working with them to provide solutions that we have from the SPIN platform. that is a piece of what we really look to the opportunity. it is bringing on additional resources that are really strong folks that are, you know, limited but in their management teams that have joined our management team in key strategic positions that we had open as part of our 2026 budget.

It gives us immediate visibility into acquisition opportunities that are in their platform, which was in the case of the manager in the Southeast We announced earlier this year the preferred equity investment that kind of immediately with this transition and purchase we bring onboard management fees that far outweigh the cost of those management fees. It gives us immediate opportunity to also not only run that asset, but potentially buy it in the relatively near term. So it is it is the acquisition pipeline opportunity. And then in, you know, in the case of the manager that we are under LOI with, there is also additional management fees associated with that transaction.

That we will, you know, be able to roll into our platform. And ultimately, if that is, you know, done at an even lower old total cost, that will benefit the flow through to our EBITDA growth.

Wes Golladay: Okay. You also highlighted a lot of enhancements to the platform. And I want to dig into the leads internally generated. What percentage of the leads do you get internally now, and where do you think you can get that to? Yeah. So right now, we are just north of 70% that we are generating through our own mechanisms, whether it is kind of local lead generation, boots on the ground, or it is our digital platforms. We have seen that continue to progress on a quarterly basis.

And so, ultimately, I think that the ideal goal is you want to get to an entirely internally generated lead profile The reality of the presence of the aggregators in the market is that we continue to work with them and I think we just wanna see good consistent progress over time. it is a bit hard to predict where that market is gonna go just with all the changes in how people look for the product and just the impact of some of the AI tools out there on the customer decision making. So we just wanna keep pushing up on those generated percentages because we see better conversion. They are more efficient. They are lower cost.

You know, dollars that are going out to third parties. I just got 1 balance sheet question.

Kevin J. Detz: I believe you said the remaining dispositions are about 2% of NOI. Or 2% of properties. Will they have a positive leverage impact when you sell them? Yep. So the first 2 that we just sold did have a positive leveraging impact, and we expect that the remaining ones will have something between a neutral to a slightly positive impact on deleveraging and overall net cash proceeds.

Wes Golladay: Thanks for the time.

Brandon Ribar: Thanks, Wes.

Operator: Your next question from the line of Benjamin Hendrix with RBC Capital Markets. Benjamin, your line is open. Please go ahead.

Benjamin Hendrix: Great. Thank you very much. Just wanted to follow-up on some of Anton D. Nikodemus's initiatives in the SPIN platform and operational proficiency realm. I think you noted, Sonida Collections. And the price tiering that you have implemented across the portfolio. Wanted to get a little indication of kind of what you have discovered around the various tiers and pricing tiers, how demand differs between those, and, what you are seeing from an occupancy and rate backdrop in those across those various tiers? Thanks.

Brandon Ribar: Yeah, Benjamin. I would say we are still in the early stages of the effort around the Sonida collections. We started on the dining front and really investing on that side. And we have got a lot of work to do, but are seeing, you know, immediate opportunities in how we are planning for growth in the rate side in 2027. As well as just what we think the opportunity is from an efficiency of our labor model.

And so I think while the collections is really an internal framework, we think that as we set the standards and build our operating model even more specific to those tiers, it is gonna help with margin. it is gonna help with pricing. And, ultimately, it is gonna deliver a better product that is aligned with the dollars that the residents are paying on a on a monthly basis. So I think we will continue to share more of the efforts on the collections front.

But, initially, I think the sales and marketing and the rate components of what we are doing are going to have the-- see the most immediate benefit because they are going to be reflective of what we are seeing in terms of demand as you referenced that. You know, what is available in the market and how we can you know, drive rate appropriately there.

Benjamin Hendrix: Any initial thoughts on kinda what you are targeting as a kind of a hurdle rate for savings or for, I would say, for, for pricing enhancements from the data driven pricing initiative for 2027?

Brandon Ribar: I think that is gonna be a big piece of why we are confident in just the overall rate profile being kind of at or above where we have been in continuing to push hard on that front. It also gives us additional opportunity on the level of care side And then as we continue to get our arms around the communities that have recently transitioned into the portfolio or will be purchased here between now and the end of the year. 1 of the most immediate areas that we consistently have seen over the years is that rate opportunity. So that is all gonna be built into the additional kind of perspective we provide on 2027.

Benjamin Hendrix: Great. Thank you very much.

Brandon Ribar: Thanks, Benjamin.

Operator: Your next question from the line of Rob Simone with Compass Point. Rob, your line is open. Please go ahead.

Rob Simone: Hey, guys, Good morning. Thanks a lot for taking the question. Just a quick question on the 3 acquisitions you guys have, and I think it is Page 33 of the deck. So I know you guys have said and mentioned and also put on paper that you are targeting double digit unlevered returns there. But can you give us any color on what the starting point is? Like what give us any color on what the starting point is? Like, kinda what initial yield you are buying them into so we can kind of bracket the range of where you are starting versus where you are going?

And then also, just a sense of how much capital you have to put into those assets. Thanks. that is all for me.

Brandon Ribar: Thanks, Rob. Yeah. And I can speak to kind of. I will speak to the entirety of $250 million, which includes those that we have completed in the second half then what we have got in the pipeline as well. So consistent with what we have been purchasing in the past, there is a significant range in what you would say in terms of going in cap rates. So a handful of the assets are in the high single digits, the kind of 8, 9 range. And then we also have communities in there that have greater lift and greater opportunity, and those are in the closer to the low single digits.

With, you know, 1 or 2 of them also, we are buying at a cash flow negative position. And see really strong upside. It might just take a little bit longer because of that lift required. But all in blended, I think that kind of cause that price 3% to 5% range is the way to think about it. With the opportunity to stabilize as we have talked about previously in that high single-digit 9-plus range. And feel really good about the quality of the assets that we bought or will finish the purchase this year. Do not expect that there is gonna be a lot of CapEx.

I think 1 of the opportunities we called out in the 3 community portfolio that you referenced on that page is that we actually have building expansion availability in each of those 3 assets. We did not build that into the assumptions of the underwriting. We built it in as additional opportunity, and those do underwrite to, you know, the types of returns that we are targeting. So I would say that the capital is going to be, you know, really ROI capital versus just getting them up to speed and kind of our consistent operating expectation because of the high quality that we are purchasing. That also have upside in terms of unit expansion and unit conversion. Great.

Thanks a lot for that. Appreciate it.

Operator: Again, if you would like to ask a question, please press *1 on your telephone keypad to raise your hand. To withdraw your question, press *1 again. There are no further questions at this time. I will now turn the call back to Brandon Ribar, CEO, for closing remarks.

Brandon Ribar: Thank you all for your time this morning. We appreciate it, and we look forward to speaking with you again in the New Year. Take care.

Operator: This concludes today's call. You for attending. You may now disconnect.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.