Sonida Senior Living Prices Upsized Public Offering of Common Stock

Rhea-AI Summary

Sonida Senior Living (NYSE: SNDA) has priced an upsized public offering of 4,300,000 shares of common stock at $27.00 per share. The offering, initially set for 4,000,000 shares, includes a 30-day option for underwriters to purchase up to 645,000 additional shares. Closing is expected on August 19, 2024. Sonida plans to use $102.9 million of the net proceeds to fund the acquisition of eight senior living communities, with the remainder allocated for general corporate purposes. Morgan Stanley, RBC Capital Markets, and BMO Capital Markets are acting as joint lead book-running managers for the offering, which is being made through a prospectus supplement and base prospectus filed with the SEC.

Positive

• Upsized public offering from 4,000,000 to 4,300,000 shares, indicating strong demand
• Expected to raise approximately $116.1 million (before underwriter option)
• $102.9 million allocated for acquisition of eight senior living communities, expanding portfolio
• Potential for additional capital if underwriters exercise their option for 645,000 shares

Negative

• Potential dilution of existing shareholders' ownership
• Stock price set at $27.00 may represent a discount to market price, depending on current trading

Insights

Financial Analyst

Sonida Senior Living's upsized public offering of 4.3 million shares at $27.00 per share is a significant capital raise, potentially generating $116.1 million before expenses. This move strengthens the company's financial position, with $102.9 million earmarked for acquiring eight senior living communities. The 7.5% increase in offering size from the initial 4 million shares suggests strong investor interest. However, this will dilute existing shareholders' ownership. The pricing at $27.00 per share implies market confidence in Sonida's growth strategy. The additional communities could boost revenue and market presence, but integration costs and potential operational challenges should be considered. Overall, this offering positions Sonida for expansion in the growing senior housing market.

Market Research Analyst

The senior housing market is poised for growth, driven by an aging population. Sonida's strategic acquisition of eight communities capitalizes on this trend. The upsized offering and involvement of major underwriters like Morgan Stanley and RBC Capital Markets indicate strong institutional interest. However, the sector faces challenges such as staffing shortages and potential regulatory changes. Sonida's expansion comes with execution risks, including integrating new properties and maintaining occupancy rates. The $27.00 share price suggests a premium valuation, reflecting investor optimism but also setting high expectations for future performance. This move could reshape the competitive landscape, potentially triggering consolidation in the fragmented senior housing market.

Legal Expert

The offering's compliance with SEC regulations, including the use of a shelf registration statement and prospectus supplement, demonstrates Sonida's adherence to legal requirements. The 30-day option granted to underwriters for additional shares is a standard practice that provides flexibility. The clear disclosure of intended use of proceeds aligns with transparency obligations. However, investors should note the disclaimer that this press release does not constitute an offer to sell, protecting Sonida from potential legal issues. The company's expansion through acquisition may trigger regulatory reviews, particularly regarding resident care standards and facility licensing. Shareholders should be aware that while this offering fuels growth, it also dilutes their ownership, potentially affecting voting rights and earnings per share.

DALLAS--(BUSINESS WIRE)-- Sonida Senior Living, Inc. (“Sonida” or the “Company”) (NYSE: SNDA), a leading owner, operator and investor in senior housing communities, announced today that it has priced an underwritten public offering of 4,300,000 shares of its common stock upsized from 4,000,000 shares at launch. The price to the public of the offering is $27.00 per share. The Company has granted the underwriters a 30-day option to purchase up to an additional 645,000 shares of the Company’s common stock. The offering is expected to close on August 19, 2024, subject to customary closing conditions.

The Company intends to use $102.9 million of the net proceeds from the offering to fund the purchase price for the proposed acquisition of eight senior living communities. The Company intends to use the remaining net proceeds from the offering, including any net proceeds from the underwriters’ exercise of their option to purchase additional shares, for other general corporate purposes.

Morgan Stanley, RBC Capital Markets, LLC and BMO Capital Markets are acting as joint lead book-running managers of the offering.

The offering is being made only by means of a prospectus supplement and an accompanying base prospectus, each of which is part of an effective shelf registration statement previously filed by the Company with the Securities and Exchange Commission (the “SEC”). An electronic copy of the preliminary prospectus supplement and accompanying base prospectus may be obtained at no charge on the SEC’s website at www.sec.gov. A copy of the preliminary prospectus supplement and the accompanying base prospectus relating to the offering may also be obtained from the offices of:

Morgan Stanley & Co. LLC 1585 Broadway, New York, New York 10036, Attention: Equity Syndicate Desk, with a copy to the Legal Department

RBC Capital Markets, LLC Brookfield Place, 200 Vesey Street, 8th Floor New York, New York 10281, Attention: Equity Syndicate Desk

BMO Capital Markets Corp. 151 W 42nd Street, 32nd Floor, New York, New York 10036, Attention: Equity Syndicate Department, with a copy to the Legal Department

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of any securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About Sonida

Dallas-based Sonida Senior Living, Inc. is a leading owner, operator and investor in independent living, assisted living and memory care communities and services for senior adults. The Company provides compassionate, resident-centric services and care as well as engaging programming operating 83 senior housing communities in 20 states with an aggregate capacity of approximately 9,000 residents, including 70 communities which the Company owns (including eight communities in which the Company owns varying interests through two separate joint ventures), and 13 communities that the Company manages on behalf of a third-party.

For more information, visit www.sonidaseniorliving.com or connect with the Company on Facebook, Twitter or LinkedIn.

Forward-Looking Statements

This press release contains forward-looking statements, which are subject to certain risks and uncertainties that could cause the Company’s actual results and financial condition to differ materially from those indicated in the forward-looking statements, including, but not limited to, the risks, uncertainties and factors identified from time to time in the Company’s filings with the SEC; the Company’s ability to consummate the proposed equity offering in the size and manner anticipated; the Company’s ability to generate sufficient cash flows from operations, additional proceeds from equity issuances and debt financings, and proceeds from the sale of assets to satisfy its short- and long-term debt obligations and to fund its acquisitions and capital improvement projects to expand, redevelop, and/or reposition its senior living communities; increases in market interest rates that increase the cost of certain of the Company’s debt obligations; increased competition for, or a shortage of, skilled workers, including due to general labor market conditions, along with wage pressures resulting from such increased competition, low unemployment levels, use of contract labor, minimum wage increases and/or changes in overtime laws; the Company’s ability to obtain additional capital on terms acceptable to it; the Company’s ability to extend or refinance its existing debt as such debt matures; the Company’s compliance with its debt agreements, including certain financial covenants and the risk of cross-default in the event such non-compliance occurs; the Company’s ability to complete acquisitions, including its proposed acquisition of eight senior living communities, and dispositions upon favorable terms or at all including the possibility that the expected benefits and our projections related to such acquisitions may not materialize as expected, that such acquisitions not being timely completed, if completed at all, that prior to the completion of such acquisitions, the targets’ businesses could experience disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, residents, other business partners or governmental entities, and that we may be unable to successfully implement integration strategies or achieve expected synergies and operating efficiencies within our expected timeframes or at all; the risk of oversupply and increased competition in the markets which the Company operates; the Company’s ability to improve and maintain controls over financial reporting and remediate the identified material weakness discussed in its recent Quarterly and Annual Reports filed with the SEC; the cost and difficulty of complying with applicable licensure, legislative oversight, or regulatory changes; risks associated with current global economic conditions and general economic factors such as inflation, the consumer price index, commodity costs, fuel and other energy costs, competition in the labor market, costs of salaries, wages, benefits, and insurance, interest rates, and tax rates; the impact from or the potential emergence and effects of a future epidemic, pandemic, outbreak of infectious disease or other health crisis; and changes in accounting principles and interpretations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240815324734/en/

Investor Relations

Jason Finkelstein

Ignition Investor Relations

mailto:ir@sonidaliving.com

Source: Sonida Senior Living, Inc.

FAQ

What is the price per share for Sonida Senior Living's (SNDA) public offering?

Sonida Senior Living (SNDA) has priced its public offering at $27.00 per share.

How many shares is Sonida Senior Living (SNDA) offering in its upsized public offering?

Sonida Senior Living (SNDA) is offering 4,300,000 shares of common stock in its upsized public offering.

When is the expected closing date for Sonida Senior Living's (SNDA) public offering?

The public offering for Sonida Senior Living (SNDA) is expected to close on August 19, 2024, subject to customary closing conditions.

How does Sonida Senior Living (SNDA) plan to use the proceeds from its public offering?

Sonida Senior Living (SNDA) plans to use $102.9 million of the net proceeds to fund the acquisition of eight senior living communities, with the remainder for general corporate purposes.