Sonida Completes Loan Modifications with Fannie Mae in Forbearance Agreement

by Jeff Shaw

DALLAS — Sonida Senior Living Inc. (NYSE: SNDA), a Dallas-based owner-operator of communities and services for seniors, has entered into loan modification agreements with Fannie Mae covering all 37 of its communities mortgaged through the government-sponsored entity.

On June 29, Sonida entered into a comprehensive forbearance agreement with Fannie Mae as the first of a two-step process to modify all existing mortgage agreements with Fannie Mae. The modifications finalize the comprehensive restructuring. The terms of the Fannie Mae loan modifications were consistent with those set forth in the forbearance agreement.

Among the key elements of the loan modification:

  • All maturities under the 37 Fannie Mae loans have been extended to December 2026 or later.
  • All contractually required principal payments under the 37 Fannie Mae loans have been deferred for three years or waived until maturity, resulting in $33 million of cash flow savings through maturity.
  • Sonida received near-term interest rate reduction on all 37 assets, resulting in $6.1 million in cash interest savings from June 2023 through May 2024.
  • Sonida to provide two $5 million principal payments to be applied against the loan balances. The first paydown was funded in June 2023 and the second will be funded in June 2024.
  • As previously announced, Conversant Capital committed to purchase up to $13.5 million of common equity at $10 per share over an 18-month period following the date of its commitment. Sonida shall have the right, but not the obligation, to utilize Conversant’s equity commitment and may draw on the commitment in whole or in part. The Company drew $6 million in July, in conjunction with the first $5 million principal payment to Fannie Mae. The remaining funds may be drawn as needed for general working capital needs or to fund the second $5 million loan paydown due to Fannie Mae.

Also, as previously announced, in connection with the Fannie loan modifications and the Conversant equity commitment, Ally Bank agreed to temporarily reduce the minimum liquidity requirement under its $88.1 million facility with Sonida for 18 months.

Sonida continues to engage in dialogue with its other significant lending partner, Protective Life, regarding potential modifications or repurchases, among other possibilities.

Concurrent with the loan modification announcement, Sonida also released some of its third-quarter results. Occupancy rose 100 basis points from the second quarter to 86.8 percent. Rental rates increased 9.8 percent year over year, which the company says is a “significant component of the company’s 2023 NOI margin expansion.”

“The debt restructuring along with strong Q3 occupancy gains have created significant momentum for us as we move into the final quarter of the year,” says Kevin Detz, CFO.

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