Sonida Senior Living's Q1 2025: Unpacking Contradictions in Strategy, Acquisitions, and Returns

Occupancy and pricing strategy, acquisition strategy and impact, repositioning strategy and expected returns, acquisitions and their impact, repositioning strategy and reasons are the key contradictions discussed in Sonida Senior Living's latest 2025Q1 earnings call.



Strong Portfolio Performance:
- Sonida Senior Living reported a total portfolio NOI growth of 37.6% year-over-year for Q1 2025.
- This growth was driven by a 19.3% increase in same-store NOI and a 31.3% increase in acquisition portfolio NOI.

Occupancy and Rate Increases:
- The company's overall occupancy improved to 84.7%, with same-store occupancy increasing by 100 basis points year-over-year.
- The improvements were supported by a 6.6% average renewal rate increase for the portfolio, impacting nearly 70% of the resident base.

Operational Efficiency and Cost Management:
- Total labor excluding benefits decreased by 110 basis points as a percent of revenue, with 71% of the additional revenue flowing through to NOI.
- This was attributed to stabilization in total hours worked and average hourly wage profile, along with increasing employee retention.

Acquisition Strategy and Impact:
- Sonida acquired 20 communities in 2024, with 10 joining the portfolio in Q4, contributing to a 31.3% NOI growth in the acquisition portfolio.
- The company continues to target high-quality assets at a discount to replacement costs, aiming for low double-digit yields.

Repositioning and Strategic Investments:
- The company identified five assets for repositioning, investing $4 million to $5 million to reduce Medicaid exposure and strengthen private-pay focus.
- These investments are projected to achieve a return on investment exceeding 30%, aligning with Sonida's long-term business model.