Sonida Senior Living, Inc.

Greetings and welcome to the Sonita Senior Living First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jason Finkelstein of Investor Relations for Sonita. Please proceed. Thank you, Camila.

All statements made today, May 10th, 2024, which are not historical facts, may be deemed to be forward-looking statements within the meaning of federal securities laws. The company expressly disclaims any obligation to update these statements in the future. Absolute results and performance may differ materially from forward-looking statements. Certain factors that can cause absolute results to differ are detailed in the earnings relief the company issued earlier today, as well as new reports that the company files with the SEC from time to time, including the risk factors contained in the annual report on Form 10-K and quarterly reports on Form 10-Q. Please see today's press release for the full safe harbor statement, which may be found in an 8-K filing from this morning, and at the company's investor relations page down at www.sonitaseniorliving.com. Also, please note that during this call, the company will present non-GAAP financial measures, For reconciliations of each non-GAAP measure and the most comparable GAAP measure, please also see today's press release. At this time, I would like to turn the call over to Cernita Senior Living President and CEO, Brandon Rebar.

Thanks, Jason. Hello, and welcome to our 2024 First Quarter Earnings Call. I'm joined today by Kevin Dietz, our Chief Financial Officer. Earlier today, we posted our Q1 earnings and investor presentation, which will be referenced throughout this call as we discuss our strategic priorities and operating results, in addition to updating you on our growth efforts in 2024. You can find our latest presentation at sonitaseniorliving.com in the investor relations section if you would like to follow along. In addition, we have included supplemental earnings information within our investor presentation consistent with the prior quarter release. We ended Q1 with significant momentum towards both our organic and external growth goals and remain optimistic around our 2024 operating targets. We have swiftly moved into growth mode in Q2 with the expected completion of four transactions before the end of June. Looking ahead, we have clear line of sight into further growth opportunities with similar return characteristics in the near-term pipeline. We anticipate that we will continue to use our recently established ATM program to match fund bolt-on acquisitions while exploring a traditional equity raise later this year, subject to the capital needs of our pipeline. Over the last three months, Sunita has raised nearly $60 million in equity capital with approximately $35 million earmarked for transactions expected to close in the next 90 days. These transactions include both existing and new institutional capital partners excited to access this highly attractive senior living investment landscape through Sunita. To touch on our performance for the quarter, Q1 was characterized by the continued improvement of the core portfolio. Occupancy remained in line with prior quarter, coming in just shy of 86%, while we successfully completed another material increase in our overall rate profile as of March 1st. March rate increases effectively at 7% on a run rate basis to our total private pay revenue. While the rate increases led to higher than average move-out volume for financial reasons, the increase was in line with our expectations for the 2024 plan and supports significant revenue increases throughout the year. Overall, the 2.4% increase in revenue sequentially and 7.3% year-over-year reflect ongoing strength in our operations and sales leadership. Additionally, continued operating and margin expansion, as highlighted on slide 12, further supports our expectations to achieve significant year-over-year improvement again in 2024. On a total dollar basis, adjusted EBITDA increased more than 21% year-over-year and 2% sequentially for the quarter. On our previous call, we referenced our 2024 strategic growth plan focusing on the strength of our local and regional leadership teams, further investments in capital and programming to support our community performance, and the recovery of a concentrated set of underperforming buildings. Capital investments in our communities remain on track with project delivery timelines set for the second half of the year. On the resident programming front, the development of our trademark Magnolia Trails memory care offering continues to produce exceptional outcomes for our residents and has delivered a year-over-year increase of 750 basis points in occupancy, from just north of 80% in Q1 2023 to nearly 88% occupancy across our memory care units in Q1 2024. Further implementation of fall prevention technology completed in the last six months has enhanced resident safety and family member confidence in Senita to provide a safe and caring environment for their loved ones. I'll shift gears and speak for a minute on our underperforming communities and the progress we are making to accelerate recovery plans. In March and April, we experienced positive momentum in the occupancy and margin associated with our key recovery communities. we delivered sequential quarterly occupancy improvement of 240 basis points and 130 basis points of margin expansion over Q4 2023. Detailed onsite process reviews, focused digital marketing efforts, and targeted capital investments were key drivers of this improvement. In summarizing the core portfolio performance, I remain confident in the capabilities and stability of our local and regional leadership to drive further occupancy, rate, and margin improvement throughout the year. Our resident rates have increased eight quarters in a row, and with the combination of the increases achieved with our March 1st annual adjustment, positive releasing rates, and further improvement in capturing our level of care adjustments, I expect the trend to continue. We've also implemented a new level of care initiative within several of our Magnolia Trails memory care locations focused on expense management, Specifically, effective labor cost control has continued to push down our labor costs as a percent of total revenue and support our year-over-year and sequential margin improvement on a normalized basis. In the current environment, we see opportunistic investments as most compelling and are focusing largely on acquiring underperforming but quality assets at significant discounts to replacement costs. Sunita identifies situations where our systems and processes can structurally improve margin as well as quality of care and resident experience. When combined with an attractive cost basis and capital structure considerations, each of the investments set for close in Q2 reflects an attractive asset level return profile commensurate with the risk profile of acquiring underperforming assets. Moreover, we are laser focused on generating per share net asset value and free cash flow accretion with every investment we make. We believe that the financial success of a community is first and foremost dependent on having a strong local leadership team, and key to our success is the hiring and retention of great talent that together with Sunita's tools and programs are able to stabilize challenged assets. One core principle is focusing on regional densification, where we were able to benefit from our scale, implement our full suite of labor management tools, and thus grow our portfolio without costly recruiting and without meaningful changes to G&A. Ten of the 12 communities set to join Tanita are in states or nearby markets we currently operate, with the exception of Austin, Texas and Atlanta, Georgia, two markets with attractive growth and demographic profiles that fit the Tanita footprint. Specific to onboarding new communities, we've introduced an operational excellence team, focusing on portfolio-wide initiatives and best practices. and integrating them into newly transitioning communities. The team is comprised of operational, clinical, and sales resources with a track record of successfully driving recovery in underperforming communities. On the financing front, we look forward to expanding our banking relationships with four new lenders providing debt capital for the acquisitions reference in our presentation. For the second half of the year, we will continue to target similar opportunities to purchase assets outright or through joint venture relationships with leading investors in real estate. The increasing default rate and level of non-performing loans across the market, in addition to the absence of interest rate relief to date in 2024, continues to generate a robust pipeline of growth opportunities. To that end, we made the decision to further invest in our executive leadership with the hiring of our new chief investment officer, Max Levy, announced earlier this morning. With his strong real estate investment track record and as a valued member of our board of directors and a contributor to the CINEDA growth strategy over the last two years, Max adds substantial firepower to our capital markets and acquisition capabilities. We are appreciative of Conversant Capital's flexibility and continued support in agreeing to this critical hire. This morning, we also announced a meaningful addition to our Board of Directors. Lily Donoghue, a seasoned executive leader in senior living and real estate-based businesses, has agreed to join the Sunita Board of Directors effective today. Lily's wealth of experience and proven track record for scaling large real estate platforms will contribute significant value to the management team and the board. Our culture at Sunita is built on a team comprised of individuals with the highest levels of integrity and passion for building a great offering for seniors, and I'm excited to add two top-notch leaders to our collective team. The Sunita 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 returns. reinforced by the trends of a growing senior population against the backdrop of a significant slowdown in construction activity of new properties. Sunita's disciplined deployment of balance sheet capital, coupled with flexible and creative deal structuring, allows us to strategically acquire assets that can favorably impact our portfolio through an expansion of operations and highly attractive returns upon stabilization. I'll now turn it over to Kevin for discussion of the financial results.