Sonida Senior Living, Inc. · NYSE:SNDA
Sonida Senior Living — Capital Senior Living — Investor Presentation (October 2007)
34 slides from Sonida Senior Living's investor presentation, Oct 18, 2007
Slide 1: Capital Senior Living Corporation
Capital Senior Living Corporation
Slide 2: Forward-Looking Statements
Forward-Looking Statements The forward-looking statements in this presentation are subject to certain risks and uncertainties that could cause results to differ materially, including, but not without limitation to, the Company's ability to complete the refinancing of certain of our wholly owned comm
Slide 3: Investment Highlights
Investment Highlights Favorable demographics and attractive industry fundamentals Strong growth in same-store community net income Acquisition opportunities in highly fragmented industry National platform and existing infrastructure result in low marginal integration cost Predominately private pay w
Slide 4: Summary of Portfolio
Summary of Portfolio Capital Senior Living owns and/or operates 64 communities in 23 states with the ability to serve 9,544 residents 49 of these communities are owned or leased with resident capacity of 7,636 Achieved 95% approval rating in 2006 residents' satisfaction survey Owned Leased Joint Ven
Slide 5: Senior Living Industry: Favorable Demographics
Senior Living Industry Favorable Demographics 2000 2005 2010 2015 2020 2025 2030 Population Age 75+ 16.6 17.9 18.5 19.6 22.3 27 32.6 Population Age 85+ 4.2 4.9 5.8 6.4 6.7 7.4 8.9 Source: U.S. Census Bureau
Slide 6: Favorable Supply Trends
Favorable Supply Trends Source: National Investment Center / American Seniors Housing Association Seniors Housing Construction Trends Report, 2006 & NIC Key Financial Indicators * Including senior apartments, independent living, assisted living, dementia care, and nursing care 1997 1998 1999 2000 20
Slide 7: Senior Living Industry: Unit Construction Starts
Senior Living Industry Q1 2006 Q1 2007 Q2 2007 IL 8239 11082 10520 AL 4086 3620 3183 DC 932 1011 1119 NC 3938 3084 2598 Source: National Investment Center / American Seniors Housing Association MAP Data Unit Construction Starts Independent Living Assisted Living Dementia Care Nursing Care Q1 2006 Q1
Slide 8: Senior Living Industry: Senior Housing Capitalization Rates
Source: National Investment Center for the Seniors Housing & Care Industry Note: Q1 2005 data not available Senior Living Industry Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Independent Living 0.1 0.099 0.104 0.103 0.1 0.091 0.094 0.091 0.082 0.082 0.085 0.082 0.083 0.077 0.077 0.077 0.079 A
Slide 9: The Capital Advantage: Senior Living Options (Independent Living)
The Capital Advantage: Senior Living Options Spacious apartments with a variety of floor plans Restaurant-style dining 24-hour staffing Social events, recreational activities, educational programs and outings Scheduled transportation Housekeeping and linen service On-site beauty salon and barber sho
Slide 10: The Capital Advantage: Senior Living Options (Assisted Living)
The Capital Advantage: Senior Living Options Three delicious meals daily and snacks Medication reminders Assistance with activities of daily living such as bathing, dressing and grooming 24-hour on-site staff Emergency call systems Resident "well-being" checks Scheduled entertainment & activities Sc
Slide 11: Resident Demographics at CSU Communities
Resident Demographics at CSU Communities Average age of resident: 85 years Average age of resident moving in: 82 years Average stay period: 2-3 years Percent of female residents: 80% Resident turnover is primarily attributed to death or need for higher care
Slide 12: The Capital Advantage: Established National Platform
? Wholly Owned (25) ? JV Ownership/Managed (12) ? Leased (24) ? Management Only (3) ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? SW Region Duane Ness (14) Linda McAlister (11) Midwest Region David Beathard (33) (Interim) Donna Monroe (10) ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Dallas Region Carole B
Slide 13: The Capital Advantage: Years of Management Experience
The Capital Advantage: 168 Years of Management Experience James A. Stroud Chairman (22) Lawrence A. Cohen Vice-Chairman/CEO (22) Keith N. Johannessen President/COO (28) Rob L. Goodpaster VP Marketing (31) David W. Beathard VP Operations (33) Glen H. Campbell VP Development (32) (Parenthetical indica
Slide 14: The Capital Advantage: Proven Track Record
The Capital Advantage: Proven Track Record Stabilized Operating Results Capital Senior Living Industry Averages Industry Averages Capital Senior Living Independent Living Assisted Living Occupancy 1 90.5% 91.5% 87.5% Operating Margins 2,3 47.0% 52.6% 44.4% Second Quarter 2007 CSU and NIC Key Financi
Slide 15: The Capital Advantage: Proven Track Record, Same Store Analysis
The Capital Advantage: Proven Track Record Communities Under Management Same Store Analysis Source: 2005 - 2006 CSU; The State of Seniors Housing 2007 by the American Seniors Housing Association (ASHA) Capital Senior Living Industry Averages Industry Averages Capital Senior Living Independent Living
Slide 16: Industry Median Increases in Resident Revenue
Industry Median Increases in Resident Revenue Year Independent Living Independent Living Assisted Living Assisted Living Year Existing Residents New Residents Existing Residents New Residents 2006 4.5% 4.7% 6.0% 4.0% 2005 4 % 4.6% 5% 5% 2004 4% 4% 5% 5% 2003 4% 4% 5% 5% 2002 4% 5% 4% 5% 2001 4% 5% 5
Slide 17: Organic Growth: Enhance Revenues
Organic Growth: Enhance Revenues Improve occupancy Rate Increases Community Fees Ancillary Services Respite Care / Guest Rooms Guest and Additional Resident Meals Catering Additional Housekeeping/Maintenance Services Leased Space - Home Health Agencies, Therapy Companies Additional Transportation Co
Slide 18: Growth Strategies: Additional Levels of Care
Growth Strategies: Additional levels of care Acquire or form a joint venture with home health care agency Expand or convert existing communities, where feasible Independent living units Assisted living units Alzheimer units
Slide 19: Organic Growth: Cottonwood Expansion
Organic Growth: Cottonwood Expansion IL IL AL AL Total Total Units Occ% Units Occ% Units Occ% Annual Revenue Pre-expansion 65 100% - - 65 100% $1.3M 2007 114 98% 48 96% 162 98% $4.6M Annual revenues increased 3.5 times since expansion
Slide 20: Organic Growth: Sedgwick Conversion
Organic Growth: Sedgwick Conversion IL IL AL AL Total Total Units Occ% Units Occ% Units Occ% Annual Revenue 2003 117 48% 35 100% 152 60% $2.0M 2007 118 94% 29 97% 147 95% $3.5M Annual revenues increased 75%, with an increase of over 50% in occupancy
Slide 21: Organic Growth: Expense Savings/Controls
Organic Growth: Expense Savings/Controls "The Capital System" - spend down sheets and staffing patterns tie to occupancy Group Purchasing Program as member of Premier GPO Premier - 43,500 members with volume over $27 billion 224 contracted diverse suppliers with over 1,300 contracts including: US Fo
Slide 22: Organic Growth: Expense Savings/Controls, Electricity Contracts
Organic Growth: Expense Savings/Controls Electricity Contracts in Deregulated State of Texas Six contracted through November 2009 at 40% savings over TXU price Eight contracted through May 2012 at 23% savings over TXU price
Slide 23: Organic Growth: Property/Liability Insurance Savings
Organic Growth: Property/Liability Insurance Savings 1 Cost shown above includes primary GL/PL insurance and property insurance. Capital Senior Living Industry Averages Industry Averages Capital Senior Living Independent Living Assisted Living 2006/07 Cost of Property and Liability Insurance per Uni
Slide 24: Reduction in Insurance Premiums
Reduction in Insurance Premiums 1 Policy Period 2003/04 2004/05 2005/06 2006/07 Resident Capacity 6,854 8,688 8,915 9,544 % Premium Reduction 9.3% 13.1% 2.6% ($s in millions) $1.8 million in insurance premium savings, despite 39% growth in resident capacity since 2003 1 Premiums include primary and
Slide 25: Growth Strategies: Acquisition/Lease Transactions
Growth Strategies: Acquisition/Lease Transactions Year 1 Year 2 $ Increase % Increase Revenue $5,000,000 $5,300,000 $300,000 6.0% Operating Expense $3,000,000 $3,120,000 $120,000 4.0% EBITDAR $2,000,000 $2,180,000 $180,000 9.0% Lease Expense $1,560,000 $1,600,000 $40,000 2.5% EBITDA $440,000 $580,00
Slide 26: Growth Strategies: Joint Ventures
Growth Strategies: Joint Ventures Joint venture partners Blackstone Real Estate Advisors GE Healthcare Financial Services Prudential Real Estate Investors Acquired eight communities for a total value of $85 million with joint venture partner in 2006 Seeking additional acquisitions/developments of se
Slide 27: Growth Strategies: Joint Ventures, Benefits of Financial Leverage
Growth Strategies: Joint Ventures 75% Debt / 25% Equity 75% Debt / 25% Equity 70% Debt / 30% Equity 70% Debt / 30% Equity Cap Rate 8.0% 9.0% 8.0% 9.0% Interest Rate 6.00% 6.00% 6.00% 6.00% ROE 14.0% 18.0% 12.7% 16.0% ROE with 25-year amortization 8.5% 12.5% 8.4% 11.8% Benefits of Financial Leverage
Slide 28: Example of Joint Venture Economics
Example of Joint Venture Economics Venture CSU Partner NOI $ 8,000,000 Cap Rate 8% Purchase Price $100,000,000 Debt $ 75,000,000 Equity $ 25,000,000 $2,500,000 $22,500,000 Revenues $ 25,000,000 Mgt. Fees (5%) $1,250,000 ROE (14.0%) $ 350,000 $ 3,150,000 Total First Year Return $1,600,000 $ 3,150,000
Slide 29: Growth Strategies: Example of Enhancing Shareholder Value
Growth Strategies: Example of Enhancing Shareholder Value $100 Million of Lease Acquisitions $100 Million of Joint Venture Acquisitions 93% Occupancy in Consolidated Communities Revenue $25.0 $1.3 $17.3 1 EBITDAR $10.0 $1.3 $13.0 2 Lease Expense $8.0 - - Implied CSU Equity Value Per Share (at 26.6M
Slide 30: Capital Advantage: Financial Growth
Capital Advantage: Financial Growth Revenue and Adjusted EBITDAR ($ in millions) Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Revenue 31.5 32.1 33.9 37.1 43 46.2 Adjusted EBITDAR 8.4 8.8 9.6 10.3 11.9 13.2 Adjusted EBITDAR Margin % 0.3 0.3 0.3 0.3 0.3 0.3 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Revenue 35.
Slide 31: Income Statement: Q2 Comparison
Income Statement: Q2 Comparison • 2007 and 2006 excludes write-off of deferred loan costs; 2007 excludes JV noncash charge; 2006 excludes write-off of contract rights (in millions, except per share) 2007 2006 %Change Resident & Health Care Revenue $41.6 $33.3 24.9% Other Revenue 5.3 4.4 20.5% Total
Slide 32: Balance Sheet Strength
Since Q1 2006, CSU has significantly strengthened its balance sheet Reduced total mortgage debt by $51.6 million Refinanced or retired $162 million of variable rate debt Reduced average interest rate from 7.5% to 6.1% fixed Resulting in $8.3 million of annual interest expense savings Balance Sheet S
Slide 33: Balance Sheet
Balance Sheet ASSETS ASSETS Cash and Securities $ 24.3 Other Current Assets 20.9 Total Current Assets 45.2 Fixed Assets 310.5 Other Assets 35.9 TOTAL ASSETS $391.6 As of June 30, 2007 (in millions) LIABILITIES & EQUITY LIABILITIES & EQUITY Current Liabilities $ 29.2 Long-Term Debt 191.2 Other Liabil
Slide 34: Capital Senior Living Corporation
Capital Senior Living Corporation
Capital Senior Living — Investor Presentation (October 2007) on 6ix