Sonida Senior Living, Inc. · NYSE:SNDA
Sonida Senior Living — Capital Senior Living — Investor Day (October 2015)
78 slides from Sonida Senior Living's investor day presentation, Oct 8, 2015
Slide 1: Investor and Analyst Day October 8, 2015
Investor and Analyst Day October 8, 2015 Exhibit 99.1
Slide 2: Investor & Analyst Day Agenda
Investor & Analyst Day Agenda 2 9:00 am Transformation of Capital Senior Living and Executing Capital Senior Living’s Sustainable Growth Strategy Larry Cohen 9:20 am Operations David Beathard 9:40 am Sales and Marketing Gary Fernandez 10:00 am Acquisition Program Joe Solari 10:20 am Seniors Housing
Slide 3: Transformation of Capital Senior Living and Executing Sustainable Growth Strategy
Transformation of Capital Senior Living and Executing Capital Senior Living’s Sustainable Growth Strategy Larry Cohen Chief Executive Officer
Slide 4: Forward-Looking Statements
Forward-Looking Statements 4 • 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
Slide 5: Non-GAAP Financial Measures
Non-GAAP Financial Measures 5 • Adjusted EBITDAR, Adjusted EBITDAR Margin, Adjusted Net Income and Adjusted CFFO are financial measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures may have mat
Slide 6: Capital Senior Living Well Positioned For Sustainable Growth
Capital Senior Living Well Positioned For Sustainable Growth 6 • Value leader in geographically concentrated regions providing quality seniors housing and care at reasonable prices • Highest percentage of wholly-owned communities among top seniors housing operators generating strong cash flow • Stra
Slide 7: The Seniors Housing Market is Highly Fragmented
The Seniors Housing Market is Highly Fragmented 75% 63% 7 Independent Living Companies 20% 25% Top 10 Top 25 Assisted Living Companies 29% 37% Top 10 Source: IBISWorld, Provider Magazine, and Barclays Research Top 10 Top 25 Top 25 Remaining Market
Slide 8: Largest U.S. Seniors Housing Operators
Largest U.S. Seniors Housing Operators Rank Company Units Operated % Owned 8 Brookdale Senior Living 110,443 33.8% Holiday Retirement 37,657 36.6% LCS 32,172 14.9% Five Star Senior Living 31,267 9.8% Sunrise Senior Living LLC 22,561 0.0% Erickson Living 20,517 28.2% Senior Lifestyle Corporation 20,3
Slide 9: Competitive Advantages in Highly Fragmented Industry
Capital Senior Living’s Competitive Advantages in Highly Fragmented Industry 9 • Exceptional talent and reputation • Economies of scale and operating efficiencies • Strong cash flow funds investments in technology, training, systems, renovations, refurbishments and accretive growth • Enhanced sales
Slide 10: Geographic Concentration
Capital Senior Living Geographic Concentration IN. 2,381 OH. 2,172 TX. 3,870 10 • Capital Senior Living operates 119 communities in geographically concentrated regions with the capacity to serve 15,200 residents AR. CT. FL. IA. IL. MI. MN. MO. MS. NC. SC. NE. NJ. NY. VA. CA. Number of residents by S
Slide 11: NIC MAP Markets
NIC MAP Markets 11 Source: NIC MAP Capital Senior Living locations Capital Senior Living has operations in 29 of NIC-MAP’s 99 primary and secondary markets
Slide 12: Demand & Supply Conditions Affect Metro Areas Differently
Demand & Supply Conditions Affect Metro Areas Differently 12 Seniors Housing – Primary Markets Supply and Demand Changes as of Q2 2015 Source: NIC MAP Data Service
Slide 13: Demand Pull/Cost Push Pressures Favor Senior Living
Demand Pull/Cost Push Pressures Favor Senior Living Age- Restricted Housing Independent Living Assisted Living Memory Care Skilled Nursing Hospital 13 • Aging, Demographics, Acuity Levels and Disabilities • Rising Penetration Rates • Fewer Family Caregivers • Social Engagement, Support and Emotional
Slide 14: Assisted Living Is a Lower Cost Alternative for Post-Acute Care
Assisted Living Is a Lower Cost Alternative for Post-Acute Care Higher Average Cost Lower Average Cost Acute Care Post-Acute Care Continuum 14 Hospital $1,819/day Long-Term Care Hospital $1,450/day Inpatient Rehab Facility $1,314/day Skilled Nursing Property $432/day $190/day Home w/ Home Health Car
Slide 15: Seniors Housing Yields Consistent High Investment Returns
Seniors Housing Yields Consistent High Investment Returns 15 Source: NCREIF, NIC MAP Data Service NCREIF Annualized Total Investment Returns (1, 3, 5, 10-Year Periods, as of Q2 2015)
Slide 16: Transformation: Wholly-Owned Portfolio Growth
Transformation: Wholly-Owned Portfolio Growth 25 69 16 2010 Current Owned Leased Joint Venture 77 Total Properties Owned % 32.5% 58.0% 119 Total Properties
Slide 17: Transformation: Increased Level of Care
Transformation: Increased Level of Care 17 • Average monthly rent has increased from $2,754 in Q2 10 to $3,364 in Q2 15
Slide 18: Transformation: Significant Growth in Key Metrics
Transformation: Significant Growth in Key Metrics 18 81.1% 88.0% 75.0% 80.0% 85.0% 90.0% Q2 10 Q2 15 Occupancy $188 $406 $0 $100 $200 $300 $400 $500 Q2 10 Annualized Q2 15 Annualized Resident Revenue $0.64 $1.64 $- $0.50 $1.00 $1.50 $2.00 Q2 10 Annualized Q2 15 Annualized CFFO Per Share ($ in millio
Slide 19: Transformation: Age of Portfolio
Transformation: Age of Portfolio 19 11.9 15.1 New Acquisitions All Others Average Age in Years Currently 78 communities are undergoing conversions and renovations to be completed in the next 18 months
Slide 20: Transformation: New Independent Directors
Transformation: New Independent Directors 20 • Strengthened the Board by adding 5 independent directors with extensive experience in seniors real estate and care: • Philip Brooks – 28 years experience in commercial real estate finance, including $5B of seniors housing and healthcare financings • Rod
Slide 21: Transformation: New Key Senior Personnel
Transformation: New Key Senior Personnel 21 • New positions: • Vice President Corporate Development • Two Regional Operations Vice Presidents • Quality and Clinical Director • Regional Clinical & Quality Assurance Director • New people in key positions: • Chief Financial Officer • Vice President Nat
Slide 22: Transformation: Consistent Significant Growth in Key Metrics
Transformation: Consistent Significant Growth in Key Metrics Revenue * Adjusted EBITDAR Adjusted EBITDAR Margin Adjusted CFFO per share 22 ($ In Millions) $197 $257 $305 $343 $380 2010 2011 2012 2013 2014 * Excludes community reimbursement revenue and management services revenue 32.4% 35.0% 35.4% 34
Slide 23: Operations
Operations David Beathard Senior Vice President, Operations
Slide 24: Mission Statement
Mission Statement 24 “We are committed to providing quality housing and services based on the highest standards of excellence in the industry. Our goal is to enrich the daily lives of our senior residents by providing an environment that stimulates them physically, mentally and emotionally.”
Slide 25: Our Greatest Resource – Our Employees
Capital Senior Living’s Greatest Resource – Our Employees 25 • Starts with hiring the right people with a heart for seniors • Most important hire is the Executive Director with senior housing experience • Community empowerment is essential due to the local nature of the markets that we serve • Empow
Slide 26: Operations and Marketing Organization Chart
Operations and Marketing Organization Chart Keith Johannessen (37) President & COO Glen Campbell (43) Vice President Asset Management 2 Project Managers David Beathard (41) Senior Vice President Operations 4 Regional Managers 2 District Managers Greg Boemer (21) Vice President Operations 5 Regional
Slide 27: Experienced Corporate Team
Experienced Corporate Team 27 • Regional/District Operations Managers average 17 years of senior housing experience • 10 of 12 Regional/District Operations Managers were promoted from Capital Senior Living Executive Directors • Regional Marketing Directors average 18 years of senior housing experien
Slide 28: Capital Senior Living System
Capital Senior Living System 28 • Capital Senior Living has transformed over the past 4 years from predominantly an Independent Living operator to 53% Assisted Living/Memory Care and 47% Independent Living • Increased the utilization of technology: • Real Page resident assessment tool and associated
Slide 29: Capital Senior Living System – Continued
Capital Senior Living System – Continued 29 • Increased Risk Management Programs: • Quality Assurance Program led by Quality and Clinical Services Director and a Regional Clinical Director, both RNs • Established Quality Assurance Committee (President, 2 VPs of Operations and General Counsel) • Perf
Slide 30: Organic Growth
Organic Growth 30 • Focus on occupancy improvement through weekly meetings on communities with occupancy below 90% focusing on pricing and marketing initiatives • Increase average rents through level of care charges, market rents and in-house rent increases: • Effective September 1 st , increased ma
Slide 31: Organic Growth
Organic Growth 31 • Proactive expense management including: • Group Purchasing Program discounts through Premier GPO, including US Food program (average savings of 16.5% for past 4.5 years). • Fixed discounted electricity rates of $0.05 per KWH through 2019 in Ohio and 2020 in Texas • Spenddown shee
Slide 32: Transformation of Sales and Marketing
Transformation of Sales and Marketing Gary Fernandez Vice President, National Marketing and Sales
Slide 33: Sales & Marketing Overview
Sales & Marketing Overview 33 • Increased focus on sales • Daily focus calls: review hot prospects, next steps, outreach marketing • Weekly Matrix Care / REPS review and accountability • Weekly zone calls • Continue to build brand awareness • Re-branding started in 2012 • Branded marketing materials
Slide 34: Marketing Initiatives
Marketing Initiatives
Slide 35: Building Brand Awareness
Building Brand Awareness 35 Flyer example Postcard example Storefront Order Screen • Capital Senior Living continues its aggressive branding strategy to develop name recognition, market awareness and to position our quality products and services with our core customers.
Slide 36: New Vehicle Wraps
New Vehicle Wraps 36 • Vehicle wrap design mirrors community website home page and print media, branded collateral
Slide 37: New Property Signage
New Property Signage 37 New property monument sign rendering
Slide 38: Transformation of Lead Generation
Transformation of Lead Generation Shift in Media and Marketing
Slide 39: Transformation of Lead Generation
Transformation of Lead Generation 39 • Technology and changing consumer behaviors have altered the landscape in senior living marketing • Today’s consumer decides: • When to evaluate • Where to turn for answers • Who should be on the short list for consideration • Capital Senior Living has changed t
Slide 40: Transformation of Lead Generation
Transformation of Lead Generation 40 • 220 million Americans have registered their number on the Federal Trade Commission’s National Do Not Call Registry • 86 percent of television viewers use technology to skip advertising • Newspaper paid circulation has been on a steady decline for the past 20 ye
Slide 41: Transformation of Leads: The Internet
Transformation of Leads: The Internet 41 • Internet leads represent approximately 50% of all new lead generation in the senior living industry • Capital Senior Living: Internet leads represent 64% of total leads • Capital Senior Living: Internet referral partners represent 51% of total leads • Inter
Slide 42: Transformation of Lead Generation
42 Transformation of Lead Generation +11.2% 3,250 1,348 1,190 12,615 2,253 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Internet Referrals Family/Friend Traditional Media Professional Referral 1Q/2Q 2012 vs. 1Q/2Q 2015 Lead Generation Trends 2012 2015 Capital Senior Living Executive Report/Standing
Slide 43: Quarterly Web Traffic Trends
43 Capital Senior Living Quarterly Web Traffic Trends +11.2% +10.3% +10.8% 118,679 124,521 131,495 137,396 25,000 50,000 75,000 100,000 125,000 150,000 Q1 Q2 Q1 and Q2 Capital Senior Living Web Traffic Trends Capital Senior Living Executive Report/Standing Dog 2014 2015
Slide 44: Website Lead Generation
44 Capital Senior Living Website Lead Generation +11.2% +10.3% 1,048 1,029 2,077 1,122 1,168 2,290 1,000 2,000 Q1 Q2 Total Q1 and Q2 Capital Senior Living Web Leads Trends Capital Senior Living Executive Report/Standing Dog 2014 2015
Slide 45: Email Trigger and Nurturing Program
45 Email Trigger and Nurturing Program • Capital Senior Living launched a very robust Email Trigger and Nurturing Program in Q1 2015 as a way to actively engage prospects throughout the selling cycle. • Email Trigger and Nurturing Program • Includes all new lead contacts • Allows us to mine our exis
Slide 46: Event Email and Trigger Email Creative
Event Email and Trigger Email Creative 46
Slide 47: Prospect Tour Surveys and Resident Referral Forms
Prospect Tour Surveys and Resident Referral Forms 47
Slide 48: Call Center
Call Center 48 • Capital Senior Living launched its Call Center to serve as a link between our customers / prospects and a Capital Senior Living community. The center gives customers immediate access to information when they need it most • Call Center objectives • Immediate response to calls/inquiri
Slide 49: Capital Senior Living Sales Initiatives
Capital Senior Living Sales Initiatives
Slide 50: Capital Senior Living Sales Systems
Capital Senior Living Sales Systems 50 • In order to effectively manage the sales process, it is important to have good sales systems in place • What systems are in place at Capital Senior Living communities? • Inquiry system: to capture and convert traffic to on-site visits • Referral prospecting s
Slide 51: Sales: Closing Ratios
51 Capital Senior Living Sales: Closing Ratios Q1 Q2 2014 vs. 2015 Closing Ratio % Trends 2014 2015 Closing Ratio % Based on Net Deposits/Tours Capital Senior Living Month End Compliance and Occupancy Reports / REPS Industry Trend Source: Bild & Co. IL Industry Average IL Industry Average AL Industr
Slide 52: Acquisition Program
Acquisition Program Joe Solari Vice President Corporate Development
Slide 53: General Acquisition Criteria
53 General Acquisition Criteria 53 • IL, AL and MC communities located in geographically concentrated regions • Predominantly private-pay • Recently built or renovated • Single properties or portfolios • Building size = - units • Strong occupancy, average rents and margins • Favorable demographics
Slide 54: Types of Deals
54 Types of Deals Brokered Off-Market “Quasi” Off- Market • National and local brokers • Seniors housing • Multi-family • Local / regional developers • “Moms and pops” • Industry relationships / referral sources • Repeat sellers • Brokers and sellers who approach only 3-5 qualified buyers
Slide 55: Competition for Deals
55 Competition for Deals Prefer larger transactions in major metropolitan markets Need to partner with operators Prefer larger transactions but will compete for single properties Will buy in primary and secondary markets Need to partner with operators Prefer newer, larger, Class A properties and por
Slide 56: Capital Senior Living Competitive Advantages
56 Capital Senior Living Competitive Advantages • Name recognition • Long and successful track record of closing on a timely basis • Certainty in securing financing • Reputation for being responsive, fair and “straight-shooters” • Owner / operator • Sellers deal with one party (i.e., no capital part
Slide 57: Acquisition Activity Jan 2011 – Aug YTD 2015
57 Acquisition Activity Jan 2011 – Aug YTD 2015 Market Off-Market Tot./Avg. Signed Confidentiality Agreements (CA’s) Pct. Of Total CA’s Signed 69% 31% 100% Offers Submitted Pct. of Signed CA’s 30% 54% 37% # of Properties Offers Accepted Pct. of Offers Submitted 35% 60% 46% # of Properties Properties
Slide 58: Keys to Off-Market Success
58 Keys to Off-Market Success • Extensive industry relationships • Name recognition and track record of closing acquisitions • Establishing rapport and trust with sellers and local brokers • Discipline and persistence • Doing the little things that matter: • Returning all unsolicited calls – no matt
Slide 59: Acquisition Process & Timeline
59 Acquisition Process & Timeline Sign Confidentiality Agreement Initial Underwriting and Submittal of Letter of Intent Negotiation and Execution of Purchase & Sale Agreement Due Diligence and 3 rd Party Reports Financing Commitment and Licensure Approval • 2-3 weeks • 2-4 weeks • 4-6 weeks • 4-6 we
Slide 60: A Team Approach
60 A Team Approach Acquisitions * Relationship with Broker and/or Seller * Underwriting & Financial Modeling * Negotiation of LOI & Purchase & Sale Agreement * Coordination of Due Diligence Legal • Purchase & Sale Agreement • Legal Due Diligence • Title & Survey • Licensure Operations • Operational
Slide 61: Excerpt from The Daily Star Oneonta, NY
61 Excerpt from The Daily Star Oneonta, NY - May 31, 2015 "We knew that, at some point, we would sell," Biedenkopf said by phone Sunday. "There were a lot of suitors.. but Capital Senior Living rose above the others, with phenomenal depth and scope of experience and an appreciation for what The Plai
Slide 62: Seller Testimonials
62 Seller Testimonials • “You and your team have made this potentially very stressful experience a very good one.” • “This has been a tremendous experience. I know my people are in good hands or I would not have proceeded! My sincerest thanks to all of you for making this as pain free as is humanly
Slide 63: Seniors Housing Lender Panel
Seniors Housing Lender Panel Moderator: Carey Hendrickson, Chief Financial Officer Dan Biron, Berkadia Commercial Mortgage Roosevelt Davis, Fannie Mae Laura McDonald, Protective Life Insurance Company
Slide 64: Financial Overview
Financial Overview Carey Hendrickson Chief Financial Officer
Slide 65: Multiple Avenues of Growth
65 Multiple Avenues of Growth • Core Growth • Conversion of units to higher levels of care • Accretive acquisitions • Will add back communities currently excluded from our non- GAAP financial measures when repositioning is complete
Slide 66: Core Growth
66 Core Growth • Goal is to increase revenue at a rate 50 to 100 bps higher than expenses • Occupancy growth is resulting in pricing power • Continue to enhance sales and marketing initiatives • Renovations and refurbishments enhance growth prospects • Proactive expense management • Wage pressure is
Slide 67: Conversions: Significant Increases in Occupancy, Revenue and CFFO
67 Conversions: Significant Increases in Occupancy, Revenue and CFFO Occupancy Prior to Conversions (1) Planned IL to AL Conversions Occupancy After Conversions Annual Financial Impact IL AL Total Total Units 6,192 5,434 11,626 Occupied Units 5,287 4,869 10,156 Occupancy % 85.4% 89.6% 87.4% IL AL Va
Slide 68: Significant Occupancy Improvement After Conversion
68 Significant Occupancy Improvement After Conversion 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Prior to Conversion June 30, 2015 80.5% 92.7% • Occupancy has increased 122 basis points at communities where conversions were completed in 3Q and 4Q 2014
Slide 69: Conversions: Significant Increases in Occupancy, Revenue, and CFFO
69 Conversions: Significant Increases in Occupancy, Revenue, and CFFO • 400 units converted at June 30, 2015 • Includes 94 units at two of the four communities currently excluded from our Non-GAAP results • $0.20 per share of CFFO • 100 units to be converted in second half of 2015 • $0.03 per share
Slide 70: Strategic Accretive Acquisitions
70 Strategic Accretive Acquisitions 2011 2012 2013 2014 Jan – Aug 2015 Combined * Based on share count at time of transaction (in millions except number of communities) Purchase Price $83.4 $181.3 $150.4 $160.2 $109.0 $684.3 Communities Units 1,367 4,220 Debt $59.3 $129.5 $112.3 $119.7 $78.9 $499.7
Slide 71: Strategic Accretive Acquisitions
71 Strategic Accretive Acquisitions • Have achieved an average cash on cash return of 16.0% • Cash has come from internally generated cash flow • Pipeline is robust • Financing environment remains favorable
Slide 72: Balance Sheet
Balance Sheet ASSETS LIABILITIES & EQUITY 72 • As of June 30, 2015 (in millions) Cash and Securities $ 51.7 Other Current Assets 23.8 Total Current Assets 75.5 Fixed Assets 811.1 Other Assets 35.4 TOTAL ASSETS $ 922.0 Current Liabilities $ 71.4 Long-Term Debt 660.2 Other Liabilities 55.9 Total Liabi
Slide 73: Debt Overview: 100% Mortgage Debt
Debt Overview : 100% Mortgage Debt Debt Maturities Weighted Average Interest Rate 73 (In thousands ) $636,096 $0 $0 $0 $43,660 $0 $0 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 2021 & After 2020 2019 2018 2017 2016 2015 Average duration of debt is 8 years, with approximately 94
Slide 74: Impacts of a Rising Interest Rate Environment
74 Impacts of a Rising Interest Rate Environment • Ninety-eight percent of existing debt has fixed interest rates • Increases in short-term rates do not necessarily result in increases in long-term rates • The rising income of our residents would allow us the opportunity to implement higher rate inc
Slide 75: Accelerated CFFO Growth through 2018
Accelerated CFFO Growth through 2018 75 Note: This chart illustrates the potential financial impact of successful execution of our strategic plan; it is not intended as financial guidance. Please see Capital Senior Living’s disclosure related to forward-looking statements. • EBITDAR would increase a
Slide 76: Investor and Analyst Day October 8, 2015
Investor and Analyst Day October 8, 2015
Slide 77: the difference
A A the difference SENIOR LIVING
Slide 78: Investor and Analyst Day October 8, 2015
Investor and Analyst Day October 8, 2015