Sonida Senior Living Q3 2026 Earnings Call Transcript

Sonida Senior Living (NYSE:SNDA) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Sonida Senior Living reported strong financial results for Q3 2026, with same-store occupancy reaching 88.6% and NOI growing 16.1% year over year.

The company completed the acquisition of CNL Healthcare Properties, Inc., integrating 43 out of 54 SHOP communities, and plans to sell 8 non-core communities by early 2027.

Sonida is on track to deploy $250 million in acquisitions in 2026, financed through cash on hand, revolving credit, and equity, with a focus on expanding its regional presence and improving operational efficiencies.

Operational improvements, such as the SPIN Business Intelligence platform and Sonida Senior Living Collections, are enhancing revenue growth and margin expansion.

Management expressed confidence in continued occupancy and rate growth, supported by strategic acquisitions and integration efforts, and plans to introduce full-year 2027 guidance with Q4 results.

Full Transcript

OPERATOR

We will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Megan Caldwell, Investor Relations. Megan, please go ahead.

Megan Caldwell (Investor Relations)

Thank you, operator. All statements made today, November 5, 2026, which are not historical facts, are forward-looking statements within the meaning of federal securities laws. The Company expressly disclaims any obligation to update these statements in the future, except as required by law. Actual results or performance may differ materially from forward-looking statements. Certain factors that could cause actual results to differ are detailed in the earnings release that the Company issued earlier today, as well as in the reports that the Company files with the SEC, including the risk factors contained in the Annual Report on Form 10-K. Please see today’s press release for the full safe harbor and forward-looking statements, which may be found in the Form 8-K filing from this morning or at the Company’s Investor Relations page at investors.sonidaseniorliving.com.

As previously disclosed, the Company completed its acquisition of CNL Healthcare Properties, Inc., or CHP, on March 11, 2026. Unless otherwise specifically noted or the context otherwise requires, the financial and operating results we are discussing today and that are included in our earnings release and presentation represent the combined Company on a pro forma basis for any period presented in which we did not own CHP for the full period, including CHP, as if the acquisition had closed on the first day of that period.

We believe this pro forma information provides a meaningful method of comparing the performance in the combined business over historical periods. This pro forma information, giving effect to the CHP acquisition, has not been prepared in compliance with Article 11 of Regulation S-X and does not reflect the actual results we would have achieved had the CHP acquisition occurred on the first day of the applicable period and may not be predictive of future results.

Please note that our GAAP financials reflect CHP’s results from the closing date only, and our third quarter 2026 financials reflect CHP for the full period without any adjustment. See the disclaimer slide in our presentation for additional information about the preparation of, and the limitations associated with, this pro forma financial information. In addition, unless otherwise specifically noted or the context otherwise requires, the financial and operating results we are discussing today and that are included in our earnings release and presentation are presented at-share or on a basis that reflects the Company’s proportional economic stake in its JVs. Please also note that during this call the Company will present non-GAAP financial measures. For reconciliation of these non-GAAP measures to the most comparable GAAP measure, please see today’s earnings release and presentation.

If you’d like to follow along during today’s call, you can find Sonida’s third quarter 2026 earnings presentation in the Investor Relations section of the Company’s website. In addition, we have included supplemental earnings information within our presentation consistent with prior quarter releases. I would now like to turn the call over to Sonida President and CEO Brandon Ribar.

Brandon Ribar (President and CEO)

Thanks, Megan. Good morning, and thank you for joining our third quarter 2026 earnings call. This quarter’s results reinforce the positive momentum we have experienced all year. Steady pricing and occupancy gains are translating into margin expansion and meaningful earnings growth across the platform. Same-store weighted average occupancy reached 88.6%, up 200 basis points year over year, supported by healthy move-in activity and consistent execution by our community teams.

Same-store SHOP NOI grew 15.6%, and margin expanded 230 basis points to 31.8%. Incremental flow-through was 63.3%, meaning more than 60 cents of every incremental revenue dollar converted to NOI. Across the total portfolio, including both SHOP and net lease, NOI grew 16.1% year over year to $63.3 million. Normalized FFO was $0.46 per share, and adjusted EBITDA increased 26.2% year over year to $46.8 million. These results reflect the strength of the team we have built and the systems that support it.

Our operating team continues to absorb new communities without compromising performance in the existing portfolio, and our proprietary SPIN Business Intelligence platform provides timely visibility and actionable insights into each community. As we execute on our growth strategy, we are increasingly focused on leveraging our proven operating playbook, culture, and leadership team across a larger, higher-quality portfolio. Over the past three years, we have been highly selective in our acquisitions outside of CHP. The communities we acquired during that period average approximately eight years in age, and we believe our portfolio compares favorably across the sector. Our communities are primarily located in strong suburban submarkets of primary and secondary MSAs with favorable demographic trends and limited new supply.

We focus on communities in affluent, growing areas where our assets are among the strongest competitors in their markets. Our objective is to continue improving upon our diverse portfolio of high-quality real estate capable of delivering sustainable long-term growth across the entire platform. Our CHP integration continues to progress well. To date, we have identified and are advancing on plans for 43 of the 54 SHOP communities. This includes those that have transitioned to Sonida Senior Living’s operating platform, have set transition dates, and 8 non-core communities in various phases of the sales process, which we expect to close in early 2027. Completing the remaining transitions while sustaining our growth trajectory is a top operating priority to close the year.

Further differentiating our avenues for inorganic growth, we recently acquired a small operator with a regional brand in the Southeast. We also entered into a letter of intent to acquire a large minority ownership stake in a second CHP operator, a multi-generational, family-owned operator. If completed, we expect that investment will expand our geographic reach and give us exposure to a growing management company with established third-party revenue streams and off-market acquisition opportunities.

In both cases, our operating capability and strategic fit, rather than the price we were willing to pay, gave us access to opportunities that we believe will create long-term shareholder value. Beyond our initial underwriting of the CHP merger, we view Sonida Senior Living as bringing together three capabilities: a best-in-class operating platform, a high-quality owned real estate portfolio, and strategic third-party partnerships. We continue to refine our approach to acquisition communities with more meaningful recovery opportunities, where we believe operational improvements, leadership changes, and reputation rebuilding can create meaningful long-term value.

Drawing on both our successful integration track record and our SPIN data intelligence, we now identify recovery needs earlier in diligence, which has shortened stabilization timelines and improved early-stage performance in these communities. Our experience over the last three years directly informs our capital allocation strategy as we pursue opportunities where we believe operational execution can drive outsized returns and where we can deepen our regional density to unlock synergies across our cluster markets.

Despite recent interest rate volatility, the senior housing sector’s needs-based and demographic-driven demand continues to support fundamentals in the medium term. Higher interest rates should further challenge capital formation for new development and will likely extend the runway in which we face limited supply. Our target investment profile remains consistent: strong submarkets, high-quality physical assets, and situations where our operating platform can drive improvement and deliver outsized returns on invested capital.

We continued to execute on that strategy. During and after the quarter, we closed one acquisition during the third quarter and six additional communities subsequent to quarter end, bringing our recent acquisitions since closing the CHP merger to 7 communities and 620 units for a combined purchase price of $150.2 million, or approximately $242,000 per unit. With an average age of approximately 9 years, these are well-positioned and amenitized communities in growing suburban markets with favorable demographics and established healthcare networks where our operating platform and local market knowledge can accelerate NOI growth.

As part of our ongoing portfolio optimization strategy, we completed the sale of two non-core communities for aggregate gross proceeds of approximately $23 million, one during the quarter and one subsequent to quarter end. These transactions continue our recycling of capital into assets better aligned with our long-term strategy and demonstrate sustained buyer interest in all of our assets despite a higher interest rate environment. Looking ahead, our acquisition pipeline remains active and deep. With approximately $98 million under contract, including acquisitions closed to date and those currently under contract, we are on track to deploy approximately $250 million of acquisition capital in 2026, excluding the CHP merger. Given the timing of the merger’s close in March of this year, all of the $250 million will be deployed in the second half of the year. This is the fastest pace of deployment in our history, achieved while we continue to integrate the CHP portfolio.

As Kevin will discuss in more detail, we have funded our 2026 acquisitions through cash on hand, availability under our revolving credit facility, and by raising nearly $70 million of equity at over $39 per share on our ATM. This is consistent with our approach of raising equity only to the extent the acquisitions provide a significant incremental return, as measured on an unlevered IRR basis, to our then-prevailing share price. Sustaining an accelerated growth rate and continued successful integration requires a culture centered on accountability, empowerment, and service, while giving local leaders autonomy to run their communities. We expect our community leaders to be present and visible, engaging with residents daily and building the trust that is foundational for a successful community. We want our teams focused not just on completing tasks, but on creating resident experiences that support satisfaction, renewals, referrals, and, over time, pricing power.

As we have scaled, we have invested deliberately to sustain that culture through enhanced team member incentive programs, a competitive wage philosophy, and leadership development. With a larger portfolio, our focus now is on building not only stable leadership in every community, but exceptional leaders that meet Sonida Senior Living’s standards. This year we expanded direct training for executive directors at our central support center while increasing the cadence of in-person, on-site training across our communities.

Early returns are encouraging, with retention among executive directors exceeding 90% to date. We’ve also aligned incentives across the organization. Our executive team and community leaders are measured against the same performance goals, which ties decisions made in each community directly to the results that matter for the company as a whole. This includes the opportunity for top-performing executive directors to participate in our annual equity compensation program.

Combined with the real-time visibility SPIN provides, that alignment equips local leaders with the ownership and information to act and holds every community to a common operating standard. That foundation positions us to take the next step. Since joining as Chief Operating Officer earlier this year, Anton has introduced a set of operating initiatives designed to build on the strength of our platform and drive the next phase of revenue growth and margin expansion. I want to highlight three of them today. The first is Sonida Senior Living Collections, an internal framework that organizes our communities into tiers, each with defined standards for dining, amenities, care, and activities.

The goal is to ensure that the experience in every community is aligned with its price point and the value it delivers. Dining is an early example. We have made a significant investment in our corporate culinary leadership, and our menus are now chef-led and supported centrally, tailored to each collection. The result is a meaningfully elevated dining experience across the portfolio, delivered in a way that reflects what residents value at each price point.

Enhancements to our assisted living and memory care programs will follow, and we look forward to sharing more on that work in the coming quarters. Second, we are strengthening our sales and marketing engines. We continue to increase our investment in digital marketing and have streamlined the systems and processes our sales teams use to respond to leads, with the goal of shortening the time from inquiry to tour to move-in. Sonida Senior Living’s digital marketing is generating a growing share of our leads as stronger search visibility makes our communities easier for prospective residents to find, and better call tracking shows us which listings are driving inquiries.

In our same-store communities owned prior to 2026, digital leads increased 30.6% year over year, and that interest is translating into occupancy, with move-ins from digital sources up 13.6%. Third, we are building toward a more granular, data-driven approach to rate setting, drawing on data from across our operating platform to better understand pricing and capital investment at the unit level. We intend to begin rolling out this approach in 2027. Each of these initiatives reinforces the others. We are defining the experience, filling our communities with residents who value it, and pricing to reflect that value. Combined with the staffing discipline built into our operating platform, we believe they form a clear path to sustainable revenue growth and margin expansion.

Acquiring communities is only the first step. The harder work is integrating them while strengthening performance, preserving the resident experience, and maintaining a consistent culture. That capability, together with the initiatives Anton and his team are advancing, a high-quality asset base, and a deep acquisition pipeline, positions Sonida Senior Living well for the next phase of growth and gives us confidence in our ability to deliver durable per-share value creation for shareholders.

With that, I’ll turn the call over to Kevin to walk through the financial results and balance sheet in more detail.

Kevin Detz (Chief Financial Officer)

Thanks, Brandon. Before turning to the results, I’ll note that across the industry, Q3 is seasonally the most challenging for margin flow-through. The third quarter carries one additional day of labor, two holidays, and our two highest utility cost months, July and August. That context is important for any sequential comparison to Q2. Now turning to slide 19, our same-store portfolio delivered another quarter of strong operating gains. Brandon referenced the 88.6% weighted average occupancy for the quarter, which has steadily pushed up during the year. The share of same-store communities averaging above 90% occupancy increased from 47% in Q3 last year to 58% this quarter, while the share below 80% declined from 26% to 21%, and notably five communities moved into the 95% to 100% range during the quarter.

We believe the gains across each of our occupancy bands demonstrate the robust demand for our product and support the sustainability of our rent renewal and market rate strategy heading into next year. As of September 30, our same-store portfolio includes 111 communities representing more than 85% of the total SHOP portfolio on a unit basis. Our non-same-store portfolio includes 27 communities that are repositioning, held for sale, or recently acquired, and our triple net lease portfolio consists of 15 communities leased to third-party operators earlier this year. Through our continuing portfolio optimization, we identified 14 communities that no longer fit our long-term portfolio strategy because of market position, scale, or margin profile.

These communities represent approximately 2% of total company NOI, and we expect their sale to be accretive to the company’s overall margin. The two sales Brandon referenced earlier also had a deleveraging impact. We anticipate completing the remaining community sales during the fourth quarter and first half of 2027, and we plan to recycle the net proceeds into additional community acquisitions over the same period. Same-store RevPOR increased 4.6% year over year to $5,413 per occupied unit, which combined with higher occupancy lifted resident revenue 7.3% to $163.5 million. Operating expenses grew a modest 3.8%, allowing $7 million of the $11 million increase year over year in resident revenue to flow down to NOI, bringing same-store NOI to $52 million for the quarter. The continued stabilization of our 2024 acquisition cohort also contributed to same-store margin expansion.

Five of those 19 communities are now at 95% or higher occupancy, and another six are sitting between 90% and 95%. As more communities move above 90% occupancy, our fixed and semi-fixed cost base is absorbed across a larger revenue pool and incremental revenues flow to margin at a higher rate. Moving to total portfolio results on slide 20, total SHOP NOI increased 17.2% year over year to $55.3 million. Weighted average occupancy improved 180 basis points to 87.4%, reflecting gains across our stabilized core alongside continued lease-up at recently acquired communities with lower starting occupancy. The 120 basis point gap between total and same-store occupancy reflects the additional lease-up opportunity within those communities outside of SHOP.

Our triple net lease portfolio generated $8 million of lease income, which included an annual fiscal performance-based rent payment of approximately $600,000 earned during the quarter. Our recent acquisitions continue to follow a consistent playbook, building density in markets where we already operate and targeting communities where our platform can capture operating upside. In the third quarter, we closed on a 2016 vintage community in Florida with 107 assisted living and memory care units, acquired out of receivership for $14.7 million, or approximately $137,000 per unit. The community offers meaningful upside from a planned renovation and operational overhaul.

The six additional communities that we acquired subsequent to quarter end are also newer vintage assets completed between 2013 and 2022 in growing suburban markets supported by established health care networks. These six acquisitions include a three-community portfolio in Orlando and suburban Atlanta, bringing our metro Atlanta footprint to nine communities. They also include two assisted living and memory care communities in Florida and a Class A independent living community in Washington.

All seven communities will be reflected in our non-same-store portfolio beginning with fourth quarter. Reporting on the CHP integration, we have transitioned management of 19 of 54 SHOP communities as of November 1st. The first 14 onboarded communities, of which all but one are included in our same-store portfolio, delivered year-over-year NOI growth of 33.2% and NOI margin expansion of 600 basis points. These results largely reflect the starting point of this initial group, which entered 2026 with below portfolio average operating metrics and significant recovery opportunity through the transition.

Our focus has been sustaining that recovery through staffing aligned to resident needs, community-level rate management, and the purchasing scale of our platform, all supported by SPIN. We are pleased that these communities continued their recovery trajectory post transition without meaningful operational disruption. Because the remaining CHP communities generally begin from a stronger operating base, we expect more moderate growth as they transition, with the value driven by consistent execution and integration onto our operating platform.

We see the same pattern from our 2025 acquisitions, which remain in non-same-store today. Since the fourth quarter of 2025, our first full quarter of ownership, occupancy at these four communities has risen 22 percentage points from 53% to 75%, and NOI margin has improved from negative 1% to 15%. This reflects the complex turnarounds we are equipped to tackle, and it is how we create value on acquisitions. With considerable runway still ahead, these communities are positioned to deliver meaningful year-over-year NOI contribution when they enter the same-store portfolio later in 2027.

More broadly, total SHOP NOI margin reached 29.1% in the third quarter, up 240 basis points year over year. The 80 basis point decline from 29.9% in the second quarter reflects third quarter seasonality that I referenced at the beginning of my remarks. We will now move to slide 21. Same-store RevPOR held steady from the second quarter as expected between renewal periods. Importantly, the in-place rent increases we implemented this year have proven durable, underscoring the pricing power of our portfolio and the quality of care and service our teams deliver. Private rent revenue grew 8% and level-of-care revenue increased 7.8% as SPIN’s real-time data enables us to align care pricing more accurately with the care each resident requires.

Together with monthly community-level rate reviews and the staggered timing of legacy CHP renewals, these levers show us where the remaining rate upside sits and how to capture it. Turning to slide 22, labor efficiency remains a key contributor to margin expansion. Labor costs were 41.3% of revenue in the third quarter, a 90 basis point improvement from the prior year. The full improvement came from direct labor, while contract and other labor were flat on a combined basis. Labor as a percentage of revenue increased from 40.6% in the second quarter, in line with the same seasonal trend I explained earlier. As there is both one additional day of labor and two holidays in Q3, we view the year-over-year improvement as durable rather than cyclical.

Our staffing model is designed around fewer, higher-quality team members, an approach that improves retention and reduces the cost of turnover. SPIN enables us to match staffing precisely to resident needs using real-time acuity and care-hour data to deploy the right people at the right time rather than overstaffing to cover uncertainty. Our executive directors manage per-resident-day labor targets that are banded to occupancy and acuity, and they have the autonomy to act on SPIN data at the community level with incentives tied to their own community results.

Importantly, SPIN grows more powerful with scale. Every acquisition and transition enriches the data set that informs our operating decisions, giving us a compounding advantage over less institutional operators. Non-labor costs also remained well controlled. Our culinary investments, paired with GPO purchasing power, held food costs to $7.44 per resident day. Locked-in energy rates helped mitigate utility cost increases amidst a severe summer. And finally, our self-insurance program, backed by third-party stop-loss coverage, continues to evenly spread and de-risk claim loss risk across the broader portfolio. Taken together, ExPOR for the quarter increased 1.1% year over year, while RevPOR grew 4.6% over that same period.

The consistent widening of RevPOR and ExPOR spread—350 basis points this quarter—has been the primary driver of our same-store margin expansion this year. Just as important, we expect that operating profile to benefit our non-same-store portfolio as communities continue to stabilize and flip into same-store. Turning to slides 24 and 25, we made measurable progress on the balance sheet during the third quarter. In August, and as discussed last quarter, we closed a $380 million five-year term loan with Ally Bank priced at SOFR plus 185. The loan came in 80 basis points inside the prior Ally term loan. Proceeds fully repaid the $170 million bridge loan and the prior Ally term loan, reduced borrowings on our revolving credit facility by $70 million, and extended our maturity profile.

Net leverage was 8.1 times at quarter end compared with 7.8 times on June 30, primarily driven by the seasonal impact on Q3’s adjusted EBITDA as compared to Q2. We remain on track toward our near-term target of six to six and a half times, driven by NOI growth, free cash flow, and capital recycling. As of quarter end, total debt stands at approximately $1.7 billion at a weighted average interest rate of 5.78%, with 83% of total debt either fixed or hedged and borrowings under our revolving credit facility representing nearly all of the unhedged variable-rate debt. Ninety-eight percent of our total debt matures in 2029 or later, and 42.1% matures in 2031 or later before extension options. Our seven recent acquisitions were funded primarily through cash on hand, borrowings on our revolving credit facility, and supplemented by opportunistic ATM sales.

With no significant near-term maturities, limited floating-rate debt, and meaningful capacity in our revolving credit facility, our balance sheet is well built to withstand today’s rate volatility, and our growth strategy does not depend on rate relief. At quarter end, approximately $80 million was available under our $455 million secured revolving credit facility, with another $125 million committed today. We have issued $68.6 million of equity under our ATM program at a blended price of $39.18 per share to fund identified acquisitions, which we expect to be accretive to free cash flow and NAV per share.

Between cash on hand, revolver capacity, disposition proceeds, and free cash flow, we have ample liquidity to fund the pipeline Brandon outlined. We will continue to opportunistically equitize the pipeline as we pursue accretive acquisitions. However, the flexibility of our balance sheet means we are not reliant on the equity markets to execute on our pipeline, and we will not issue equity at levels that are dilutive to shareholder value. As we’ve discussed previously, the progress we’ve made integrating CHP alongside the continued stabilization of recent acquisitions has significantly improved our visibility into portfolio performance and earnings growth. As a result, we expect to introduce full-year 2027 guidance with our fourth quarter results to provide investors with a clear framework for evaluating our operating and financial performance. I’ll now turn it back to Brandon for closing comments.

Brandon Ribar (President and CEO)

Our third quarter results show that the work we’ve done over the past several years is paying off. We have a high-quality portfolio, a platform that consistently converts occupancy gains into margin and NOI growth, and a leadership team with the continuity to execute our strategy as we scale those strengths. Position us well for 2027 and beyond as we capture the significant remaining opportunity within our portfolio and integrate nearly $250 million in high-growth acquisitions completed or expected to close before year end.

I want to thank our team members across every community for the care and commitment they bring to our residents and families each day. Their work is the foundation of everything we’ve discussed this morning. We look forward to sharing more, including our full-year 2027 guidance when we report fourth quarter results. Operator, we’re now ready to open the line for questions.

OPERATOR

We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ronald Camden with Morgan Stanley.

Ronald, your line is open. Please go ahead.

Ronald Camden (Analyst)

Hey, great. Thanks so much for the time. First question is, just thinking about the occupancy growth year over year and the RevPOR growth year over year, it looked like a slight decel versus last quarter. I guess I’d just love to hear some commentary about, just high level, what you think those levels’ growth rates should be going forward and how you think about, when you’re underwriting acquisitions, what assumptions go into that regarding occupancy and RevPOR.

Hope that made sense.

Brandon Ribar (President and CEO)

You did. Thanks, Ron, and good morning. Couple things I’d say: we’re seeing really good progress in the occupancy growth in some of the newer communities that we brought on board over the last couple of years. And so we feel confident that as we head into the end of this year, we have seen continued improvement in October, and we’ll work really hard towards the end of the year, and then as we issue our guidance early next year, expect to see continued occupancy growth that’s consistent with what we’ve seen over the last couple of years.

So we feel like there’s still plenty of upside in the portfolio, a lot of progress in the communities that we have bought over the last year, year and a half really, and that we’re continuing to see opportunities as we integrate the communities from the CHP portfolio as well as the ones that we’ve recently purchased into the operating platform. I think the same holds true on the rate front. It’s been a good couple of years and we’re going to continue to push really hard to see the value that we’re creating for our residents really fall through to the rate growth. And we’re also seeing upside opportunity in those new communities that we brought on board, not only from past practices and what we’re going to bring to the table with our SPIN platform, but I also think the opportunities to grow things like level of care and other ancillary revenues is something we’re going to be highlighting and targeting in 2027.

So I think it’s imperative that those assets we purchased, as well as those that we’ve had prior to 2026, you’ll see that good, sustainable rate growth that’s in line with or above where we’ve been.

OPERATOR

Your next question from the line of Rich Anderson with Cantor Fitzgerald. Rich, your line is open. Please go ahead.

Rich Anderson (Analyst)

Thanks. Good morning. So on the integration front, you said 43 of 54 had been advanced into a plan. I think eight of those are non-core sales and the rest transitions to Sonida’s operating platform. First of all, do I have that right? Yes or no?

Kevin Detz (Chief Financial Officer)

Yes. And that includes the couple of acquisitions that we referenced of the operator, the small operator’s platform.

Rich Anderson (Analyst)

Yep, yep. Okay, so I’m looking at slide 36. And this is just maybe for my own recollection and maybe for those that are listening, the $19 million of third-party management fees at CHP just flows through to the pro forma synergy column there. I’m curious why that is the case. If you are transitioning operators to your platform, why would the 19 not go down?

Kevin Detz (Chief Financial Officer)

I’d say that when we initially came out with that, our expectation was that we wanted to wait and see until we were seeing those meaningful savings and understood the savings. And we’ve consistently said that we feel like that $19 million, which is 5%, we feel like we can be running at the 3 to 3.5% mark on a stabilized basis. So that wasn’t built into our assumptions around the CHP integration, but we still feel confident that that’s the upside opportunity from the number you referenced.

Rich Anderson (Analyst)

Okay, so even though you’ve already transitioned some, you’re just playing your cards conservatively. Is that the way to think about it?

Kevin Detz (Chief Financial Officer)

Yeah, I think that one of the impacts that we saw in terms of just the sequential EBITDA change from Q2 to Q3 is timing of the integration of those assets and investing in the G&A to support them. So I think we want to have a really strong kind of run-rate management structure in place and be able to provide that again in early 2027 so that people can see the savings on that $19 million integrated into our run-rate G&A.

Rich Anderson (Analyst)

Okay, so the 19, even though it’s a different shade of blue, is sort of your G&A, or a lot of it is your G&A. Some of it is not. But is that right? Like some of it is?

Kevin Detz (Chief Financial Officer)

Yeah, it assumes it’s flat and provides the opportunity for upside when we come in under that.

Rich Anderson (Analyst)

Okay, good. And then for the 11 of the 54 that haven’t, you know, aren’t in this quote-unquote advanced stage, what’s the plan there and the timing there, if you can comment? Or is it still a TBD?

Brandon Ribar (President and CEO)

Those communities are with two managers. They’re with two really, really strong managers of ours that we’ve had a strong relationship with ever since, and even before we acquired the assets. I think we’re working with them to kind of finalize that solution and expect that we’ll be able to announce what’s going on with those remaining communities on our next call, with whatever solution ultimately we land on, whether it’s a strategic relationship or it’s the internalization of those assets into the Sonida platform in total.

Rich Anderson (Analyst)

Okay, and just a finer point on that. So you referenced two that are long-term relationships. Those are different managers than these two for the 11? Or are they the same, just for clarification?

Brandon Ribar (President and CEO)

Yep, those are different.

Rich Anderson (Analyst)

Okay, fair enough. Okay, thanks so much.

OPERATOR

Thank you, Rich. Your next question from the line of Wes Golliday with Baird. Wes, your line is open. Please go ahead.

Wes Golliday (Analyst)

Hello everyone. Can you talk about the opportunity set to acquire operators and what do you get? Is there an immediate benefit from adding scale, building clusters, plugging them into SPIN? Just trying to see what you get from buying the operators.

Brandon Ribar (President and CEO)

Yeah, immediate benefit comes from working with them to provide the solutions that we have from the SPIN platform. That’s a piece of what we really look to, to the opportunity. It’s bringing on additional resources that are really strong folks that are limited but in their management teams that have joined our management team in key strategic positions that we had open as part of our 2026 budget. It gives us immediate visibility into acquisition opportunities that are in their platform, which was in the case of the manager in the Southeast we announced earlier this year, the preferred equity investment, that kind of immediately with this transition and purchase, we bring on board management fees that far outweigh the cost of those management fees. It gives us immediate opportunity to also not only run that asset, but potentially buy it in the relatively near term.

So it’s the acquisition pipeline opportunity. And then in the case of the manager that we’re under LOI with, there’s also additional management fees associated with that transaction that we will be able to roll into our platform and ultimately, if that’s done at an even lower total cost, that’ll benefit the flow-through to our EBITDA growth.

Wes Golliday (Analyst)

Okay. You also highlighted a lot of enhancements to the platform and want to dig into the leads internally generated. What percentage of the leads do you get internally now and where do you think you can get that to?

Anton Nikodemus (Chief Operating Officer)

Yeah, so right now we’re just north of 70% that we’re generating through our own mechanisms, whether it’s kind of local lead generation, boots on the ground, or it’s our digital platforms. We’ve seen that continue to progress on a quarterly basis. And so ultimately, I think that the ideal goal is you want to get to an entirely internally generated lead profile. The reality of the presence of the aggregators in the market is that we continue to work with them, and I think we just want to see good, consistent progress over time.

It’s a bit hard to predict where that market is going to go just with all the changes in how people look for the product and just the impact of some of the AI tools out there on the customer decision-making. So we just want to keep pushing up on those internally generated percentages because we see better conversion, they’re more efficient, they are lower-cost dollars that are going out to third parties.

Wes Golliday (Analyst)

I just got one balance sheet question. I believe you said the remaining dispositions are about 2% of NOI or 2% of properties. Will they have a positive leverage impact when you sell them?

Kevin Detz (Chief Financial Officer)

Yep. So the first two that we just sold did have a positive leveraging impact. And we expect that the remaining ones will have something between a neutral to a slightly positive impact on deleveraging and overall net cash proceeds.

Wes Golliday (Analyst)

Thanks for the time.

OPERATOR

Thanks, Rich. Your next question from the line of Ben Hendricks with RBC Capital Markets. Ben, your line is open. Please go ahead.

Ben Hendricks (Analyst)

Great. Thank you very much. Just wanted to follow up on some of Anton’s initiatives in the SPIN platform and operation proficiency realm. I think you noted Sonida collections in the price tiering that you’ve implemented across the portfolio. Just wanted to get a little indication of kind of what you’ve discovered around the various tiers and pricing tiers, how demand differs between those, and what you’re seeing from an occupancy and rate backlog backdrop in those across those various tiers.

Brandon Ribar (President and CEO)

Yeah, Ben, I’d say we’re still in the early stages of the effort around the Sonida collections. We started on the dining front and really investing on that side. And we’ve got a lot of work to do, but are seeing, you know, immediate opportunities in how we’re planning for growth in the rate side in 2027, as well as just what we think the opportunity is from an efficiency of our labor. And so I think while the collections is really an internal framework, we think that as we set the standards and build our operating model even more specific to those tiers, it’s going to help with margin, it’s going to help with pricing, and ultimately it’s going to deliver a better product that’s aligned with the dollars that the residents are paying on a monthly basis.

So I think we’ll continue to share more of the efforts on the collections front, but initially, I think the sales and marketing and the rate components of what we’re doing are going to have the, you know, see the most immediate benefit because they’re going to be reflective of, you know, what we’re seeing in terms of demand. As you referenced the, you know, what’s available in the market and how we can, you know, drive rate appropriately there.

Ben Hendricks (Analyst)

Any initial thoughts on kind of what you’re targeting as a, as kind of a hurdle rate for savings or for, I’m saying for, for pricing enhancements from the data-driven pricing initiative for 2027.

Brandon Ribar (President and CEO)

I think that’s going to be a big piece of why we’re confident in just the overall rate profile being kind of at or above where we’ve been and continuing to push hard on that front. It also gives us additional opportunity on the level of care side. And then as we continue to get our arms around the communities that have recently transitioned into the portfolio or will be purchased here between now and the end of the year, one of the most immediate areas that we consistently have seen over the years is that rate opportunity.

And so that’s all going to be built into the additional kind of perspective we provide on 2027.

Ben Hendricks (Analyst)

Great. Thank you very much.

Brandon Ribar (President and CEO)

Thanks, Ben.

OPERATOR

Your next question from the line of Rob Simone with Compass Point. Rob, your line is open. Please go ahead.

Rob Simone (Analyst)

Hey guys, good morning. Thanks a lot for taking the question. Just a quick question on the three acquisitions you guys have, and I think it’s page 33 of the deck. So I know you guys have said and mentioned and also put on paper that you’re targeting double digit unlevered returns there. But can you give us any color on what the starting point is, like kind of what initial yield you’re buying them into? So we can like kind of bracket the range of where you’re starting versus where you’re going and then also just a sense of how much capital you have to put into those assets.

Thanks. That’s all for me.

Kevin Detz (Chief Financial Officer)

Thanks, Rob. Yeah, and I can speak to kind of, I’ll speak to the entirety of the 250 million, which includes those that we’ve completed in the second half and then what we’ve got in the pipeline as well. So consistent with what we’ve been purchasing in the past, there’s a, you know, there’s a significant range in what you would say in terms of going-in cap rates. So a handful of the assets are in the high single digits, you know, the kind of 8, 9 range.

And then we also have communities in there that have greater lift and greater opportunity and those are in the closer to the, you know, low single digits with, you know, one or two of them also, you know, we’re buying at a cash flow negative position and see really strong upside. It might just take a little bit longer because of that, that lift required. But all in blended, I think, you know, that, you know, kind of call it that 3 to 5% range is the way to think about it. With the opportunity to stabilize, as we’ve talked about previously, in that, you know, high single digit, nine plus range and feel really good about the quality of the assets that we bought and or will, you know, finish the purchase this year. Don’t expect that there’s going to be a lot of CapEx. I think one of the opportunities we called out in the three-community portfolio that you referenced on that page is that we actually have building expansion availability in each of those three assets.

Where we didn’t build that into the assumptions of the underwriting, we built it in as additional opportunity and those do underwrite to, you know, the types of returns that we’re targeting. So I’d say that the capital is going to be, you know, really ROI capital versus just getting them up to speed and kind of our consistent operating expectation because of the high quality that we’re purchasing that also have upside in terms of both unit expansion and unit conversion.

Rob Simone (Analyst)

Great. Thanks a lot for that. Appreciate it.

OPERATOR

Again, if you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. There are no further questions at this time. I will now turn the call back to Brandon Ribar, CEO, for closing remarks.

Brandon Ribar (President and CEO)

Thank you all for your time this morning. We appreciate it and we look forward to speaking with you again in the new year. Take care.

OPERATOR

This concludes today’s call. Thank you for attending. You may now disconnect.

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