Sonida (SNDA) Q4 2025 Earnings Call Transcript

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DATE

Mar. 11, 2026, 4:30 p.m. ET

CALL PARTICIPANTS

• President and CEO — Brandon M. Ribar
• Chief Financial Officer — Kevin J. Detz

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TAKEAWAYS

• Acquisition of CNL Healthcare Properties (CHP) -- The merger closed for total consideration of $1.8 billion, with more than 95% of shareholder votes received in support.
• Share Issuance Efficiency -- Approximately 8 million fewer shares were issued than originally anticipated, creating additional value for shareholders; CHP shareholders received $7.22 per share in total consideration, above the $6.90 value had the price stayed within the collar range.
• Portfolio Expansion -- Since 2024, 93 communities have been added, primarily high-quality assets in growth markets, reinforcing Sonida Senior Living (NYSE:SNDA)’s competitive positioning.
• Net Operating Income (NOI) -- For the full year 2025, NOI increased over 22% year over year, with total portfolio NOI at share rising by $15 million on an annualized basis.
• Adjusted EBITDA -- Increased 28% for the year, reflecting growth in both the same store and acquisition portfolios.
• REVPOR Growth -- Year-over-year revenue per occupied room grew 8.8% annually and 5.9% in Q4.
• 2024 Acquisition Performance -- The 19 communities acquired in 2024 showed a sequential occupancy improvement of 290 basis points from Q3 to Q4, an 820 basis point occupancy increase year over year, a 22%+ revenue rise, and NOI margin expansion from 21% to 28%.
• Acquisition Portfolio Metrics -- Annual occupancy in the 2024 acquisition cohort rose 680 basis points, with NOI margin expanding to 24.7% from 19.2%, mainly driven by 2024 acquisitions.
• Same Store Occupancy -- Sequential quarterly occupancy gain of 20 basis points in Q4, building on a 90 basis point gain in Q3.
• Same Store NOI Growth Pro Forma -- Removing noncore assets, the future-state same store portfolio achieved 16.2% year-over-year NOI growth for Q4, with pro forma NOI margin reaching 27.8%.
• Rent Renewal Rate -- March 1 in-place lease renewal averaged 7.9% for 96% of same store residents, compared to 6.8% in the prior year.
• Level-of-Care Revenues -- Increased 11.4% for 2025.
• Labor Cost Trends -- Total labor expense (excluding benefits) fell by 40 basis points as a percentage of revenue sequentially; hours relative to occupancy decreased 2%, and direct labor as well as overtime dropped quarter over quarter, while non-labor expenses fell by $200,000 from Q3 to Q4.
• Synergy Estimates -- Initial guidance targets $16 million to $20 million in year-one run-rate synergy, mainly from G&A reductions due to immediate termination of CNL’s advisory fee.
• Portfolio Pruning Plan -- Intend to dispose roughly 10% of the community count, focusing on less profitable assets, with proceeds directed first to deleveraging and then capital recycling.
• Debt Structure Post-CHP Acquisition -- Completion includes $525 million in term loans at S + 195 bps (with potential to reduce to S + 130 bps), a $405 million upsized revolver, and an accordion feature for $320 million additional capacity, totaling $1.25 billion available debt capacity.
• Series A Preferred Conversion -- Conversant Capital’s $51.25 million Series A convertible preferred with an 11% coupon will convert to common equity at $32 per share, expected to yield annual free cash flow savings of over $5 million.
• Reporting Update -- Starting in Q2, Sonida Senior Living will add normalized FFO reporting in line with real estate peers and segment communities into same store, non-same store, and triple net lease.

SUMMARY

The call confirmed the accelerated close of the CHP acquisition and immediate portfolio expansion to 96 communities, with CHP assets recognized as high-quality and located in strong growth markets. Management stated the pro forma portfolio will see strategic pruning of lower-growth assets, with divestiture proceeds initially used for deleveraging. The team detailed immediate reductions in G&A expenses following integration and identified $16 million to $20 million in annual run-rate synergy potential from the combined platform. Capital structure simplification will occur with the early conversion of Conversant’s Series A preferred, projected to lower cost of capital and increase annual free cash flow. Normalized FFO metrics and a new reporting structure will be implemented to align with real estate industry standards.

• CEO Ribar stated, "Including this transaction, we have added 93 communities to our portfolio of owned real estate since 2024, nearly all of which are high-quality assets in growth markets that are newer than most of the competition in the market."
• CFO Detz noted, "The pro forma impact of bifurcating these noncore assets out of our same store portfolio yielded a 16.2% year-over-year NOI growth rate when comparing Q4 2025 to Q4 2024."
• CEO Ribar explained that approximately 8 million fewer shares were issued than expected due to the collar structure: "have issued approximately 8 million fewer shares than originally anticipated based on the reference price at the time of the announcement, resulting in material additional value creation for both legacy Sonida Senior Living and CHP shareholders."
• The elimination of the Series A convertible preferred, as described by Ribar, "eliminating a high-cost and onerous remnant of the company’s legacy capital structure," will drive more than $5 million of annual cash flow savings.

INDUSTRY GLOSSARY

• SHOP assets: Senior housing operating properties, typically managed rather than triple net-leased, where operational results directly influence owner earnings.
• REVPOR: Revenue per occupied room, a key operating performance measure for senior living and hospitality businesses.
• In-place lease renewal rate: The average percentage increase in rent for residents renewing leases versus the prior period.
• Level-of-care revenues: Revenue derived from special care or service surcharges based on the personalized needs of residents in assisted living and memory care communities.
• NOI margin: Net operating income as a percentage of total revenue, indicating operating efficiency at the asset level.
• Accordion feature: Provision in a credit facility allowing a borrower to increase committed borrowing capacity, under specified terms, without renegotiating the loan.

Full Conference Call Transcript

As further described in the company’s current report on Form 8-Ks, filed with the SEC this morning, the company completed its previously announced acquisition of CNL Healthcare Properties, Inc., or CHP, through a series of steps ending with a forward merger of CHP within into a subsidiary of the company, with such subsidiary surviving the CHP merger, as a result of which the company now indirectly owns all the assets of CHP. Unless otherwise specifically noted, or the context otherwise requires, the information presented on today’s call does not reflect the closing of the CHP acquisition. Please also note that during the call, the company will present non-GAAP financial measures.

For reconciliations of these non-GAAP measures to the most comparable GAAP measure, please see today’s earnings release. If you would like to follow along during today’s call, you can find Sonida Senior Living, Inc.’s fourth quarter and full year 2025 earnings presentation in the Investor Relations section of the company’s website. In addition, we have included supplemental information within our presentation, consistent with prior quarters’ releases. I will now turn the call over to Sonida Senior Living, Inc. President and CEO, Brandon M. Ribar.

Brandon M. Ribar: Good afternoon, and thank you for joining us on our fourth quarter and year-end earnings call. This morning, we announced the completion of our previously announced merger in which Sonida Senior Living, Inc. has acquired CNL Healthcare Properties, or CHP, for a total consideration of $1.8 billion. The transaction closed on an accelerated timeframe with the overwhelming support of shareholders from both Sonida Senior Living, Inc. and CHP. More than 95% of votes received supported the transaction, a reflection of the significant value proposition delivered to shareholders of both companies. I am thankful for the substantial effort put forth by both parties and our respective advisers.

The transaction significantly enhances the company’s competitive positioning, including benefits of scale with additional accretive investment opportunities, increased trading liquidity, and balance sheet strength, accelerates our growth profile, and is expected to deliver earnings accretion to Sonida Senior Living, Inc.’s shareholders. It is worth pointing out that based on the accretive asymmetrical collar structure that was put in place, we have issued approximately 8 million fewer shares than originally anticipated based on the reference price at the time of the announcement, resulting in material additional value creation for both legacy Sonida Senior Living, Inc. and CHP shareholders.

Further, based on yesterday’s closing price, which is above the high end of the collar range, CHP shareholders received $7.22 of total consideration, which compares favorably to the $6.90 of value they would have received had the stock remained in the collar range. We are excited to welcome all of the CHP shareholders to Sonida Senior Living, Inc. We assure you that every day we strive to create significant value and returns to our investors. The company has been on quite the journey over the last three years.

Including this transaction, we have added 93 communities to our portfolio of owned real estate since 2024, nearly all of which are high-quality assets in growth markets that are newer than most of the competition in the market. We will continue to strive for excellence in our operational capabilities and customer service across each community we manage. I will provide additional color on the integration work completed since the transaction was announced last November later in my remarks. Switching to the performance of our business, I am pleased with the progress and continued momentum in the fourth quarter, which continues into 2026.

The impact of investments in our labor model and the restructuring of operations were evident in our fourth quarter results and continue to trend well in the early months of 2026. Growth in both our same store and acquisition portfolios accelerated in Q4, and we are optimistic that with Q1 results, we will continue the trend of year-over-year and sequential quarterly improvement in top-line and bottom-line metrics. For the full year 2025, Sonida Senior Living, Inc. net operating income increased more than 22% and adjusted EBITDA at share improved 28%, a testament to both the earnings potential of assets purchased in 2024 and our operating team’s ability to drive organic asset growth while limiting our incremental G&A.

We continue to see improving trends in the first quarter based on occupancy improvement in the same store portfolio alongside an accelerated recovery in newly purchased communities. Additionally, for the full year 2026, we are targeting growth in our revenue per occupied room at or above our same store growth achieved in 2025. Our portfolio top line continued to deliver sequential growth and year-over-year improvement driven by both occupancy and rate, highlighted by accelerated recovery in our acquisition communities. I would like to quickly highlight the accelerated recovery in our acquisition communities. The 19 communities acquired in 2024 performed exceptionally well, with a sequential occupancy improvement of 290 basis points from Q3 to Q4.

Comparing Q4 2025 to Q4 2024, for these communities total occupancy improved 820 basis points, revenue increased more than 22%, and NOI margin expanded from 21% to 28%. This further demonstrates the growth potential in 2026 and beyond and is a reflection on the caliber of real estate we acquired and our team’s operating capabilities. Given both the scale of the CHP transaction and Sonida Senior Living, Inc.’s track record of successfully integrating communities into our operating platform with minimal periods of disruption, we are extremely optimistic that this merger will continue to drive improved performance trends and significant upside in a combined platform.

Heading into 2026, our operating team will place added emphasis in two specific areas: the consistent delivery of excellent clinical care and services that support the health and well-being of our residents, and the continued development of a labor model that rewards our strongest employees and furthers our retention efforts. We are proud of the work done in recent years to reduce our turnover by more than 30 percentage points. However, we still have room for improvement. Kevin will provide additional detail on our efforts across the labor side of the business, as well as progress across key operating metrics in Q4.

I will quickly touch on the work completed over the previous four months on post-transaction integration and our updated view on synergies, corporate and operational. We have spent considerable time working with the operators across the existing CHP portfolio to understand areas of opportunity and assess potential strategic relationships. Our first priority is minimizing operational disruption for residents and community team members. Two key components to the effort are creating additional incentives for strong ongoing performance at the operator level and maintaining continuity within the CHP asset management function in the pro forma Sonida Senior Living, Inc. platform.

Performance at the CHP operator and asset level has continued to trend favorably post announcement, with strong results in Q4 and positive trends as well early in 2026. We previously identified value-creating synergy in three components: the reduction in the cost associated with managing the 54 SHOP assets and the operational benefits communities will experience as part of the Sonida Senior Living, Inc. platform. Kevin will provide further detail in his comments, in addition to our plans for reporting changes in Q1 consistent with real estate-heavy peers, including the REITs. The addition of high-quality real estate located in strong growth markets further enhances the near- and long-term earnings power of our portfolio.

On the combined portfolio, we will also accelerate deleveraging through strategic asset dispositions, enabling Sonida Senior Living, Inc. to recycle capital into higher growth, higher quality assets. This approach will apply to approximately 10% of the portfolio based on community count and subject to operational trajectory and market dynamics. We also expect the company’s free cash flow generation post transaction to provide significant capital for reinvestment in both internal ROI projects and new acquisitions. The commitment of a new upsized $405 million revolver at close of the transaction will further increase our available capital to capitalize our robust investment pipeline during the remainder of 2026. Finally, I will touch briefly on the company’s capital structure.

We are pleased to have reached an agreement with Conversant Capital for the early conversion of its Series A convertible preferred stock into common equity. As disclosed earlier today in our Form 8-K, the convertible preferred originated in 2021 with the Conversant recapitalization and, as of 12/31, had an outstanding balance of $51.25 million carrying an 11% coupon, which we have been paying in cash. Under the terms of the new agreement, the Series A will be converted into common equity at $32 per share, thereby eliminating a high-cost and onerous remnant of the company’s legacy capital structure.

This more than $5 million of additional annual free cash flow savings will be used to reinvest in opportunities in excess of the current 11% cost of capital. Pro forma for the conversion, Conversant will be fully aligned with all shareholders, with all exposure via common equity. The transaction simplifies our capital structure, reduces our cost of capital, accelerates our deleveraging, and improves the pro forma free cash flow profile of the business. Note that the impact from this subsequent event is not reflected in the financial information being shared in today’s earnings presentation.

These operating results and the continued value-creating growth of our platform, including the CHP transaction, depend on the strength and capabilities of our local and regional leadership. We are proud of the compassion and commitment to results delivered every day in our Sonida Senior Living, Inc. communities. Our focus will intensify further on retaining, developing, and recruiting new talent as we grow. Employee turnover and leadership turnover within our communities continue to trend favorably. Kevin will share additional details on companywide trends, and I am confident these retention levels are a result of the investments we have made in wages, benefits, and the positive and supportive culture at Sonida Senior Living, Inc.

We continue to attract high-level talent in the operating and support functions due to elevated interest in career opportunities with Sonida Senior Living, Inc., and I am confident we will continue to attract top-notch talent with a commitment to providing high-quality care and services to our residents. Our near-term strategy and focus remain consistent as we accelerate our growth trajectory. Our mission is to continue building a best-in-class real estate portfolio with geographic purpose that enables our owner-operator model to deliver differentiated FFO and NOI growth. Operational performance based on retention and development of strong local and regional leadership, combined with advanced technology platforms to improve resident outcomes and operating efficiency, remain the linchpin to our success.

Continued acquisitions in our primary geographies, along with strategic expansion into additional markets, will create further benefit operationally, including additional product offerings and pricing options, efficiencies in sales and marketing costs, and labor efficiencies. I will now turn the call over to Kevin for a detailed discussion of our Q4 financial performance.

Kevin J. Detz: Thanks, Brandon. I will pick up on slide 16 with some commentary on Q4 and full year 2025. For our total portfolio at share for Q4, the company realized a 5.9% increase in REVPOR when comparing to the same quarter in the prior year. Annually, the year-over-year REVPOR growth was 8.8%, which reflects an elevated rate profile from our acquisitions and outsized rate increase on our same store portfolio during the year. On an annual basis, adjusted EBITDA grew 28% through a combination of our same store portfolio’s steady growth and the high-paced growth of our 2024 acquisition cohort.

The same store portfolio picked up an additional 20 basis points of sequential occupancy gains in Q4 on the heels of growing our Q3 occupancy by 90 basis points to close out a strong second half of overall occupancy gain. With the 19 communities from the 2024 acquisition cohort moving into the same store portfolio in 2026, we anticipate accelerated occupancy gains as these communities achieve full stabilization. Moving to our acquisition portfolio in more depth on slide 18, the company realized an annual 680 basis point occupancy jump from 2024. Just as significant, most of this top-line performance flowed through, with the acquisition portfolio’s community NOI margin expanding 550 basis points to 24.7% from its 19.2% average.

This one-year look at our 2024 and 2025 acquisitions validates the company’s strategy of acquiring underoperated quality assets in strong submarkets at significant discounts to replacement cost. Further, due to the timing of the four community acquisitions that came online in 2025, this year’s NOI margin success was largely driven by the 2024 acquisition. Because of this, we believe there is a similar significant runway for outsized KPIs on the 2025 acquisition cohort in the upcoming year. Moving to total portfolio highlights on slide 19, the company grew its year-over-year total portfolio NOI at share by 22%, or $15 million on an annualized basis.

Note that the overall year-over-year occupancy and margin percentage for the total portfolio at share is unfavorably impacted due to the acquisitions coming in at lower starting average occupancy and margin levels. Moving ahead to slide 20, where I will briefly touch on our new reporting portfolios for 2026 and beyond, going forward our communities will be presented in one of three portfolios: same store, non-same store, and triple net lease. This simplified grouping aims to create more meaningful comps to our peer set and more closely aligns with how management thinks about the business and the company’s core portfolio. Earlier, Brandon referenced our strategy to upgrade our portfolio to a higher quality and younger community composition.

To support this strategy, the company anticipates pruning its portfolio by approximately 10% based on community count, both legacy Sonida Senior Living, Inc. as well as CHP communities, and recycling capital out of communities with limited long-term growth prospects. Note that these communities represent significantly less than the 10% of NOI as they are less profitable than the company’s core assets. These noncore assets will be reported in our non-same store portfolio, along with our four stabilizing communities that came online in 2025 and other communities where targeted reinvestments and/or care conversions are in flight.

The pro forma impact of bifurcating these noncore assets out of our same store portfolio yielded a 16.2% year-over-year NOI growth rate when comparing Q4 2025 to Q4 2024. The related pro forma NOI margin percentage on this future-state same store portfolio of 27.8%, coupled with the recent execution of another successful annual in-place rate renewal campaign, positions the company for near- to mid-term achievement of breaking the 30% NOI margin threshold. Hitting once more on occupancy on slide 21, our same store occupancy gained 20 basis points sequentially in the last quarter of the year, which is typically the softest quarter of the year in terms of resident demand and tours.

Despite this, we believe the widened sales funnel from our investments into digital marketing during 2025 allowed us to convert an outsized percentage of tours to move-ins, particularly in the second half of the year. We also believe that with similar strong demographics and our increased submarket density, the CHP portfolio will be favorably impacted by the overlay of Sonida Senior Living, Inc.’s digital marketing and SEO capabilities. On to the same store rate discussion on slide 22, looking ahead to 2026, the average annual rent renewal rate on in-place leases for the recent March 1 renewal was 7.9%, which was applicable to 96% of the total same store residents.

For context, the same percentage one year ago on a similar resident lease count was 6.8%. Additionally, the level-of-care revenues for 2025 increased 11.4% compared to prior year. Both these KPIs confirm that our thoughtful and detailed approach to rate setting, which is anchored by our investments in technology and close collaboration with community leaders on market rate analysis, is sustainable and will position us to continue to expand margins. We believe our pricing power will also benefit from the pruning of a handful of under-earning communities and increasing overall demand as occupancy levels continue to rise.

On the CHP portfolio, we are excited to see how the investments made in our clinical technologies will expand the capture of more timely and accurate care reassessments-related ancillary revenues. Diving into margin drivers and NOI more broadly, we will move ahead to slide 23 to discuss same store operating expense trends. As a percentage of revenue, total labor excluding benefits decreased 40 basis points from the previous quarter and also decreased slightly from the same quarter in 2024. In our Q3 earnings call, we discussed several communities’ labor not being flexed timely amidst a rapid spike in occupancy during that quarter.

Using our proprietary labor tools, we identified the drivers of the labor misses and implemented more stringent labor controls and close monitoring oversight through our corporate support center. These measures took root and supported reduced labor levels towards the end of Q3 and fully into Q4. For the fourth quarter, hours relative to occupancy decreased 2%. Additionally, absolute direct labor and overtime decreased approximately, and on the non-labor expense front, $200,000 from Q3 to Q4. Absolute operating costs decreased slightly from Q3 2025 to Q4 2025, resulting in a favorable expense trending over the same period.

Based on the structural changes to our labor control program in 2025, and positive early trending in 2026, we are encouraged by a solid foundation of unit economics around overall labor dollars. On the G&A and synergies front, we will revisit slide 11 for some of the merits of the CHP acquisition.

We previously identified value creation in three distinct and separate areas: first, the reduction of total company G&A; second, the reduction in costs associated with internalizing management of a portion of the 54 SHOP assets; and third, the operational benefits CHP communities will experience as part of the Sonida Senior Living, Inc. platform, not necessarily limited to communities for which Sonida Senior Living, Inc. will start to operate directly. Our initial guidance contemplated only the reduction in G&A, with a range of $16 million to $20 million per year-one run-rate synergy.

Based on our diligence, this synergy estimate continues to be appropriate, largely in part due to the immediate termination of CNL’s advisory fee in connection with the close of the transaction. Beyond this initial guidance, we have identified further opportunities for future synergies tied to the latter two areas. Since November’s acquisition announcement, the initial discussions we have had with CHP’s third-party operators and our combined company deployment structure analysis have provided us with clear visibility into both top- and bottom-line upside that should gradually be realized through planned integration activities. Starting with our first full combined reporting period in Q2, we will introduce additional reporting metrics such as normalized FFO, consistent with real estate peers.

Closing out my prepared comments, we will move to the balance sheet on slide 24. The CHP acquisition has allowed the company to take a significant stride towards its short-term leverage target of 6.0x to 6.5x. The capitalization includes two term loans totaling $525 million at S + 195 bps, with the ability to push down to S + 130 bps as the company further reduces its leverage levels. Beyond the upsizing of the company’s revolver to $405 million that Brandon referenced earlier, the accordion feature provides for an additional $320 million of debt capacity to support the company’s growth initiatives.

In total, the bank debt provides for total capacity of $1.25 billion and was led by blue-chip banks, including seven first-time lenders to Sonida Senior Living, Inc., as well as the re-upping from our two legacy corporate lenders, BMO and RBC. We are extremely pleased with the execution of this syndication and the support that the bank group can provide to our ongoing growth. Back to you, Brandon.

Brandon M. Ribar: Thanks, Kevin. 2026 is off to a strong start on all fronts. The combination of organic growth across our 96 communities, coupled with the addition of high-quality assets within the CHP portfolio, provides opportunity for accelerated growth. On the people front, our leadership team across the community, regional, and central support level has never been stronger or more motivated to create great outcomes for our residents, team members, and key stakeholders. Plans are in place for the successful integration of new communities on a responsible and productive timeline, and further strategic relationships with select new managers offer additional growth opportunities. We welcome our new shareholders as of today, and the additional institutional investors seeking a differentiated owner-operator platform.

We are truly excited about the future ahead and thankful for the consistent support from our existing investors. This Sonida Senior Living, Inc. team remains fully dedicated to the successful execution of our organic and inorganic growth objectives. This concludes our prepared remarks. Operator, please open the line for any questions.

Operator: At this time, if you would like to ask a question, press star and the number 1 on your telephone keypad. To withdraw your question, simply press 1 again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Ronald Kamdem with Morgan Stanley. Please go ahead.

Ronald Kamdem: Great. Congrats on closing the merger. I am sure that was a lot of work to get done. I guess my first question, and I can appreciate I think you mentioned normalized FFO guidance is coming in Q2, but I think the presentation had $1.20 sort of on a run-rate basis and so forth. I was just wondering if you could talk through, at a high level, what the adjusted EBITDA and interest cost and any other assumptions that were going into that number post merger. Thanks.

Brandon M. Ribar: Yeah, Ron. Thank you for the congrats. The team did a ton of work over the last handful of months, and I think in terms of what is going to go into the calculation, we will continue to get that information out as we release in Q1 and all the various components that are going to go into it. Our goal has been to make it comparable with the other large-scale reporters on the REIT side, so you should expect that there will be consistent puts and takes around those numbers as we convert them over to providing that additional information.

Ronald Kamdem: Great. And then my second question was just on the 10% of the portfolio that is to be pruned. Any idea of the speed of that? Is that over the next six to twelve months, or how are you thinking about that? And is that capital going into more acquisitions in the pipeline? Is it paying down debt? Is there more development CapEx to spend? Just how are you thinking about those sources and uses? Thanks.

Brandon M. Ribar: Yeah. I would say that we do want to make progress on that front right out of the gate, so I would expect, in the six- to twelve-month timeline, that we will be in the market on a handful of those assets. As Kevin mentioned in his script, they are not really high NOI contributors in terms of the percent of the total portfolio. Dollars from those transactions would first go to delever the company and then would be available for recycling into assets that we feel reflect what the go-forward portfolio represents, which are high-quality, newer-vintage assets in strong growth markets that have a really good growth trajectory.

So think about it in terms of reducing the low-growth assets and recycling that into higher-growth, newer, long-term hold assets.

Ronald Kamdem: Great. And then my last one, if I may, is just on the portfolio changes. I think you said 16% plus—16% to 17%—same store NOI pro forma for the new same store pool. Is that a good run-rate number? Is there any puts and takes in terms of comps or anything like that? Because I think the reported number was sort of 6.5% for Q4, so that is a big delta. Just wondering if there are any other puts and takes around that. Thanks.

Kevin J. Detz: Hey, Ron. This is Kevin. I appreciate all the comments. We think about that number as just a jumping-off point from 2025 in terms of how that new bucket, that redefined bucket of assets, performed, not necessarily relative to the peer set. As we release the blocks to model this out and then normalized FFO metrics, you will get more insight as to what we think that NOI growth percentage would be. But right now, what we are seeing, particularly on the rate environment and the stabilization of rate hours and labor, we think that is a pretty good number in terms of what we can expect from that new same store portfolio.

Ronald Kamdem: Great. Thanks so much. That is it for me.

Operator: Your next question comes from the line of Wes Golladay with Baird. Please go ahead.

Wes Golladay: Hey, everyone. Congrats on getting the merger completed. Follow-up on Ron’s question: when you look at your new same store pool, it looks like there is going to be a lot of occupancy gain and also some pricing power in the legacy portfolio. But that 6% or 7.9% rate increase, is that for the legacy pool or the current pool?

Kevin J. Detz: That is for the legacy pool that just got pushed through last week, March 1.

Wes Golladay: Okay. And then you talked about working on your labor model, boosting retention. Do you think that will be all completed within this year?

Brandon M. Ribar: I do not think we will ever be fully complete on optimizing our labor model. The reality is we are always going to be working on it. I think we feel really good about the market right now in terms of being able to retain our people at levels of wage increases that are in line with our expectations and inside of what we experienced last year. So I think that the areas in the middle of last year that we saw a challenge in or invested in additional labor costs, we feel confident that trends we saw in Q4 are continuing in the early part of this year.

We have a significant amount of resources dedicated to ensuring stability on that front, and then also working, as we bring new communities into the fold, on areas of opportunity within their labor models. So that will be a heavy focus for us this year.

Wes Golladay: Okay. And then on the disposition front, you did mention selling lower income-producing assets, but can you talk about what is your long-term plan with the net lease assets? Will those be any part of the dispositions this year?

Brandon M. Ribar: I would say that, right out of the gate, clearly there is a very attractive profile from a cash flow perspective that we have shared in terms of our expectations around stabilized free cash flow. So there is a really strong component to that. It is not our core business, but I think that we will conduct ongoing evaluation of how the market is looking at those types of assets and opportunities. So no immediate plans. I think that we will be thoughtfully considering how that continues to look in the market and whether or not there is an opportunity that makes sense to sell and recycle the capital.

But, realistically, immediately we are going to see the benefit of two really good operators in there that are delivering really stable cash flow through those leases.

Wes Golladay: Great. Alright. Thanks a lot. I will hop back in the queue.

Operator: That concludes our question-and-answer session. We will now turn the call back over to Brandon M. Ribar for closing remarks.

Brandon M. Ribar: Thank you all for participating in the call today. We appreciate all the support. We are excited around the announcement this morning of the completion of the merger and look forward to continued discussions next time we chat around results. Take care.

Operator: Ladies and gentlemen, this concludes today’s call. Thank you all for joining. You may now disconnect.

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