By Peter Grant
Sonida Senior Living said Wednesday that it had agreed to acquire a smaller rival in a $1.8 billion deal that would create one of the country's largest senior housing companies.
The Dallas-based owner and operator said it would acquire CNL Healthcare Properties in a cash and stock deal. It would represent the largest senior-housing transaction in the U.S. since 2021.
Sonida's acquisition, expected to close in the first half of 2026, would create the country's eighth-largest senior housing company, with more than 14,000 units in 153 independent living, assisted living and memory-care communities in Texas, the Midwest and western states.
The senior housing business is emerging as one of the hottest in the commercial real-estate sector, recovering from a devastating slump that lasted for years.
A glut of new supply and collapse in demand during the pandemic caused occupancy rates to tumble and many senior housing facilities to shut down. Inflation, labor shortages and higher interest rates also pounded the sector.
The industry has rebounded this year as more baby boomers approach their 80s and more of them conclude they can no longer live safely at home.
Construction of new senior communities has slowed to historic lows, and occupancy rates and rents are now rising fast. Overall, the industry has been raising rents 4% a year in 2024 and 2025, but higher quality operators are pushing 6% to 8% increases, according to real estate analytics firm Green Street.
"You have effectively near all time low starts right when you have anticipated growth being the best it will ever be for the cohort," said Michael Simanovsky, Sonida's chairman.
Dealmaking in the sector is also on the rise. Transaction activity in the first three quarters of this year reached $13 billion, up 67% from the same period last year, according to Newmark, a commercial real-estate services firm.
"People are moving out of a survival mindset into a growth and meeting the future mindset," said Arick Morton, chief executive of NIC MAP, a data firm that tracks the senior housing industry.
Sonida's past five years capture both the pain of the senior-housing industry and its recent recovery. The company, formerly named Capital Senior Living, was on the ropes financially in the early stages of the pandemic as costs skyrocketed and revenue plummeted.
Its occupancy rate plummeted more than 10 percentage points to mid-70% range. Its share price, which was close to $400 in 2015, fell below $10 in 2020 as Wall Street worried about whether it would be able to continue servicing its high debt load.
Sonida's relief initially came in the form of a $154.8 million equity infusion by Conversant Capital, an investment firm founded in 2020. That allowed Sonida to shore up its balance sheet, restructure debt with lenders, and reposition itself to capitalize on the industry's fallout rather than be consumed by it.
Since then, Conversant has invested another $100 million in Sonida. As part of the CNL deal, the firm would contribute an additional $100 million, giving it a roughly 30% stake in the merged company, according to people familiar with the matter.
Following the capital infusion, Sonida's occupancy rate rebounded strongly, positioning the company to go on an acquisition spree. The company has acquired 23 communities with more than 2,500 units, not including the CNL deal, over the past 18 months.
CNL Healthcare is a nontraded real-estate investment trust sponsored by CNL Securities that was formed more than a decade ago to purchase senior housing and healthcare real estate. It owns about 70 properties, with close to 8,000 units in 26 states.
Under the terms of the deal, shareholders of CNL Healthcare will receive $6.90 in cash and stock for every share of CNL they hold, according to people familiar with the matter. Shares of CNL Healthcare initially were sold to the public at $10 each in 2011. Since then they have paid dividends as well as a $2 per share special distribution, according to public filings.
Write to Peter Grant at peter.grant@wsj.com
(END) Dow Jones Newswires
November 05, 2025 13:05 ET (18:05 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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