10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022 

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 1-13445

Sonida Senior Living, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	75-2678809
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

16301 Quorum Drive, Suite 160A, Addison, TX	75001
(Address of principal executive offices)	(Zip code)

(972) 770-5600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, $0.01 par value per share	SNDA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes   x     No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐ No  x

As of October 31, 2022, the Registrant had 6,669,949 shares of common stock outstanding.

Sonida Senior Living, Inc.

Form 10-Q Table of Contents

For the Period Ended September 30, 2022

	Page Number
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets — September 30, 2022 (Unaudited) and December 31, 2021	4
Condensed Consolidated Statements of Operations — Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	5
Condensed Consolidated Statements of Shareholders’ Equity (Deficit)— Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	6
Condensed Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2022 and 2021 (Unaudited)	7
Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
Item 4. Controls and Procedures	23
Part II. Other Information	25
Item 1. Legal Proceedings	25
Item 1A. Risk Factors	25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3. Defaults Upon Senior Securities	25
Item 4. Mine Safety Disclosures	25
Item 5. Other Information	25
Item 6. Exhibits	26
Signature	27

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Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this Quarterly Report on Form 10-Q of Sonida Senior Living, Inc. (together with its consolidated subsidiaries, “Sonida,” “we,” “our,” “us,” or the “Company”) constitutes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts included in this Quarterly Report on Form 10-Q, including, without limitation, those relating to the Company’s future business prospects and strategies, financial results, working capital, liquidity, capital needs and expenditures, interest costs, insurance availability and contingent liabilities, are forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “will,” “would,” “intend,” “could,” “believe,” “expect,” “anticipate,” “project,” “plans,” “estimate” or “continue” or the negatives thereof or other variations thereon or comparable terminology.

Forward-looking statements are subject to certain risks and uncertainties that could cause the Company’s actual results and financial condition to differ materially from those indicated in the forward-looking statements, including, among others, the risks, uncertainties and factors set forth under “Item. 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2022, and also include the following:

•the impact of COVID-19, including the actions taken to prevent or contain the spread of COVID-19, the transmission of its highly contagious variants and sub-lineages and the development and availability of vaccinations and other related treatments, or another epidemic, pandemic or other health crisis;

•the Company’s ability to generate sufficient cash flows from operations, additional proceeds from debt financings or refinancings, and proceeds from the sale of assets to satisfy its short and long-term debt obligations and to fund the Company’s capital improvement projects to expand, redevelop, and/or reposition its senior living communities;

•increases in market interest rates that increase the cost of certain of our debt obligations;

•increased competition for, or a shortage of, skilled workers, including due to the COVID-19 pandemic or general labor market conditions, along with wage pressures resulting from such increased competition, low unemployment levels, use of contract labor, minimum wage increases and/or changes in overtime laws;

•the Company’s ability to obtain additional capital on terms acceptable to it;

•the Company’s ability to extend or refinance its existing debt as such debt matures;

•the Company’s compliance with its debt agreements, including certain financial covenants, and the risk of cross-default in the event such non-compliance occurs;

•the Company’s ability to complete acquisitions and dispositions upon favorable terms or at all;

• the risk of oversupply and increased competition in the markets which the Company operates;

•the Company’s ability to improve and maintain controls over financial reporting and remediate the identified material weakness discussed in Item 4 of this Quarterly Report on Form 10-Q;

•the departure of the Company’s key officers and personnel;

•the cost and difficulty of complying with applicable licensure, legislative oversight, or regulatory changes;

•risks associated with current global economic conditions and general economic factors such as inflation, the consumer price index, commodity costs, fuel and other energy costs, competition in the labor market, costs of salaries, wages, benefits, and insurance, interest rates, and tax rates; and

•changes in accounting principles and interpretations.

We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or outcomes that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. All forward-looking statements in this Quarterly Report on Form 10-Q apply only as of the date made and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q. Except as required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

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Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Sonida Senior Living, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)

	September 30, 2022		December 31, 2021
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	27,046	$	78,691
Restricted cash	13,770		14,185
Accounts receivable, net	4,759		3,983
Prepaid expenses and other	4,526		9,328
Total current assets	50,101		106,187
Property and equipment, net	622,753		621,199
Other assets, net	2,460		1,166
Total assets	$	675,314	$	728,552
Liabilities and Equity
Current liabilities:
Accounts payable	$	10,571	$	9,168
Accrued expenses	36,619		37,026
Current portion of notes payable, net of deferred financing costs	46,137		69,769
Deferred income	3,576		3,162
Federal and state income taxes payable	176		599
Other current liabilities	732		758
Total current liabilities	97,811		120,482
Notes payable, net of deferred financing costs and current portion	619,798		613,342
Other liabilities	143		288
Total liabilities	717,752		734,112
Commitments and contingencies
Redeemable preferred stock:
Series A convertible preferred stock, $0.01 par value; 41 shares authorized, 41 shares issued and outstanding as of September 30, 2022 and December 31, 2021	42,384		41,250
Shareholders’ equity (deficit):
Preferred stock $0.01 par value per share; 15,000 shares authorized; none issued or outstanding, except Series A convertible preferred stock as noted above	—		—
Common stock $0.01 par value per share; 15,000 shares authorized; 6,670 and 6,634 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	67		66
Additional paid-in capital	295,595		295,781
Retained deficit	(380,484)		(342,657)
Total shareholders’ equity (deficit)	(84,822)		(46,810)
Total liabilities, redeemable preferred stock and shareholders’ equity (deficit)	$	675,314	$	728,552

See Notes to Condensed Consolidated Financial Statements.

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Sonida Senior Living, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Resident revenue	$	52,485	$	48,968	$	155,315	$	140,819
Management fees	608		1,029		1,836		2,978
Managed community reimbursement revenue	7,694		7,927		21,757		33,317
Total revenues	60,787		57,924		178,908		177,114
Expenses:
Operating expense	43,123		40,668		126,562		114,994
General and administrative expense	5,851		7,473		23,563		24,182
Depreciation and amortization expense	9,691		9,503		28,940		27,811
Managed community reimbursement expense	7,694		7,927		21,757		33,317
Total expenses	66,359		65,571		200,822		200,304
Other income (expense):
Interest income	44		—		47		5
Interest expense	(8,205)		(9,701)		(23,728)		(28,574)
Gain (loss) on extinguishment of debt	—		54,080		(641)		168,292
Loss on disposition of assets, net	—		(15)		—		(436)
Other income (expense), net	(6)		—		8,663		8,703
(Loss) income before provision for income taxes	(13,739)		36,717		(37,573)		124,800
Provision for income taxes	—		(207)		(254)		(368)
Net (loss) income	(13,739)		36,510		(37,827)		124,432
Dividends on Series A convertible preferred stock	(1,134)		—		(3,401)		—
Net (loss) income attributable to common stockholders	$	(14,873)	$	36,510	$	(41,228)	$	124,432
Weighted average common shares outstanding — basic	6,364		2,062		6,357		2,061
Weighted average common shares outstanding — diluted	6,364		2,089		6,357		2,088
Basic net (loss) income per common share	$	(2.34)	$	17.71	$	(6.49)	$	60.37
Diluted net (loss) income per common share	$	(2.34)	$	17.48	$	(6.49)	$	59.59

See Notes to Condensed Consolidated Financial Statements.

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Sonida Senior Living, Inc.

Condensed Consolidated Statements of Shareholders’ Equity (Deficit) (Unaudited)

(in thousands)

	Common Stock			Additional Paid-In Capital		Retained Deficit
	Shares	Amount						Total
Balance at December 31, 2020	2,084	$	21	$	188,978	$	(468,264)	$	(279,265)
Restricted stock awards (cancellations), net	98	1		(1)		—		—
Non-cash stock-based compensation	—	—		166		—		166
Net income	—	—		—		38,844		38,844
Balance at March 31, 2021	2,182	$	22	$	189,143	$	(429,420)	$	(240,255)
Restricted stock awards (cancellations), net	12	—		—		—		—
Non-cash stock-based compensation	—	—		517		—		517
Net income	—	—		—		49,078		49,078
Balance at June 30, 2021	2,194	$	22	$	189,660	$	(380,342)	$	(190,660)
Restricted stock awards (cancellations), net	(1)	—		—		—		—
Non-cash stock-based compensation	—	—		586		—		586
Net income	—	—		—		36,510		36,510
Balance at September 30, 2021	2,193	$	22	$	190,246	$	(343,832)	$	(153,564)
	Common Stock			Additional Paid-In Capital		Retained Deficit
	Shares	Amount						Total
Balance at December 31, 2021	6,634	$	66	$	295,781	$	(342,657)	$	(46,810)
Restricted stock awards (cancellations), net	31	1		—		—		1
Series A convertible preferred stock dividends	—	—		(1,133)		—		(1,133)
Non-cash stock-based compensation	—	—		1,827		—		1,827
Net loss	—	—		—		(16,678)		(16,678)
Balance at March 31, 2022	6,665	$	67	$	296,475	$	(359,335)	$	(62,793)
Restricted stock awards (cancellations), net	157	1		(1)		—		—
Series A convertible preferred stock dividends	—	—		(1,134)		—		(1,134)
Purchase of common stock	—	—		(219)		—		(219)
Non-cash stock-based compensation	—	—		2,240		—		2,240
Net loss	—	—		—		(7,410)		(7,410)
Balance at June 30, 2022	6,822	$	68	$	297,361	$	(366,745)	$	(69,316)
Restricted stock awards (cancellations), net	(152)	(1)		—		—		(1)
Series A convertible preferred stock dividends	—	—		(1,134)		—		(1,134)
Purchase of common stock	—	—		(44)		—		(44)
Non-cash stock-based compensation	—	—		(588)		—		(588)
Net loss	—	—		—		(13,739)		(13,739)
Balance at September 30, 2022	6,670	$	67	$	295,595	$	(380,484)	$	(84,822)

See Notes to Condensed Consolidated Financial Statements.

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Sonida Senior Living, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net income (loss)	$	(37,827)	$	124,432
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	28,940		27,811
Amortization of deferred financing costs	946		1,121
Lease expense adjustment	7		(256)
Loss on disposition of assets, net	—		436
Write-off of other assets	535		—
Unrealized gain on interest rate cap, net	(206)		—
Loss (gain) on extinguishment of debt	641		(168,292)
Provision for bad debt	908		747
Non-cash stock-based compensation expense	3,479		1,269
Changes in operating assets and liabilities:
Accounts receivable, net	(1,760)		763
Prepaid expenses and other	6,755		369
Other assets, net	(115)		(95)
Accounts payable and accrued expense	566		5,199
Federal and state income taxes payable	(423)		211
Deferred resident revenue	414		(502)
Other current liabilities	43		(375)
Net cash provided by (used in) operating activities	2,903		(7,162)
Cash flows from investing activities:
Acquisition of new communities	(12,342)		—
Capital expenditures	(18,317)		(7,096)
Net cash used in investing activities	(30,659)		(7,096)
Cash flows from financing activities:
Proceeds from notes payable	80,000		17,168
Repayments of notes payable	(98,535)		(10,513)
Cash payments for finance leases and financing obligations	(81)		(74)
Purchase of common stock	(263)		—
Dividends paid to Series A preferred stockholders	(2,987)		—
Purchase of interest rate cap	(258)		—
Deferred financing costs paid	(2,180)		—
Net cash (used in) provided by financing activities	(24,304)		6,581
Decrease in cash and cash equivalents and restricted cash	(52,060)		(7,677)
Cash, cash equivalents, and restricted cash at beginning of period	92,876		30,504
Cash, cash equivalents, and restricted cash at end of period	$	40,816	$	22,827
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest	$	21,536	$	23,221
Income taxes	$	672	$	309

See Notes to Condensed Consolidated Financial Statements.

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Sonida Senior Living, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

Organization and Business

Sonida Senior Living, Inc., a Delaware corporation, is one of the leading owner-operators of senior housing communities in the United States in terms of resident capacity. As used herein, the “Company,” “we,” “us,” or “our” refers to Sonida Senior Living, Inc. and its subsidiaries. The Company owns, operates, develops, and manages senior housing communities throughout the United States. As of September 30, 2022, the Company operated 76 senior housing communities in 18 states with an aggregate capacity of approximately 8,000 residents, including 62 senior housing communities that the Company owned and 14 communities that the Company managed on behalf of third parties. The accompanying condensed consolidated financial statements include the financial statements of Sonida Senior Living, Inc. and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Interim Unaudited Financial Information

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted from this Quarterly Report on Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The results for the interim periods shown in this report are not necessarily indicative of future financial results. The accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, including normal recurring items, necessary to present fairly our condensed consolidated financial position as of September 30, 2022 and December 31, 2021, and our condensed consolidated results of operations and cash flows for the periods ended September 30, 2022 and 2021.

Reclassifications

Certain amounts previously reflected in the prior year condensed consolidated balance sheet have been reclassified to conform to our September 30, 2022 presentation. The consolidated balance sheet as of December 31, 2021 reflects reclassifying “operating lease right-of-use assets, net” to “other assets, net”, “property tax and insurance deposits” to “restricted cash” and lender reserves from “other assets, net” to “restricted cash.” “Current portion of lease liabilities” and “customer deposits” were combined into “other current liabilities.” “Lease liabilities, net of current portion” has been reclassified as “other liabilities.” The consolidated statements of operations include the consolidation of “stock-based compensation expense” within “general and administrative expenses.” These reclassifications had no effect on the previously reported total assets or total liabilities.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. These estimates include such items related to the accounting for: income taxes, including assessments of probabilities of realization of income tax benefits; impairment of long-lived assets, including applicable cash flow projections, holding periods and fair value evaluations; self-insurance liabilities and expense; stock-based compensation; and depreciation and amortization including determination of estimated useful lives. Actual results could differ from those estimates.

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2. Significant Accounting Policies and Recently Issued Accounting Standards

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments with original maturities of three months or less at the date of acquisition to be cash equivalents. The Company has deposits in banks that exceed Federal Deposit Insurance Corporation insurance limits. Management believes that credit risk related to these deposits is minimal.

Restricted cash consists of reserve accounts for property insurance, real estate taxes, capital expenditures, and debt service required by certain loan agreements. In addition, restricted cash includes deposits required by certain counterparties as collateral pursuant to letters of credit which must remain so long as the letters of credit are outstanding, which are subject to renewal annually.

The statement of cash flows reflects cash flow changes and balances for cash, cash equivalents and restricted cash on an aggregated basis. The following table reconciles cash, cash equivalents and restricted cash as reported on the condensed consolidated balance sheets to the aggregated amounts presented on the condensed consolidated statements of cash flows (in thousands):

	September 30, 2022		December 31, 2021
Cash and cash equivalents	$	27,046	$	78,691
Restricted cash:
Property tax and insurance reserves	6,215		6,666
Lender reserve	1,500		—
Capital expenditures reserves	1,944		2,637
Deposits pursuant to outstanding letters of credit	4,111		4,882
Total restricted cash	13,770		14,185
Total cash, cash equivalents, and restricted cash	$	40,816	$	92,876

Property and Equipment

Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the assets. At each balance sheet date, the Company reviews the carrying value of its property and equipment to determine if facts and circumstances suggest that they may be impaired or that the depreciation period may need to be changed. The Company considers internal factors such as net operating losses along with external factors relating to each asset, including contract changes, local market developments, and other publicly available information to determine whether impairment indicators exist.

If an indicator of impairment is identified, recoverability of an asset group is assessed by comparing its carrying amount to the estimated future undiscounted net cash flows expected to be generated by the asset group through operation or disposition, calculated utilizing the lowest level of identifiable cash flows. If this comparison indicates that the carrying amount of an asset group is not recoverable, we estimate fair value of the asset group and record an impairment loss when the carrying amount exceeds fair value. There were no impairments of long-lived assets during the three or nine months ended September 30, 2022 or 2021.

In evaluating our long-lived assets for impairment, we undergo continuous evaluations of property level performance and real estate trends, and management makes several estimates and assumptions, including, but not limited to, the projected date of disposition, estimated sales price and future cash flows of each property during our estimated holding period. If our analysis or assumptions regarding the projected cash flows expected to result from the use and eventual disposition of our properties change, we incur additional costs and expenses during the holding period, or our expected hold periods change, we may incur future impairment losses.

Upon the acquisition of new communities accounted for as an acquisition of an asset, we recognize the assets acquired and the liabilities assumed as of the acquisition date, measured at their relative fair values once we have determined the fair value of each of these assets and liabilities. The acquisition date is the date on which we obtain control of the real estate property. The assets acquired and liabilities assumed consist of land, inclusive of associated rights, buildings, assumed debt, and identified intangible assets and liabilities.

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Revenue Recognition

Resident revenue primarily consists of fees for basic housing and certain support services provided to residents which are accounted for under GAAP in accordance with lease accounting standards. The Company's residency lease agreements are generally short term in nature, with durations of one year or less, and are typically terminable by either party, under certain circumstances, upon providing 30 days’ notice, unless state law provides otherwise. Resident leases do not contain purchase options or require significant assumptions or judgments. Resident fees are billed monthly in advance. Basic housing and certain support services revenue is recorded when services are rendered and amounts are billable to residents in the period in which the rental and other services are provided. At September 30, 2022 and December 31, 2021, the Company had contract liabilities for deferred fees paid by its residents prior to the month that housing and support services were to be provided totaling approximately $2.6 million and $2.3 million, respectively, which are included in deferred income.

Revenue for certain ancillary services is recognized as services are provided to customers and includes fees for certain services, such as medication management, daily living activities, beautician/barber, laundry, television, guest meals, pets, and parking, which are generally billed monthly in arrears and are included in resident revenue.

Other operating revenue generally includes nonrecurring state grants and is included in resident revenue as earned.

The Company's senior housing communities have residency agreements that generally require the resident to pay a community fee prior to moving into the community which are initially recorded as deferred revenue and subsequently amortized evenly each month over the term of the agreement. At September 30, 2022 and December 31, 2021, the Company had contract liabilities for deferred community fees totaling approximately $0.9 million and $0.8 million, respectively, which are included in deferred income.

The Company has management agreements whereby it manages certain communities on behalf of third party owners under agreements that provide for management fee payments to the Company. The Company has determined that all community management activities are a single performance obligation, which is satisfied over time as the services are rendered. The Company’s estimate of the transaction price for management services also includes the amount of reimbursement due from the owners of the communities for services provided and related costs incurred. Such revenue is included in “managed community reimbursement revenue.” The related costs are included in “managed community reimbursement expense.” Although these costs are funded by the community owners, accounting guidance requires the Company to report these fees on a gross basis as both revenues and expenses.

In April 2022 and January 2021, the Company accepted $9.1 million and $8.7 million of cash, respectively, through grants from the Public Health and Social Services Emergency Fund’s (the “Provider Relief Fund”) Phases 4 and 3 General Distribution, respectively, which was expanded by the CARES Act to provide grants or other funding mechanisms to eligible healthcare providers for healthcare-related or lost revenues attributable to COVID-19. Both the Phase 4 and Phase 3 Provider Relief Funds were recorded as other income in the periods ended September 30, 2022 and 2021, respectively. No grants were received during the three month periods ended September 30, 2022 and September 30, 2021. The CARES Act Provider Relief Funds are grants that do not have to be repaid provided we satisfy the terms and conditions of the CARES Act.

Credit Risk and Allowance for Doubtful Accounts

The Company’s resident accounts receivable are generally due within 30 days after the date billed. Accounts receivable are reported net of an allowance for doubtful accounts of $5.6 million and $4.7 million at September 30, 2022, and December 31, 2021, respectively, and represent the Company’s estimate of the amount that ultimately will be collected. The adequacy of the Company’s allowance for doubtful accounts is reviewed on an ongoing basis, using historical payment trends, write-off experience, analyses of receivable portfolios by payor source and aging of receivables, as well as a review of specific accounts, and adjustments are made to the allowance, as necessary. Credit losses on resident receivables have historically been within management’s estimates, and management believes that the allowance for doubtful accounts adequately provides for expected losses.

Concentration of Credit Risk and Business Risk

Substantially all of our revenues are derived from senior living communities we own and senior living communities that we manage. Senior living operations are particularly sensitive to adverse economic, social and competitive conditions and trends, including the effects of the COVID-19 pandemic, which has adversely affected, and may continue to adversely affect, our business, financial condition, and results of operations.

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We have a concentration of owned properties operating in Texas (16), Indiana (12), Ohio (11) and Wisconsin (8).

Self-Insurance Liability Accruals

The Company offers full-time employees an option to participate in its health and dental plans. The Company is self-insured up to certain limits and is insured if claims in excess of these limits are incurred. The cost of employee health and dental benefits, net of employee contributions, is shared between the corporate office and the senior housing communities based on the respective number of plan participants. Funds collected are used to pay the actual program costs, including estimated annual claims, third-party administrative fees, network provider fees, communication costs, and other related administrative costs incurred by the plans. Claims are paid as they are submitted to the Company’s third-party administrator. The Company records a liability for outstanding claims as well as claims that have been incurred but not yet reported. This liability is based on the historical claim reporting lag and payment trends of health and dental insurance claims.

The Company uses a combination of insurance and self-insurance for workers’ compensation. Determining the reserve for workers’ compensation losses and costs that the Company has incurred as of the end of a reporting period involves significant judgment based on projected future events, including among other factors, potential settlements for pending claims, known incidents which may result in claims, estimates of incurred but not yet reported claims, changes in insurance premiums and/or estimated litigation costs. The Company regularly adjusts these estimates to reflect changes in the foregoing factors. However, since this reserve is based on estimates, it is possible the actual expenses incurred may differ from the amounts reserved. Any subsequent changes in estimates are recorded in the period in which they are determined.

Income Taxes

Income taxes are computed using the asset and liability method and current income taxes are recorded based on amounts refundable or payable in the current year. The effective tax rates for the three and nine months ended September 30, 2022 and 2021 differ from the statutory tax rates due to state income taxes, permanent tax differences, and changes in the deferred tax asset valuation allowance.

Deferred income taxes are recorded based on the estimated future tax effects of loss carryforwards and temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the years in which the Company expects those carryforwards and temporary differences to be recovered or settled. Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation. As part of the evaluation, management has evaluated taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies, and future expectations of income. As of December 31, 2021, the Company had a three-year cumulative net operating loss for its U.S. operations and is subject to annual operating loss utilization limits and accordingly, has provided a full valuation allowance on its U.S. and state net deferred tax assets.  The valuation allowance reduces the Company’s net deferred tax assets to the amount that is “more likely than not” (i.e., a greater than 50% likelihood) to be realized. However, in the event that the Company were to ultimately determine that it would be more likely than not that the Company would realize the benefit of deferred tax assets in the future in excess of their net recorded amounts, adjustments to deferred tax assets would increase net income in the period such determination was made. The benefits of the net deferred tax assets might not be realized if actual results differ from expectations.

The Company evaluates uncertain tax positions through consideration of accounting and reporting guidance on criteria, measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide enhanced financial statement comparability among different companies. The Company is required to recognize a tax benefit in its financial statements for an uncertain tax position only if management’s assessment is that such position is “more likely than not” to be upheld on audit based solely on the technical merits of the tax position. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as income tax expense.

Redeemable Preferred Stock

The Company evaluates the classification of redeemable preferred stock based on the instrument’s specific terms and rights. Perpetual convertible preferred stock which can be converted to common stock outside of the Company’s control is classified as mezzanine equity, outside of the stockholders’ equity (deficit) section, and recorded at the maximum liquidation or conversion amount. During the year ended December 31, 2021, the Company issued 41,250 shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”). Dividends on redeemable preferred stock are recorded to retained earnings or additional paid-in capital if retained earnings is an accumulated deficit. If the Board does not declare a dividend in respect of any dividend payment date, the amount of such accrued and unpaid dividend is added to the liquidation preference and compounds quarterly.

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During the three months ended September 30, 2022, the Board did not declare a dividend, and accordingly, $1.1 million was added to the liquidation preference, effectively increasing the carrying value of the redeemable preferred stock.

Derivative Instruments

We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with the fluctuations in interest rates. We may also be required to enter into interest rate derivative instruments in compliance with debt agreements. We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments. We do not enter into derivative financial instruments for trading or speculative purposes. We record all derivatives at fair value. As of September 30, 2022, our derivative instruments consisted of an interest rate cap that was not designated as a hedge instrument. Changes in fair value of undesignated hedge instruments are recorded in current period earnings in interest expense. We did not have any derivative instruments as of December 31, 2021.

Net Income (Loss) Per Common Share

Basic income (loss) per share is computed by dividing net income (loss) less distributions to participating securities using the two-class method and preferred stock dividends, including redeemable preferred stock classified as mezzanine equity, divided by the weighted average number of shares of common stock outstanding. Under the two-class method, net income is reduced by the amount of any dividends earned during the period. The remaining earnings (undistributed earnings) are allocated based on the weighted-average shares outstanding of common stock and Series A Preferred Stock (on an if-converted basis) to the extent that each preferred security may share in earnings as if all of the earnings for the period had been distributed. The total earnings allocated to common stock is then divided by the number of outstanding shares to which the earnings are allocated to determine the earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the Series A Preferred Stock have no obligation to fund losses.

Diluted net income (loss) per common share is computed under the two-class method by using the weighted-average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of instruments convertible into common stock, stock options, stock-based compensation awards and warrants. The Company analyzes the potential dilutive effect of convertible instruments under the “if-converted” method, in which it is assumed that the instruments convert into common stock at the beginning of the period or when issued, if later. The Company reports the more dilutive of the approaches (two class or “if-converted”) as its diluted net income per share during the period. Dilutive securities are excluded from the calculation of diluted income per share if the effect would be anti-dilutive.

Segment Reporting

The Company evaluates the performance and allocates resources of its senior living communities based on current operations and market assessments on a property-by-property basis. The Company does not have a concentration of operations geographically or by product or service as its management functions are integrated at the property level. The Company has determined that its operating units meet the criteria in ASC Topic 280, Segment Reporting, to be aggregated into one reporting segment. As such, the Company operates in one segment.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. Current GAAP requires an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. ASU 2016-13 replaces the current incurred loss methodology non-lease revenue credit losses and removes the thresholds that companies apply to measure credit losses on financial statements measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to form credit loss estimates. For smaller reporting companies, ASU 2016-13 is effective for fiscal years and for interim periods within those fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of this guidance will have on its condensed consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”). The provisions of this standard are available for election through December 31, 2022. The Company is currently evaluating its contracts and the optional expedients provided by this update.

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3. Property and Equipment, net

The following is a summary of our property and equipment, net as of September 30, 2022 and December 31, 2021 (in thousands):

	Asset Lives	September 30, 2022		December 31, 2021
Land		$	47,598	$	46,069
Land improvements	5 to 20 years	19,606		19,146
Buildings and building improvements	10 to 40 years	837,331		814,035
Furniture and equipment	5 to 10 years	56,376		52,602
Automobiles	5 to 7 years	2,730		2,662
Assets under financing leases and leasehold improvements (1)		2,311		2,276
Construction in progress		1,289		392
Total property and equipment		967,241		937,182
Less accumulated depreciation and amortization		(344,488)		(315,983)
Total property and equipment, net		$	622,753	$	621,199

__________

(1) Leasehold improvements are amortized over the shorter of the useful life of the asset or the remaining lease term. Assets under financing leases and leasehold improvements include $0.5 million and $0.3 million of financing lease right-of-use assets as of September 30, 2022 and December 31, 2021, respectively.

On February 1, 2022, the Company completed the acquisition of two senior living communities located in Indiana for a combined purchase price of $12.3 million. The communities consist of a total of 157 independent living units. The acquisition price was funded with cash on hand. The acquired assets did not meet the definition of a business and, as such, the transaction was accounted for as an asset acquisition pursuant to the guidance in subsection 805-50 of Accounting Standards Codification ("ASC") 805, Business Combinations.

4. Accrued expenses

The following is a summary of our accrued expenses as of September 30, 2022 and December 31, 2021 (in thousands):

	September 30, 2022		December 31, 2021
Accrued payroll and employee benefits	$	14,355	$	13,592
Accrued interest (1)	8,768		7,311
Accrued taxes	7,779		7,278
Accrued professional fees	2,839		4,102
Accrued other expenses	2,878		4,743
Total accrued expenses	$	36,619	$	37,026

__________

(1) Includes accrued interest related to the remaining two Fannie Mae communities totaling $3.7 million and $2.7 million as of September 30, 2022 and December 31, 2021, respectively. See “Transactions Involving Certain Fannie Mae Loans” disclosure below.

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5. Notes Payable

Notes payable consists of the following (in thousands):

	Maturity Dates	September 30, 2022		December 31, 2021
Fixed rate mortgage notes payable	2024 to 2045	$	506,137	$	561,006
Fannie Mae mortgage notes payable (1)	2022	31,991		31,991
Variable rate mortgage notes payable (2)	2026 to 2029	129,727		88,711
Notes payable - insurance	2023	1,395		3,483
Notes payable - other	2023	2,121		2,121
Total notes payable		$	671,371	$	687,312
Less: deferred financing costs, net		(5,436)		(4,201)
Total notes payable, net		$	665,935	$	683,111
Less: current portion		(46,137)		(69,769)
Total long-term notes payable, net		$	619,798	$	613,342

The following schedule summarizing our notes payable as of September 30, 2022 (in thousands):

Principal payments due in:
2022 (1)	$	35,813
2023	15,054
2024	152,155
2025	114,285
2026	155,919
Thereafter	198,145
Total notes payable, excluding deferred financing costs	$	671,371

__________

(1) See “Transactions Involving Certain Fannie Mae Loans” disclosure below.

(2) See Note 12 for interest rate cap agreements on variable rate mortgage notes payable.

As of September 30, 2022, our fixed rate mortgage notes bear interest rates ranging from 3.6% to 6.3%. Our variable rate mortgage notes are based on either one-month LIBOR or the Secured Overnight Financing Rate (“SOFR”) plus an applicable margin. As of September 30, 2022, one-month LIBOR and one-month SOFR were 3.2% and 3.0%, respectively, and the applicable margins were 2.14% and 3.50%, respectively.

As of September 30, 2022, we had property and equipment with a net carrying value of $599.2 million that is secured by outstanding notes payable.

2022 Mortgage Refinance

In March 2022, the Company completed the refinancing of certain existing mortgage debt (“Refinance Facility”) for ten of its communities. The Refinance Facility includes an initial term loan of $80 million. In addition, $10 million is available as delayed loans that can be borrowed upon achieving and maintaining certain financial covenant requirements and up to an additional uncommitted $40 million may be available to fund future growth initiatives. In addition, the Company provided a limited payment guaranty (“Limited Payment Guaranty”) of 33%, that reduces to 25% and then to 10%, of the then outstanding balance of the Refinance Facility based upon achieving certain financial covenants and then maintained over the life of the loan. As defined and required in the Limited Payment Guaranty, the Company is required to maintain certain covenants including maintaining a Tangible Net Worth of $150 million and Liquid Assets of at least $13 million which is inclusive of a $1.5 million debt service reserve provided by the Company at the closing of the Refinance Facility. The debt service reserve may be released upon terms described in the “Loan Agreement” and is included in restricted cash.

The Refinance Facility also requires the financial performance of the ten communities to meet certain financial covenants, including a minimum debt service coverage ratio and a minimum debt yield (as defined in the Loan Agreement) with a first

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measurement date as of June 30, 2022 and quarterly measurement dates thereafter. As of September 30, 2022, we were in compliance with the financial covenants. We can provide no assurance that any financial covenants will be met in the future.

The Refinancing Facility requires that the Company purchase and maintain an interest rate cap facility during the term of the Refinancing Facility. The Company is in process of obtaining the interest rate cap facility in compliance with the lender’s requirements.

In conjunction with the Refinancing Facility, the Company incurred costs of $2.2 million in March 2022. These costs, net of amortization of $0.3 million, are included in deferred financing costs at September 30, 2022.

The financing transaction generated a loss on refinancing of notes payable of $0.6 million which is included in loss on extinguishment of debt for the nine months ended September 30, 2022.

Transactions Involving Certain Fannie Mae Loans

The Coronavirus Aid, Relief and Economic Security (“CARES”) Act, among other things, permitted borrowers with mortgages from Government Sponsored Enterprises who experienced a financial hardship related to the COVID-19 pandemic to obtain forbearance of their loans for up to 90 days. During 2020, the Company entered into several loan forbearance agreements with the Federal National Mortgage Association (“Fannie Mae”). In July 2020, the Company elected not to pay $3.8 million on the loans for 18 properties as of that date as it initiated a process intended to transfer the operations and ownership of such properties to Fannie Mae.  Therefore, the Company was in default on such loans. 

As a result of the events of default and receivership order obtained by Fannie Mae, the Company discontinued recognizing revenues and expenses related to the 18 properties effective August 1, 2020, which was the date of default.  In addition, the Company concluded that it was no longer entitled to receive any existing accounts receivable or revenue related to the properties, that all amounts held in escrow by Fannie Mae were forfeited, and that the Company no longer had control of the properties in accordance with GAAP. Accordingly, the Company derecognized the net carrying value of the properties and related assets from the financial statements and recorded a loss from the forbearance. The Company continues to recognize the related debt and liabilities until the debts are formally released. When these debts are formally released, the net carrying value of the debts is derecognized and a gain on extinguishment of debt is recognized. During the three and nine months ended September 30, 2021, Fannie Mae completed the transition of legal ownership of five and fourteen, cumulatively, of the Company's properties, respectively, and the Company recorded a gain on extinguishment of this debt for such periods of $54.1 million and $168.3 million, respectively.

As of September 30, 2022, two properties remain for which the legal ownership has not been transferred back to Fannie Mae. At both September 30, 2022 and December 31, 2021, the Company included $31.8 million in outstanding debt in current portion of notes payable, net of deferred financing costs of $0.2 million. As September 30, 2022 and December 31, 2021, accrued interest related to the remaining two properties was $3.7 million and $2.7 million, respectively. As of September 30, 2022 and December 31, 2021, the Company did not manage these properties (or any properties) on behalf of Fannie Mae. Except for the non-compliance with Fannie Mae mortgages for the two remaining properties expected to transition back to Fannie Mae, as noted above, the Company was in compliance with all other aspects of its outstanding indebtedness at September 30, 2022.

6. Redeemable Preferred Stock

In November 2021, the Company issued 41,250 shares of Series A Preferred Stock. The Series A Preferred Stock is convertible outside of the Company's control and in accordance with GAAP is classified as mezzanine equity, outside the stockholders’ equity (deficit) section, on our condensed consolidated balance sheets. The Series A Preferred Stock was initially recorded at fair value upon issuance in 2021, net of issuance costs. The holders of Series A Preferred Stock are entitled to vote with the holders of common stock on all matters submitted to a vote of stockholders of the Company. It is deemed probable that the Series A Preferred Stock could be redeemed for cash, and as such, the Series A Preferred Stock is required to be remeasured and adjusted to its maximum redemption value at the end of each reporting period. However, to the extent that the maximum redemption value of the Series A Preferred Stock does not exceed the fair value of the shares at the date of issuance, the shares are not adjusted below the fair value at the date of issuance. As of September 30, 2022 and December 31, 2021, the Series A Preferred Stock is carried at the maximum redemption value. The Series A Preferred Stock does not have a maturity date and therefore is considered as perpetual.

The Series A Preferred Stock has an 11% annual dividend calculated on the original investment of approximately $41.3 million accrued quarterly in arrears and compounded. Dividends are cumulative, and any declaration of dividends is at the discretion of the Company’s Board of Directors. If the Board does not declare a dividend in respect of any dividend payment date, the

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amount of such accrued and unpaid dividend is added to the liquidation preference and compounds quarterly thereafter. During the three months ended September 30, 2022, the Board did not declare a dividend, and accordingly, $1.1 million was added to the liquidation preference of the Series A Preferred Stock, effectively increasing the carrying value of the Series A Preferred Stock. On June 8, 2022, the Company declared a $1.1 million cash dividend on the Series A Preferred Stock, which was paid in June 2022. On March 31, 2022, the Company declared a $1.1 million cash dividend on the Series A Preferred Stock which was included in accounts payable and accrued expense as of March 31, 2022, and paid in April 2022. There were no corresponding amounts for the three or nine months ended September 30, 2021, as there were no shares of Series A Preferred Stock outstanding during such periods.

7. Revenue

Revenue for the three and nine months ended September 30, 2022 and 2021 is comprised of the following components (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Housing and support services	$	51,703	$	48,249	$	151,854	$	138,709
Community fees	481		403		1,410		1,228
Ancillary services	301		316		838		882
Other operating revenue (1)	—		—		1,213		—
Resident revenue	52,485		48,968		155,315		140,819
Management fees	608		1,029		1,836		2,978
Managed community reimbursement revenue	7,694		7,927		21,757		33,317
Total revenues	$	60,787	$	57,924	$	178,908	$	177,114

__________

(1) Other operating revenue consists of Provider Relief Funds received from state departments due to financial distress impacts of COVID-19. The Company intends to pursue additional funding that may become available in the future, but there is no guarantee of qualifying for, or receiving, any additional relief funds in the future.

Community fees, ancillary services, management fees, and community reimbursement revenue represent revenue from contracts with customers in accordance with GAAP.

8. Stock-Based Compensation

During the three months ended September 30, 2022, the Company granted restricted stock units and restricted stock awards under the Company’s 2019 Omnibus Incentive Plan. Grants of stock units and awards were as follows:

(in thousands, except weighted average amount)	Restricted Stock Unit and Stock Award Grants	Weighted Average Grant Date Fair Value Per Share	Total Grant Date Fair Value
Three months ended September 30, 2022	30	20.39	$	246

The Company recognized $(0.6) million and $0.6 million in stock-based compensation expense for the three months ended September 30, 2022 and 2021, respectively. The negative expense for the three months ended September 30, 2022 is due to forfeiture credits as a result of executive personnel changes in September 2022. The Company recognized $3.5 million and $1.3 million in stock-based compensation expense for the nine months ended September 30, 2022 and 2021, respectively.

9. Commitments and Contingencies

As of September 30, 2022, we had contractual commitments of $7.0 million related to future renovations and technology enhancements to our communities. We expect these amounts to be substantially expended during 2023.

The Company has claims incurred in the normal course of its business. Most of these claims are believed by management to be covered by insurance, subject to deductibles, normal reservations of rights by the insurance companies and possibly subject to certain exclusions in the applicable insurance policies. Whether or not covered by insurance, these claims, in the opinion of management, based on advice of legal counsel, should not have a material impact on the condensed consolidated financial statements of the Company.

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10. Related Party Transactions

As of September 30, 2022, affiliates of Conversant Capital LLC owned approximately 57.9% of our outstanding shares of common stock (inclusive of common stock issuable upon conversion of outstanding Series A Preferred Stock and outstanding warrants). Series A Preferred Stock dividends recognized in additional paid-in capital were $1.1 million and $3.4 million for the three and nine months ended September 30, 2022, respectively. The $1.1 million recognized for the three months ended September 30, 2022 was not paid in cash, but was instead added to the liquidation preference of the Series A Preferred Stock, effectively increasing the carrying value of the Series A Preferred Stock. Dividends of $3.0 million were paid on the Series A Preferred Stock during the nine months ended September 30, 2022, which included $2.3 million of dividends declared in 2022, and $0.7 million of dividends declared in 2021. There were no corresponding amounts for the three or nine months ended September 30, 2021 as there were no shares of Series A Preferred Stock outstanding during such period.

11. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company uses interest rate cap arrangements with financial institutions to manage exposure to interest rate changes for loans that utilize floating interest rates. As of September 30, 2022, we had an interest rate cap with an aggregate notional value of $50.3 million that was entered into on March 1, 2022. The fair value of this interest rate cap as of September 30, 2022 was $0.5 million (See Note 12, Derivatives and Hedging), and was determined using significant observable inputs (Level 2), including quantitative models that utilize multiple market inputs to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

Financial Instruments Not Reported at Fair Value

For those financial instruments not carried at fair value, the carrying amount and estimated fair values of our financial assets and liabilities were as follows at September 30, 2022 and December 31, 2021 (in thousands):

	September 30, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Notes payable, excluding deferred financing costs	$	671,371	$	585,731	$	687,312	$	636,836

We believe the carrying amount of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued liabilities approximate fair value due to their short-term nature.

The fair value of notes payable, excluding deferred financing costs, is estimated using discounted cash flow analysis, based on current incremental borrowing rates for similar types of borrowing arrangements, which represent Level 2 inputs as defined in ASC 820, Fair Value Measurement.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company may adjust the carrying amount of certain non-financial assets to fair value on a non-recurring basis when they are impaired. During the year ended December, 31, 2021, the Company recorded non-cash impairment charges of $6.5 million to property and equipment, net. The fair value of the impaired assets was $14.0 million at December 31, 2021. The fair value of the property and equipment, net was primarily determined utilizing an income capitalization approach considering stabilized facility operating income and market capitalization rates of 8.25%. There were no impairment losses for the three and nine months ended September 30, 2022 and September 30, 2021.

12. Derivatives and Hedging

The Company uses derivatives as part of our overall strategy to manage our exposure to market risks associated with the fluctuations in interest rates. We may also be required to enter into interest rate derivative instruments in compliance with debt agreements. We do not enter into derivative financial instruments for trading or speculative purposes.

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On March 1, 2022, the Company entered into an interest rate cap transaction for an aggregate notional amount of $50.3 million to reduce exposure to interest rate fluctuations associated with a portion of our variable mortgage notes payable. The interest rate cap agreement has a 24-month term and effectively caps LIBOR at 4.00% from March 1, 2022 through March 1, 2024 with respect to the portion of our floating rate indebtedness. In the event LIBOR is less than the capped rate, we will pay interest at the lower LIBOR rate. In the event LIBOR is higher than the capped rate, we will pay interest at the capped rate of 4.00%. The interest rate cap is not designated as a cash flow hedge under ASC 815-20, Derivatives - Hedging, therefore all changes in the fair value of the instrument are captured as a component of interest expense in the condensed consolidated statements of operations.

The following table presents the fair values of derivative assets and liabilities in the condensed consolidated balance sheets (in thousands):

	September 30, 2022
	Derivative Asset				Derivative Liability
	Notional Amount		Fair Value		Notional Amount		Fair Value
Interest rate cap	$	50,260	$	464	$	—	$	—
Total derivative			$	464			$	—

The following table presents the effect of the derivative instrument on the condensed consolidated statements of operations (in thousands):

	Three months ended September 30,		Nine months ended September 30,
	2022	2021	2022	2021
Derivative not designated as hedge
Interest rate cap
Gain on derivative not designated as hedge included in interest expense	251	—	206	—

13. Subsequent Event

On August 9, 2022, the Company received a notice of intent from Welltower Victory II TRS LLC (“Welltower”) to transition management of its four properties that were under an interim management agreement. The transition was completed on October 20, 2022.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help provide an understanding of our business and results of operations. This MD&A should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This report, including the following MD&A, contains forward-looking statements regarding future events or trends that should be read in conjunction with the risks, uncertainties and other factors described under “Cautionary Note Regarding Forward-Looking Statements” above in this Quarterly Report on Form 10-Q and “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on April 15, 2022. Actual results may differ materially from those projected in such statements as a result of such risks, uncertainties and other factors.

Critical Accounting Policies and Estimates

For a discussion of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. There have been no significant changes to our critical accounting policies since December 31, 2021.

Overview

The following discussion and analysis addresses (i) the Company’s results of operations for the three and nine months ended September 30, 2022 and 2021, and (ii) liquidity and capital resources of the Company.

The Company is one of the leading owner-operators of senior housing communities in the United States. The Company’s operating strategy is to provide value to its senior living residents by offering quality senior living services at reasonable prices, while achieving and sustaining a strong, competitive position within its geographically concentrated regions, as well as continuing to enhance the performance of its operations. The Company provides senior living services to the 75+ population, including independent living, assisted living, and memory care services at reasonable prices. Many of the Company’s communities offer a continuum of care to meet each resident’s needs as they change over time. This continuum of care, which integrates independent living, assisted living, and memory care which may be bridged by home care through independent home care agencies, sustains our residents’ autonomy and independence based on their physical and mental abilities.

As of September 30, 2022, the Company operated 76 senior housing communities in 18 states with an aggregate capacity of approximately 8,000 residents, including 62 owned senior housing communities and 14 communities that we manage on behalf of third parties.

COVID-19 Pandemic

The COVID-19 pandemic significantly disrupted the nation’s economy, the senior living industry and the Company’s business beginning in March 2020. The COVID-19 pandemic caused a decline in the occupancy levels at the Company’s communities, which negatively impacted the Company’s revenues and operating results, that depend significantly on such occupancy levels. In an effort to protect its residents and employees and slow the spread of COVID-19 and in response to quarantines, shelter-in-place orders and other limitations imposed by federal, state and local governments, the Company had previously restricted or limited access to its communities, including limitations on in-person prospective resident tours and, in certain cases, new resident admissions. As of March 31, 2022, all of the Company's senior living communities were open for new resident move-ins, and the Company has continued to make progress to rebuild occupancy lost during the COVID-19 pandemic. Although vaccines are now widely available, we cannot predict the duration of the pandemic or its ongoing impact on our business. If the COVID-19 pandemic worsens, including the transmission of highly contagious variants of the COVID-19 virus, the Company may have to impose or revert to restricted or limited access to its communities.

The COVID-19 pandemic has required the Company to incur significant additional operating costs and expenses in order to implement enhanced infection control protocols and otherwise care for its residents, including increased costs and expenses relating to supplies and personal protective equipment, testing of the Company’s residents and employees, labor and specialized disinfecting and cleaning services, which has increased the costs of caring for the residents and resulted in reduced occupancy at such communities. During the three month periods ended September 30, 2022 and 2021, the Company incurred $0.1 million and $0.4 million, respectively, in direct costs related to the COVID-19 pandemic. During the nine months ended September 30, 2022 and 2021, the Company incurred $0.4 million and $1.7 million, respectively, in direct costs related to the COVID-19 pandemic.

In April 2022 and January 2021, the Company accepted $9.1 million and $8.7 million of cash, respectively, through grants from the Public Health and Social Services Emergency Fund’s (the “Provider Relief Fund”) Phases 4 and 3 General Distribution,

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respectively, which was expanded by the CARES Act to provide grants or other funding mechanism to eligible healthcare providers for healthcare-related or lost revenues attributable to COVID-19. Both the Phase 4 and Phase 3 Provider Relief Funds were recorded as other income in the periods ended June 30, 2022 and 2021, respectively. No grants were received during the three months ended September 30, 2022 and September 30, 2021. The CARES Act Provider Relief Funds are grants that do not have to be repaid provided we satisfy the terms and conditions of the CARES Act.

The Company elected to utilize the CARES Act payroll tax deferral program to delay payment of a portion of its payroll taxes incurred from April 2020 through December 2020. The Company repaid one-half of the deferral amount in December 2021 and the other half will become due on December 31, 2022. At September 30, 2022 and December 31, 2021, the Company had $3.7 million in deferred payroll taxes, which was included in accrued expenses.

CARES Act Provider Relief Funds are subject to the terms and conditions of the program, including stringent restrictions that funds may only be used to reimburse COVID-19 related expenses or lost revenue that are attributable to COVID-19 and have not been reimbursed from other sources or that other sources are not obligated to reimburse. While we intend to pursue additional funding that may become available, there can be no assurances that we will qualify for, or receive, any additional relief funds in the future.

Significant Financial and Operational Highlights

Operations

Weighted average occupancy for the three months ended September 30, 2022 and 2021 for the 60 communities owned by the Company during both periods was 83.7% and 81.0%, respectively, reflecting continued occupancy recovery. The average monthly rental rate for these communities for the three months ended September 30, 2022 was higher by 290 basis points when compared to the three months ended September 30, 2021.

Weighted average occupancy for the nine months ended September 30, 2022 and 2021 for the 60 communities owned by the Company during both periods was 83.1% and 78.2%, respectively, reflecting continued occupancy recovery. The average monthly rental rate for these communities for the nine months ended September 30, 2022 was higher by 340 basis points when compared to the nine months ended September 30, 2021.

During the three and nine months ended September 30, 2022, the Company continued to be impacted by the senior living industry's workforce challenges related to limited staff availability, which required the use of overtime, shift bonuses and contract labor to properly support our senior living communities and residents.

2022 Mortgage Refinance

In March 2022, the Company completed the refinancing of certain existing mortgage debt (“Refinance Facility”) for ten of its communities. The Refinance Facility includes an initial term loan of $80 million. In addition, $10 million is available as delayed loans that can be borrowed upon achieving and maintaining certain financial covenant requirements and up to an additional uncommitted $40 million may be available to fund future growth initiatives. In addition, the Company provided a limited payment guaranty (“Limited Payment Guaranty”) of 33%, that reduces to 25% and then to 10%, of the then outstanding balance of the Refinance Facility if the Company achieves certain financial covenants maintained over the life of the loan. As defined and required in the Limited Payment Guaranty, the Company is required to maintain certain covenants including maintaining Tangible Net Worth of $150 million and Liquid Assets of at least $13 million, which is inclusive of a $1.5 million debt service reserve provided by the Company at the closing of the Refinance Facility. The debt services reserve may be released upon terms described in the Loan Agreement and is included in restricted cash.

The Refinance Facility also requires the financial performance of the ten communities to meet certain financial covenants, including a minimum debt service coverage ratio and a minimum debt yield (as defined in the Loan Agreement) with a first measurement date as of June 30, 2022 and quarterly measurement dates thereafter. As of September 30, 2022, the Company was in compliance with such financial covenants. We can provide no assurance that financial covenants will be met in the future.

The Refinance Facility carries an initial interest rate of one-month SOFR plus 3.50%, subject to a SOFR floor of 0.25% and a lower margin spread of 3.25% or 3.00% if the Company achieves and maintains certain financial covenants. The Refinancing Facility requires that the Company purchase and maintain an interest rate cap facility during the term of the Refinancing Facility. The Company is in process of obtaining the interest rate cap facility in compliance with the lender’s requirement.

20

Results of Operations

Three months ended September 30, 2022 as compared to three months ended September 30, 2021

Revenues

Resident revenue for the three months ended September 30, 2022 was $52.5 million as compared to $49.0 million for the three months ended September 30, 2021, an increase of $3.5 million, or 7.2%. The increase in revenue was primarily due to increased occupancy, increased average rent rates, and the acquisition of two new communities in early 2022.

Management fee revenue for the three months ended September 30, 2022 decreased by $0.4 million as compared to the three months ended September 30, 2021, primarily as a result of managing fewer communities in 2022.

Managed community reimbursement revenue for the three months ended September 30, 2022 was $7.7 million as compared to $7.9 million for the three months ended September 30, 2021, representing a decrease of $0.2 million. The decrease was primarily a result of transitioning five Fannie Mae communities to other operators during the three-month period ended September 30, 2021.

Expenses

Operating expenses for the three months ended September 30, 2022 were $43.1 million as compared to $40.7 million for the three months ended September 30, 2021, an increase of $2.4 million or 5.9%. The increase is primarily due to a $2.6 million increase in labor and employee-related expenses, a $0.4 million increase in utility costs, and a $0.3 million increase in food expenses, partially offset by the $1.0 million energy provider settlement from winter storm Uri expensed in Q3 2021.

General and administrative expenses for the three months ended September 30, 2022 were $5.9 million as compared to $7.5 million for the three months ended September 30, 2021, representing a decrease of $1.6 million. This decrease is primarily due to a $1.2 million decrease in stock-based compensation expense from prior year due to forfeiture credits in connection with executive personnel changes in September 2022, and a $0.4 million net decrease in recurring corporate expenses.

Managed community reimbursement expense for the three months ended September 30, 2022 was $7.7 million as compared to $7.9 million for the three months ended September 30, 2021, representing a decrease of $0.2 million. The decrease was primarily a result of transitioning of five Fannie Mae communities to other operators during the three-month period ended September 30, 2021.

Interest expense for the three months ended September 30, 2022 was $8.2 million as compared to $9.7 million for the three months ended September 30, 2021, representing a decrease of $1.5 million due to lower overall borrowings in 2022, partially offset by increased interest rates associated with the Company’s variable rate mortgages.

Gain on extinguishment of debt was $54.1 million for the three months ended September 30, 2021. The 2021 gain related to the derecognition of notes payable and liabilities as a result of the transition of legal ownership of five communities to Fannie Mae, the holder of the related non-recourse debt.

Results of Operations

Nine months ended September 30, 2022 as compared to nine months ended September 30, 2021

Revenues

Resident revenue for the nine months ended September 30, 2022 was $155.3 million as compared to $140.8 million for the nine months ended September 30, 2021, an increase of $14.5 million, or 10.3%. The increase in revenue was primarily due to increased occupancy, increased average rent rates, and the acquisition of two new communities in early 2022.

Management fee revenue for the nine months ended September 30, 2022 decreased by $1.2 million as compared to the nine months ended September 30, 2021, primarily as a result of managing fewer communities in 2022.

Managed community reimbursement revenue for the nine months ended September 30, 2022 was $21.8 million as compared to $33.3 million for the nine months ended September 30, 2021, a decrease of $11.5 million. The decrease was primarily a result of transitioning of 14 Fannie Mae communities to other operators during the nine-month period ended September 30, 2021.

21

Expenses

Operating expenses for the nine months ended September 30, 2022 were $126.6 million as compared to $115.0 million for the nine months ended September 30, 2021, an increase of $11.6 million or 10.1%. The increase is primarily due to a $9.2 million increase in labor and employee-related expenses including premium labor, a $1.0 million increase in food costs, and a $1.4 million increase in other operating expenses.

General and administrative expenses for the nine months ended September 30, 2022 were $23.6 million as compared to $24.2 million for the nine months ended September 30, 2021, a decrease of $0.6 million. This decrease is primarily due to a $2.2 million decrease in bonuses and a $1.9 million decrease in payroll and employee-related expenses, partially offset by a $2.2 million increase in stock-based compensation expense and a $1.3 million increase in other expenses.

Managed community reimbursement expense for the nine months ended September 30, 2022 was $21.8 million as compared to $33.3 million for the nine months ended September 30, 2021, a decrease of $11.5 million. The decrease was primarily a result of transitioning 14 Fannie Mae communities to other operators during the nine-month period ended September 30, 2021.

Interest expense for the nine months ended September 30, 2022 was $23.7 million as compared to $28.6 million for the nine months ended September 30, 2021, a decrease of $4.9 million, primarily due to lower overall borrowings in 2022, partially offset by increased interest rates associated with the Company’s variable rate mortgages.

Loss on extinguishment of debt for the nine months ended September 30, 2022 was $0.6 million as compared to a gain on extinguishment of debt of $168.3 million for the nine months ended September 30, 2021, a decrease of $168.9 million. The 2022 loss relates to the refinancing of debt in Q1 2022. The 2021 gain related to the derecognition of notes payable and liabilities as a result of transition of legal ownership of fourteen communities to Fannie Mae, the holder of the related non-recourse debt.

Other income for the nine months ended September 30, 2022 and for the nine months ended September 30, 2021 was $8.7 million. Both current year and prior year periods include cash received for CARES Act funding for healthcare-related expenses or lost revenues attributable to COVID-19.

Cash Flow Analysis

Nine months ended September 30, 2022 as compared to nine months ended September 30, 2021

Operating activities

Net cash provided by operating activities for the nine months ended September 30, 2022 was $2.9 million as compared to net cash used in operating activities of $7.2 million for the nine months ended September 30, 2021, an increase of $10.1 million primarily due to the timing of settlements of our receivables, current assets, and payables, as well as improved operations.

Investing activities

Net cash used in investing activities for the nine months ended September 30, 2022 was $30.7 million as compared to $7.1 million for the nine months ended September 30, 2021 primarily due to increase in ongoing capital improvements and renovation projects at existing communities totaling $18.3 million, and the acquisition of two new communities in Q1 2022 for $12.3 million.

Financing activities

Net cash used in financing activities for the nine months ended September 30, 2022 was $24.3 million and primarily results from repayments of notes payable and deferred financing costs paid, net of proceeds from notes payable, of $20.7 million, related to our 2022 debt refinancing and $3.0 million of dividends paid to Series A Preferred Stockholders. The net cash provided by financing activities for the nine months ended September 30, 2021 was $6.6 million and primarily results from proceeds from notes payable, net of repayments.

Liquidity and Capital Resources

Short-term liquidity

Our primary source of short-term liquidity is our cash and cash equivalents and results from operations. As of September 30, 2022, we had $27.0 million of cash and cash equivalents excluding our restricted cash balance of $13.8 million. Due to the continued effects of the COVID-19 pandemic, our operations have not yet returned to 2019, pre-pandemic levels. We currently anticipate cash flow from operations will continue to be impacted for at least the near-term. Our known liquidity requirements

22

primarily consist of funds necessary to pay for operating expenses related to our communities and other expenditures, including general and administrative expenses, interest and scheduled principal payments on our debt and dividends on our convertible preferred stock.

The Refinancing Facility we entered into in March 2022 contains financial covenants that were effective beginning June 30, 2022 and quarterly thereafter. As of September 30, 2022, the Company was in compliance with such covenants. There is no assurance that the Company will be able to meet any financial covenant requirements in the future. One of these financial covenants is that we are required to maintain cash and cash equivalents of no less than $13 million, inclusive of a $1.5 million lender service reserve, which is included in “restricted cash”. In connection with the Refinancing Facility, the Company is in the process of obtaining an interest rate cap to hedge against further exposure in a rising interest rate environment.

Additional short-term sources of liquidity include grants under the CARES Act. As described above, these grants are available to reimburse the Company for COVID-19 related expenses. In April 2022, we received a grant of $9.1 million, where we determined we met the CARES Act requirements which allowed the Company to retain the funds and not repay the grant. There is no assurance that we will meet such requirements or qualify for, or receive, any additional CARES Act funds in the future, and we do not consider this to be a significant source of liquidity in the future. In addition, the Company has historically received and is eligible for funding in connection with various state programs.

Long-term liquidity

The Company, from time to time, considers and evaluates financial and capital raising transactions related to its portfolio, including debt financing or refinancings, purchases and sales of assets, and other transactions. If capital were obtained through the issuance of Company equity, the issuance of Company securities would dilute the ownership of our existing stockholders and any newly issued securities may have rights, preferences, and/or privileges senior to those of our common stock. There can be no assurance that the Company will continue to generate cash flows at or above current levels, or that the Company will be able to obtain the capital necessary to meet the Company’s short and long-term capital requirements.

In connection with the refinancing transaction in March 2022, the Company was able to refinance certain debt due during 2022, 2023 and early 2024 with longer-term financing that matures in 2026. In addition, $10.0 million is available as delayed loans that can be borrowed upon achieving and maintaining certain financial covenant requirements and up to an additional uncommitted $40 million may be available to fund future growth initiatives. There is no assurance that we will be able to meet these financial covenant requirements.

As discussed in “Note 5. Notes Payable” of the condensed consolidated financial statements, the Company has scheduled maturities of debt coming due in the next five years and thereafter. The Company currently expects to be able to meet those maturities from cash on hand, future operations and future refinancings. The Refinance Facility matures in four years with an optional one-year extension if certain financial performance metrics and other customary conditions are maintained. There is no assurance that we will be able to meet such conditions or source refinancings at the time any of our debt matures or whether the terms of such refinancings will be comparable or satisfactory compared to our current loans.

The Company has unencumbered properties with a net book value of $23.6 million as of September 30, 2022, which could provide a source of liquidity from new debt. In the near term, the Company intends to finance the two Indiana communities purchased in Q1 2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Effectiveness of Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to the Company’s management, including the CEO and CFO as appropriate, to allow timely decisions regarding required disclosure.

23

Based upon the controls evaluation, procedures evaluation and the material weakness described in our Annual Report on Form 10-K, which was filed with the SEC on April 15, 2022, the Company’s CEO and CFO have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s disclosure controls and procedures are ineffective.

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company’s fiscal quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Remediation Plan

As disclosed in previous filings for the quarters ended June 30, 2021 and September 30, 2021, for the year ended December 31, 2021, and for the quarters ended March 31, 2022 and June 30, 2022, we identified a material weakness in our internal control over financial reporting. Due to challenges in maintaining necessary accounting staffing levels, this material weakness has not been remediated as of September 30, 2022, as disclosed above.

We have developed and initiated a plan for remediation of the material weakness, including developing and maintaining appropriate management review and process level controls. We will continue to monitor the effectiveness of our remediation measures in connection with our future assessments of the effectiveness of internal control over financial reporting and disclosure controls and procedures, and we will make any changes to the design of our plan and take such other actions that we deem appropriate given the circumstances. Based on the current remediation plan, we expect to have implemented the remediation process, including developing and maintaining appropriate management review and process level controls, by the end of the fourth quarter of 2022. Control weaknesses are not considered remediated until new internal controls have been operational for a period of time, are tested, and management concludes that these controls are operating effectively.

24

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company has claims incurred in the normal course of its business. Most of these claims are believed by management to be covered by insurance, subject to normal reservations of rights by the insurance companies and possibly subject to certain exclusions in the applicable insurance policies. Whether or not covered by insurance, these claims, in the opinion of management, based on advice of legal counsel, should not have a material effect on the condensed consolidated financial statements of the Company if determined adversely to the Company.

Item 1A. Risk Factors.

There have been no material changes to the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following information is provided pursuant to Item 703 of Regulation S-K. The information set forth in the table below reflects the common stock purchased by the Company for the quarter ended September 30, 2022:

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share	Total Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
July 1 – July 31, 2022	—	—	—	6,570,222
August 1 – August 31, 2022	—	—	—	6,570,222
September 1 – September 30, 2022	—	—	—	6,570,222

__________

(1) Does not include shares withheld to satisfy tax liabilities due upon the vesting of restricted stock, all of which have been reported in Form 4 filings relating to the Company. The average price paid per share for such share withholding is based on the closing price per share on the vesting date of the restricted stock or, if such date is not a trading day, the trading day immediately prior to such vesting date.

On January 22, 2009, the Company’s board of directors approved a share repurchase program that authorized the Company to purchase up to $10.0 million of the Company’s common stock. On January 14, 2016, the Company announced that its board of directors approved a continuation of the share repurchase program. The repurchase program does not obligate the Company to acquire any particular amount of common stock and the share repurchase authorization has no stated expiration date. All shares that have been acquired by the Company under this program were purchased in open-market transactions. The Company may evaluate whether to acquire additional shares of common stock under this program at its discretion.

Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

25

Item 6. Exhibits

The following documents are filed as a part of this report. Those exhibits previously filed and incorporated herein by reference are identified below. Exhibits not required for this report have been omitted.

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of the Registrant. (Incorporated by reference to Exhibit 3.1 to the Registration Statement No. 333-33379 on Form S-1/A filed by the Company with the Securities and Exchange Commission on September 8, 1997.)
3.1.1	Amendment to Amended and Restated Certificate of Incorporation of the Registrant. (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1999, filed by the Company with the Securities and Exchange Commission.)
3.1.2	Second Amendment to Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on December 14, 2020.)
3.1.3	Third Amendment to Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on November 4, 2021.)
3.1.4	Fourth Amendment to Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on November 10, 2021.)
3.2	Second Amended and Restated Bylaws of the Registrant. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report filed by the Company on Form 8-K with the Securities and Exchange Commission on March 8, 2013.)
3.2.1	Amendment to the Second Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on November 10, 2021.)
3.3	Certificate of Designation, Rights and Privileges of Series A Convertible Preferred Stock, par value $0.01, of the Company (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on November 4, 2021.)
10.1	Amendment to Employment Agreement, by and between Sonida Senior Living, Inc. and Brandon Ribar (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed by the Company with the Securities and Exchange Commission on August 5, 2022.)
31.1*	Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)
31.2*	Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)
32.1*	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	The following materials from the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2022 formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Shareholders’ Equity (Deficit) and (v) related notes.
104*	Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Filed herewith.

26

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Sonida Senior Living, Inc

(Registrant)

By:	/s/ BRANDON M. RIBAR
	Brandon M. Ribar
	President and Chief Executive Officer
	(Principal Executive Officer)
	Date: November 14, 2022

By:	/s/ KEVIN J. DETZ
	Kevin J. Detz
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)
	Date: November 14, 2022

27

EX-31.1

EXHIBIT 31.1

SONIDA SENIOR LIVING, INC.

CERTIFICATIONS

I, Brandon M. Ribar, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sonida Senior Living, Inc. (“Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/ BRANDON M. RIBAR

Brandon M. Ribar

President and Chief Executive Officer

(Principal Executive Officer)

November 14, 2022

EX-31.2

EXHIBIT 31.2

SONIDA SENIOR LIVING, INC.

CERTIFICATIONS

I, Kevin J. Detz, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sonida Senior Living, Inc. (“Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/ KEVIN J. DETZ

Kevin J. Detz

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

November 14, 2022

EX-32.1

EXHIBIT 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the filing of the Quarterly Report of Sonida Senior Living, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brandon M. Ribar, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ BRANDON M. RIBAR

Brandon M. Ribar

President and Chief Executive Officer

(Principal Executive Officer)

November 14, 2022

EX-32.2

EXHIBIT 32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the filing of the Quarterly Report of Sonida Senior Living, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kevin J. Detz, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ KEVIN J. DETZ

Kevin J. Detz

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

November 14, 2022

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2022	Oct. 31, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	1-13445
Entity Registrant Name	Sonida Senior Living, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	75-2678809
Entity Address, Address Line One	16301 Quorum Drive
Entity Address, Address Line Two	Suite 160A
Entity Address, City or Town	Addison
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75001
City Area Code	972
Local Phone Number	770-5600
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	SNDA
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		6,669,949
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001043000
Current Fiscal Year End Date	--12-31

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 27,046	$ 78,691
Restricted cash	13,770	14,185
Accounts receivable, net	4,759	3,983
Prepaid expenses and other	4,526	9,328
Total current assets	50,101	106,187
Property and equipment, net	622,753	621,199
Other assets, net	2,460	1,166
Total assets	675,314	728,552
Current liabilities:
Accounts payable	10,571	9,168
Accrued expenses	36,619	37,026
Current portion of notes payable, net of deferred financing costs	46,137	69,769
Deferred income	3,576	3,162
Federal and state income taxes payable	176	599
Other current liabilities	732	758
Total current liabilities	97,811	120,482
Notes payable, net of deferred financing costs and current portion	619,798	613,342
Other liabilities	143	288
Total liabilities	717,752	734,112
Commitments and contingencies
Redeemable preferred stock:
Series A convertible preferred stock, $0.01 par value; 41 shares authorized, 41 shares issued and outstanding as of September 30, 2022 and December 31, 2021	42,384	41,250
Shareholders’ equity (deficit):
Preferred stock $0.01 par value per share; 15,000 shares authorized; none issued or outstanding, except Series A convertible preferred stock as noted above	0	0
Common stock $0.01 par value per share; 15,000 shares authorized; 6,670 and 6,634 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	67	66
Additional paid-in capital	295,595	295,781
Retained deficit	(380,484)	(342,657)
Total shareholders’ equity (deficit)	(84,822)	(46,810)
Total liabilities, redeemable preferred stock and shareholders’ equity (deficit)	$ 675,314	$ 728,552

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Series A convertible preferred stock , par value (in USD per share)	$ 0.01	$ 0.01
Temporary equity, shares authorized (in shares)	41,000	41,000
Temporary equity, shares issued (in shares)	41,000	41,000
Temporary equity, shares outstanding (in shares)	41,000	41,000
Preferred stock, par value (in USD per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	15,000,000	15,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	15,000,000	15,000,000
Common stock, shares issued (in shares)	6,670,000	6,634,000
Common stock, shares outstanding (in shares)	6,670,000	6,634,000

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenue from Contract with Customer [Abstract]
Total revenues	$ 60,787	$ 57,924	$ 178,908	$ 177,114
Expenses:
Operating expense	43,123	40,668	126,562	114,994
General and administrative expense	5,851	7,473	23,563	24,182
Depreciation and amortization expense	9,691	9,503	28,940	27,811
Managed community reimbursement expense	7,694	7,927	21,757	33,317
Total expenses	66,359	65,571	200,822	200,304
Other income (expense):
Interest income	44	0	47	5
Interest expense	(8,205)	(9,701)	(23,728)	(28,574)
Gain (loss) on extinguishment of debt	0	54,080	(641)	168,292
Loss on disposition of assets, net	0	(15)	0	(436)
Other income (expense), net	(6)	0	8,663	8,703
(Loss) income before provision for income taxes	(13,739)	36,717	(37,573)	124,800
Provision for income taxes	0	(207)	(254)	(368)
Net (loss) income	(13,739)	36,510	(37,827)	124,432
Dividends on Series A convertible preferred stock	(1,134)	0	(3,401)	0
Net (loss) income attributable to common stockholders	$ (14,873)	$ 36,510	$ (41,228)	$ 124,432
Weighted average shares outstanding — basic (in shares)	6,364	2,062	6,357	2,061
Weighted average shares outstanding — diluted (in shares)	6,364	2,089	6,357	2,088
Basic net (loss) income per share (in USD per share)	$ (2.34)	$ 17.71	$ (6.49)	$ 60.37
Diluted net (loss) income per share (in USD per share)	$ (2.34)	$ 17.48	$ (6.49)	$ 59.59
Resident revenue
Revenue from Contract with Customer [Abstract]
Total revenues	$ 52,485	$ 48,968	$ 155,315	$ 140,819
Management fees
Revenue from Contract with Customer [Abstract]
Total revenues	608	1,029	1,836	2,978
Managed community reimbursement revenue
Revenue from Contract with Customer [Abstract]
Total revenues	$ 7,694	$ 7,927	$ 21,757	$ 33,317

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Condensed Consolidated Statements of Shareholders' Equity (Deficit) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Deficit
Beginning Balance (in shares) at Dec. 31, 2020		2,084
Beginning Balance at Dec. 31, 2020	$ (279,265)	$ 21	$ 188,978	$ (468,264)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock awards (cancellations), net (in shares)		98
Restricted stock awards (cancellations), net		$ 1	(1)
Non-cash stock-based compensation	166		166
Net income (loss)	38,844			38,844
Ending Balance (in shares) at Mar. 31, 2021		2,182
Ending Balance at Mar. 31, 2021	(240,255)	$ 22	189,143	(429,420)
Beginning Balance (in shares) at Dec. 31, 2020		2,084
Beginning Balance at Dec. 31, 2020	(279,265)	$ 21	188,978	(468,264)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Series A convertible preferred stock dividends	0
Net income (loss)	124,432
Ending Balance (in shares) at Sep. 30, 2021		2,193
Ending Balance at Sep. 30, 2021	(153,564)	$ 22	190,246	(343,832)
Beginning Balance (in shares) at Mar. 31, 2021		2,182
Beginning Balance at Mar. 31, 2021	(240,255)	$ 22	189,143	(429,420)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock awards (cancellations), net (in shares)		12
Non-cash stock-based compensation	517		517
Net income (loss)	49,078			49,078
Ending Balance (in shares) at Jun. 30, 2021		2,194
Ending Balance at Jun. 30, 2021	(190,660)	$ 22	189,660	(380,342)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock awards (cancellations), net (in shares)		(1)
Series A convertible preferred stock dividends	0
Non-cash stock-based compensation	586		586
Net income (loss)	36,510			36,510
Ending Balance (in shares) at Sep. 30, 2021		2,193
Ending Balance at Sep. 30, 2021	(153,564)	$ 22	190,246	(343,832)
Beginning Balance (in shares) at Dec. 31, 2021		6,634
Beginning Balance at Dec. 31, 2021	(46,810)	$ 66	295,781	(342,657)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock awards (cancellations), net (in shares)		31
Restricted stock awards (cancellations), net	1	$ 1
Series A convertible preferred stock dividends	(1,133)		(1,133)
Non-cash stock-based compensation	1,827		1,827
Net income (loss)	(16,678)			(16,678)
Ending Balance (in shares) at Mar. 31, 2022		6,665
Ending Balance at Mar. 31, 2022	(62,793)	$ 67	296,475	(359,335)
Beginning Balance (in shares) at Dec. 31, 2021		6,634
Beginning Balance at Dec. 31, 2021	(46,810)	$ 66	295,781	(342,657)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Series A convertible preferred stock dividends	(3,401)
Net income (loss)	(37,827)
Ending Balance (in shares) at Sep. 30, 2022		6,670
Ending Balance at Sep. 30, 2022	(84,822)	$ 67	295,595	(380,484)
Beginning Balance (in shares) at Mar. 31, 2022		6,665
Beginning Balance at Mar. 31, 2022	(62,793)	$ 67	296,475	(359,335)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock awards (cancellations), net (in shares)		157
Restricted stock awards (cancellations), net		$ 1	(1)
Series A convertible preferred stock dividends	(1,134)		(1,134)
Purchase of common stock	(219)		(219)
Non-cash stock-based compensation	2,240		2,240
Net income (loss)	(7,410)			(7,410)
Ending Balance (in shares) at Jun. 30, 2022		6,822
Ending Balance at Jun. 30, 2022	(69,316)	$ 68	297,361	(366,745)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock awards (cancellations), net (in shares)		(152)
Restricted stock awards (cancellations), net	(1)	$ (1)
Series A convertible preferred stock dividends	(1,134)		(1,134)
Purchase of common stock	(44)		(44)
Non-cash stock-based compensation	(588)		(588)
Net income (loss)	(13,739)			(13,739)
Ending Balance (in shares) at Sep. 30, 2022		6,670
Ending Balance at Sep. 30, 2022	$ (84,822)	$ 67	$ 295,595	$ (380,484)

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net income (loss)	$ (37,827)	$ 124,432
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	28,940	27,811
Amortization of deferred financing costs	946	1,121
Lease expense adjustment	7	(256)
Loss on disposition of assets, net	0	436
Write-off of other assets	535	0
Unrealized gain on interest rate cap, net	(206)	0
Loss (gain) on extinguishment of debt	641	(168,292)
Provision for bad debt	908	747
Non-cash stock-based compensation expense	3,479	1,269
Changes in operating assets and liabilities:
Accounts receivable, net	(1,760)	763
Prepaid expenses and other	6,755	369
Other assets, net	(115)	(95)
Accounts payable and accrued expense	566	5,199
Federal and state income taxes payable	(423)	211
Deferred resident revenue	414	(502)
Other current liabilities	43	(375)
Net cash provided by (used in) operating activities	2,903	(7,162)
Cash flows from investing activities:
Acquisition of new communities	(12,342)	0
Capital expenditures	(18,317)	(7,096)
Net cash used in investing activities	(30,659)	(7,096)
Cash flows from financing activities:
Proceeds from notes payable	80,000	17,168
Repayments of notes payable	(98,535)	(10,513)
Cash payments for finance leases and financing obligations	(81)	(74)
Purchase of common stock	(263)	0
Dividends paid to Series A preferred stockholders	(2,987)	0
Purchase of interest rate cap	(258)	0
Deferred financing costs paid	(2,180)	0
Net cash (used in) provided by financing activities	(24,304)	6,581
Decrease in cash and cash equivalents and restricted cash	(52,060)	(7,677)
Cash, cash equivalents, and restricted cash at beginning of period	92,876	30,504
Cash, cash equivalents, and restricted cash at end of period	40,816	22,827
Cash paid during the period for:
Interest	21,536	23,221
Income taxes	$ 672	$ 309

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Basis of Presentation

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Organization and Business

Sonida Senior Living, Inc., a Delaware corporation, is one of the leading owner-operators of senior housing communities in the United States in terms of resident capacity. As used herein, the “Company,” “we,” “us,” or “our” refers to Sonida Senior Living, Inc. and its subsidiaries. The Company owns, operates, develops, and manages senior housing communities throughout the United States. As of September 30, 2022, the Company operated 76 senior housing communities in 18 states with an aggregate capacity of approximately 8,000 residents, including 62 senior housing communities that the Company owned and 14 communities that the Company managed on behalf of third parties. The accompanying condensed consolidated financial statements include the financial statements of Sonida Senior Living, Inc. and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Interim Unaudited Financial Information

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted from this Quarterly Report on Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The results for the interim periods shown in this report are not necessarily indicative of future financial results. The accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, including normal recurring items, necessary to present fairly our condensed consolidated financial position as of September 30, 2022 and December 31, 2021, and our condensed consolidated results of operations and cash flows for the periods ended September 30, 2022 and 2021.

Reclassifications

Certain amounts previously reflected in the prior year condensed consolidated balance sheet have been reclassified to conform to our September 30, 2022 presentation. The consolidated balance sheet as of December 31, 2021 reflects reclassifying “operating lease right-of-use assets, net” to “other assets, net”, “property tax and insurance deposits” to “restricted cash” and lender reserves from “other assets, net” to “restricted cash.” “Current portion of lease liabilities” and “customer deposits” were combined into “other current liabilities.” “Lease liabilities, net of current portion” has been reclassified as “other liabilities.” The consolidated statements of operations include the consolidation of “stock-based compensation expense” within “general and administrative expenses.” These reclassifications had no effect on the previously reported total assets or total liabilities.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. These estimates include such items related to the accounting for: income taxes, including assessments of probabilities of realization of income tax benefits; impairment of long-lived assets, including applicable cash flow projections, holding periods and fair value evaluations; self-insurance liabilities and expense; stock-based compensation; and depreciation and amortization including determination of estimated useful lives. Actual results could differ from those estimates.

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Significant Accounting Policies and Recently Issued Accounting Standards

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Significant Accounting Policies and Recently Issued Accounting Standards

Significant Accounting Policies and Recently Issued Accounting Standards

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments with original maturities of three months or less at the date of acquisition to be cash equivalents. The Company has deposits in banks that exceed Federal Deposit Insurance Corporation insurance limits. Management believes that credit risk related to these deposits is minimal.

Restricted cash consists of reserve accounts for property insurance, real estate taxes, capital expenditures, and debt service required by certain loan agreements. In addition, restricted cash includes deposits required by certain counterparties as collateral pursuant to letters of credit which must remain so long as the letters of credit are outstanding, which are subject to renewal annually.

The statement of cash flows reflects cash flow changes and balances for cash, cash equivalents and restricted cash on an aggregated basis. The following table reconciles cash, cash equivalents and restricted cash as reported on the condensed consolidated balance sheets to the aggregated amounts presented on the condensed consolidated statements of cash flows (in thousands):

	September 30, 2022		December 31, 2021
Cash and cash equivalents	$	27,046	$	78,691
Restricted cash:
Property tax and insurance reserves	6,215		6,666
Lender reserve	1,500		—
Capital expenditures reserves	1,944		2,637
Deposits pursuant to outstanding letters of credit	4,111		4,882
Total restricted cash	13,770		14,185
Total cash, cash equivalents, and restricted cash	$	40,816	$	92,876

Property and Equipment

Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the assets. At each balance sheet date, the Company reviews the carrying value of its property and equipment to determine if facts and circumstances suggest that they may be impaired or that the depreciation period may need to be changed. The Company considers internal factors such as net operating losses along with external factors relating to each asset, including contract changes, local market developments, and other publicly available information to determine whether impairment indicators exist.

If an indicator of impairment is identified, recoverability of an asset group is assessed by comparing its carrying amount to the estimated future undiscounted net cash flows expected to be generated by the asset group through operation or disposition, calculated utilizing the lowest level of identifiable cash flows. If this comparison indicates that the carrying amount of an asset group is not recoverable, we estimate fair value of the asset group and record an impairment loss when the carrying amount exceeds fair value. There were no impairments of long-lived assets during the three or nine months ended September 30, 2022 or 2021.

In evaluating our long-lived assets for impairment, we undergo continuous evaluations of property level performance and real estate trends, and management makes several estimates and assumptions, including, but not limited to, the projected date of disposition, estimated sales price and future cash flows of each property during our estimated holding period. If our analysis or assumptions regarding the projected cash flows expected to result from the use and eventual disposition of our properties change, we incur additional costs and expenses during the holding period, or our expected hold periods change, we may incur future impairment losses.

Upon the acquisition of new communities accounted for as an acquisition of an asset, we recognize the assets acquired and the liabilities assumed as of the acquisition date, measured at their relative fair values once we have determined the fair value of each of these assets and liabilities. The acquisition date is the date on which we obtain control of the real estate property. The assets acquired and liabilities assumed consist of land, inclusive of associated rights, buildings, assumed debt, and identified intangible assets and liabilities.

Revenue Recognition

Resident revenue primarily consists of fees for basic housing and certain support services provided to residents which are accounted for under GAAP in accordance with lease accounting standards. The Company's residency lease agreements are generally short term in nature, with durations of one year or less, and are typically terminable by either party, under certain circumstances, upon providing 30 days’ notice, unless state law provides otherwise. Resident leases do not contain purchase options or require significant assumptions or judgments. Resident fees are billed monthly in advance. Basic housing and certain support services revenue is recorded when services are rendered and amounts are billable to residents in the period in which the rental and other services are provided. At September 30, 2022 and December 31, 2021, the Company had contract liabilities for deferred fees paid by its residents prior to the month that housing and support services were to be provided totaling approximately $2.6 million and $2.3 million, respectively, which are included in deferred income.

Revenue for certain ancillary services is recognized as services are provided to customers and includes fees for certain services, such as medication management, daily living activities, beautician/barber, laundry, television, guest meals, pets, and parking, which are generally billed monthly in arrears and are included in resident revenue.

Other operating revenue generally includes nonrecurring state grants and is included in resident revenue as earned.

The Company's senior housing communities have residency agreements that generally require the resident to pay a community fee prior to moving into the community which are initially recorded as deferred revenue and subsequently amortized evenly each month over the term of the agreement. At September 30, 2022 and December 31, 2021, the Company had contract liabilities for deferred community fees totaling approximately $0.9 million and $0.8 million, respectively, which are included in deferred income.

The Company has management agreements whereby it manages certain communities on behalf of third party owners under agreements that provide for management fee payments to the Company. The Company has determined that all community management activities are a single performance obligation, which is satisfied over time as the services are rendered. The Company’s estimate of the transaction price for management services also includes the amount of reimbursement due from the owners of the communities for services provided and related costs incurred. Such revenue is included in “managed community reimbursement revenue.” The related costs are included in “managed community reimbursement expense.” Although these costs are funded by the community owners, accounting guidance requires the Company to report these fees on a gross basis as both revenues and expenses.

In April 2022 and January 2021, the Company accepted $9.1 million and $8.7 million of cash, respectively, through grants from the Public Health and Social Services Emergency Fund’s (the “Provider Relief Fund”) Phases 4 and 3 General Distribution, respectively, which was expanded by the CARES Act to provide grants or other funding mechanisms to eligible healthcare providers for healthcare-related or lost revenues attributable to COVID-19. Both the Phase 4 and Phase 3 Provider Relief Funds were recorded as other income in the periods ended September 30, 2022 and 2021, respectively. No grants were received during the three month periods ended September 30, 2022 and September 30, 2021. The CARES Act Provider Relief Funds are grants that do not have to be repaid provided we satisfy the terms and conditions of the CARES Act.

Credit Risk and Allowance for Doubtful Accounts

The Company’s resident accounts receivable are generally due within 30 days after the date billed. Accounts receivable are reported net of an allowance for doubtful accounts of $5.6 million and $4.7 million at September 30, 2022, and December 31, 2021, respectively, and represent the Company’s estimate of the amount that ultimately will be collected. The adequacy of the Company’s allowance for doubtful accounts is reviewed on an ongoing basis, using historical payment trends, write-off experience, analyses of receivable portfolios by payor source and aging of receivables, as well as a review of specific accounts, and adjustments are made to the allowance, as necessary. Credit losses on resident receivables have historically been within management’s estimates, and management believes that the allowance for doubtful accounts adequately provides for expected losses.

Concentration of Credit Risk and Business Risk

Substantially all of our revenues are derived from senior living communities we own and senior living communities that we manage. Senior living operations are particularly sensitive to adverse economic, social and competitive conditions and trends, including the effects of the COVID-19 pandemic, which has adversely affected, and may continue to adversely affect, our business, financial condition, and results of operations.

We have a concentration of owned properties operating in Texas (16), Indiana (12), Ohio (11) and Wisconsin (8).

Self-Insurance Liability Accruals

The Company offers full-time employees an option to participate in its health and dental plans. The Company is self-insured up to certain limits and is insured if claims in excess of these limits are incurred. The cost of employee health and dental benefits, net of employee contributions, is shared between the corporate office and the senior housing communities based on the respective number of plan participants. Funds collected are used to pay the actual program costs, including estimated annual claims, third-party administrative fees, network provider fees, communication costs, and other related administrative costs incurred by the plans. Claims are paid as they are submitted to the Company’s third-party administrator. The Company records a liability for outstanding claims as well as claims that have been incurred but not yet reported. This liability is based on the historical claim reporting lag and payment trends of health and dental insurance claims.

The Company uses a combination of insurance and self-insurance for workers’ compensation. Determining the reserve for workers’ compensation losses and costs that the Company has incurred as of the end of a reporting period involves significant judgment based on projected future events, including among other factors, potential settlements for pending claims, known incidents which may result in claims, estimates of incurred but not yet reported claims, changes in insurance premiums and/or estimated litigation costs. The Company regularly adjusts these estimates to reflect changes in the foregoing factors. However, since this reserve is based on estimates, it is possible the actual expenses incurred may differ from the amounts reserved. Any subsequent changes in estimates are recorded in the period in which they are determined.

Income Taxes

Income taxes are computed using the asset and liability method and current income taxes are recorded based on amounts refundable or payable in the current year. The effective tax rates for the three and nine months ended September 30, 2022 and 2021 differ from the statutory tax rates due to state income taxes, permanent tax differences, and changes in the deferred tax asset valuation allowance.

Deferred income taxes are recorded based on the estimated future tax effects of loss carryforwards and temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the years in which the Company expects those carryforwards and temporary differences to be recovered or settled. Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation. As part of the evaluation, management has evaluated taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies, and future expectations of income. As of December 31, 2021, the Company had a three-year cumulative net operating loss for its U.S. operations and is subject to annual operating loss utilization limits and accordingly, has provided a full valuation allowance on its U.S. and state net deferred tax assets.  The valuation allowance reduces the Company’s net deferred tax assets to the amount that is “more likely than not” (i.e., a greater than 50% likelihood) to be realized. However, in the event that the Company were to ultimately determine that it would be more likely than not that the Company would realize the benefit of deferred tax assets in the future in excess of their net recorded amounts, adjustments to deferred tax assets would increase net income in the period such determination was made. The benefits of the net deferred tax assets might not be realized if actual results differ from expectations.

The Company evaluates uncertain tax positions through consideration of accounting and reporting guidance on criteria, measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide enhanced financial statement comparability among different companies. The Company is required to recognize a tax benefit in its financial statements for an uncertain tax position only if management’s assessment is that such position is “more likely than not” to be upheld on audit based solely on the technical merits of the tax position. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as income tax expense.

Redeemable Preferred Stock

The Company evaluates the classification of redeemable preferred stock based on the instrument’s specific terms and rights. Perpetual convertible preferred stock which can be converted to common stock outside of the Company’s control is classified as mezzanine equity, outside of the stockholders’ equity (deficit) section, and recorded at the maximum liquidation or conversion amount. During the year ended December 31, 2021, the Company issued 41,250 shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”). Dividends on redeemable preferred stock are recorded to retained earnings or additional paid-in capital if retained earnings is an accumulated deficit. If the Board does not declare a dividend in respect of any dividend payment date, the amount of such accrued and unpaid dividend is added to the liquidation preference and compounds quarterly.

During the three months ended September 30, 2022, the Board did not declare a dividend, and accordingly, $1.1 million was added to the liquidation preference, effectively increasing the carrying value of the redeemable preferred stock.

Derivative Instruments

We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with the fluctuations in interest rates. We may also be required to enter into interest rate derivative instruments in compliance with debt agreements. We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments. We do not enter into derivative financial instruments for trading or speculative purposes. We record all derivatives at fair value. As of September 30, 2022, our derivative instruments consisted of an interest rate cap that was not designated as a hedge instrument. Changes in fair value of undesignated hedge instruments are recorded in current period earnings in interest expense. We did not have any derivative instruments as of December 31, 2021.

Net Income (Loss) Per Common Share

Basic income (loss) per share is computed by dividing net income (loss) less distributions to participating securities using the two-class method and preferred stock dividends, including redeemable preferred stock classified as mezzanine equity, divided by the weighted average number of shares of common stock outstanding. Under the two-class method, net income is reduced by the amount of any dividends earned during the period. The remaining earnings (undistributed earnings) are allocated based on the weighted-average shares outstanding of common stock and Series A Preferred Stock (on an if-converted basis) to the extent that each preferred security may share in earnings as if all of the earnings for the period had been distributed. The total earnings allocated to common stock is then divided by the number of outstanding shares to which the earnings are allocated to determine the earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the Series A Preferred Stock have no obligation to fund losses.

Diluted net income (loss) per common share is computed under the two-class method by using the weighted-average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of instruments convertible into common stock, stock options, stock-based compensation awards and warrants. The Company analyzes the potential dilutive effect of convertible instruments under the “if-converted” method, in which it is assumed that the instruments convert into common stock at the beginning of the period or when issued, if later. The Company reports the more dilutive of the approaches (two class or “if-converted”) as its diluted net income per share during the period. Dilutive securities are excluded from the calculation of diluted income per share if the effect would be anti-dilutive.

Segment Reporting

The Company evaluates the performance and allocates resources of its senior living communities based on current operations and market assessments on a property-by-property basis. The Company does not have a concentration of operations geographically or by product or service as its management functions are integrated at the property level. The Company has determined that its operating units meet the criteria in ASC Topic 280, Segment Reporting, to be aggregated into one reporting segment. As such, the Company operates in one segment.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. Current GAAP requires an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. ASU 2016-13 replaces the current incurred loss methodology non-lease revenue credit losses and removes the thresholds that companies apply to measure credit losses on financial statements measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to form credit loss estimates. For smaller reporting companies, ASU 2016-13 is effective for fiscal years and for interim periods within those fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of this guidance will have on its condensed consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”). The provisions of this standard are available for election through December 31, 2022. The Company is currently evaluating its contracts and the optional expedients provided by this update.

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Property and Equipment, net

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment, net

Property and Equipment, net

The following is a summary of our property and equipment, net as of September 30, 2022 and December 31, 2021 (in thousands):

	Asset Lives	September 30, 2022		December 31, 2021
Land		$	47,598	$	46,069
Land improvements	5 to 20 years	19,606		19,146
Buildings and building improvements	10 to 40 years	837,331		814,035
Furniture and equipment	5 to 10 years	56,376		52,602
Automobiles	5 to 7 years	2,730		2,662
Assets under financing leases and leasehold improvements (1)		2,311		2,276
Construction in progress		1,289		392
Total property and equipment		967,241		937,182
Less accumulated depreciation and amortization		(344,488)		(315,983)
Total property and equipment, net		$	622,753	$	621,199

__________

(1) Leasehold improvements are amortized over the shorter of the useful life of the asset or the remaining lease term. Assets under financing leases and leasehold improvements include $0.5 million and $0.3 million of financing lease right-of-use assets as of September 30, 2022 and December 31, 2021, respectively.

On February 1, 2022, the Company completed the acquisition of two senior living communities located in Indiana for a combined purchase price of $12.3 million. The communities consist of a total of 157 independent living units. The acquisition price was funded with cash on hand. The acquired assets did not meet the definition of a business and, as such, the transaction was accounted for as an asset acquisition pursuant to the guidance in subsection 805-50 of Accounting Standards Codification ("ASC") 805, Business Combinations.

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Accrued expenses

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

Accrued expenses

Accrued expenses

The following is a summary of our accrued expenses as of September 30, 2022 and December 31, 2021 (in thousands):

	September 30, 2022		December 31, 2021
Accrued payroll and employee benefits	$	14,355	$	13,592
Accrued interest (1)	8,768		7,311
Accrued taxes	7,779		7,278
Accrued professional fees	2,839		4,102
Accrued other expenses	2,878		4,743
Total accrued expenses	$	36,619	$	37,026

__________

(1) Includes accrued interest related to the remaining two Fannie Mae communities totaling $3.7 million and $2.7 million as of September 30, 2022 and December 31, 2021, respectively. See “Transactions Involving Certain Fannie Mae Loans” disclosure below.

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Notes Payable

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Notes Payable

Notes Payable

Notes payable consists of the following (in thousands):

	Maturity Dates	September 30, 2022		December 31, 2021
Fixed rate mortgage notes payable	2024 to 2045	$	506,137	$	561,006
Fannie Mae mortgage notes payable (1)	2022	31,991		31,991
Variable rate mortgage notes payable (2)	2026 to 2029	129,727		88,711
Notes payable - insurance	2023	1,395		3,483
Notes payable - other	2023	2,121		2,121
Total notes payable		$	671,371	$	687,312
Less: deferred financing costs, net		(5,436)		(4,201)
Total notes payable, net		$	665,935	$	683,111
Less: current portion		(46,137)		(69,769)
Total long-term notes payable, net		$	619,798	$	613,342

The following schedule summarizing our notes payable as of September 30, 2022 (in thousands):

Principal payments due in:
2022 (1)	$	35,813
2023	15,054
2024	152,155
2025	114,285
2026	155,919
Thereafter	198,145
Total notes payable, excluding deferred financing costs	$	671,371

__________

(1) See “Transactions Involving Certain Fannie Mae Loans” disclosure below.

(2) See Note 12 for interest rate cap agreements on variable rate mortgage notes payable.

As of September 30, 2022, our fixed rate mortgage notes bear interest rates ranging from 3.6% to 6.3%. Our variable rate mortgage notes are based on either one-month LIBOR or the Secured Overnight Financing Rate (“SOFR”) plus an applicable margin. As of September 30, 2022, one-month LIBOR and one-month SOFR were 3.2% and 3.0%, respectively, and the applicable margins were 2.14% and 3.50%, respectively.

As of September 30, 2022, we had property and equipment with a net carrying value of $599.2 million that is secured by outstanding notes payable.

2022 Mortgage Refinance

In March 2022, the Company completed the refinancing of certain existing mortgage debt (“Refinance Facility”) for ten of its communities. The Refinance Facility includes an initial term loan of $80 million. In addition, $10 million is available as delayed loans that can be borrowed upon achieving and maintaining certain financial covenant requirements and up to an additional uncommitted $40 million may be available to fund future growth initiatives. In addition, the Company provided a limited payment guaranty (“Limited Payment Guaranty”) of 33%, that reduces to 25% and then to 10%, of the then outstanding balance of the Refinance Facility based upon achieving certain financial covenants and then maintained over the life of the loan. As defined and required in the Limited Payment Guaranty, the Company is required to maintain certain covenants including maintaining a Tangible Net Worth of $150 million and Liquid Assets of at least $13 million which is inclusive of a $1.5 million debt service reserve provided by the Company at the closing of the Refinance Facility. The debt service reserve may be released upon terms described in the “Loan Agreement” and is included in restricted cash.

The Refinance Facility also requires the financial performance of the ten communities to meet certain financial covenants, including a minimum debt service coverage ratio and a minimum debt yield (as defined in the Loan Agreement) with a first

measurement date as of June 30, 2022 and quarterly measurement dates thereafter. As of September 30, 2022, we were in compliance with the financial covenants. We can provide no assurance that any financial covenants will be met in the future.

The Refinancing Facility requires that the Company purchase and maintain an interest rate cap facility during the term of the Refinancing Facility. The Company is in process of obtaining the interest rate cap facility in compliance with the lender’s requirements.

In conjunction with the Refinancing Facility, the Company incurred costs of $2.2 million in March 2022. These costs, net of amortization of $0.3 million, are included in deferred financing costs at September 30, 2022.

The financing transaction generated a loss on refinancing of notes payable of $0.6 million which is included in loss on extinguishment of debt for the nine months ended September 30, 2022.

Transactions Involving Certain Fannie Mae Loans

The Coronavirus Aid, Relief and Economic Security (“CARES”) Act, among other things, permitted borrowers with mortgages from Government Sponsored Enterprises who experienced a financial hardship related to the COVID-19 pandemic to obtain forbearance of their loans for up to 90 days. During 2020, the Company entered into several loan forbearance agreements with the Federal National Mortgage Association (“Fannie Mae”). In July 2020, the Company elected not to pay $3.8 million on the loans for 18 properties as of that date as it initiated a process intended to transfer the operations and ownership of such properties to Fannie Mae.  Therefore, the Company was in default on such loans. 

As a result of the events of default and receivership order obtained by Fannie Mae, the Company discontinued recognizing revenues and expenses related to the 18 properties effective August 1, 2020, which was the date of default.  In addition, the Company concluded that it was no longer entitled to receive any existing accounts receivable or revenue related to the properties, that all amounts held in escrow by Fannie Mae were forfeited, and that the Company no longer had control of the properties in accordance with GAAP. Accordingly, the Company derecognized the net carrying value of the properties and related assets from the financial statements and recorded a loss from the forbearance. The Company continues to recognize the related debt and liabilities until the debts are formally released. When these debts are formally released, the net carrying value of the debts is derecognized and a gain on extinguishment of debt is recognized. During the three and nine months ended September 30, 2021, Fannie Mae completed the transition of legal ownership of five and fourteen, cumulatively, of the Company's properties, respectively, and the Company recorded a gain on extinguishment of this debt for such periods of $54.1 million and $168.3 million, respectively.

As of September 30, 2022, two properties remain for which the legal ownership has not been transferred back to Fannie Mae. At both September 30, 2022 and December 31, 2021, the Company included $31.8 million in outstanding debt in current portion of notes payable, net of deferred financing costs of $0.2 million. As September 30, 2022 and December 31, 2021, accrued interest related to the remaining two properties was $3.7 million and $2.7 million, respectively. As of September 30, 2022 and December 31, 2021, the Company did not manage these properties (or any properties) on behalf of Fannie Mae. Except for the non-compliance with Fannie Mae mortgages for the two remaining properties expected to transition back to Fannie Mae, as noted above, the Company was in compliance with all other aspects of its outstanding indebtedness at September 30, 2022.

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Redeemable Preferred Stock

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Redeemable Preferred Stock

Redeemable Preferred Stock

In November 2021, the Company issued 41,250 shares of Series A Preferred Stock. The Series A Preferred Stock is convertible outside of the Company's control and in accordance with GAAP is classified as mezzanine equity, outside the stockholders’ equity (deficit) section, on our condensed consolidated balance sheets. The Series A Preferred Stock was initially recorded at fair value upon issuance in 2021, net of issuance costs. The holders of Series A Preferred Stock are entitled to vote with the holders of common stock on all matters submitted to a vote of stockholders of the Company. It is deemed probable that the Series A Preferred Stock could be redeemed for cash, and as such, the Series A Preferred Stock is required to be remeasured and adjusted to its maximum redemption value at the end of each reporting period. However, to the extent that the maximum redemption value of the Series A Preferred Stock does not exceed the fair value of the shares at the date of issuance, the shares are not adjusted below the fair value at the date of issuance. As of September 30, 2022 and December 31, 2021, the Series A Preferred Stock is carried at the maximum redemption value. The Series A Preferred Stock does not have a maturity date and therefore is considered as perpetual.

The Series A Preferred Stock has an 11% annual dividend calculated on the original investment of approximately $41.3 million accrued quarterly in arrears and compounded. Dividends are cumulative, and any declaration of dividends is at the discretion of the Company’s Board of Directors. If the Board does not declare a dividend in respect of any dividend payment date, the

amount of such accrued and unpaid dividend is added to the liquidation preference and compounds quarterly thereafter. During the three months ended September 30, 2022, the Board did not declare a dividend, and accordingly, $1.1 million was added to the liquidation preference of the Series A Preferred Stock, effectively increasing the carrying value of the Series A Preferred Stock. On June 8, 2022, the Company declared a $1.1 million cash dividend on the Series A Preferred Stock, which was paid in June 2022. On March 31, 2022, the Company declared a $1.1 million cash dividend on the Series A Preferred Stock which was included in accounts payable and accrued expense as of March 31, 2022, and paid in April 2022. There were no corresponding amounts for the three or nine months ended September 30, 2021, as there were no shares of Series A Preferred Stock outstanding during such periods.

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Revenue

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Revenue for the three and nine months ended September 30, 2022 and 2021 is comprised of the following components (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Housing and support services	$	51,703	$	48,249	$	151,854	$	138,709
Community fees	481		403		1,410		1,228
Ancillary services	301		316		838		882
Other operating revenue (1)	—		—		1,213		—
Resident revenue	52,485		48,968		155,315		140,819
Management fees	608		1,029		1,836		2,978
Managed community reimbursement revenue	7,694		7,927		21,757		33,317
Total revenues	$	60,787	$	57,924	$	178,908	$	177,114

__________

(1) Other operating revenue consists of Provider Relief Funds received from state departments due to financial distress impacts of COVID-19. The Company intends to pursue additional funding that may become available in the future, but there is no guarantee of qualifying for, or receiving, any additional relief funds in the future.

Community fees, ancillary services, management fees, and community reimbursement revenue represent revenue from contracts with customers in accordance with GAAP.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

During the three months ended September 30, 2022, the Company granted restricted stock units and restricted stock awards under the Company’s 2019 Omnibus Incentive Plan. Grants of stock units and awards were as follows:

(in thousands, except weighted average amount)	Restricted Stock Unit and Stock Award Grants	Weighted Average Grant Date Fair Value Per Share	Total Grant Date Fair Value
Three months ended September 30, 2022	30	20.39	$	246

The Company recognized $(0.6) million and $0.6 million in stock-based compensation expense for the three months ended September 30, 2022 and 2021, respectively. The negative expense for the three months ended September 30, 2022 is due to forfeiture credits as a result of executive personnel changes in September 2022. The Company recognized $3.5 million and $1.3 million in stock-based compensation expense for the nine months ended September 30, 2022 and 2021, respectively.

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Commitments and Contingencies	9 Months Ended
	Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and ContingenciesAs of September 30, 2022, we had contractual commitments of $7.0 million related to future renovations and technology enhancements to our communities. We expect these amounts to be substantially expended during 2023.The Company has claims incurred in the normal course of its business. Most of these claims are believed by management to be covered by insurance, subject to deductibles, normal reservations of rights by the insurance companies and possibly subject to certain exclusions in the applicable insurance policies. Whether or not covered by insurance, these claims, in the opinion of management, based on advice of legal counsel, should not have a material impact on the condensed consolidated financial statements of the Company.

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Related Party Transactions	9 Months Ended
	Sep. 30, 2022
Related Party Transactions [Abstract]
Related Party Transactions	Related Party TransactionsAs of September 30, 2022, affiliates of Conversant Capital LLC owned approximately 57.9% of our outstanding shares of common stock (inclusive of common stock issuable upon conversion of outstanding Series A Preferred Stock and outstanding warrants). Series A Preferred Stock dividends recognized in additional paid-in capital were $1.1 million and $3.4 million for the three and nine months ended September 30, 2022, respectively. The $1.1 million recognized for the three months ended September 30, 2022 was not paid in cash, but was instead added to the liquidation preference of the Series A Preferred Stock, effectively increasing the carrying value of the Series A Preferred Stock. Dividends of $3.0 million were paid on the Series A Preferred Stock during the nine months ended September 30, 2022, which included $2.3 million of dividends declared in 2022, and $0.7 million of dividends declared in 2021. There were no corresponding amounts for the three or nine months ended September 30, 2021 as there were no shares of Series A Preferred Stock outstanding during such period.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company uses interest rate cap arrangements with financial institutions to manage exposure to interest rate changes for loans that utilize floating interest rates. As of September 30, 2022, we had an interest rate cap with an aggregate notional value of $50.3 million that was entered into on March 1, 2022. The fair value of this interest rate cap as of September 30, 2022 was $0.5 million (See Note 12, Derivatives and Hedging), and was determined using significant observable inputs (Level 2), including quantitative models that utilize multiple market inputs to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

Financial Instruments Not Reported at Fair Value

For those financial instruments not carried at fair value, the carrying amount and estimated fair values of our financial assets and liabilities were as follows at September 30, 2022 and December 31, 2021 (in thousands):

	September 30, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Notes payable, excluding deferred financing costs	$	671,371	$	585,731	$	687,312	$	636,836

We believe the carrying amount of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued liabilities approximate fair value due to their short-term nature.

The fair value of notes payable, excluding deferred financing costs, is estimated using discounted cash flow analysis, based on current incremental borrowing rates for similar types of borrowing arrangements, which represent Level 2 inputs as defined in ASC 820, Fair Value Measurement.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company may adjust the carrying amount of certain non-financial assets to fair value on a non-recurring basis when they are impaired. During the year ended December, 31, 2021, the Company recorded non-cash impairment charges of $6.5 million to property and equipment, net. The fair value of the impaired assets was $14.0 million at December 31, 2021. The fair value of the property and equipment, net was primarily determined utilizing an income capitalization approach considering stabilized facility operating income and market capitalization rates of 8.25%. There were no impairment losses for the three and nine months ended September 30, 2022

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Derivatives and Hedging

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging

Derivatives and HedgingThe Company uses derivatives as part of our overall strategy to manage our exposure to market risks associated with the fluctuations in interest rates. We may also be required to enter into interest rate derivative instruments in compliance with debt agreements. We do not enter into derivative financial instruments for trading or speculative purposes.

On March 1, 2022, the Company entered into an interest rate cap transaction for an aggregate notional amount of $50.3 million to reduce exposure to interest rate fluctuations associated with a portion of our variable mortgage notes payable. The interest rate cap agreement has a 24-month term and effectively caps LIBOR at 4.00% from March 1, 2022 through March 1, 2024 with respect to the portion of our floating rate indebtedness. In the event LIBOR is less than the capped rate, we will pay interest at the lower LIBOR rate. In the event LIBOR is higher than the capped rate, we will pay interest at the capped rate of 4.00%. The interest rate cap is not designated as a cash flow hedge under ASC 815-20, Derivatives - Hedging, therefore all changes in the fair value of the instrument are captured as a component of interest expense in the condensed consolidated statements of operations.

The following table presents the fair values of derivative assets and liabilities in the condensed consolidated balance sheets (in thousands):

	September 30, 2022
	Derivative Asset				Derivative Liability
	Notional Amount		Fair Value		Notional Amount		Fair Value
Interest rate cap	$	50,260	$	464	$	—	$	—
Total derivative			$	464			$	—

The following table presents the effect of the derivative instrument on the condensed consolidated statements of operations (in thousands):

	Three months ended September 30,		Nine months ended September 30,
	2022	2021	2022	2021
Derivative not designated as hedge
Interest rate cap
Gain on derivative not designated as hedge included in interest expense	251	—	206	—

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Subsequent Events	9 Months Ended
	Sep. 30, 2022
Subsequent Events [Abstract]
Subsequent Events	Subsequent Event On August 9, 2022, the Company received a notice of intent from Welltower Victory II TRS LLC (“Welltower”) to transition management of its four properties that were under an interim management agreement. The transition was completed on October 20, 2022.

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Significant Accounting Policies and Recently Issued Accounting Standards (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Cash, Cash Equivalents, and Restricted Cash

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments with original maturities of three months or less at the date of acquisition to be cash equivalents. The Company has deposits in banks that exceed Federal Deposit Insurance Corporation insurance limits. Management believes that credit risk related to these deposits is minimal.

Restricted cash consists of reserve accounts for property insurance, real estate taxes, capital expenditures, and debt service required by certain loan agreements. In addition, restricted cash includes deposits required by certain counterparties as collateral pursuant to letters of credit which must remain so long as the letters of credit are outstanding, which are subject to renewal annually.

The statement of cash flows reflects cash flow changes and balances for cash, cash equivalents and restricted cash on an aggregated basis. The following table reconciles cash, cash equivalents and restricted cash as reported on the condensed consolidated balance sheets to the aggregated amounts presented on the condensed consolidated statements of cash flows (in thousands):

	September 30, 2022		December 31, 2021
Cash and cash equivalents	$	27,046	$	78,691
Restricted cash:
Property tax and insurance reserves	6,215		6,666
Lender reserve	1,500		—
Capital expenditures reserves	1,944		2,637
Deposits pursuant to outstanding letters of credit	4,111		4,882
Total restricted cash	13,770		14,185
Total cash, cash equivalents, and restricted cash	$	40,816	$	92,876

Property and Equipment

Property and Equipment

Property and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the assets. At each balance sheet date, the Company reviews the carrying value of its property and equipment to determine if facts and circumstances suggest that they may be impaired or that the depreciation period may need to be changed. The Company considers internal factors such as net operating losses along with external factors relating to each asset, including contract changes, local market developments, and other publicly available information to determine whether impairment indicators exist.

If an indicator of impairment is identified, recoverability of an asset group is assessed by comparing its carrying amount to the estimated future undiscounted net cash flows expected to be generated by the asset group through operation or disposition, calculated utilizing the lowest level of identifiable cash flows. If this comparison indicates that the carrying amount of an asset group is not recoverable, we estimate fair value of the asset group and record an impairment loss when the carrying amount exceeds fair value. There were no impairments of long-lived assets during the three or nine months ended September 30, 2022 or 2021.

In evaluating our long-lived assets for impairment, we undergo continuous evaluations of property level performance and real estate trends, and management makes several estimates and assumptions, including, but not limited to, the projected date of disposition, estimated sales price and future cash flows of each property during our estimated holding period. If our analysis or assumptions regarding the projected cash flows expected to result from the use and eventual disposition of our properties change, we incur additional costs and expenses during the holding period, or our expected hold periods change, we may incur future impairment losses.

Upon the acquisition of new communities accounted for as an acquisition of an asset, we recognize the assets acquired and the liabilities assumed as of the acquisition date, measured at their relative fair values once we have determined the fair value of each of these assets and liabilities. The acquisition date is the date on which we obtain control of the real estate property. The assets acquired and liabilities assumed consist of land, inclusive of associated rights, buildings, assumed debt, and identified intangible assets and liabilities.

Revenue Recognition

Revenue Recognition

Resident revenue primarily consists of fees for basic housing and certain support services provided to residents which are accounted for under GAAP in accordance with lease accounting standards. The Company's residency lease agreements are generally short term in nature, with durations of one year or less, and are typically terminable by either party, under certain circumstances, upon providing 30 days’ notice, unless state law provides otherwise. Resident leases do not contain purchase options or require significant assumptions or judgments. Resident fees are billed monthly in advance. Basic housing and certain support services revenue is recorded when services are rendered and amounts are billable to residents in the period in which the rental and other services are provided. At September 30, 2022 and December 31, 2021, the Company had contract liabilities for deferred fees paid by its residents prior to the month that housing and support services were to be provided totaling approximately $2.6 million and $2.3 million, respectively, which are included in deferred income.

Revenue for certain ancillary services is recognized as services are provided to customers and includes fees for certain services, such as medication management, daily living activities, beautician/barber, laundry, television, guest meals, pets, and parking, which are generally billed monthly in arrears and are included in resident revenue.

Other operating revenue generally includes nonrecurring state grants and is included in resident revenue as earned.

The Company's senior housing communities have residency agreements that generally require the resident to pay a community fee prior to moving into the community which are initially recorded as deferred revenue and subsequently amortized evenly each month over the term of the agreement. At September 30, 2022 and December 31, 2021, the Company had contract liabilities for deferred community fees totaling approximately $0.9 million and $0.8 million, respectively, which are included in deferred income.

The Company has management agreements whereby it manages certain communities on behalf of third party owners under agreements that provide for management fee payments to the Company. The Company has determined that all community management activities are a single performance obligation, which is satisfied over time as the services are rendered. The Company’s estimate of the transaction price for management services also includes the amount of reimbursement due from the owners of the communities for services provided and related costs incurred. Such revenue is included in “managed community reimbursement revenue.” The related costs are included in “managed community reimbursement expense.” Although these costs are funded by the community owners, accounting guidance requires the Company to report these fees on a gross basis as both revenues and expenses.

In April 2022 and January 2021, the Company accepted $9.1 million and $8.7 million of cash, respectively, through grants from the Public Health and Social Services Emergency Fund’s (the “Provider Relief Fund”) Phases 4 and 3 General Distribution, respectively, which was expanded by the CARES Act to provide grants or other funding mechanisms to eligible healthcare providers for healthcare-related or lost revenues attributable to COVID-19. Both the Phase 4 and Phase 3 Provider Relief Funds were recorded as other income in the periods ended September 30, 2022 and 2021, respectively. No grants were received during the three month periods ended September 30, 2022 and September 30, 2021. The CARES Act Provider Relief Funds are grants that do not have to be repaid provided we satisfy the terms and conditions of the CARES Act.

Credit Risk and Allowance for Doubtful Accounts

Credit Risk and Allowance for Doubtful Accounts

The Company’s resident accounts receivable are generally due within 30 days after the date billed. Accounts receivable are reported net of an allowance for doubtful accounts of $5.6 million and $4.7 million at September 30, 2022, and December 31, 2021, respectively, and represent the Company’s estimate of the amount that ultimately will be collected. The adequacy of the Company’s allowance for doubtful accounts is reviewed on an ongoing basis, using historical payment trends, write-off experience, analyses of receivable portfolios by payor source and aging of receivables, as well as a review of specific accounts, and adjustments are made to the allowance, as necessary. Credit losses on resident receivables have historically been within management’s estimates, and management believes that the allowance for doubtful accounts adequately provides for expected losses.

Concentration of Credit Risk and Business Risk

Concentration of Credit Risk and Business Risk

Substantially all of our revenues are derived from senior living communities we own and senior living communities that we manage. Senior living operations are particularly sensitive to adverse economic, social and competitive conditions and trends, including the effects of the COVID-19 pandemic, which has adversely affected, and may continue to adversely affect, our business, financial condition, and results of operations.

We have a concentration of owned properties operating in Texas (16), Indiana (12), Ohio (11) and Wisconsin (8).

Self-Insurance Liability Accruals

Self-Insurance Liability Accruals

The Company offers full-time employees an option to participate in its health and dental plans. The Company is self-insured up to certain limits and is insured if claims in excess of these limits are incurred. The cost of employee health and dental benefits, net of employee contributions, is shared between the corporate office and the senior housing communities based on the respective number of plan participants. Funds collected are used to pay the actual program costs, including estimated annual claims, third-party administrative fees, network provider fees, communication costs, and other related administrative costs incurred by the plans. Claims are paid as they are submitted to the Company’s third-party administrator. The Company records a liability for outstanding claims as well as claims that have been incurred but not yet reported. This liability is based on the historical claim reporting lag and payment trends of health and dental insurance claims.

The Company uses a combination of insurance and self-insurance for workers’ compensation. Determining the reserve for workers’ compensation losses and costs that the Company has incurred as of the end of a reporting period involves significant judgment based on projected future events, including among other factors, potential settlements for pending claims, known incidents which may result in claims, estimates of incurred but not yet reported claims, changes in insurance premiums and/or estimated litigation costs. The Company regularly adjusts these estimates to reflect changes in the foregoing factors. However, since this reserve is based on estimates, it is possible the actual expenses incurred may differ from the amounts reserved. Any subsequent changes in estimates are recorded in the period in which they are determined.

Income Taxes

Income Taxes

Income taxes are computed using the asset and liability method and current income taxes are recorded based on amounts refundable or payable in the current year. The effective tax rates for the three and nine months ended September 30, 2022 and 2021 differ from the statutory tax rates due to state income taxes, permanent tax differences, and changes in the deferred tax asset valuation allowance.

Deferred income taxes are recorded based on the estimated future tax effects of loss carryforwards and temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the years in which the Company expects those carryforwards and temporary differences to be recovered or settled. Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation. As part of the evaluation, management has evaluated taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies, and future expectations of income. As of December 31, 2021, the Company had a three-year cumulative net operating loss for its U.S. operations and is subject to annual operating loss utilization limits and accordingly, has provided a full valuation allowance on its U.S. and state net deferred tax assets.  The valuation allowance reduces the Company’s net deferred tax assets to the amount that is “more likely than not” (i.e., a greater than 50% likelihood) to be realized. However, in the event that the Company were to ultimately determine that it would be more likely than not that the Company would realize the benefit of deferred tax assets in the future in excess of their net recorded amounts, adjustments to deferred tax assets would increase net income in the period such determination was made. The benefits of the net deferred tax assets might not be realized if actual results differ from expectations.

The Company evaluates uncertain tax positions through consideration of accounting and reporting guidance on criteria, measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide enhanced financial statement comparability among different companies. The Company is required to recognize a tax benefit in its financial statements for an uncertain tax position only if management’s assessment is that such position is “more likely than not” to be upheld on audit based solely on the technical merits of the tax position. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as income tax expense.

Redeemable Preferred Stock

Redeemable Preferred Stock

The Company evaluates the classification of redeemable preferred stock based on the instrument’s specific terms and rights. Perpetual convertible preferred stock which can be converted to common stock outside of the Company’s control is classified as mezzanine equity, outside of the stockholders’ equity (deficit) section, and recorded at the maximum liquidation or conversion amount. During the year ended December 31, 2021, the Company issued 41,250 shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”). Dividends on redeemable preferred stock are recorded to retained earnings or additional paid-in capital if retained earnings is an accumulated deficit. If the Board does not declare a dividend in respect of any dividend payment date, the amount of such accrued and unpaid dividend is added to the liquidation preference and compounds quarterly.

During the three months ended September 30, 2022, the Board did not declare a dividend, and accordingly, $1.1 million was added to the liquidation preference, effectively increasing the carrying value of the redeemable preferred stock.

Derivative Instruments

Derivative Instruments

We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with the fluctuations in interest rates. We may also be required to enter into interest rate derivative instruments in compliance with debt agreements. We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments. We do not enter into derivative financial instruments for trading or speculative purposes. We record all derivatives at fair value. As of September 30, 2022, our derivative instruments consisted of an interest rate cap that was not designated as a hedge instrument. Changes in fair value of undesignated hedge instruments are recorded in current period earnings in interest expense. We did not have any derivative instruments as of December 31, 2021.

Net Income (Loss) Per Common Share

Net Income (Loss) Per Common Share

Basic income (loss) per share is computed by dividing net income (loss) less distributions to participating securities using the two-class method and preferred stock dividends, including redeemable preferred stock classified as mezzanine equity, divided by the weighted average number of shares of common stock outstanding. Under the two-class method, net income is reduced by the amount of any dividends earned during the period. The remaining earnings (undistributed earnings) are allocated based on the weighted-average shares outstanding of common stock and Series A Preferred Stock (on an if-converted basis) to the extent that each preferred security may share in earnings as if all of the earnings for the period had been distributed. The total earnings allocated to common stock is then divided by the number of outstanding shares to which the earnings are allocated to determine the earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the Series A Preferred Stock have no obligation to fund losses.

Diluted net income (loss) per common share is computed under the two-class method by using the weighted-average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of instruments convertible into common stock, stock options, stock-based compensation awards and warrants. The Company analyzes the potential dilutive effect of convertible instruments under the “if-converted” method, in which it is assumed that the instruments convert into common stock at the beginning of the period or when issued, if later. The Company reports the more dilutive of the approaches (two class or “if-converted”) as its diluted net income per share during the period. Dilutive securities are excluded from the calculation of diluted income per share if the effect would be anti-dilutive.

Segment Reporting

Segment Reporting

The Company evaluates the performance and allocates resources of its senior living communities based on current operations and market assessments on a property-by-property basis. The Company does not have a concentration of operations geographically or by product or service as its management functions are integrated at the property level. The Company has determined that its operating units meet the criteria in ASC Topic 280, Segment Reporting, to be aggregated into one reporting segment. As such, the Company operates in one segment.

Recently Issued Accounting Pronouncements Not Yet Adopted

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. Current GAAP requires an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. ASU 2016-13 replaces the current incurred loss methodology non-lease revenue credit losses and removes the thresholds that companies apply to measure credit losses on financial statements measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to form credit loss estimates. For smaller reporting companies, ASU 2016-13 is effective for fiscal years and for interim periods within those fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of this guidance will have on its condensed consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on contracts, hedging relationships, and other transactions that reference the London Inter-Bank Offered Rate (“LIBOR”). The provisions of this standard are available for election through December 31, 2022. The Company is currently evaluating its contracts and the optional expedients provided by this update.

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Significant Accounting Policies and Recently Issued Accounting Standards (Tables)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Schedule of Cash and Cash Equivalents and Restricted Cash

The following table reconciles cash, cash equivalents and restricted cash as reported on the condensed consolidated balance sheets to the aggregated amounts presented on the condensed consolidated statements of cash flows (in thousands):

	September 30, 2022		December 31, 2021
Cash and cash equivalents	$	27,046	$	78,691
Restricted cash:
Property tax and insurance reserves	6,215		6,666
Lender reserve	1,500		—
Capital expenditures reserves	1,944		2,637
Deposits pursuant to outstanding letters of credit	4,111		4,882
Total restricted cash	13,770		14,185
Total cash, cash equivalents, and restricted cash	$	40,816	$	92,876

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Property and Equipment, net (Tables)

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Schedule of Net Property and Equipment and Leasehold Improvements

The following is a summary of our property and equipment, net as of September 30, 2022 and December 31, 2021 (in thousands):

	Asset Lives	September 30, 2022		December 31, 2021
Land		$	47,598	$	46,069
Land improvements	5 to 20 years	19,606		19,146
Buildings and building improvements	10 to 40 years	837,331		814,035
Furniture and equipment	5 to 10 years	56,376		52,602
Automobiles	5 to 7 years	2,730		2,662
Assets under financing leases and leasehold improvements (1)		2,311		2,276
Construction in progress		1,289		392
Total property and equipment		967,241		937,182
Less accumulated depreciation and amortization		(344,488)		(315,983)
Total property and equipment, net		$	622,753	$	621,199

__________

(1) Leasehold improvements are amortized over the shorter of the useful life of the asset or the remaining lease term. Assets under financing leases and leasehold improvements include $0.5 million and $0.3 million of financing lease right-of-use assets as of September 30, 2022 and December 31, 2021, respectively.

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Accrued expenses (Tables)

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

Schedule of accounts payable and accrued liabilities

The following is a summary of our accrued expenses as of September 30, 2022 and December 31, 2021 (in thousands):

	September 30, 2022		December 31, 2021
Accrued payroll and employee benefits	$	14,355	$	13,592
Accrued interest (1)	8,768		7,311
Accrued taxes	7,779		7,278
Accrued professional fees	2,839		4,102
Accrued other expenses	2,878		4,743
Total accrued expenses	$	36,619	$	37,026

__________

(1) Includes accrued interest related to the remaining two Fannie Mae communities totaling $3.7 million and $2.7 million as of September 30, 2022 and December 31, 2021, respectively. See “Transactions Involving Certain Fannie Mae Loans” disclosure below.

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Notes Payable (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of Notes Payable

Notes payable consists of the following (in thousands):

	Maturity Dates	September 30, 2022		December 31, 2021
Fixed rate mortgage notes payable	2024 to 2045	$	506,137	$	561,006
Fannie Mae mortgage notes payable (1)	2022	31,991		31,991
Variable rate mortgage notes payable (2)	2026 to 2029	129,727		88,711
Notes payable - insurance	2023	1,395		3,483
Notes payable - other	2023	2,121		2,121
Total notes payable		$	671,371	$	687,312
Less: deferred financing costs, net		(5,436)		(4,201)
Total notes payable, net		$	665,935	$	683,111
Less: current portion		(46,137)		(69,769)
Total long-term notes payable, net		$	619,798	$	613,342

Summary of Aggregate Scheduled Maturities of Notes Payable

The following schedule summarizing our notes payable as of September 30, 2022 (in thousands):

Principal payments due in:
2022 (1)	$	35,813
2023	15,054
2024	152,155
2025	114,285
2026	155,919
Thereafter	198,145
Total notes payable, excluding deferred financing costs	$	671,371

__________

(1) See “Transactions Involving Certain Fannie Mae Loans” disclosure below.

(2) See Note 12 for interest rate cap agreements on variable rate mortgage notes payable.

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Revenue (Tables)

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Revenue for the three and nine months ended September 30, 2022 and 2021 is comprised of the following components (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Housing and support services	$	51,703	$	48,249	$	151,854	$	138,709
Community fees	481		403		1,410		1,228
Ancillary services	301		316		838		882
Other operating revenue (1)	—		—		1,213		—
Resident revenue	52,485		48,968		155,315		140,819
Management fees	608		1,029		1,836		2,978
Managed community reimbursement revenue	7,694		7,927		21,757		33,317
Total revenues	$	60,787	$	57,924	$	178,908	$	177,114

__________

(1) Other operating revenue consists of Provider Relief Funds received from state departments due to financial distress impacts of COVID-19. The Company intends to pursue additional funding that may become available in the future, but there is no guarantee of qualifying for, or receiving, any additional relief funds in the future.

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Grants of Market-Based Restricted Stock Awards

Grants of stock units and awards were as follows:

(in thousands, except weighted average amount)	Restricted Stock Unit and Stock Award Grants	Weighted Average Grant Date Fair Value Per Share	Total Grant Date Fair Value
Three months ended September 30, 2022	30	20.39	$	246

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Carrying Amounts and Fair Values of Financial Instruments

For those financial instruments not carried at fair value, the carrying amount and estimated fair values of our financial assets and liabilities were as follows at September 30, 2022 and December 31, 2021 (in thousands):

	September 30, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Notes payable, excluding deferred financing costs	$	671,371	$	585,731	$	687,312	$	636,836

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Derivatives and Hedging (Tables)

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in the Balance Sheets

The following table presents the fair values of derivative assets and liabilities in the condensed consolidated balance sheets (in thousands):

	September 30, 2022
	Derivative Asset				Derivative Liability
	Notional Amount		Fair Value		Notional Amount		Fair Value
Interest rate cap	$	50,260	$	464	$	—	$	—
Total derivative			$	464			$	—

Schedule of Derivative Instruments in the Statement of Operations

The following table presents the effect of the derivative instrument on the condensed consolidated statements of operations (in thousands):

	Three months ended September 30,		Nine months ended September 30,
	2022	2021	2022	2021
Derivative not designated as hedge
Interest rate cap
Gain on derivative not designated as hedge included in interest expense	251	—	206	—

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Basis of Presentation (Details)	Sep. 30, 2022 state resident seniorHousingCommunity
Real Estate Properties [Line Items]
Number of senior housing communities	76
Number of states with senior housing communities | state	18
Aggregate capacity of residents in senior housing communities | resident	8,000
Managed On Behalf Of Third Parties
Real Estate Properties [Line Items]
Number of senior housing communities	14
Wholly Owned Properties
Real Estate Properties [Line Items]
Number of senior housing communities	62

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Significant Accounting Policies and Recently Issued Accounting Standards - Schedule of Cash and Cash Equivalents and Restricted Cash (Detail) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Dec. 31, 2020
Restricted Cash and Cash Equivalents Items [Line Items]
Cash and cash equivalents	$ 27,046	$ 78,691
Restricted cash	13,770	14,185
Total cash, cash equivalents, and restricted cash	40,816	92,876	$ 22,827	$ 30,504
Property tax and insurance reserves
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	6,215	6,666
Lender reserve
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	1,500	0
Capital expenditures reserves
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	1,944	2,637
Deposits pursuant to outstanding letters of credit
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	$ 4,111	$ 4,882

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Significant Accounting Policies and Recently Issued Accounting Standards - Narrative (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($) property seniorHousingCommunity shares	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) property seniorHousingCommunity segment shares	Sep. 30, 2021 USD ($)	Apr. 30, 2022 USD ($)	Dec. 31, 2021 USD ($) shares	Jan. 31, 2021 USD ($)
Accounting Policies [Line Items]
Impairment of long-lived assets	$ 0	$ 0	$ 0	$ 0
Grants receivable	0	$ 0	$ 0	$ 0	$ 9,100,000		$ 8,700,000
Resident receivables due period			30 days
Allowance for doubtful accounts	$ 5,600,000		$ 5,600,000			$ 4,700,000
Number of senior housing communities | seniorHousingCommunity	76		76
Preferred stock, shares issued (in shares) | shares	0		0			0
Number of operating segments | segment			1
Properties | Geographic Concentration Risk | Texas
Accounting Policies [Line Items]
Number of senior housing communities | property	16		16
Properties | Geographic Concentration Risk | Indiana
Accounting Policies [Line Items]
Number of senior housing communities | property	12		12
Properties | Geographic Concentration Risk | Ohio
Accounting Policies [Line Items]
Number of senior housing communities | property	11		11
Properties | Geographic Concentration Risk | Wisconsin
Accounting Policies [Line Items]
Number of senior housing communities | property	8		8
Convertible Preferred Stock
Accounting Policies [Line Items]
Preferred stock, shares issued (in shares) | shares						41,250
Increase in carrying amount of redeemable preferred stock	$ 1,100,000
Housing and support services
Accounting Policies [Line Items]
Contract liabilities for deferred fees paid	2,600,000		$ 2,600,000			$ 2,300,000
Community fees
Accounting Policies [Line Items]
Contract liabilities for deferred fees paid	$ 900,000		$ 900,000			$ 800,000

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Property and Equipment, net - Schedule of Net Property and Equipment and Leasehold Improvements (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 967,241	$ 937,182
Less accumulated depreciation and amortization	(344,488)	(315,983)
Total property and equipment, net	$ 622,753	$ 621,199
Finance lease, right-of-use asset, statement of financial position	Total property and equipment, net	Total property and equipment, net
Finance lease, right-of-use asset, after accumulated amortization	$ 500	$ 300
Land
Property, Plant and Equipment [Line Items]
Total property and equipment	47,598	46,069
Land improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 19,606	19,146
Land improvements | Minimum
Property, Plant and Equipment [Line Items]
Asset Lives	5 years
Land improvements | Maximum
Property, Plant and Equipment [Line Items]
Asset Lives	20 years
Buildings and building improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 837,331	814,035
Buildings and building improvements | Minimum
Property, Plant and Equipment [Line Items]
Asset Lives	10 years
Buildings and building improvements | Maximum
Property, Plant and Equipment [Line Items]
Asset Lives	40 years
Furniture and equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 56,376	52,602
Furniture and equipment | Minimum
Property, Plant and Equipment [Line Items]
Asset Lives	5 years
Furniture and equipment | Maximum
Property, Plant and Equipment [Line Items]
Asset Lives	10 years
Automobiles
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 2,730	2,662
Automobiles | Minimum
Property, Plant and Equipment [Line Items]
Asset Lives	5 years
Automobiles | Maximum
Property, Plant and Equipment [Line Items]
Asset Lives	7 years
Assets under financing leases and leasehold improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 2,311	2,276
Construction in progress
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 1,289	$ 392

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Property and Equipment, net - Narrative (Details) - Senior Living Communities Located in Indiana $ in Millions	Feb. 01, 2022 USD ($) seniorHousingCommunity
Property, Plant and Equipment [Line Items]
Number of assets acquired	2
Asset acquisition, consideration transferred | $	$ 12.3
Number of living units in a housing community sold	157

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Accrued expenses - Schedule of accounts payable and accrued liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Accrued payroll and employee benefits	$ 14,355	$ 13,592
Accrued interest	8,768	7,311
Accrued taxes	7,779	7,278
Accrued professional fees	2,839	4,102
Accrued other expenses	2,878	4,743
Total accrued expenses	36,619	37,026
Forbearance Agreements
Debt Instrument [Line Items]
Accrued interest	$ 3,700	$ 2,700

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Notes Payable - Schedule of Notes Payable (Detail) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Total notes payable	$ 671,371	$ 687,312
Less: deferred financing costs, net	(5,436)	(4,201)
Total notes payable, net	665,935	683,111
Less: current portion	(46,137)	(69,769)
Total long-term notes payable, net	619,798	613,342
Fixed rate mortgage notes payable
Debt Instrument [Line Items]
Total notes payable	506,137	561,006
Fannie Mae Loan
Debt Instrument [Line Items]
Total notes payable	31,991	31,991
Variable rate mortgage notes payable (2)
Debt Instrument [Line Items]
Total notes payable	129,727	88,711
Notes payable - insurance
Debt Instrument [Line Items]
Total notes payable	1,395	3,483
Notes payable - other
Debt Instrument [Line Items]
Total notes payable	$ 2,121	$ 2,121

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Notes Payable - Schedule of Aggregate Scheduled Maturities of Notes Payable (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
2022	$ 35,813
2023	15,054
2024	152,155
2025	114,285
2026	155,919
Thereafter	198,145
Total notes payable, excluding deferred financing costs	$ 671,371	$ 687,312

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Notes Payable - Narrative (Detail) $ in Thousands		1 Months Ended	3 Months Ended	9 Months Ended
	Jul. 31, 2020 USD ($) property	Mar. 31, 2020 seniorHousingCommunity	Sep. 30, 2021 USD ($) seniorHousingCommunity	Sep. 30, 2022 USD ($) property seniorHousingCommunity	Sep. 30, 2021 USD ($) seniorHousingCommunity	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Debt Instrument [Line Items]
Property and equipment, net				$ 599,200
Other assets, net				2,460			$ 1,166
Amortization of deferred financing costs				946	$ 1,121
Gain (loss) on debt				$ (641)	168,292
Number of properties | seniorHousingCommunity				76
Current portion of note payable, net of deferred loan costs				$ 31,800			31,800
Deferred costs				$ 200			200
Fixed rate mortgage notes payable | Minimum
Debt Instrument [Line Items]
Debt effective interest rate				3.60%
Fixed rate mortgage notes payable | Maximum
Debt Instrument [Line Items]
Debt effective interest rate				6.30%
Variable rate mortgage notes payable (2) | LIBOR
Debt Instrument [Line Items]
Debt instrument, variable rate at period end				3.20%
Debt instrument, basis spread on variable rate				2.14%
Variable rate mortgage notes payable (2) | SOFR
Debt Instrument [Line Items]
Debt instrument, variable rate at period end				3.00%
Debt instrument, basis spread on variable rate				3.50%
Refinance Facility
Debt Instrument [Line Items]
Debt issuance costs, net				$ 2,200
Amortization of deferred financing costs				300
Refinance Facility | Mortgage Debt
Debt Instrument [Line Items]
Number of communities refinanced | seniorHousingCommunity		10
Finance agreement amount						$ 80,000
Amount available as delayed loans						10,000
Additional uncommitted amount						40,000
Debt instrument, covenant, tangible net worth, amount, minimum						150,000
Debt instrument, covenant, liquidity, amount, minimum						13,000
Other assets, net						$ 1,500
Gain (loss) on debt				$ (600)
Refinance Facility | Mortgage Debt | Covenant Achievement, Scenario One
Debt Instrument [Line Items]
Limited payment guaranty, percentage of outstanding balance of the refinance facility						0.33
Refinance Facility | Mortgage Debt | Covenant Achievement, Scenario Two
Debt Instrument [Line Items]
Limited payment guaranty, percentage of outstanding balance of the refinance facility						0.25
Refinance Facility | Mortgage Debt | Covenant Achievement, Scenario Three
Debt Instrument [Line Items]
Limited payment guaranty, percentage of outstanding balance of the refinance facility						0.10
Forbearance Agreements
Debt Instrument [Line Items]
Number of properties | property				2
Accrued interest				$ 3,700			$ 2,700
Fannie Mae Loan | Forbearance Agreements
Debt Instrument [Line Items]
Gain (loss) on debt			$ 54,100		$ 168,300
Unpaid loans	$ 3,800
Number of properties | property	18
Transition of ownership, number of real estate properties | seniorHousingCommunity			5		14

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Redeemable Preferred Stock (Detail) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Jun. 08, 2022	Mar. 31, 2022	Dec. 31, 2021	Nov. 30, 2021	Sep. 30, 2021
Class of Stock [Line Items]
Temporary equity, shares issued (in shares)	41,000	41,000			41,000
Preferred stock, dividend rate, percentage		11.00%
Preferred stock, shares outstanding (in shares)	0	0			0
Convertible Preferred Stock
Class of Stock [Line Items]
Temporary equity, shares issued (in shares)						41,250
Increase in carrying amount of redeemable preferred stock	$ 1.1
Dividends payable to Series A preferred stockholders			$ 1.1	$ 1.1			$ 0.0
Preferred stock, shares outstanding (in shares)							0
Convertible Preferred Stock | Private Placement
Class of Stock [Line Items]
Proceeds from sale of stock under agreement		$ 41.3

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Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Revenues	$ 60,787	$ 57,924	$ 178,908	$ 177,114
Resident revenue
Disaggregation of Revenue [Line Items]
Revenues	52,485	48,968	155,315	140,819
Housing and support services
Disaggregation of Revenue [Line Items]
Revenues	51,703	48,249	151,854	138,709
Community fees
Disaggregation of Revenue [Line Items]
Revenues	481	403	1,410	1,228
Ancillary services
Disaggregation of Revenue [Line Items]
Revenues	301	316	838	882
Other operating revenue
Disaggregation of Revenue [Line Items]
Revenues	0	0	1,213	0
Management fees
Disaggregation of Revenue [Line Items]
Revenues	608	1,029	1,836	2,978
Managed community reimbursement revenue
Disaggregation of Revenue [Line Items]
Revenues	$ 7,694	$ 7,927	$ 21,757	$ 33,317

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Share-Based Compensation - Crats of Market-Based Restricted Stock Awards (Detail) - Restricted Stock $ / shares in Units, shares in Thousands, $ in Thousands	Sep. 30, 2022 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares (in shares) | shares	30
Weighted average grant date fair value (in USD per share) | $ / shares	$ 20.39
Total Grant Date Fair Value | $	$ 246

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Stock-Based Compensation - Narrative (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Share-Based Payment Arrangement [Abstract]
Stock-based compensation expense	$ (0.6)	$ 0.6	$ 3.5	$ 1.3

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Commitments and Contingencies (Details) $ in Millions	Sep. 30, 2022 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Contractual obligation	$ 7.0

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Related Party Transactions (Details) shares in Thousands	3 Months Ended				9 Months Ended		12 Months Ended
	Sep. 30, 2022 USD ($) shares	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Sep. 30, 2021 USD ($) shares	Sep. 30, 2022 USD ($) shares	Sep. 30, 2021 USD ($) shares	Dec. 31, 2021 USD ($) shares
Related Party Transaction [Line Items]
Dividends on Series A convertible preferred stock	$ 1,134,000	$ 1,134,000	$ 1,133,000	$ 0	$ 3,401,000	$ 0
Preferred stock, shares outstanding (in shares) | shares	0				0		0
Affiliates Of Conversant Capital LLC
Related Party Transaction [Line Items]
Ownership percentage, controlling owners	0.579				0.579
Dividends on Series A convertible preferred stock	$ 1,100,000				$ 3,400,000
Dividends paid				$ 0	3,000,000	$ 0
Dividends, preferred stock					$ 2,300,000		$ 700,000
Preferred stock, shares outstanding (in shares) | shares				0		0

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Fair Value Measurements - Carrying Amounts and Fair Values of Financial Instruments (Detail) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable, excluding deferred financing costs	$ 665,935	$ 683,111
Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable, excluding deferred financing costs	671,371	687,312
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable, excluding deferred financing costs	$ 585,731	$ 636,836

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Fair Value Measurements - Narrative (Detail)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)	Mar. 01, 2022 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets, fair value	$ 464,000		$ 464,000
Interest rate cap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative, notional amount	50,300,000		50,300,000			$ 50,300,000
Derivative assets, fair value	464,000		464,000
Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Non-cash impairment charge on property and equipment	$ 0	$ 0	$ 0	$ 0	$ 6,500,000
Fair value of impaired assets					$ 14,000,000
Measurement Input, Cap Rate | Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Market capitalization rate					0.0825

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Derivatives and Hedging - Narrative (Details) - Interest rate cap - USD ($) $ in Millions	Sep. 30, 2022	Mar. 01, 2022
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, notional amount	$ 50.3	$ 50.3
Interest rate cap agreement term		24 months
LIBOR
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Debt instrument, variable rate at period end		4.00%

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Derivatives and Hedging - Schedule of Derivative Instruments in Balance Sheet (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative assets, fair value	$ 464
Interest rate cap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative asset, notional amount	50,260
Derivative assets, fair value	$ 464

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Derivatives and Hedging - Schedule of Derivative Instruments in Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Interest rate cap | Interest Expense
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Gain on derivative not designated as hedge included in interest expense	$ 251	$ 0	$ 206	$ 0

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Subsequent Events (Details)	Oct. 20, 2022 property
Subsequent Event
Subsequent Event [Line Items]
Number of properties transitioning	4