Investments, Acquisitions and Assets Held for Sale |
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| Investments, Acquisitions and Assets Held for Sale | Investments, Acquisitions and Assets Held for Sale Investment in Parc LP Unconsolidated Entity and Community Purchase Call Option In April 2026, the Company purchased a preferred equity investment in Parc LP totaling $1.8 million with a community purchase call option totaling $1.0 million. The preferred equity investment carries a 15% annual non-compounding coupon. The preferred equity investment is included in investment in unconsolidated entities and the purchase call option is included in other assets, net in the condensed consolidated balance sheets. The Company has evaluated its investment in Parc LP under ASC 810 and determined that it does not have the power to direct the activities of the VIE that most significantly impact its economic performance and is not the primary beneficiary of the VIE. The Company's interests in the VIE are, therefore, accounted for under the equity method of accounting. The carrying amount of the Company's investment in the unconsolidated venture and maximum exposure to loss as a result of the Company’s ownership interest in Parc LP was $1.8 million as of June 30, 2026. The Company evaluates the realization of its investment in unconsolidated entities accounted for using the equity method if circumstances indicate the Company's investment is other than temporarily impaired. For the three and six months ended June 30, 2026, there were no impairments with respect to the Company’s investment in Parc LP. Investment in Consolidated VIE The Company has a joint venture with affiliates of Palatine Capital Partners (“Palatine”). Prior to March 31, 2026, it included four communities owned by subsidiaries of Palatine under two joint ventures. On March 31, 2026, the Company purchased the noncontrolling interest from Palatine of one of its joint ventures for a purchase price of $2.1 million and assumed the mortgage of $1.7 million on the community. As of June 30, 2026, the mortgage on this community has been repaid. As of June 30, 2026, the Company is a 51% owner in the remaining Palatine joint venture. The noncontrolling interest of the Palatine JV is included in the Company’s condensed consolidated balance sheets. Investment in Stone Unconsolidated Entity The Company has a joint venture with KZ Stone Investor LLC (the “Stone JV”) which owns four communities in the Midwest. KZ Stone Investor LLC is the controlling managing member of the Stone JV and owned 67.29% of the entity as of June 30, 2026. Sonida owned a 32.71% noncontrolling interest in the Stone JV as of June 30, 2026. Sonida operates the four communities for a management fee based on the gross revenues of the applicable communities, as well as an incentive management fee based on earnings before interest, taxes, depreciation, amortization, rent, and management fees, and other customary terms and conditions. The Company has evaluated its investment in the Stone JV under ASC 810 and determined that it does not have the power to direct the activities of the VIE that most significantly impact its economic performance and is not the primary beneficiary of the VIE. The Company's interests in the VIE are, therefore, accounted for under the equity method of accounting. The carrying amount of the Company's investment in the unconsolidated venture and maximum exposure to loss as a result of the Company’s ownership interest in the Stone JV was $20.8 million as of June 30, 2026. The carrying amount of the Company's investment in the unconsolidated venture was $8.8 million as of December 31, 2025. For the six months ended June 30, 2026, the Company received a return of its investment of $11.1 million in its unconsolidated entity. For the six months ended June 30, 2025, the Company received $0.4 million as a return on the Company’s investment in the Stone JV. See “Note 14–Related Party Transactions” for refinancing of the Stone JV debt. The Company evaluates the realization of its investment in unconsolidated entities accounted for using the equity method if circumstances indicate the Company's investment is other than temporarily impaired. For the three and six months ended June 30, 2026 and 2025, there were no impairments with respect to the Company’s investment in the Stone JV. Assets and Liabilities Held for Sale As of June 30, 2026, the Company classified one community as held for sale in its condensed consolidated balance sheets in accordance with ASC 360. Additionally, the Company completed the sale of one of its communities in June 2026 that was previously classified as held for sale as of December 31, 2025. See “Note 8–Debt”. The reclassification of the property’s assets and liabilities held-for-sale status represents a presentation change within the balance sheet, rather than a new investing or financing transaction. The community did not meet the criteria for classification as a discontinued operation under ASC 205-20, as the sale does not represent a strategic shift that has or will have a major effect on the Company’s operations and financial results. The below summarizes the carrying amounts of the major classes of assets and liabilities classified as held for sale in the condensed consolidated balance sheets (in thousands):
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