Life Time Completes Refinancing, Latest Sale-Leaseback Deal

Life Time Group Holdings, Inc. has completed the refinancing of its $274 million Term Loan B facility, the company announced on May 9.

The refinancing of the Term Loan B facility extended the maturity to Jan. 15, 2026, and increased the facility to $310 million. The company will use the incremental net proceeds to repay in full the outstanding balance on the company's $475 million revolver and for general corporate purposes.

On April 20, Life Time completed a sale-leaseback deal worth $45 million, part of its plan to complete $300 million in sale-leaseback transactions in 2023.

The transaction involved one property and was with an institutional real estate investor that has completed multiple sale-leaseback transactions with Life Time.

As previously announced, Life Time signed letters of intent for the sale-leaseback of three properties in transactions totaling approximately $123 million. Life Time closed on the first transaction for $33 million in gross proceeds, effective March 1, 2023. The transaction for the third property, which currently is under construction, is expected to be completed by Sept. 30, 2023, for approximately $45 million.

Sale-leaseback transaction proceeds will be used by the Company to support new growth opportunities and strengthen its balance sheet.

On May 2, Life Time shared that S&P Global Ratings upgraded the company's issuer credit rating to 'B' from 'B-'. S&P Global cited the following reasons for the upgrade: improving performance, including membership, revenue and EBITDA trends, and steps the company is taking to continue to improve its balance sheet and reduce leverage.

The upgrade came a few days after the sale-leaseback deal and after Life Time announced its first quarter 2023 revenue was $510.9 million, an increase of 30.2 percent from $392.3 million in first quarter 2022.

Net income and adjusted EBITDA improved as the company experienced greater flow through of its increased revenue and benefited from its ongoing margin expansion efforts. Adjusted EBITDA increased by 195.8 percent to $120.1 million from $40.6 million in the same period. Net income increased to $27.5 million from a net loss of $38.0 million in first quarter 2022.

Life Time also increased by $30 million its 2023 full-year adjusted EBITDA guidance to $470 million to $490 million.