The 2013 acquisition from Holiday Retirement added 51 properties to Newcastle's portfolio.

NEW YORK CITY—Newcastle Investment Corp. said Monday it had filed a registration statement to spin off its senior housing business into a REIT that will trade under the name New Senior Investment Group. The move comes about six months after the New York City-based investment firm, one of the largest publicly traded players in the space, acquired a 51-property portfolio from an affiliate of Holiday Retirement for $1.04 billion.

“The spin-off of New Senior from Newcastle will be a key step towards optimizing the future growth of each standalone company,” says Newcastle CEO Kenneth Riis. “As two separately traded public companies, both Newcastle and New Senior will be better positioned to capitalize on respective market opportunities and further enhance shareholder value creation.”

The REIT will be externally managed by an affiliate of Fortress Investment Group. Newcastle itself is managed by a Fortress affiliate.

Last year’s Holiday portfolio buy represents more than half of Newcastle’s current total by both number of properties and number of beds. Holiday continues to run the 51 properties in that portfolio under a 17-year master lease.

In all, Newcastle’s senior living portfolio runs to 86 properties with 10,556 beds, 5,840 of which were acquired in the Holiday buy. As of the end of the first quarter, there were also deals under contract that would add another 15 assets to the total.

The New Senior portfolio, for which Newcastle has projected a 17% annual yield in 2014, is 95% private-pay independent living and assisted living with no direct Medicare exposure. Further, Newcastle says 95% of its portfolio was sourced in off-market, non-brokered transactions.

In a quarterly update, Newcastle notes that the US population aged 70-plus is expected to grow 89% between 2010 and 2030 to 53 million. The company notes that 70% of the properties in the senior housing sector are run by “mom-and-pop” operators, with REITs controlling only 9%.