NEW YORK CITY—Newcastle Investment Corp. saidMonday it had filed a registration statement to spin off itssenior housing business into aREIT that will trade under the name NewSenior Investment Group. The move comes about six monthsafter the New York City-based investment firm, one of the largestpublicly traded players in the space, acquired a 51-property portfolio from an affiliate ofHoliday Retirement for $1.04 billion.

|

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

|

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

|

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

|

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

|

The New Senior portfolio, for which Newcastle has projected a17% annual yield in 2014, is 95% private-pay independent living andassisted 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 populationaged 70-plus is expected to grow 89% between 2010 and 2030 to 53million. The company notes that 70% of the properties in the seniorhousing sector are run by “mom-and-pop” operators, with REITscontrolling only 9%.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.