NEW YORK CITY-Newcastle Investment Corp. said Tuesday it had completed its acquisition of 51 independent-living senior housing properties across 24 states from an affiliate of Holiday Retirement for $1.04 billion. The deal was funded with $720 million of non-recourse, fixed-rate mortgage debt and $320 million of equity.
Holiday will continue to operate the properties under a 17-year master lease. The initial lease yield is 6.5%, with 4.5% increases in years two through four and increases based on the Consumer Price Index in years five through 17. The portfolio is 100% private pay and had an average occupancy rate of 91% as of this past Sept. 30.
With the Holiday acquisition having closed, Newcastle has invested more than $500 million of equity in senior housing assets over the past 18 months, acquiring 84 senior housing properties with over 10,000 beds. Including the Holiday acquisition and other committed transactions, Newcastle's senior housing portfolio runs to 99 properties with 12,347 rentable units, and is targeted to generate a 17% FFO yield in 2014.
Holiday is the largest private owner and operator of senior housing properties in North America, operating 333 properties with 40,000 apartments in 43 states across the US and in seven Canadian provinces. It's majority owned by private equity funds managed by an affiliate of Newcastle's manager. Newcastle itself is managed by an affiliate of Fortress Investment Group LLC.
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