Newcastle REIT Eyes Senior Housing Spin Off, $300 Million Pipeline

Newcastle Investment Corp. (NYSE: NCT) said Friday that it is considering spinning off its senior living business and is planning future acquisitions in its pipeline in the neighborhood of $300 million. 

Recently, Newcastle spun off its media-related investments into its own entity, New Media Investment Group Inc. (NYSE: NEWM).

Now, the company may be looking to do the same with its senior housing assets, according to comments made Friday by Newcastle Chairman Wes Edens.

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The idea of Newcastle spinning off its senior living business has become a “very serious” topic, Edens said.

“Given the scale of where we have achieved, what we’ve achieved with this company is now a very serious topic for us and our Board to consider whether or not this would be the kind of thing that we would spin out and give it its own separate identity as we’ve done with companies thus far,” Edens said. 

While the company has not yet made a conclusive decision on this topic, Edens does think it is “very viable.”

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Newcastle is also in-contract to acquire 11 senior housing properties for a total purchase price of $273 million, of which the company expects will require an equity investment of $92 million, according to supplemental materials released Friday in conjunction with the earnings results. Details of the properties were not disclosed. 

The company, which is externally managed by Fortress Investment Group (NYSE: FIG), has been ramping up its investment activity in recent months—all in the course of a little more than a year.

“We now have one of the largest portfolios of independent living and assisted living properties in the U.S., but again, we really only started down this path 18 months ago,” said Andrew White, who heads the senior housing business for Newcastle.

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The company’s first transaction into the senior housing sector took place in July 2012, when it purchased an eight property portfolio on the West Coast and completed two more transactions shortly thereafter.

“Based in part on the success we had with the first two transactions, we decided to commit significant resources to the senior housing business,” he said. 

In November, the investment group made waves in the senior living industry when it announced that it had plans to acquire 52 properties from Holiday Retirement for $1.01 billion.

In January, Newcastle invested $9 million of equity to acquire two managed senior housing properties for a total of $26 million. 

Written by Jason Oliva

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