[Update] Newcastle: New Senior Housing REIT is Immense Runway For Growth

Newcastle Investment Corp. (NYSE:NCT) confirmed today it will spin off its senior housing business, creating a new publicly traded real estate investment trust (REIT) focused specifically on the sector.

Newcastle, which has already established its position as a senior housing heavy hitter with more than $500 million in investments to date as of the first quarter, will primarily target senior housing related investments under its new spin off entity, New Senior Investment Group Inc. (NYSE:SNR).

In terms of property type, the newly formed entity will target mostly private pay assets with a focus mainly on independent living, according to comments made by Newcastle Chairman of the Board Wesley Edens.


“The spin-off  is expected to create a private-pay focused senior housing vehicle with an immense runway for growth,” Edens said.

Monday’s announcement arrives following speculation and hints from management over the past few months that a senior housing spin off may be imminent for Newcastle.

During a first quarter earnings call last month, Riis entertained the possibility that a spin off was something Newcastle had been considering “very seriously,” especially given the equity the company had invested into its senior housing business as of the first quarter.


Last quarter’s spin off of Newcastle’s media-related investments into its own entity, New Media Investment Group Inc. (NYSE:NEWM), also added to speculation that the company, which is externally managed by Fortress Investment Group (NYSE:FIG), could do the same for its senior living assets.

“The spin-off of New Senior from Newcastle will be a key step towards optimizing the future growth of each standalone company,” stated Newcastle CEO Kenneth Riis in a company press release.

Fortress made a name for itself in the senior living business last November when it had announced plans to acquire 52 properties from Holiday Retirement for $1.01 billion.

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Since then, Newcastle has continued to bet big on its senior housing segment, planning more than $300 million of future acquisitions, the company said during its first quarter earnings call

During that same call, Newcastle also stated that it is under contract to acquire 15 senior housing properties for a total purchase price of $319 million.

“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,” stated Riis.

New Senior will be externally managed by an affiliate of Fortress Investment Group, LLC.

The company says it will be providing more information during a conference call following the announcement. SHN will provide updates as they are made available.

Written by Jason Olive