Newcastle’s New Senior Spinoff to Acquire $435 Million Holiday Portfolio

New Senior Investment Group, Inc. (NYSE: SNR) has made its first big play in  senior housing, announcing plans today to acquire a 17-property portfolio for $435 million.

The company, which was spun-off from Newcastle Investment Corp. (NYSE: NCR) in June, entered into an agreement to acquire 17 private-pay independent living properties from affiliates of Vancouver, Washington-based Hawthorn Retirement Group, LLC.

“As the only pure play senior housing REIT, this transaction is consistent with our strategy of focusing on owning private pay senior housing assets, and we are excited to add 17 high-quality independent living properties to our portfolio,” said New Senior Chief Executive Officer Susan Givens in a written statement.


The portfolio is 100% private-pay and contains 2,082 units located across 10 states with an average occupancy of 92% for November 2014.

Currently operated by Holiday Retirement, the portfolio will continue to be operated by the company under a new property management agreement.

To fund the acquisition, New Senior expects to invest approximately $135 million of existing cash to acquire the portfolio and fund the remainder of the purchase price with debt.


New Senior expects the portfolio to generate a net operating income yield—after management fees—of approximately 6.3%.

Upon closing, the company expects cash NOI from private pay independent, assisted living and memory care communities to increase from 91% as of the third quarter of 2014 to approximately 93%.

The deal is one of the biggest moves from New Senior since it became a public company early November. Externally managed by Fortress Investment Group (NYSE: FIG), New Senior’s focus will largely target private-pay assets, primarily independent living, according to comments made by Newcastle Chairman Wesley Edens when the company first confirmed the spin-off creation of New Senior.

Separately from the Hawthorne portfolio acquisition, New Senior also announced it has acquired a 66-bed memory care community in Illinois for $15.7 million at an NOI yield of 7.8%.

Built in 2012, the community will continue to be managed by JEA Senior Living, a company also headquartered in Vancouver, WA, which commands a current portfolio of 46 properties in 16 states.

The acquisition will bring New Senior’s total portfolio to117 properties with over 14,500 beds across 30 states, increasing the company’s geographic reach to Massachusetts, Washington and Nebraska.

Written by Jason Oliva

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