With stronger earnings and a plan to recapture shareholder value, things might be turning around for New Senior Investment Group (NYSE: SNR). The company, which has been hounded by shareholders over its declining stock price and outside management structure, reported higher occupancy rates for the end of 2015 and beat revenue estimates by more than $3 million.
The company previously announced a $100 million stock buyback plan and purchased 10 million shares before the end of 2015. With implied cap rates hovering between 7.5% and 8% for the stock buyback, the plan to continue purchasing more stock “makes sense,” executives said on a conference call with analysts Thursday.
The company plans to sell a significant piece—up to 10%—of its $3 billion investment portfolio to continue its buyback strategy, said CEO Susan Givens.
“We’re out there in the market right now,” Givens said. “We have a lot of good traction. Our hope and our goal is that we could have some deals closed in the second quarter, but that’s what we are targeting and that’s where we are moving towards.”
Givens did not give divulge a specific timeline for the asset sales or how long the buyback plan would continue.
“…So long as our stock price is at a meaningful discount to what we think is the NAV, we would buy back our stock,” Givens said. “So we would sell assets and then we would take that capital and buy back our stock.”
The plan to sell a significant amount of assets comes on the heels of other major investments in the company that have spurred predictions the company could be ripe to be sold. In January, BlackRock Inc., the world’s largest asset management firm, took at 7.4% stake in New Senior.
Earlier this week, New Senior announced that Robert Savage would serve as director of the company with a term expiring in 2017. The appointment was part of an agreement with a stockholder group of New Senior, the Levin Group of Levin Capital Strategies, L.P. John Levin of Levin Capital Strategies urged New Senior’s board members to address concerns about its management structure in a public letter last fall.
The Levin Group agreed to vote “all of its shares at New Senior’s “2016 annual meeting in favor of the director nominees of the company’s board of directors,” according to a press release. Levin stated he was “please to have reached this agreement with New Senior.”
Executives gave no indication they were considering a sale of the entire company during the earnings call Thursday, stating the buyback plan was part of their strategy to recapture shareholder value.
Written by Amy Baxter