New Senior Explores Strategic Alternatives, Won’t Rule Out Company Sale

Big changes might be in store for New Senior Investment Group (NYSE: SNR), including a possible sale of the company.

That was the prominent topic of discussion during the New York City-based real estate investment trust’s (REIT) fourth-quarter 2017 earnings call Friday. Specifically, the company announced all options are on the table as it seeks to boost value for shareholders in the face of near-term challenges.

“The measures we’ve taken to date, including stock buybacks and a tender offer in 2016, as well as the implementation of a selective asset sale strategy, have not driven our stock price performance,” CEO Susan Givens said during Friday’s call. “Against this backdrop, our board of directors has been directing a process to explore and evaluate a full range of strategic alternatives focused on maximizing shareholder value.”

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The senior housing sector as a whole is contending with various challenges, including large amounts of new supply entering some geographies and tight labor markets. New Senior also has taken fire for its management structure with private equity group Fortress. Fortress has managed the REIT since it was formed in 2014, as a spin-off of Newcastle Investment Corp.

Investors appeared to be excited by news of the strategic review, as the REIT’s share price climbed 12.48% by the time the markets closed on Friday. Healthy earnings results probably helped as well.

The REIT logged fourth-quarter funds from operations (FFO) of of $22.9 million, or $0.28 per share, beating analysts’ expectations by three cents. New Senior’s full-year 2017 revenue of $106.9 million also beat analysts’ expectations by roughly $920,000.

On the occupancy side, New Senior’s portfolio didn’t gain any ground—but it didn’t lose much ground, either, especially when weighed against what other REITs have faced lately.

“We’re down, quarter over quarter, 40 basis points, which is a pretty good outcome considering what we’ve seen over the last 12 months or so,” Givens said.

New Senior Investment Group is the eighth-largest senior housing owner in the U.S. with 133 properties, about 80% of which are independent living communities.

‘Everything you would expect’

Despite facing a handful of questions about the future of the company, Givens was tight-lipped. New Senior also didn’t respond to a request for comment from Senior Housing News.

“We’re exploring a full range of alternatives,” Givens said in response to an analyst’s question regarding a possible sale of the entire company. “That really includes everything you would expect.”

That doesn’t mean a company-wide sale is necessarily likely. The company could sell off only some of its assets, among other possibilities. There is also no timeline for when the strategic review will be completed. The bottom line, however, is that a possible sea change is in the works for the REIT.

“It’s hard for me to say exactly where it all lands,” Givens said during Friday’s call. “Our focus is on trying to maximize value for shareholders as best as we can, and I think that given the sort of options we have at our disposal, we can do that.”

Written by Tim Regan

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