NEW YORK — The Board of Directors of Newcastle Investment Corp. (NYSE: NCT) has approved a plan to spin off its seniors housing business into a publicly traded real estate investment trust that primarily targets seniors housing related investments. The new company will be called New Senior Investment Group and trade on the New York Stock Exchange under the symbol SNR.
The approval by the board occurs six months after Newcastle purchased a 51-property portfolio from an affiliate of Holiday Retirement for more than $1 billion.
“The spin-off of New Senior from Newcastle will be a key step towards optimizing the future growth of each standalone company,” said Newcastle CEO Kenneth Riis in a prepared statement. “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.”
An affiliate of Fortress Investment Group LLC will manage New Senior Investment Group.
In an investor call on Monday, Newcastle Chairman of the Board Wesley Edens said the reasons for the spin-off include the expected growth of the U.S. senior population, the cost of capital both on the equity side and the debt side that will create better pricing and shareholder value, as well as the fact that spinning off will land the new REIT into the top 10 of senior living-focused REITs.
The New Senior portfolio will be 95 percent private-pay independent living and assisted living with no direct Medicare exposure. Newcastle’s current portfolio includes 99 properties with 12,400 beds in 28 states.
Following the spin-off, Newcastle will continue to manage its existing collateralized debt obligations and debt businesses, including the buying back and liquidation of assets.
Newcastle filed for the spin-off with the U.S. Securities and Exchange Commission yesterday and expects it to be complete in the third or fourth quarter of this year.
The stock price of Newcastle closed at $5.07 per share on Monday, June 16, down from $5.46 per share on Friday, June 14, 2013.
— Scott Reid