New Senior Announces Agreement to Acquire $640 Million of High Quality Senior Housing Assets
June 22 2015 - 4:05PM
Business Wire
New Senior Investment Group Inc. (“New Senior” or the “Company”)
(NYSE:SNR) announced today it has entered into an agreement to
acquire a 28-property portfolio of private pay, independent living
senior housing properties (the “Portfolio”) from affiliates of
Holiday Retirement (“Holiday”) for approximately $640 million. The
Company expects to invest approximately $190 million of equity and
incur approximately $450 million of debt to acquire the
Portfolio.
The Portfolio is 100% private pay and contains 3,298 independent
living units located across 21 states and had an average occupancy
rate of 88% as of May 2015. The Portfolio is currently operated by
Holiday, and the Company expects Holiday will continue to operate
the Portfolio following the closing of the acquisition under new
property management agreements. The Company expects the Portfolio
to generate an initial cash net operating income (“NOI”) yield
(after property management fees) of approximately 6.4%.
“We are excited to add 28 independent living properties to our
portfolio through this accretive acquisition. This transaction
further increases our industry-leading private pay senior housing
NOI exposure to 91% of our portfolio,” New Senior Chief Executive
Officer Susan Givens said.
Upon closing of the acquisition, the Company’s portfolio will
include 152 properties with approximately 18,900 beds across 37
states.
Strategic Benefits of the
Acquisition
- Increased and Industry-Leading
Private Pay Senior Housing NOI: Upon closing, the Company
expects NOI from private pay independent living and assisted living
/ memory care communities to increase to approximately 91%, the
highest among the publicly-traded healthcare REITs. New Senior’s
portfolio will be attractively balanced between business models,
with its managed portfolio expected to account for approximately
51% of NOI and its triple-net leased portfolio expected to account
for approximately 49% of NOI following the acquisition.
- High-Quality Portfolio with an
Attractive Yield and Growth Potential: The Portfolio has strong
occupancy of 88%. Furthermore, the Portfolio generated strong NOI
margins (after property management fees) of approximately 40% for
the first quarter of 2015 and is expected to generate an initial
cash NOI yield of approximately 6.4%.
- Additional Geographic
Diversification: The acquisition will increase the geographic
diversification of the Company’s portfolio, adding five new states
(AR, SD, SC, HI and IN). Following the acquisition, New Senior’s
portfolio will span 37 states.
- Expanded Relationship with a Proven
Best-in-Class Senior Housing Operator: The Company expects
Holiday, the largest independent living operator in the U.S. with
over 300 properties in 43 states, to continue to manage the
properties after the closing of the acquisition, which should allow
for a seamless transition in the property operations. The terms of
the management agreement will include a base management fee along
with an incentive fee to align the interests of Holiday and New
Senior in driving performance and growth. Holiday is majority owned
by private equity funds managed by an affiliate of the Company’s
manager.
- Accretive Transaction: The
Company expects the acquisition to be accretive to the Company’s
adjusted funds from operations (“AFFO”) and normalized funds
available for distribution (“Normalized FAD”).
The Company expects the closing of the acquisition to occur by
the third quarter of 2015. The closing is subject to customary
closing conditions, and there can be no assurance as to the timing
or the occurrence of the closing.
The transaction was unanimously approved by a committee of the
Company’s Board of Directors composed of the Company’s independent
directors (the “Transaction Committee”), with Greenhill & Co.,
LLC acting as the Transaction Committee’s financial advisor and
Davis Polk & Wardell LLP acting as its legal advisor. Skadden,
Arps, Slate, Meagher & Flom LLP is acting as legal advisor to
Holiday.
ABOUT NEW SENIOR
New Senior is a real estate investment trust focused on
investing in senior housing properties across the United States.
The Company is one of the largest owners of senior housing
properties and currently owns 124 properties in 32 states. New
Senior is managed by an affiliate of Fortress Investment Group LLC,
a global investment management firm. More information about New
Senior can be found at www.newseniorinv.com.
FORWARD-LOOKING STATEMENTS
Certain items in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements
regarding the amount of the expected debt and equity investment,
the Portfolio’s expected an initial cash NOI yield, which
represents the expected cash NOI from the Portfolio for a full year
period divided by the purchase price for the Portfolio, the
Company’s expected NOI from private pay independent living and
assisted living / memory care communities and the expected balance
between managed and triple-net leased properties, the expectation
that Holiday will continue to manage the properties after the
closing of the acquisition, the expectation that the acquisition
will be accretive to AFFO and normalized FAD or at all, the
expectation that the Company will complete the acquisition of the
Portfolio and the expected closing date of the acquisition. These
statements are based on management's current expectations and
beliefs and are subject to a number of trends and uncertainties
that could cause actual results to differ materially from those
described in the forward-looking statements, many of which are
beyond our control. For a discussion of some of the risks and
important factors that could affect such forward-looking
statements, see the sections entitled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operation” in the Company’s Annual Report on Form 10-K
and Quarterly Report on Form 10-Q, which are available on the
Company’s website (www.newseniorinv.com). Factors which could have
a material adverse effect on the Company’s operations and future
prospects include, but are not limited to, various risks relating
to the acquisition and the inability to obtain, or delays in
obtaining the benefits from the acquisition. In addition, new risks
and uncertainties emerge from time to time, and it is not possible
for the Company to predict or assess the impact of every factor
that may cause its actual results to differ from those contained in
any forward-looking statements. Such forward-looking statements
speak only as of the date of this press release. The Company
expressly disclaims any obligation to release publicly any updates
or revisions to any forward-looking statements contained herein to
reflect any change in the Company’s expectations with regard
thereto or change in events, conditions or circumstances on which
any statement is based.
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New Senior Investment Group Inc.David Smith, 212-479-3140
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