New Senior Announces $296 Million of Asset Sales Under Contract
October 05 2017 - 5:10PM
Business Wire
New Senior Investment Group Inc. (“New Senior” or the “Company”)
(NYSE: SNR) announced today that it expects to complete $296
million of asset sales (the “Transactions”) during the fourth
quarter of 2017. The Transactions include (i) a $186.0 million sale
of six triple net leased properties, as well as termination of the
related lease with LCS (the “Leased Portfolio Sale”) and (ii) a
$109.5 million sale of nine properties managed by Holiday
Retirement (the “Managed Portfolio Sale”).
The Transactions offer distinct strategic benefits. The
properties in the Leased Portfolio Sale have experienced
significant occupancy and EBITDARM declines since acquisition, and
the sale will eliminate the Company’s lowest covering triple net
lease portfolio. In addition, the Leased Portfolio Sale, which
includes four Continuing Care Retirement Communities (“CCRCs”),
will substantially eliminate the Company’s exposure to skilled
nursing and significantly reduce exposure to the competitive
Dallas, Texas metropolitan area. The Managed Portfolio Sale will
divest non-core, underperforming assisted living / memory care
(“AL/MC”) assets with low net operating income (“NOI”) margins.
“The sales announced today significantly advance our stated
objective of pursuing selective asset sales in order to enhance the
overall quality of our portfolio. In addition, these sales are
expected to generate significant dry powder for new investments and
other initiatives,” New Senior Chief Executive Officer Susan Givens
said.
Total consideration of $186.0 million for the Leased Portfolio
Sale represents a 6.6% cap rate on 2Q 2017 annualized NOI generated
by the underlying portfolio, and represents an 8.2% lease yield on
2Q 2017 annualized cash rent. Total consideration of $109.5 million
for the Managed Portfolio Sale represents a 5.1% cap rate on 2Q
2017 annualized cash NOI.
In connection with the Transactions, the Company expects to
repay approximately $178 million of existing debt with a weighted
average interest rate of approximately 4.6%. After debt repayment,
the net proceeds from the Transactions will be approximately $117.5
million (before fees and expenses). The Company intends to use the
net proceeds for general corporate purposes, which may include new
investments, debt prepayment and/or repurchases of common stock,
depending on market conditions.
More detail about the benefits of the Transactions is set forth
below:
- Improve Triple Net Lease Portfolio
Coverage: The properties in the Leased Portfolio Sale have
experienced significant occupancy and EBITDARM declines since
acquisition, and the sale will eliminate the Company’s lowest
covering triple net lease portfolio. For the second quarter of
2017, the properties in the Leased Portfolio Sale had EBITDARM
coverage of 1.05x. For illustrative purposes, excluding these
properties would increase EBITDARM coverage for the total triple
net portfolio from 1.17x to 1.19x. EBITDARM coverage is presented
one quarter in arrears on a trailing twelve month basis.
- Improve Managed Portfolio
Quality: The Managed Portfolio Sale will improve the quality of
New Senior’s managed portfolio on the basis of several metrics. For
the second quarter of 2017, the properties in the Managed Portfolio
Sale had an average occupancy of 82.3% and an NOI margin of 16.4%.
For illustrative purposes, excluding these properties from second
quarter 2017 results would improve same store RevPOR by 2.5% to
$3,085, same store occupancy by 60 basis points to 86.8% and same
store NOI margin by 190 basis points to 34.5%.
- Increase Independent Living
Exposure: The Leased Portfolio Sale is composed of four CCRCs,
one AL/MC facility and one independent living (“IL”) facility, and
the Managed Portfolio Sale is composed entirely of AL/MC
facilities. For illustrative purposes, excluding these properties
from second quarter 2017 results would improve the Company’s
exposure to IL assets as a percentage of NOI from 72% to 80%.
- Improve Geographic
Concentration: All of the properties being sold in the
Transactions are located in Florida and Texas, which are the states
that currently account for the greatest concentration of the
Company’s NOI, followed by California. For illustrative purposes,
excluding these properties from second quarter results would reduce
the concentration of NOI from these three states from 39% to
32%.
The impact of the Transactions on various portfolio metrics is
summarized below.
Metric 2Q'17
Illustrative -2Q’17 Excl.
Sale Assets
Total Number of Properties 148 133 Total
Portfolio NOI - % Triple Net 51% 49% Total Portfolio NOI - %
Managed 49% 51% Total Portfolio NOI - % IL 72% 80% Total
Portfolio NOI - % AL/MC 19% 17% Total Portfolio NOI - % CCRC 9% 3%
Triple Net Portfolio - EBITDARM Coverage 1.17x 1.19x
Same Store Managed Portfolio - RevPOR $3,009 $3,085 Same Store
Managed Portfolio - Occupancy 86.2% 86.8% Same Store Managed
Portfolio - NOI Margin 32.6% 34.5%
The closings of the Transactions, which are independent of one
another, are expected to occur by the end of 2017, subject to
customary closing conditions. However, there can be no assurances
that the Transactions will be completed on the terms and within the
timeframe described herein, or at all. There can also be no
assurance that actual results would equal the illustrative
information contained herein, and any differences could be
material.
ABOUT NEW SENIOR
New Senior Investment Group (NYSE: SNR) is a publicly-traded
real estate investment trust with a diversified portfolio of senior
housing properties located across the United States. As of June 30,
2017, New Senior is one of the largest publicly-traded owners of
senior housing properties, with 148 properties across 37 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.
CAUTIONARY NOTE REGARDING 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, such as statements
regarding the expected completion of asset sales, the expected
impact of those sales on the Company and the anticipated use of
proceeds. These statements are not historical facts. They represent
management’s current expectations regarding future events and are
subject to a number of trends and uncertainties, many of which are
beyond our control, that could cause actual results to differ
materially from those described in the forward-looking statements.
Accordingly, you should not place undue reliance on any
forward-looking statements contained herein. For a discussion of
some of the risks and important factors that could affect such
forward-looking statements as well as the illustrative information
contained herein, see the sections entitled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in the Company’s annual and quarterly
reports filed with the Securities and Exchange Commission, which
are available on the Company’s website (www.newseniorinv.com). 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. Any of these risks
could impact the ability to complete the Transactions on the terms
and within the timeframe described herein and the ability to deploy
the net proceeds into new investments or other initiatives.
Forward-looking statements contained herein speak only as of the
date of this press release, and 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, 212-515-7783
New Senior Investment (NYSE:SNR)
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