Newcastle Investment Corp agrees on USD 1.01 billion purchase of 52 senior housing properties

November 19
2:26 AM 2013

Newcastle Investment Corp, a unit of Fortress Investment Group, will be buying 52 senior housing properties for USD 1.01 billion. The seller is Holiday Acquisition Holdings. An alternative asset manager, Fortress Investment Group puts its experience and expertise in various investment strategies like private equity, liquid markets, credit and traditional asset management for its more than 1,500 institutional investors and private clients all over the world.

The portfolio that Newcastle Investment Corp will pay for is composed of 5,885 units spread out in 24 states. The 100% private pay portfolio had an occupancy rate of 91% as of September this year.

It would be funding the acquisition with USD 300 million of equity and the rest with non-recourse mortgage debt, Newcastle Investment said in a statement. The unit also plans to go into two master leases with affiliates of Holiday Acquisition Holdings. The agreement is set to be completed in December. The statement added that the amount of the first year's rent will equate to 6.5% of the purchase price.

After completion of the transaction, Newcastle said will have invested about USD 600 million of equity in its senior housing assets. The company's senior housing portfolio will then include 99 properties composed of 12,347 units which can be rented. Newcastle said it is looking to generate funds from operations or FFO yield of 17% next year.

Newscastle Investment Corp said its investments are made primarily in senior housing and real estate debt. Its operations enable it to qualify as a real estate investment trust or REIT. The company said in its statement that Holiday is the biggest private owner and operator of senior housing properties in North America. The company is currently the operator of 333 properties composed of 40,000 apartments. These are located in 43 states in the US as well as in seven provinces in Canada.

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