What's Selling in Senior Housing?

A big day for New York-based REIT Newcastle Investment Corp. yesterday: It bought more than $1 billion in senior housing properties, an area it concentrates in, and announced a public offering.

The New York Stock Exchange-traded firm, which had nearly $3 billion in assets according to its 2013 third quarter report, has been getting ready for the stock offering this year by restructuring debt, and also announcing it would spin off a nearly $272 million in media companies into a separate company.

Newcastle said it would offer 50 million common shares, with an underwriters' option for an additional 7.5 million common shares.

The proceeds would fund part of the $1.01 billion purchase price of the portfolio of senior housing properties, located nationwide, that Newcastle agreed to buy from affiliates of Holiday Acquisition Holdings LLC.  About $300 million of the offering equity would be used for the Holiday Portfolio, with the the remainder funded by non-recourse mortgage debt, according to press releases yesterday. Newcastle says it expects to close next month.

This morning, Newcastle priced the offering at "approximately $264.9 million." See today's press release here. It also announced that it expected the offering to close Friday.

The Holiday Portfolio "includes 52 independent living properties with 5,885 units located across 24 states."  (The Holiday Retirement company operates more than 300 seniors' homes nationwide, and is based in Lake Oswego, Ore.) The properties had a 91% average occupancy rate at Sept. 30, 2013. The deal also includes Newmark entering into two triple net master leases with Holiday affiliates, with first-year rent equal to 6.5% of the purchase price.

Newmark said that after its deal with Holiday Acquisition, it will have invested about $600 million of equity in senior housing assets which would include 99 properties with 12,347 rentable units, and is targeted to generate a 17% funds from operations yield in 2014.

Holiday is the largest private owner and operator of senior housing properties in North America. Holiday operates 333 properties with 40,000 apartments in 43 states in the in the United States and seven provinces in Canada. Holiday is majority owned by private equity funds managed by an affiliate of Newcastle’s

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