Senior Housing Acquisition Tops $1 Billion

Newcastle Investment Corp., an NYSE-traded New York REIT, announced this morning that it has completed its deal to buy 51 independent living senior housing properties from an affiliate of Holiday Retirement for just over $1 billion.

 

Background is in QuidnuncRE's first look at the deal HERE.

Newcastle focuses on investing in senior housing and debt.  It is externally managed and advised by an affiliate of Fortress Investment Group LLC , a big international investment firm also based in New York.  

The purchase price, according to Newcastle's press release, HERE, was funded with $720 million of non-recourse, fixed-rate mortgage debt, and $320 million of equity. (The QuidnuncRE link above discusses a stock offering by Newcastle to raise the equity used in the purchase.) The debt has a weighted average coupon of 4.15%, and consists of a $357 million loan with a term of 7 years and a $363 million loan with a term of 10 years.

 

Holiday, based in Lake Oswego, Ore., will continue to operate the properties Newcastle acquired under a 17-year master lease. The initial lease yield is 6.5%; it will increase 4.5% years two through four, and then increase based on the Consumer Price Index in years five to 17. The properties are spread over 24 western states.

 

Newcastle says it has invested more than $500 million of equity throughout the past 18 months to acquire 84 senior housing properties with more than 10,000 beds.

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