New Senior Investment Group Inc. (SNR)

[Enterprising Investor]

New Senior Announces Agreement to Acquire $435 Million of Senior Housing Assets and the Closing of a $16 Million Senior Housing Acquisition (12/22/14)

NEW YORK--(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 17-property portfolio of private pay, independent living senior housing properties (the “Portfolio”) from affiliates of Hawthorn Retirement Group LLC for approximately $435 million. The Company expects to invest approximately $135 million of existing cash to acquire the Portfolio and to fund the remainder of the purchase price with debt.

The Portfolio is 100% private pay and contains 2,082 units located across 10 states and had an average occupancy rate of 92% for November 2014. The Portfolio is currently operated by Holiday Retirement (“Holiday”), and the Company expects Holiday to continue to operate the Portfolio under a new property management agreement. The Company expects the Portfolio to generate a net operating income (“NOI”) yield (after management fees) of approximately 6.3%.

“As the only pure play senior housing REIT, this transaction is consistent with our strategy of focusing on owning private pay senior housing assets, and we are excited to add 17 high-quality independent living properties to our portfolio,” New Senior Chief Executive Officer Susan Givens said.

The Company’s portfolio, inclusive of the Portfolio, will include 117 properties with over 14,500 beds across 30 states.

Strategic Benefits of the Acquisition

• Increased Private Pay Senior Housing NOI: Upon closing, the Company expects cash NOI from private pay independent living and assisted living / memory care communities to increase from 91% as of the third quarter of 2014 to approximately 93%. New Senior’s portfolio will be attractively balanced between business models, with its managed portfolio expected to account for approximately 48% of cash NOI and its triple-net leased portfolio expected to account for approximately 52% of NOI following the acquisition.

• Newer, High-Quality Portfolio with an Attractive Yield and Growth Potential: The Portfolio has an average age of only 6 years and strong occupancy of 92% for November 2014. Furthermore, the Portfolio generates strong NOI margins (after management fees) of approximately 45% and is expected to generate a NOI yield of approximately 6.3%.

• Additional Geographic Diversification: The acquisition will increase the geographic diversification of the Company’s portfolio, adding three new states (MA, WA and NE). Following the acquisition, New Senior’s portfolio will span 30 states.

• Expanded Relationship with 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 upon closing of the transaction, which should allow for a seamless transition in the property operations. Holiday is owned by private equity funds managed by an affiliate of the Company’s manager.

• Enhances New Senior’s Scale: Upon closing, New Senior will own a portfolio of 117 senior housing properties that is expected to generate annual NOI in excess of $180 million (calculated as annualized Q3 NOI plus the projected annual NOI from the acquisition).

The Company expects the closing of the acquisition to occur by the end of the first 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 Company intends to post a presentation about the acquisition on its website, www.newseniorinv.com.

Illinois Acquisition

Separately, the Company announced it has acquired a 66-bed memory care community located in Illinois for $15.7 million at an NOI yield of 7.8%. The community, built in 2012, will continue to be managed by JEA Senior Living, a leading senior housing operator with over 25 years of operating experience and a current portfolio of 46 properties in 16 states.

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 100 properties in 27 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.

http://www.businesswire.com/news/home/20141222005102/en/Senior-Announces-Agreement-Acquire-435-Million-Senior#.VJgbPVs4