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New Senior Announces Agreement to Acquire $640 Million

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Enterprising Investor Member Level  Monday, 06/22/15 05:43:07 PM
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New Senior Announces Agreement to Acquire $640 Million of High Quality Senior Housing Assets (6/22/15)

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 28-property portfolio of private pay, independent living senior housing properties (the “Portfolio”) from affiliates of Holiday Retirement (“Holiday”) for approximately $640 million. The Company expects to invest approximately $190 million of equity and incur approximately $450 million of debt to acquire the Portfolio.

The Portfolio is 100% private pay and contains 3,298 independent living units located across 21 states and had an average occupancy rate of 88% as of May 2015. The Portfolio is currently operated by Holiday, and the Company expects Holiday will continue to operate the Portfolio following the closing of the acquisition under new property management agreements. The Company expects the Portfolio to generate an initial cash net operating income (“NOI”) yield (after property management fees) of approximately 6.4%.

“We are excited to add 28 independent living properties to our portfolio through this accretive acquisition. This transaction further increases our industry-leading private pay senior housing NOI exposure to 91% of our portfolio,” New Senior Chief Executive Officer Susan Givens said.

Upon closing of the acquisition, the Company’s portfolio will include 152 properties with approximately 18,900 beds across 37 states.

Strategic Benefits of the Acquisition

• Increased and Industry-Leading Private Pay Senior Housing NOI: Upon closing, the Company expects NOI from private pay independent living and assisted living / memory care communities to increase to approximately 91%, the highest among the publicly-traded healthcare REITs. New Senior’s portfolio will be attractively balanced between business models, with its managed portfolio expected to account for approximately 51% of NOI and its triple-net leased portfolio expected to account for approximately 49% of NOI following the acquisition.

• High-Quality Portfolio with an Attractive Yield and Growth Potential: The Portfolio has strong occupancy of 88%. Furthermore, the Portfolio generated strong NOI margins (after property management fees) of approximately 40% for the first quarter of 2015 and is expected to generate an initial cash NOI yield of approximately 6.4%.

• Additional Geographic Diversification: The acquisition will increase the geographic diversification of the Company’s portfolio, adding five new states (AR, SD, SC, HI and IN). Following the acquisition, New Senior’s portfolio will span 37 states.

• Expanded Relationship with a Proven 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 after the closing of the acquisition, which should allow for a seamless transition in the property operations. The terms of the management agreement will include a base management fee along with an incentive fee to align the interests of Holiday and New Senior in driving performance and growth. Holiday is majority owned by private equity funds managed by an affiliate of the Company’s manager.

• Accretive Transaction: The Company expects the acquisition to be accretive to the Company’s adjusted funds from operations (“AFFO”) and normalized funds available for distribution (“Normalized FAD”).

The Company expects the closing of the acquisition to occur by the third 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 transaction was unanimously approved by a committee of the Company’s Board of Directors composed of the Company’s independent directors (the “Transaction Committee”), with Greenhill & Co., LLC acting as the Transaction Committee’s financial advisor and Davis Polk & Wardell LLP acting as its legal advisor. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to Holiday.

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 124 properties in 32 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/20150622006316/en/Senior-Announces-Agreement-Acquire-640-Million-High#.VYiBBonbKUk

"Someone said it takes 30 years to be an instant success" - Gabriel Barbier-Mueller, CEO of Harwood International
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