Seeking Alpha

Newcastle considering spinoff of senior living business

  • Newcastle Investment (NCT -0.2%) $0.08 core EPS missed estimates by a penny, but Chairman Wes Edens - speaking on the earnings call (transcript) - quickly reminds the company's $150M of un-invested capital during Q4 (combined with some accounting surrounding Gatehouse debt) cost Newcastle about $0.04.
  • Is another spinoff on the way? Given Newcastle's continued high yield compared to the rest of the senior housing sector, spinning off senior housing "is now a very serious topic for us and our Board to consider."
  • Separating senior housing, however, would mean it no longer had access to the cheap capital being thrown off by Newcastle's CDO business. Why give that up, asks Credit Suisse's Doug Harter. "I think that given the dimensions of the business that we have now constructed on the senior side, I do think it’s viable as a standalone enterprise," responds Eden. "I think that giving it its own standalone vitality [will] result in a significant amount of shareholder appreciation and that’s why we are considering it in the first place."
Comments (3)
  • Michael Bryant
    , contributor
    Comments (5538) | Send Message
     
    Wow! This would be spin-off #4 for (NCT).
    28 Feb, 05:01 PM Reply Like
  • joeduck
    , contributor
    Comments (16) | Send Message
     
    I would be very careful in thinking a stand alone senior housing unit could be profitable when others are struggling.
    1 Mar, 03:03 AM Reply Like
  • Special Situations Monitor
    , contributor
    Comments (113) | Send Message
     
    Which senior housing companies are struggling?
    3 Mar, 07:42 AM Reply Like
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