Seeking Alpha

Newcastle to spin off Senior Housing business

  • It's another business separation for Newcastle Investment (NCT), which announces the spinoff of its senior housing business, New Senior Investment Group (SNR).
  • A conference call to discuss is set for 4:30 ET.
  • Source: Press Release
  • Shares +6.3% premarket
From other sites
Comments (13)
  • crl1603
    , contributor
    Comments (229) | Send Message
     
    this senior housing spin off i understand is what the market has been waiting for, does anyone have any price target thoughts.
    16 Jun 2014, 09:03 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (5746) | Send Message
     
    As far as I know, the senior housing was a big chunk of (NCT)'s business as it spun off (NRZ) and (NEWM). Thus, the senior business should be worth a little less than (NCT)'s value. And I would assume senior living would double in the next five years. But then, how much is the remaining (NCT) worth? (FIG) is (NCT)'s parent, so I assume (NCT) will buy more businesses.
    16 Jun 2014, 10:07 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (5746) | Send Message
     
    Long (NCT) for a long time. Have written many articles about (NCT) in the past, but I haven't really written an article in the last 6 months, except my portfolio update where I mentioned (NCT).
    http://seekingalpha.co...
    16 Jun 2014, 10:11 AM Reply Like
  • Exquisite Decay
    , contributor
    Comments (188) | Send Message
     
    This spin-off was not unexpected. The CEO mentioned that NCT was considering this move in its 2013 annual report.
    So that will leave NCT with golf courses and real estate debt; an odd combination. Will they next spin-off the golf courses?
    16 Jun 2014, 10:15 AM Reply Like
  • Len Friedman
    , contributor
    Comments (61) | Send Message
     
    The announced decision has previously been viewed as an unlocking of value in the amount of some 30%, were the senior properties actually spun off. The interesting question might be the underlying value of the remainder of the company. Additionally, would/could it remain a REIT with its favorable tax treatment?

     

    Today's announcement establishes several things:

     

    1. This will be another NYSE listing.
    2. The Board was unanimous.
    3. This will bear the REIT designation.

     

    Things we don't know yet:

     

    1. What is the expected value attributable to the new entity?
    2. What value will be placed on the remaining assets?
    3. Will/can it remain on the NYSE with its reduced valuation?
    4. Will/can the remainder's REIT (tax model) status remain in force?

     

    Further down the road an eyebrow should be raised when pondering not only the nature of this dynamic organic change, but also the potential enrichment threshold. Given the assumption that we unitholders will, indeed, be enriched---what would be a reasonable expectation? What I'm seeing is the opportunity to receive the bounties of a parking meter to the tune of 10 cents per month/unit. This is what I've been doing ever since it was first mentioned that this spin was under consideration. I've more than doubled my position this year and added an additional 15% upon today's announcement.

     

    Hoping to clarify something:

     

    My understanding is NOT that Fortress owns NCT. Rather, that globally strong company manages assets in exchange for a consideration paid by NCT. It strikes me that were this not the case, today's announcement would not have come from Newcastle's Board but, rather, from Fortress itself. If I'm wrong, I'd appreciate clarification from others.

     

    In any case, I couldn't be more delighted than I am by this news.
    16 Jun 2014, 11:05 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (5746) | Send Message
     
    As for the NYSE, since when did the NYSE raise its criteria to $2 from $1. I always thought the company can't trade below $1 for 30 straight days to be listed on the NYSE.
    http://bit.ly/1toKQlH
    16 Jun 2014, 11:22 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (5746) | Send Message
     
    Other than the price (if it is $1, no sweat), (NCT)'s listing should be fine.
    16 Jun 2014, 11:23 AM Reply Like
  • fire0nice228
    , contributor
    Comments (40) | Send Message
     
    Have they said anything about a $NEWM dividend or anything. I have no idea what to do with these measley shares of this. Sell and pump it back into $NCT for this new spinoff is what I'm thinking but I don't know..
    16 Jun 2014, 01:41 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (5746) | Send Message
     
    I think I heard that (NEWM) hopes to eventually give a 20% dividend. Don't know when this will happen.
    16 Jun 2014, 04:22 PM Reply Like
  • Len Friedman
    , contributor
    Comments (61) | Send Message
     
    We think alike, fireOnice228. There doesn't seem to be any reason to think that the senior housing REIT will find itself unable to continue paying a distribution equal to the current payout level. At the same time, NEWM suffered a loss the past quarter and if momentum has its way, will likely be hard pressed to be in position to pay dividends in Q3. Add to this that senior housing represents a majority portfolio within Newcastle, accounting for the greater portion of assets on which quarterly payouts are based.

     

    So, yes---why not redeploy your cash by adding to NCT? Or consider PSEC with its guaranteed monthly distributions throughout the balance of this year? And forgive the obvious but you can always move back in to NEWM if the urge strikes you.

     

    Good luck to you!
    16 Jun 2014, 04:10 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (5746) | Send Message
     
    Is (PSEC) a MLP? That 13% dividend looks good.
    16 Jun 2014, 04:31 PM Reply Like
  • COBeeMan
    , contributor
    Comments (1525) | Send Message
     
    No, PSEC is a BDC.
    17 Jun 2014, 08:27 AM Reply Like
  • Len Friedman
    , contributor
    Comments (61) | Send Message
     
    Michael,

     

    Rather than have me set things up for you on PSEC, let me suggest you check it out here at SA. There's a huge amount of information here as it's been in the news. Prospect Capital is in the banking business and pays out much of its net income much like an MLP. As you'll see, though, there's been a lot of setbacks of late due to the SEC having told the company that restatements were in order. PSEC appealed and a couple of days back it turned out that the government relented. However, it's to be assumed the company will seek to avoid duplicating the problem in the future and avoid repeating accusations of impropriety by realigning certain aspects of its approach to recognizing taxability issues.

     

    Type PSEC in the search box. You'll be surprised by the plethora of info.

     

    Something will surely confuse someone new to this stock pick: Is it safe as an investment vehicle?

     

    In the middle of the feud between the company and the government, I doubled my position, going from 3,000 shares to 6,000. The company is on record, having assured shareholders that the dividend is a lock for the balance of the year. Given that it's a monthly payer, there's a built-in flex factor in that you can opt out at any time and move the cash into something else. Meanwhile, there's a half year--- six monthly distributions to be swallowed whole. lol

     

    Good luck to you! And I'd like to hear back as to what you find and decide.

     

    Len
    16 Jun 2014, 10:25 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs