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Why A Sale At $10 Or More Makes The Most Sense For New Senior Investment Group's Shareholders

Jason Phillips profile picture
Jason Phillips


  • New Senior has announced it is “exploring alternatives to maximize shareholder value.”.
  • We think this is a great idea, and will lead to better returns for shareholders.
  • The mostly likely outcome in our view is an outright sale of the company to a third party.
  • Our “fair value” estimate remains $10 to $14.

The Big Announcement

Last Friday during the company's fourth-quarter conference call, New Senior Investment Group's (NYSE:SNR) CEO Susan Givens announced:

In addition to our fourth quarter results and dividend, today we announced that our Board of Directors had been exploring strategic alternatives in an effort to maximize shareholder value. Our Board engaged JP Morgan [Securities LLC as its financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP as its legal advisor] to help us conduct a thorough review of a variety of options.

Source: New Senior's Q4 conference call

Now, an announcement by a company that it is "exploring strategic alternatives in an effort to maximize shareholder value" could mean a lot of different things, for example it could indicate:

  • Asset sales
  • Split-off
  • Spin-off
  • A sale of the company

In the case of SNR, I don't think it's any of the first three, leaving us with the company potentially being sold outright, and here's what's leading me to that conclusion.

The company just completed $296 million of asset sales in Q4 (equal to more than 10% of its total portfolio). There was no announcement of a similar nature made prior to those asset sales taking place - so there should be no reason to expect any different this time around.

And a split-off or spin-off doesn't make logical sense either. SNR is already a "pure play publicly traded senior housing REIT" meaning there's no value to be strategically "unlocked" by breaking up or repackaging the company's holdings. Which leaves us with a "takeover" or outright sale.

This strategy makes perfect sense to us, and we welcome it, as our team has long felt that the public markets were misunderstanding the inherent value present in New Seniors portfolio (more on that below).

Now, it appears Fortress (FIG

This article was written by

Jason Phillips profile picture
Individual Investor with a focus on publicly traded equities and specializing in subjects related to public company valuation. Awarded CFA Charter by CFA Institute in March 2016.

Analyst’s Disclosure: I am/we are long SNR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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