Fortress Unit to Buy Senior-Housing Properties for $1 Billion

A unit of Fortress Investment Group LLC agreed to acquire 52 U.S. senior-housing properties from Holiday Acquisition Holdings LLC for about $1.01 billion.

Newcastle Investment Corp. will pay for the properties, which comprise 5,885 units, with about $300 million of equity and fund the remainder of the purchase with non-recourse mortgage debt, the Fortress affiliate said today in a statement. Newcastle intends to enter into two master leases with Holiday affiliates, with the deal expected to close in December, according to the statement. Rent in the first year will be equal to 6.5 percent of the purchase price, it said.

The U.S. Internal Revenue Service is weighing whether to narrow the legal definition of real estate for the purposes of converting to a real estate investment trust amid a recovery in U.S. property values. Newcastle focuses its investments on senior housing and real estate debt, and conducts its operations to qualify as a REIT, according to the statement.

Holiday is majority-owned by private-equity funds managed by an affiliate of Newcastle’s manager, according to the statement. The properties included in the proposed deal are located in 24 states, and had a 91 percent average occupancy as of Sept. 30, according to the statement.

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