As filed with the Securities and Exchange Commission on October 1 6 , 2014

File No. 001-36499

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 4
to
FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934

New Senior Investment Group Inc.

(Exact name of registrant as specified in its charter)

Delaware
80-0912734
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

1345 Avenue of the Americas
New York, New York 10105
212-479-3140
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Cameron D. MacDougall, Esq.
Fortress Investment Group LLC
1345 Avenue of the Americas
New York, New York 10105
212-479-1522
(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:
Richard B. Aftanas, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-3000

Securities to be registered pursuant to Section 12(b) of the Act:

Title of each class to
be so registered
Name of each exchange on which
each class is to be registered
Common Stock, par value $0.01 per share
New York Stock Exchange

Securities to be registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
(Do not check if a smaller reporting company)
Smaller reporting company
o

NEW SENIOR INVESTMENT GROUP INC.

INFORMATION REQUIRED IN REGISTRATION STATEMENT
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10

Certain information required to be included in this Form 10 is incorporated by reference to specifically identified portions of the body of the Information Statement filed herewith as Exhibit 99.1. None of the information contained in the Information Statement shall be incorporated by reference herein or deemed to be a part hereof unless such information is specifically incorporated by reference.

Item 1.     Business .

The information required by this item is contained under the sections of the Information Statement entitled “Summary,” “Risk Factors,” “Cautionary Statement Regarding Forward-Looking Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Certain Relationships and Transactions with Related Persons, Affiliates and Affiliated Entities” and “Where You Can Find More Information.” Those sections are incorporated herein by reference.

Item 1A.     Risk Factors .

The information required by this item is contained under the sections of the Information Statement entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Information.” Those sections are incorporated herein by reference.

Item 2.     Financial Information .

The information required by this item is contained under the sections of the Information Statement entitled “Summary—Summary Consolidated and Combined Historical and Pro Forma Financial Information,” “Selected Historical Consolidated and Combined Financial Information,” “Unaudited Pro Forma Consolidated Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Those sections are incorporated herein by reference.

Item 3.     Properties .

The information required by this item is contained under the sections of the Information Statement entitled “Business—Our Portfolio.” That section is incorporated herein by reference.

Item 4.     Security Ownership of Certain Beneficial Owners and Management .

The information required by this item is contained under the section of the Information Statement entitled “Principal Stockholders.” That section is incorporated herein by reference.

Item 5.     Directors and Executive Officers .

The information required by this item is contained under the sections of the Information Statement entitled “Management” and “Our Manager and Management Agreement.” Those sections are incorporated herein by reference.

Item 6.     Executive Compensation .

The information required by this item is contained under the sections of the Information Statement entitled “Management—Executive Officer Compensation,” “Management—Nonqualified Stock Option and Incentive Award Plan” and “Our Manager and Management Agreement.” Those sections are incorporated herein by reference.

Item 7.     Certain Relationships and Related Transactions .

The information required by this item is contained under the sections of the Information Statement entitled “Our Manager and Management Agreement,” “Management” and “Certain Relationships and Transactions With Related Persons, Affiliates and Affiliated Entities.” Those sections are incorporated herein by reference.

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Item 8.     Legal Proceedings .

The information required by this item is contained under the section of the Information Statement entitled “Business—Legal Proceedings.” That section is incorporated herein by reference.

Item 9.     Market Price of, and Dividends on, the Registrant’s Common Equity and Related Stockholder Matters .

The information required by this item is contained under the section of the Information Statement entitled “Summary—Questions and Answers About New Senior Investment Group and the Spin-off,” “Our Spin-off from Newcastle,” “Distribution Policy” and “Description of Our Capital Stock.” Those sections are incorporated herein by reference.

Item 10.     Recent Sales of Unregistered Securities .

Not applicable.

Item 11.     Description of Registrant’s Securities to be Registered .

The information required by this item is contained under the section of the Information Statement entitled “Our Spin-off from Newcastle” and “Description of Our Capital Stock.” Those sections are incorporated herein by reference.

Item 12.     Indemnification of Directors and Officers .

The information required by this item is contained under the section of the Information Statement entitled “Description of Our Capital Stock—Limitations on Liability and Indemnification of Directors and Officers.” That section is incorporated herein by reference.

Item 13.     Financial Statements and Supplementary Data .

The information required by this item is contained under the section of the Information Statement entitled “Index to Consolidated and Combined Financial Statements” (and the financial statements and related notes referenced therein). That section is incorporated herein by reference.

Item 14.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .

Not applicable.

Item 15.     Financial Statements and Exhibits .

(a) Financial Statements

The information required by this item is contained under the section of the Information Statement entitled “Index to Consolidated and Combined Financial Statements” (and the financial statements referenced therein). That section is incorporated herein by reference.

(b) Exhibits

See below.

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The following documents are filed as exhibits hereto:

Exhibit
Number
Exhibit Description
2.1**
Form of Separation and Distribution Agreement between New Senior Investment Group Inc. and Newcastle Investment Corp.
3.1**
Form of Amended and Restated Certificate of Incorporation of New Senior Investment Group Inc.
3.2**
Form of Amended and Restated Bylaws of New Senior Investment Group Inc.
10.1**
Form of Management Agreement between New Senior Investment Group Inc. and FIG LLC.
10.2**
Form of Indemnification Agreement by and between New Senior Investment Group Inc. and its directors and officers.
10.3**
Form of New Senior Investment Group Inc. Nonqualified Stock Option and Incentive Award Plan.
10.4
Master Designation Agreement, dated as of July 17, 2012, by and among B Healthcare Properties LLC and the designees listed on the signature pages attached thereto (incorporated by reference to Newcastle Investment Corp.’s Report on Form 8-K, Exhibit 10.1, filed on July 23, 2012).
10.5
Amended and Restated Purchase Agreement, dated as of February 27, 2012, by and among the Purchasers named therein, the Sellers named therein, the Former Sellers named therein and Walter C. Bowen (incorporated by reference to Newcastle Investment Corp.’s Report on Form 8-K, Exhibit 10.2, filed on July 23, 2012).
10.6
Amendment No. 1 to the Amended and Restated Purchase Agreement, dated as of March 30, 2012, by and among the Purchasers named therein, the Sellers named therein, BDC/West Covina II, LLC and Walter C. Bowen (incorporated by reference to Newcastle Investment Corp.’s Report on Form 8-K, Exhibit 10.3, filed on July 23, 2012).
10.7
Amendment No. 2 to the Amended and Restated Purchase Agreement, dated as of April 11, 2012, by and among the Purchasers named therein, the Sellers named therein and Walter C. Bowen (incorporated by reference to Newcastle Investment Corp.’s Report on Form 8-K, Exhibit 10.4, filed on July 23, 2012).
10.8
Amendment No. 3 to the Amended and Restated Purchase Agreement, dated as of April 27, 2012, by and among the Purchasers named therein, the Sellers named therein and Walter C. Bowen (incorporated by reference to Newcastle Investment Corp.’s Report on Form 8-K, Exhibit 10.5, filed on July 23, 2012).
10.9
Amendment No. 4 to the Amended and Restated Purchase Agreement, dated as of June 14, 2012, by and among the Purchasers named therein, the Sellers named therein and Walter C. Bowen (incorporated by reference to Newcastle Investment Corp.’s Report on Form 8-K, Exhibit 10.6, filed on July 23, 2012).
10.10
Amendment No. 5 to the Amended and Restated Purchase Agreement, dated as of July 16, 2012, by and among the Purchasers named therein, the Sellers named therein and Walter C. Bowen (incorporated by reference to Newcastle Investment Corp.’s Report on Form 8-K, Exhibit 10.7, filed on July 23, 2012).
10.11
Master Credit Facility Agreement, dated as of July 18, 2012, by and among the Borrowers named therein, Propco LLC, TRS LLC and Oak Grove Commercial Mortgage, LLC (incorporated by reference to Newcastle Investment Corp.’s Report on Form 8-K, Exhibit 10.8, filed on July 23, 2012).
10.12
Assignment of Master Credit Facility Agreement and Other Loan Documents, dated as of July 18, 2012, from Oak Grove Commercial Mortgage, LLC to Fannie Mae (incorporated by reference to Newcastle Investment Corp.’s Report on Form 8-K, Exhibit 10.9, filed on July 23, 2012).
10.13
Management Agreement, dated as of July 5, 2012, by and between Willow Park Management LLC and Willow Park Leasing LLC (incorporated by reference to Newcastle Investment Corp.’s Report on Form 8-K, Exhibit 10.10, filed on July 23, 2012).
10.14
Purchase and Sale Agreement, dated November 18, 2013, by and between the Sellers named therein and the Purchasers named therein (incorporated by reference to Newcastle Investment Corp.’s Report on Form 10-K, Exhibit 10.16, filed on March 3, 2014).
10.15
Master Lease, dated December 23, 2013, by and among the Landlords named therein and NCT Master Tenant I LLC (incorporated by reference to Newcastle Investment Corp.’s Report on Form 10-K, Exhibit 10.17, filed on March 3, 2014).

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Exhibit
Number
Exhibit Description
10.16
Guaranty of Lease, dated December 23, 2013, by Holiday AL Holdings LP in favor of the Landlords named therein (incorporated by reference to Newcastle Investment Corp.’s Report on Form 10-K, Exhibit 10.18, filed on March 3, 2014).
21.1**
List of Subsidiaries of New Senior Investment Group Inc.
99.1*
Information Statement of New Senior Investment Group Inc., subject to completion, dated October 16, 2014.
99.2**
Audited consolidated financial statements of Holiday AL Holdings LP as of December 31, 2013 and 2012 and for each of the years in the three year period ended December 31, 2013.
99.3**
Audited combined financial statements of NCT Portfolio as of December 31, 2012 and 2011 and for each of the years in the three year period ended December 31, 2012.
99.4**
Unaudited combined interim financial statements of NCT Portfolio as of September 30, 2013 and December 31, 2012, and for the nine month period ended September 30, 2013 and 2012.
99.5**
Audited combined financial statements of TJM Senior Housing Properties as of December 31, 2012 and 2011 and for each of the years in the three year period ended December 31, 2012, and combined unaudited interim financial statements of TJM Senior Housing Properties as of June 30, 2013 and for the six month period ended June 30, 2013 and 2012.

The following property management agreements are being omitted in reliance on Instruction 2 to Item 601 of Regulation S-K, as discussed in Item 1.01 on Newcastle’s Report on Form 8-K filed on July 23, 2012:

Management Agreement, dated as of July 5, 2012, between Sun Oak Management LLC and Sun Oak Leasing LLC.

Management Agreement, dated as of July 5, 2012, between Orchard Park Management LLC and Orchard Park Leasing LLC.

Management Agreement, dated as of July 5, 2012, between Desert Flower Management LLC and Desert Flower Leasing LLC.

Management Agreement, dated as of July 5, 2012, between Canyon Creek Property Management LLC and Canyon Creek Leasing LLC.

Management Agreement, dated as of July 5, 2012, between Regent Court Management LLC and Regent Court Leasing LLC.

Management Agreement, dated as of July 5, 2012, between Sunshine Villa Management LLC and Sunshine Villa Leasing LLC.

Management Agreement, dated as of July 5, 2012, between Sheldon Park Management LLC and Sheldon Park Leasing LLC.

In addition, the following Master Lease and Guaranty of Lease are substantially identical in all material respects, except as to the parties thereto, to the Master Lease and Guaranty of Lease that are filed as Exhibits 10.17 and 10.18, respectively, hereto and are being omitted in reliance on Instruction 2 to Item 601 of Regulation S-K:

Master Lease, dated December 23, 2013, by and among the Landlords named therein and NCT Master Tenant II LLC.

Guaranty of Lease, dated December 23, 2013, by Holiday AL Holdings LP in favor of the Landlords named therein.

* Filed herewith.
** Previously filed.

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 
NEW SENIOR INVESTMENT GROUP INC.
 
By: 
/s/
Cameron D. MacDougall
 
Name:
Cameron D. MacDougall
 
Title:
Secretary

Date: October 16, 2014

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EXHIBIT 99.1

                         , 2014

Dear Newcastle Investment Corp. Stockholder:

We are pleased to inform you that on October 16, 2014, the board of directors of Newcastle Investment Corp. (“Newcastle”) declared the distribution of all the shares of common stock of New Senior Investment Group Inc. (“New Senior Investment Group”), a wholly owned subsidiary of Newcastle, to Newcastle stockholders. New Senior Investment Group holds or will hold prior to the distribution, directly or indirectly, all of Newcastle’s investments in senior housing properties.

Upon the distribution, Newcastle stockholders will own 100% of the common stock of New Senior Investment Group. Newcastle’s board of directors has determined upon careful review and consideration that creating New Senior Investment Group is in the best interests of Newcastle.

The distribution of New Senior Investment Group common stock will occur on November 6, 2014 by way of a taxable pro rata special distribution to Newcastle stockholders of record on the record date of the distribution. Each Newcastle stockholder will be entitled to receive one share of New Senior Investment Group common stock for each share of Newcastle common stock held by such stockholder at the close of business on October 27, 2014, the record date of the distribution, after giving effect to a one-for-two reverse stock split of Newcastle common stock. The New Senior Investment Group common stock will be issued in book-entry form only, which means that no physical stock certificates will be issued.

Stockholder approval of the distribution is not required, and you are not required to take any action to receive your New Senior Investment Group common stock.

Following the distribution, you will own shares in both Newcastle and New Senior Investment Group. The number of Newcastle shares you own will change as a result of the reverse stock split but will not change as a result of this distribution. Newcastle’s common stock will continue to trade on The New York Stock Exchange under the symbol “NCT.” New Senior Investment Group intends to list its common stock on The New York Stock Exchange under the symbol “SNR.”

The Information Statement, which is being mailed to all holders of Newcastle common stock on the record date for the distribution, describes the distribution in detail and contains important information about New Senior Investment Group, its business, financial condition and operations. We urge you to read the Information Statement carefully.

We want to thank you for your continued support of Newcastle and we look forward to your future support of New Senior Investment Group.

Sincerely,

Kenneth M. Riis
Chief Executive Officer

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                , 2014

Dear Future New Senior Investment Group Inc. Stockholder:

It is our pleasure to welcome you as a stockholder of our company, New Senior Investment Group Inc. (“New Senior Investment Group”). Following the spin-off of our company from Newcastle Investment Corp. (“Newcastle”), we will be a newly listed public real estate investment trust with a diversified portfolio of senior housing properties across the United States. We will be externally managed by FIG LLC (“FIG”), an affiliate of Fortress Investment Group LLC (“Fortress”). As a result of our management agreement with FIG, we are able to draw upon the long-standing expertise and resources of Fortress, a global investment management firm with $63.8 billion of alternative and traditional assets under management as of June 30, 2014.

Our goal is to drive strong risk-adjusted returns primarily through investments in the senior housing sector of healthcare real estate, including dedicated independent living facilities and properties with some combination of independent living, assisted living or memory care facilities. Our investment guidelines will be purposefully broad to enable us to make investments in a wide array of assets. We expect our senior housing investments will be structured as either (i) triple net lease arrangements where we purchase property and enter into a long term lease with a tenant or (ii) managed properties whereby we enter into a management agreement with an operator of properties we acquire in a RIDEA compliant structure allowing us to participate directly in the cash flow of the property. We intend to invest in assets that generate significant cash flows and have the potential for meaningful capital appreciation. We expect to generate attractive and reliable returns for our stockholders by investing in a diversified portfolio of assets with an emphasis on private pay sources of revenue, while maintaining financial strength and flexibility.

We were formed as Newcastle Senior Living Holdings LLC, a Delaware limited liability company and wholly owned subsidiary of Newcastle, in May 2012. We converted to a Delaware corporation on May 30, 2014 and changed our name to New Senior Investment Group Inc. on June 16, 2014. We intend to list our common stock on The New York Stock Exchange under the symbol “SNR.”

We invite you to learn more about New Senior Investment Group by reviewing the enclosed Information Statement. We urge you to read the Information Statement carefully. We look forward to our future and to your support as a holder of New Senior Investment Group common stock.    

Sincerely,

Susan Givens
Chief Executive Officer

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The information in this information statement is subject to completion or amendment. A registration Statement on Form 10 relating to these securities has been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

SUBJECT TO COMPLETION
PRELIMINARY INFORMATION STATEMENT DATED OCTOBER 1 6 , 2014

INFORMATION STATEMENT

New Senior Investment Group Inc.

Common Stock
(Par Value, $0.01 Per Share)

This Information Statement is being furnished in connection with the distribution by Newcastle Investment Corp. (“Newcastle”) to its stockholders of the outstanding shares of common stock of New Senior Investment Group Inc. (together with its subsidiaries, “New Senior Investment Group” or the “Company,” and “we,” “us” and “our”), a wholly owned subsidiary of Newcastle. New Senior Investment Group holds or will hold, directly or indirectly, all of Newcastle’s investments in senior housing properties, including our managed properties and triple net lease properties which are comprised of dedicated independent living properties (“IL-only properties”) and properties with some combination of independent living and healthcare services, including assisted living and memory care properties (“AL/MC properties”). To implement the distribution, Newcastle will distribute the shares of New Senior Investment Group common stock on a pro rata basis.

For every share of common stock of Newcastle held of record by you as of the close of business on October 27, 2014, the record date for the distribution, you will receive one share of New Senior Investment Group common stock, after giving effect to a one-for-two reverse stock split of Newcastle common stock. As discussed under “Our Spin-off from Newcastle—Market for Common Stock—Trading Between the Record Date and Distribution Date,” if you sell your shares of common stock of Newcastle in the “regular-way” market after the record date and before the spin-off, you also will be selling your right to receive shares of our common stock in connection with the spin-off. See “Our Spin-off from Newcastle—Market for Common Stock—Trading Between the Record Date and Distribution Date.” We expect the shares of New Senior Investment Group common stock to be distributed by Newcastle to you on November 6, 2014. We refer to the date of the distribution of New Senior Investment Group common stock as the “distribution date.”

No vote of Newcastle’s stockholders is required in connection with this distribution. Therefore, you are not being asked for a proxy, and you are requested not to send us a proxy, in connection with the spin-off. You do not need to pay any consideration, exchange or surrender your existing shares of common stock of Newcastle or take any other action to receive your shares of New Senior Investment Group common stock.

New Senior Investment Group is an “emerging growth company” as defined under the federal securities laws. See “Summary—Operational and Regulatory Structure—Emerging Growth Company Status.”

There is no current trading market for New Senior Investment Group common stock, although we expect that a limited market, commonly known as a “when-issued” trading market, will develop on or shortly before the record date for the distribution, and we expect “regular-way” trading of New Senior Investment Group common stock to begin on the first trading day following the completion of the spin-off. New Senior Investment Group has applied to list its common stock on The New York Stock Exchange (“NYSE”) under the symbol “SNR.”

New Senior Investment Group intends to elect and qualify to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with its initial taxable year ending December 31, 2014. To assist it in qualifying as a REIT, among other purposes, stockholders will generally be restricted from owning more than 9.8% by value or number, whichever is more restrictive, of its outstanding shares of common stock, or 9.8% by value or number, whichever is more restrictive, of its outstanding shares of capital stock. In addition, New Senior Investment Group’s amended and restated certificate of incorporation (“certificate of incorporation”) will contain various other restrictions on the ownership and transfer of its common stock. See “Description of Our Capital Stock—Restrictions on Ownership and Transfer of Our Capital Stock.”

In reviewing this Information Statement, you should carefully consider the matters described under the caption “Risk Factors” beginning on page 21 .

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved these securities or determined if this Information Statement is truthful or complete. Any representation to the contrary is a criminal offense.

This Information Statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

This Information Statement will be first mailed to Newcastle stockholders on or about                    , 2014.

The date of this Information Statement is                    , 2014.

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Industry Data

Unless otherwise indicated, information contained in this Information Statement concerning the senior housing industry, including our general expectations and market position and market opportunity, is based on information from various sources (including government and industry publications, surveys, analyses, valuations and forecasts and our internal research), assumptions that we have made (which we believe are reasonable based on those data from such sources and other similar sources) and our knowledge of the industry. The projections, assumptions and estimates of our future performance and the future performance of the senior housing industry are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under “Risk Factors” included elsewhere in this Information Statement. These and other factors could cause results to differ materially from those expressed in the estimates included in this Information Statement.

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Summary

This summary highlights selected information from this Information Statement relating to New Senior Investment Group , our spin-off from Newcastle and the distribution of our common stock by Newcastle to Newcastle’s stockholders. For a more complete understanding of our business and the spin-off, you should carefully read the entire Information Statement.

Our Company

We will be a publicly traded REIT with a diversified portfolio of senior housing properties across the United States. Our portfolio at June 30, 2014 is composed of 56 IL-only properties 35 AL/MC and 4 continuing care retirement communities (“CCRC”) properties located across 27 states. 38 of our properties are operated pursuant to property management agreements (“managed properties”) and 57 properties are triple net lease properties (“triple net lease properties”). Our managed properties are managed by affiliates or subsidiaries of either Holiday Acquisitions Holdings LLC (“Holiday”) or FHC Property Management LLC (together with its subsidiaries, “Blue Harbor”), and our triple net lease properties are either leased to an affiliate of Holiday or LCS, a third party. Holiday is one of the largest senior housing property owners in North America.

We conduct our business through two reportable business segments: (1) Managed Properties; and (2) Triple Net Lease Properties.

We will be externally managed and advised by FIG LLC (our “Manager”). Our Manager is an affiliate of Fortress Investment Group LLC (“Fortress”), a leading global investment management firm with $63.8 billion of assets under management as of June 30, 2014. Fortress, through the private equity funds managed by its affiliates, is a large investor in the senior housing sector. Private equity funds managed by an affiliate of our Manager currently own a majority of Holiday and, until recently, a minority interest in Brookdale Senior Living, Inc. (“Brookdale”) (NYSE:BKD). Blue Harbor is an affiliate of our Manager. We intend to leverage Fortress’s nearly 15 years of experience in the senior housing industry to assist us in retaining best-in-class property managers, sourcing and completing attractive acquisitions.

We intend to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes, commencing with our initial taxable year ending December 31, 2014. We generally will not be subject to U.S. federal income taxes on our REIT taxable income to the extent that we annually distribute all of our REIT taxable income to shareholders and qualify and maintain our qualification as a REIT. We intend to conduct certain activities through taxable REIT subsidiaries (each, a “TRS”), which will be subject to U.S. federal and state income taxes.

Prior to the spin-off, we are a wholly owned subsidiary of Newcastle, which is a NYSE-listed REIT that is externally managed and advised by our Manager.

Investment Opportunity

We believe there are significant investment opportunities in the U.S. senior housing market driven by three factors: (i) growing demand from significant increases in the senior citizen population and only modest levels of new construction, (ii) highly fragmented ownership of senior housing properties among many smaller local (or “mom and pop”) and regional owner/operators, and (iii) operational improvement opportunities to increase property-level net operating income leveraging the experience and economies of scale of our Manager. According to the 2013 American Seniors Housing Association (“ASHA”) 50 Report, approximately 66% of senior housing facilities in the U.S. are owned by mom and pop operators with 15 or fewer properties. Our investments are structured as either triple net leases or managed properties whereby we have entered into a management agreement with an affiliate in a RIDEA compliant structure allowing us to participate directly in the cash flows of the facilities.

Distinctive Private Pay Senior Housing Focus

We believe that our senior housing strategy is more focused than many of our publicly traded peers. The senior housing industry offers a full continuum of care to seniors, with product types that range from “mostly housing” (i.e., senior apartments) to “mostly healthcare” (i.e., skilled nursing, hospitals, etc.). We primarily focus on product types at the center of this continuum, namely IL-only properties and AL/MC properties. Many of our peers have significant exposure to skilled nursing facilities and hospitals, providing higher acuity levels of healthcare. Accordingly, these peers have higher levels of exposure to revenues derived from Medicaid and Medicare reimbursement. Our facilities are predominantly reliant on private pay sources of revenue and have limited risk exposure to regulatory changes in

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the healthcare arena. We believe that our portfolio of IL-only and AL/MC properties will allow investors to participate in the positive fundamentals of the senior housing sector without similar levels of risk exposure associated with higher acuity types of healthcare real estate.

We will generally seek investments in senior housing facilities that have an emphasis on private pay sources of revenue. For the six months ended June 30, 2014 private pay sources represented 98% of the property level revenue from residents at our facilities. Private pay residents are individuals who are personally obligated to pay the costs of their housing and services without relying significantly on reimbursement payments from Medicaid or Medicare. Sources for these private payments include: (i) pensions, savings, and retirement funds; (ii) proceeds from the sale of real estate and personal property; (iii) assistance from residents’ families; and (iv) private insurance. While our facilities may have some level of revenues related to government reimbursements, we intend to focus on investments with predominately private pay revenue. Private pay facilities are not subject to governmental rate setting and, accordingly, we believe they provide for more predictable and higher rental rates from residents than facilities primarily reliant on government-funded sources.

Attractive Portfolio and Robust Pipeline

Our portfolio is diversified in terms of product type, operating model and geography. At June 30, 2014, we have 56 IL-only properties, 35 AL/MC properties and 4 CCRC properties across 27 states. 57 of our properties (52 IL-only properties, four CCRC properties and one AL/MC property) are triple net lease properties, and the balance of our portfolio (four IL-only properties and 34 AL/MC properties) is managed properties.

In January 2014, we completed the acquisitions of two senior housing properties (one IL-only and one AL/MC) which collectively have 261 beds. These acquisitions represented an investment of $23 million and were financed with $17 million of non-recourse mortgage notes. In May 2014, we acquired three AL/MC properties for $22 million, which was financed with approximately $16 million of non-recourse mortgage notes. These properties were integrated into our Managed Properties segment. In June 2014, we acquired six senior housing properties (one IL-only, one AL/MC, and four CCRC, which collectively have 1,267 beds and represented an investment of $183 million and were financed with cash on hand. A CCRC is a particular type of retirement community that offers several levels (generally more than three) of health care at one facility or campus, often including independent living, assisted living/memory care and skilled nursing home. CCRCs offer a tiered approach to the aging process, accommodating residents' changing needs as they age. These properties were integrated into our Triple Net Lease Properties segment. On August 21, 2014, we completed the acquisition of one IL/AL/MC property in Texas, which has 240 beds, for $45 million, which was financed with $34 million of non-recourse mortgage notes. This property will be integrated into our Managed Properties segment. In September 2014, we completed two acquisitions of three AL/MC properties, which collectively have 184 beds, for $28 million, which was financed with approximately $14 million of non-recourse mortgage notes. These properties will be integrated into our Managed Properties segment.

As of October 3, 2014, we have entered into purchase and sale agreements for one property and non-binding letters of intent granting us an exclusive right to negotiate purchase and sale agreements for ten properties. These 11 properties have an aggregate estimated value of approximately $198 million. There can be no assurance that we will acquire any of these properties. The acquisition of each of these properties is subject to various conditions, including the completion of due diligence and, in the case of properties subject to a letter of intent, the entry into a purchase and sale agreement. Moreover, the purchase and sale agreements that we have entered into contain meaningful closing conditions, such as the satisfaction of specified occupancy thresholds prior to closing, financing and the negotiation of definitive agreements. Moreover, any senior housing property that we acquire in the future may have different characteristics and expected returns than those in our existing portfolio and may expose us to additional regulatory and operational risks. See “Business—Senior Housing Industry—Government Regulations.”

Consolidation Op por tunity of Fragmented Industry

We believe there is a high degree of fragmentation among both senior housing owners and operators based on data from the National Investment Center (“NIC”) and ASHA indicating a high percentage of smaller local and regional operators controlling many markets. We believe an opportunity exists to continue to participate in the consolidation of this fragmented industry as many of these owner/operators may decide to sell their portfolios. An attractive investment opportunity exists to acquire high quality properties where operational performance can be improved by leveraging the experience of our Manager. Furthermore, we believe these properties are too small to attract many

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larger REIT and other institutional investors, affording us the opportunity to acquire properties at attractive prices in a less competitive environment than larger portfolios. As of June 30, 2014, 96% of our properties were sourced in non-brokered transactions.

Attractive Demand – Supply Dynamics

We believe that the rapidly growing senior citizen population in the U.S. will result in a substantially increased demand for senior housing properties as the baby boomer generation ages, life expectancies lengthen, and more health related services are demanded. The U.S. Census Bureau estimates that the total number of Americans aged 65 and older is expected to increase from approximately 47.7 million in 2015 to 77.3 million by 2035, with the number of citizens aged 65 and older expected to grow at four times the rate of the overall population by 2035. Healthcare is the single largest private-sector industry sector in the U.S., with healthcare expenditures in the U.S. accounting for approximately 17% of gross domestic product in December 2013. According to the Centers for Medicare and Medicaid Services (“CMS”) the average compounded growth rate for national healthcare expenditures from 2015 through 2022 is expected to be 6.2%. Senior citizens are the largest consumers of healthcare services. The target age group for our properties is Americans over 70 years old while a typical resident is 80 to 85 years of age. According to CMS, average per capita healthcare expenditures by those 65 years and older continue to be about three times more than the average spent by those 19 to 64 years old.

Demand for senior housing is driven both by growth of an aging population and by an increasing array of services and support required by residents. According to the U.S. Census Bureau in 2010, the percentage of Americans between ages 75 and 79 seeking assistance with activities of daily living is 15%, increasing to 30% for Americans over 80 years of age. According to the Alzheimer’s Association over one-third of individuals over age 85 have Alzheimer’s disease. Senior housing provides varying and flexible levels of services depending on resident needs. While our target population is growing, the rate of supply growth of new senior housing facilities remains modest. During the recent recession, according to NIC, senior housing units under construction declined significantly beginning in 2008 and continued at a slower pace in 2012. While construction increased in 2013 over 2012 unit levels, the pace of construction of new units continues to be modest.

Manager Expertise Owning & Operating Senior Housing

We will be externally managed and advised by an affiliate of Fortress, a leading global investment management firm with $63.8 billion of assets under management as of June 30, 2014. Fortress, through the private equity funds it manages, is a large investor in the senior housing sector. Private equity funds managed by an affiliate of our Manager currently own a majority of Holiday and, until recently, a minority interest in Brookdale. Blue Harbor is an affiliate of our Manager. We intend to leverage Fortress’s 15 years of experience in the senior housing industry to assist us in retaining best-in-class property managers, sourcing and completing acquisitions with attractive risk-adjusted returns.

Our Manager and its affiliates have a far-reaching presence in consumer-facing industries across the United States, through Fortress’s investments in healthcare, leisure, gaming, real estate, and transportation companies. Due to this presence, we believe we are able to achieve volume discounts for services and products at many of our properties, such as insurance and food and beverage. These types of benefits often allow us to be a more competitive bidder for small- and mid-sized managed properties than other potential buyers.

Tax Efficient REIT Status

We will elect to be treated as a REIT, and we intend to operate in conformity with the requirements for qualification and taxation as a REIT. REIT status will provide us with certain tax advantages compared to some of our competitors. Those advantages include an ability to reduce our corporate-level income taxes by making dividend distributions to our stockholders, and an ability to pass our capital gains through to our stockholders in the form of capital gains dividends. We believe our REIT status will provide us with a significant advantage as compared to other companies or industry participants who do not have a similar tax efficient structure.

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Our Portfolio

The key characteristics of our portfolio are set forth in the table below (dollars in thousands):

 
 
 
Real estate investments (1) as of
June 30 , 2014
Revenues for the
six months ended
June 30 , 2014
Operating
model
Number of
communities
Number
of beds
Real estate
investment
Percent of
total real estate
investment
Real estate
investment
per bed
Total
revenues
Percent of
total
revenues
Number
of states
Managed Properties
 
38
 
 
4,870
 
$
544,844
 
 
31.5
%
$
111.9
 
$
72,814
 
 
62.0
%
 
14
 
Triple Net Lease Properties
 
57
 
 
7,107
 
 
1,185,131
 
 
68.5
%
 
166.8
 
 
44,644
 
 
38.0
%
 
24
 
Total
 
95
 
 
11,977
 
$
1,729,975
 
 
100.0
%
 
 
 
$
117,458
 
 
100.0
%
 
27
(3)
 
 
 
Real estate investments (1) as of
December 31, 2013
Revenues for the
year ended
December 31, 2013
Operating
model
Number of
communities
Number
of beds
Real estate
investment
Percent of
total real estate
investment
Real estate
investment
per bed
Total
revenues (2)
Percent of
total
revenues
Number
of states
Managed Properties
 
33
 
 
4,453
 
$
496,016
 
 
33.1
%
$
111.4
 
$
83,218
 
 
97.7
%
 
11
 
Triple Net Lease Properties
 
51
 
 
5,840
 
 
1,000,475
 
 
66.9
%
 
171.3
 
 
1,918
 
 
2.3
%
 
24
 
Total
 
84
 
 
10,293
 
$
1,496,491
 
 
100.0
%
 
 
 
$
85,136
 
 
100.0
%
 
25
(3)

(1) Real estate investments represent the carrying value of real estate excluding accumulated depreciation and amortization.
(2) Revenues relate to the period the properties were owned by us in 2013 and, therefore, are not indicative of full-year results for all properties. For example, the triple net lease properties were acquired on December 23, 2013.
(3) Our senior housing properties are located in 25 different states at December 31, 2013. In ten of these states, we own both managed properties and triple net lease properties. As of June 30, 2014 our senior housing properties are located in 27 different states. In eleven of these states, we own both managed properties and triple net lease properties.

We divide our properties into two reportable segments: (1) Managed Properties, which are operated by property managers pursuant to property management agreements, and (2) Triple Net Lease Properties, which we lease to tenants. Our investment guidelines are purposefully broad to enable us to make investments in a wide array of assets, and we actively explore new business opportunities and asset categories as part of our business strategy. Our Managed Property segment owns various types of senior housing properties and provides our customers with a broad range of product types and services. Our Triple Net Lease Properties segment leases senior housing properties on a long-term basis whereby we do not manage the underlying operations, as our tenants are typically responsible for bearing the operating costs, including maintenance, utilities, taxes, insurance, repairs, and capital improvements. Because of such differences in the nature of the segments’ activities, each segment requires a different type of management focus. Our Management separately evaluates the performance of our Managed Properties segment from that of our Triple Net Lease Properties segment.

Product Type

The senior housing industry offers a full continuum of care to seniors, with product types that range from “mostly housing” (i.e., senior apartments) to “mostly healthcare” (i.e., skilled nursing, hospitals, etc.). We primarily focus on product types at the center of this continuum, namely IL-only properties, AL/MC properties and CCRC properties.

IL-Only Properties

As of June 30, 2014, our portfolio includes 56 IL-only properties, of which 52 are triple net lease properties and four are managed properties. IL-only properties are age-restricted, multifamily properties with central dining that provide residents access to meals and other services such as housekeeping, linen service, transportation and social and recreational activities. A typical resident is 80 to 85 years old and is relatively healthy. Residents are typically charged all-inclusive monthly rates.

AL/MC P roperties

As of June 30, 2014, our portfolio includes 35 AL/MC properties, of which 34 are managed properties and one is triple net lease property. AL/MC properties are state-regulated rental properties that provide the same services as IL-only properties and additionally have staff to provide residents assistance with activities of daily living, such as

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management of medications, bathing, dressing, toileting, ambulating and eating. AL/MC properties may include memory care properties that specifically provide care for individuals with Alzheimer’s disease and other forms of dementia or memory loss. The average age of an AL/MC resident is similar to that of an IL-only resident, but AL/MC residents typically have greater healthcare needs. Residents are typically charged all-inclusive monthly rates for IL-only services and additional “care charges” for AL/MC services, which vary depending on the types of services required. AL/MC properties are generally private pay, although many states will allow residents to cover a portion of the cost with Medicaid.

CCRC Properties

As of June 30, 2014, our portfolio includes 4 CCRC properties, all of which are triple net lease properties. CCRCs are a particular type of retirement community that offers several levels (generally more than three) of health care at one facility or campus, often including independent living, assisted living/memory care and skilled nursing home. CCRCs offer a tiered approach to the aging process, accommodating residents’ changing needs as they age.

Operating Model

We divide our properties into two reportable segments: (1) Managed Properties, which are operated by property managers pursuant to property management agreements, and (2) Triple Net Lease Properties, which we leased to tenants.

Managed Properties

As of June 30, 2014, our portfolio includes 38 managed properties managed by either Blue Harbor or Holiday. These properties include four IL-only properties and 34 AL/MC properties. We enter into long-term property management agreements for our managed properties. Currently, all of our property management agreements have initial ten-year terms, with successive automatic one-year renewal periods. Under these agreements, we pay annual property management fees. For AL/MC properties, we pay base management fees equal to 6% of effective gross income (i.e., revenue) for the first two years and 7% thereafter. For IL-only properties, we pay base management fees of 5% of effective gross income. As the owner of the managed properties, we are responsible for the properties’ operating costs, including repairs, maintenance, capital expenditures, utilities, taxes, insurance and the payroll expense of property-level employees. The payroll expense, which is included in property operating expenses in our consolidated statement of operations, is structured as a reimbursement to the property manager, who is the employer of record.

We have various rights as the property owner under our property management agreements, including rights to set budget guidelines and to terminate and exercise remedies under those agreements as provided therein. However, we rely on our property managers’ personnel, expertise, technical accounting resources and information systems, proprietary information, good faith and judgment to manage our senior housing operations efficiently and effectively. We also rely on our property managers to set appropriate resident fees and to otherwise operate our senior housing communities in compliance with the terms of our property management agreements and all applicable laws and regulations.

Triple Net Lease Properties

As of June 30, 2014, our portfolio includes 57 triple net lease properties (the “Holiday Portfolio” and the “LCS Portfolio”). These properties include 52 IL-Only properties, 4 CCRC properties and one AL/MC property, and are located across 24 states with 7,107 beds in aggregate. These properties are leased to certain affiliates of Holiday and LCS (collectively, the “Master Tenants”) pursuant to the triple net leases. Our triple net lease arrangements have initial terms of 15 and 17 years and include renewal options and periodic rent increases ranging from 2.5% to 4.5% based on changes in Consumer Price Index (“CPI”). Under each master lease, the respective Master Tenant is typically responsible for (i) operating its portion of the portfolio and bearing the related costs, including repairs, maintenance, capital expenditures, utilities, taxes, insurance, and the payroll expense of property-level employees, and (ii) complying with the terms of the mortgage financing documents. The obligations of the tenant under the master leases for the Holiday Portfolio are guaranteed to us by a subsidiary of Holiday (the “Guarantor”).

Reasons for the Spin- o ff

Newcastle’s board of directors periodically reviews strategic alternatives. The board of directors determined upon careful review and consideration that the spin-off of New Senior Investment Group is in the best interests of Newcastle. The board of directors’ determination was based on a number of factors, including those set forth below.

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Creation of two focused companies . After the spin-off, we will focus primarily on investments in senior housing properties, and Newcastle will focus primarily on harvesting its investments in commercial real estate related assets and making opportunistic investments.

Potential for a higher aggregate market value for stockholders . The spin-off will enable potential investors and the financial community to evaluate the performance of our and Newcastle’s remaining portfolio separately, which we believe could result in a higher aggregate market value than Newcastle’s pre-spin value. We believe the spin-off will enable each business to cultivate a distinct identity and to appeal to different types of investors. For example, some traditional property REIT investors are currently restricted from investing in Newcastle due to its legacy collateralized debt obligations.

Tailored capital structure and financing options . After the spin-off, we and Newcastle will have the flexibility to tailor our respective capital structures to our individual needs, and, as separate companies, we may each be able to attain more favorable financing terms and a lower blended cost of capital. In addition, tailored capital structures will facilitate our and Newcastle’s ability to pursue acquisitions and strategic alliances possibly using common stock as currency.

The anticipated benefits of the spin-off are based on a number of assumptions, and there can be no assurance that such benefits will materialize to the extent anticipated or at all. In the event that the spin-off does not result in such benefits, the costs associated with the transaction, including an expected increase in management compensation and general and administrative expenses, could have a negative effect on our and Newcastle’s financial condition and ability to make distributions to stockholders. For more information about the risks associated with the spin-off, see “Risk Factors.”

Financing Strategy

We expect to maintain a capital structure that provides the resources and flexibility to position us favorably to capitalize on our strategic growth opportunities. Our access to and cost of external capital is important to our ability to make future investments that provide attractive risk-adjusted returns.

We have historically relied on non-recourse mortgage notes and equity from Newcastle (“Parent”) to finance our investments. We expect, over time, to obtain access to additional sources of liquidity including, but not limited to, revolving credit agreements, bank debt, U.S. government agency financing and the unsecured public debt and equity markets. Generally, we attempt to match the long term duration of our investments with staggered maturities of long term debt and equity.

Our Manager and Our Management Agreement

Prior to the completion of the distribution, we will enter into a management agreement with our Manager (the “Management Agreement”). Pursuant to the terms of the Management Agreement, our Manager will provide a management team that will be responsible for implementing our business strategy and performing certain services for us. Our Manager’s duties will include: (1) performing all of our day-to-day functions, (2) determining investment criteria in conjunction with, and subject to the supervision of, our board of directors, (3) sourcing, analyzing and executing on investments and sales, (4) performing investment and liability management duties, including financing and hedging and (5) performing financial and accounting management. For its services, our Manager will be entitled to an annual management fee and incentive compensation. In addition, upon the successful completion of an offering of our common stock by us, we will issue to our Manager options equal to 10% of the number of shares sold in the offering. Our Management Agreement has an initial ten-year term and will be automatically renewed for one-year terms thereafter unless terminated either by us or our Manager. Certain terms of the Management Agreement are summarized below and described in more detail under “Our Manager and Management Agreement” elsewhere in this Information Statement.

Type
Description
Management Fee
1.5% per annum of our gross equity calculated and payable monthly in arrears in cash. Gross equity is generally the equity invested by Newcastle as of the distribution date, as defined, plus the aggregate offering price from stock offerings, plus certain capital contributions to subsidiaries, less capital distributions (calculated without regard to depreciation and amortization) and repurchases of common stock.

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Type
Description
Incentive Compensation
Our Manager will be entitled to receive on a quarterly basis annual incentive compensation in an amount equal to the product of (A) 25% of the dollar amount by which (1)(a) funds from operations (“FFO”) before the incentive compensation per share of common stock, plus (b) gains (or losses) from sales of property, plus (c) internal and third party acquisition-related expenses, plus (d) unconsummated transaction expenses, and plus (e) Other Non-Routine Items (as defined herein), in each case per share of common stock, exceed (2) an amount equal to (a) the weighted average value per share of the equity invested by Newcastle as of the distribution date and the price per share of our common stock in any offerings by us (adjusted for prior capital dividends or capital distributions, which shall be calculated without regard to depreciation and amortization) multiplied by (b) a simple interest rate of 10% per annum, multiplied by (B) the weighted average number of shares of common stock outstanding.
 
 
 
FFO means net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciable real estate assets, impairment charges of depreciable real estate, plus real estate depreciation and amortization (excluding depreciation on non-real estate assets such as furniture, fixtures and equipment), and after adjustments required to account for earnings attributable to unconsolidated partnerships and joint ventures on the basis of FFO. The computation of FFO may be adjusted by our independent directors upon reasonable request by our Manager based on changes in, or certain applications of, GAAP. FFO will be determined from the date of the spin-off without regard to Newcastle’s prior performance.
 
 
Reimbursement of Expenses
We will pay or reimburse our Manager for performing certain legal, accounting, due diligence tasks and other services that outside professionals or outside consultants otherwise would perform, provided that such costs and reimbursements are no greater than those which would be paid to outside professionals or consultants on an arm’s-length basis.
 
 
 
We also pay all operating expenses, except those specifically required to be borne by our Manager under our Management Agreement. The expenses required to be paid by us include, but are not limited to, issuance and transaction costs incidental to the sourcing, evaluation, acquisition, management, disposition and financing of our investments, legal, underwriting, sourcing, asset management and auditing fees and expenses, the compensation and expenses of our independent directors, the costs associated with the establishment and maintenance of any credit facilities and other indebtedness of ours (including commitment fees, legal fees, closing costs, etc.), expenses associated with other securities offerings of ours, the costs of printing and mailing proxies and reports to our stockholders, costs incurred by employees or agents of our Manager for travel on our behalf, costs associated with any computer software or hardware that is used solely for us, costs to obtain liability insurance to indemnify our directors and officers and the compensation and expenses of our transfer agent.
 
 
Termination Fee
The termination fee is a fee equal to the sum of (1) the amount of the management fee during the 12 months immediately preceding the date of termination and (2) the “Incentive Compensation Fair Value Amount.” The “Incentive Compensation Fair Value Amount” is an amount equal to the incentive compensation that would be paid to the Manager if our assets were sold for cash at their then current fair market value.

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Summary Risk Factors

You should carefully read and consider the risk factors set forth under “Risk Factors,” as well as all other information contained in this Information Statement. If any of the following risks occur, our business, financial condition, and results of operations could be materially and adversely affected, and the trading price of our common stock could decline.

We have no operating history as an independent company and may not be able to successfully operate our business or generate sufficient revenue to make or sustain distributions to our stockholders.
The financial information included in this Information Statement may not be indicative of the results we would have achieved as a separate stand-alone company and is not a reliable indicator of our future performance or results.
Our determination of how much leverage to apply to our investments may adversely affect our return on our investments and may reduce cash available for distribution.
Our inability to obtain financing on favorable terms, if at all, may impede our ability to grow.
The income from our managed properties depends on the ability of our property managers to successfully operate these properties.
Our ability to continue to maintain or improve occupancy levels at our senior housing properties, specifically in our Managed Properties segment, may have a material adverse effect on the returns we achieve on our investments.
Increases in labor costs at our senior housing properties may have a material adverse effect on our business.
Termination of assisted living resident agreements and resident attrition could adversely affect our business.
Our property managers and tenants (including the Master Tenants) may be faced with significant litigation and rising insurance costs, which could adversely affect their ability to obtain and maintain adequate insurance and to fulfill their payment and other obligations to us and the values of our properties.
Our property managers and tenants (including the Master Tenants) are required to comply with laws relating to the operation of our properties, and the failure to do so could adversely affect their ability to fulfill their payment and other obligations to us and the values of our properties.
Our properties and their operations are subject to extensive regulations.
Our acquisitions of senior housing properties may not be successful.
Competition may affect the ability of our property managers and tenants (including the Master Tenants) to fulfill their obligations to us or our ability to grow our investment portfolio.
Our investments are concentrated in senior housing real estate, making us more vulnerable economically to adverse changes in the real estate market and the senior housing industry than if our investments were diversified.
All of our revenue is attributable to properties managed by two property managers, Holiday and Blue Harbor, and tenants affiliated with Holiday pursuant to our triple net lease arrangement.
The geographic concentration of our assets in Florida and Texas may result in losses due to our significant exposure to the effects of economic and real estate conditions in those markets.
We are dependent on our Manager and may not find a suitable replacement in the event that the Management Agreement is terminated.
There are conflicts of interest in our relationship with our Manager.
Our directors do not approve each investment decision made by our Manager, and we may change our investment strategy without stockholder consent.
We may be unable to achieve some or all of the benefits that we expect to achieve from our spin-off from Newcastle.
We may compete with affiliates of our Manager, which could adversely affect our results of operations.

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Newcastle’s failure to qualify as a REIT could cause us to lose our REIT status. Our failure to qualify as a REIT would result in higher taxes and reduced cash available for distribution to our stockholders.
REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan.
The lease of our properties to our TRSs is subject to special requirements.
There can be no assurance that the market for our stock will provide you with adequate liquidity.
Your percentage ownership in New Senior Investment Group may be diluted in the future.

Conflicts of Interest

Although we will establish certain policies and procedures designed to mitigate conflicts of interest, there can be no assurance that these policies and procedures will be effective in doing so. It is possible that actual, potential or perceived conflicts of interest could give rise to investor dissatisfaction, litigation or regulatory enforcement actions. Below is a summary of certain factors that could result in conflicts of interest.

One or more of our officers and directors have responsibilities and commitments to entities other than us, including, but not limited to, Newcastle. In addition, we do not have a policy that expressly prohibits our directors, officers, securityholders or affiliates from engaging for their own account in business activities of the types conducted by us. Moreover, our certificate of incorporation will provide that if any of the officers, directors or employees of Newcastle or Fortress acquire knowledge of a potential transaction that could be a corporate opportunity for us, they have no duty, to the fullest extent permitted by law, to offer such corporate opportunity to us. In the event that any of our directors and officers who is also a director, officer or employee of Newcastle or Fortress acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as a director or officer of us and such person acts in good faith, then such person is deemed to have fully satisfied such person’s fiduciary duties owed to us and is not liable to us, to the fullest extent permitted by law, if Newcastle or Fortress or their affiliates, pursues or acquires the corporate opportunity or if such person does not present the corporate opportunity to us. See “Risk Factors—Risks Related to Our Manager—There are conflicts of interest in our relationship with our Manager.”

Our key agreements, including our Management Agreement, were negotiated among related parties, and their respective terms, including fees and other amounts payable, may not be as favorable to us as terms negotiated on an arm’s-length basis with unaffiliated parties.

The structure of the Manager’s compensation arrangement may have unintended consequences for us. We have agreed to pay our Manager a management fee that is not tied to our performance and incentive compensation that is based entirely on our performance. The management fee may not sufficiently incentivize our Manager to generate attractive risk-adjusted returns for us, while the performance-based incentive compensation component may cause our Manager to place undue emphasis on the maximization of earnings, including through the use of leverage, at the expense of other objectives, such as preservation of capital, to achieve higher incentive distributions. Since investments with higher yield potential are generally riskier or more speculative than investments with lower yield potential, this could result in increased risk to the value of our portfolio of assets and your investment in us.

We may compete with entities affiliated with our Manager or Fortress for certain assets that we may seek to acquire. From time to time, affiliates of Fortress may focus on investments in assets with a similar profile as our target assets. These affiliates may have meaningful purchasing capacity, which may change over time depending upon a variety of factors, including, but not limited to, available equity capital and debt financing, market conditions and cash on hand. Fortress has two funds primarily focused on investing in senior housing properties with approximately $1.9 billion in capital commitments in aggregate as of December 31, 2013, as well as other funds with significant investments in senior housing. Fortress funds generally have a fee structure similar to the structure of the fees in our Management Agreement, but the fees actually paid will vary depending on the size, terms and performance of each fund.

Our Manager may determine, in its discretion, to make a particular investment through an investment vehicle other than us. Investment allocation decisions will reflect a variety of factors, such as a particular vehicle’s availability of

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capital (including financing), investment objectives and concentration limits, legal, regulatory, tax and other similar considerations, the source of the investment opportunity and other factors that the Manager, in its discretion, deems appropriate. Our Manager does not have an obligation to offer us the opportunity to participate in any particular investment, even if it meets our investment objectives.

Operational and Regulatory Structure

REIT Qualification

We will elect to be taxed and intend to qualify as a REIT for U.S. federal income tax purposes commencing with our initial taxable year ending December 31, 2014. Our qualification as a REIT will depend upon our ability to meet, on a continuing basis, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”), relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels to our stockholders and the concentration of ownership of our capital stock. We believe that, commencing with our initial taxable year ending December 31, 2014, we will be organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and that our intended manner of operation will enable us to meet the requirements for qualification and taxation as a REIT. In connection with the spin-off, we will receive an opinion of Skadden, Arps, Slate, Meagher & Flom LLP to the effect that we have been organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and that our proposed method of operation will enable us to meet the requirements for qualification and taxation as a REIT.

Emerging Growth Company Status

We qualify as an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, an exemption from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved under Section 14A(a) and (b) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), respectively. We will not take advantage of any of these exemptions.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected not to take advantage of the benefits of this extended transition period. Therefore, we will be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies”. This election is irrevocable.

We will remain an “emerging growth company” until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (b) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act, (c) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million, or (d) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

Our Corporate Information

We were formed as Newcastle Senior Living Holdings LLC, a Delaware limited liability company and wholly owned subsidiary of Newcastle, on May 17, 2012. We converted to a Delaware corporation on May 30, 2014 and changed our name to New Senior Investment Group Inc. on June 16, 2014. On November 6, 2014, we will be spun off from Newcastle through the distribution of all of our shares of common stock to the holders of Newcastle’s common stock and become a stand-alone publicly traded company. Our principal executive offices are located at 1345 Avenue of the Americas, New York, New York 10105, care of New Senior Investment Group Inc. Our telephone number is 212-479-3140. Our web address is www.newseniorinv.com. The information on or otherwise accessible through our web site does not constitute a part of this Information Statement or any other report or document we file with or furnish to the SEC.

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Questions and Answers About New Senior Investment Group and the Spin- o ff

The following questions and answers briefly address some commonly asked questions about the spin-off. They may not include all the information that is important to you. We encourage you to read carefully this entire Information Statement and the other documents to which we have referred you. We have included references in certain parts of this section to direct you to a more detailed discussion of each topic presented in this section.

Who is entitled to receive the distribution and what will they receive?
Holders of Newcastle common stock as of October 27, 2014, the record date of the spin-off, will be entitled to receive shares of our common stock. For each share of Newcastle common stock held on the record date, Newcastle stockholders will receive one share of New Senior Investment Group common stock, after giving effect to a one-for-two reverse stock split of Newcastle common stock.
 
 
 
Immediately after the distribution, holders of Newcastle common stock as of the record date will hold all of the outstanding shares of our common stock. Based on the number of shares of Newcastle common stock outstanding on October 10, 2014, Newcastle expects to distribute approximately 66,399,857 shares of our common stock in the spin-off, after giving effect to a one-for-two reverse stock split of Newcastle common stock.
 
 
Why is the spin-off of New Senior Investment Group structured as a distribution?
Newcastle believes that a distribution of our shares is an efficient way to separate our assets from the rest of Newcastle’s portfolio and that the spin-off will create benefits and value for us and Newcastle. For more information on the reasons for the spin-off, see “Our Spin-off from Newcastle—Reasons for the Spin-off.”
 
 
What business will New Senior Investment Group engage in after the spin-off?
New Senior Investment Group will continue to focus on investments in senior housing properties. For more detail on New Senior Investment Group’s business, see “Business.”
 
 
When will the distribution occur?
We expect that Newcastle will distribute the shares of our common stock on November 6, 2014 to holders of record of Newcastle common stock on October 27, 2014, subject to certain conditions described under “Our Spin-off from Newcastle—Conditions to the Distribution.”
 
 
What do I need to do to receive my shares of New Senior Investment Group common stock?
As long as you hold Newcastle common stock as of the record date, you will not need to take any action to receive shares of New Senior Investment Group in the distribution. You will not be required to make any payment, surrender or exchange your shares of Newcastle common stock or take any other action to receive your shares of our common stock. No stockholder approval of the distribution is required or sought. We are not asking you for a proxy, and you are requested not to send us a proxy. However, if you sell shares of Newcastle common stock in the “regular-way” market through the distribution date, you will also be selling your right to receive shares of New Senior Investment Group common stock in the distribution. For more information, see “Our Spin-off from Newcastle—Market for Common Stock—Trading Between the Record Date and Distribution Date” in this Information Statement. Following the distribution, stockholders whose shares are held in book-entry form may request that their shares of New Senior Investment Group common stock held in book-entry form be transferred to a brokerage or other account at any time, without charge.
 
 
What will govern my rights as a New Senior Investment Group stockholder?
Your rights as a New Senior Investment Group stockholder will be governed by Delaware law, as well as our certificate of incorporation and our amended and restated bylaws (“bylaws”). A description of these rights is included in this Information Statement under the heading “Description of Our Capital Stock.”

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Will I be taxed on the shares of New Senior Investment Group common stock that I receive in the distribution?
Yes. The distribution will be in the form of a taxable special dividend to Newcastle stockholders. An amount equal to the fair market value of the shares of our common stock received by you will be treated as a taxable dividend to the extent of your ratable share of any current or accumulated earnings and profits of Newcastle, with the excess treated as a non-taxable return of capital to the extent of your tax basis in Newcastle common stock and any remaining excess treated as capital gain. If this special dividend is distributed in the structure and timeframe currently anticipated, the special dividend is expected to satisfy a portion of Newcastle’s 2014 REIT taxable income distribution requirements. Newcastle will not be able to advise stockholders of the amount of earnings and profits of Newcastle until after the end of the 2014 calendar year. For a more detailed discussion, see “U.S. Federal Income Tax Considerations.”
 
 
 
You should consult your own tax advisor as to the particular tax consequences of the distribution to you, including the applicability of any U.S. federal, state, local and non-U.S. tax laws.
 
 
Can Newcastle decide to cancel the distribution of the common stock even if all the conditions have been met?
Yes. Although the distribution is subject to the satisfaction or waiver of certain conditions, see “Our Spin-off from Newcastle—Conditions to the Distribution” included elsewhere in this Information Statement, Newcastle has the right not to complete the distribution if at any time prior to the distribution date (even if all of the conditions are satisfied), its board of directors determines, in its sole discretion, that the distribution is not in the best interests of Newcastle or that market conditions are such that it is not advisable to separate New Senior Investment Group from Newcastle.
 
 
 
The conditions to the distribution are that (i) our registration statement on Form 10, of which this Information Statement is a part, shall have become effective under the Exchange Act, and no stop order related to the registration statement shall be in effect; (ii) the listing of our common stock on the NYSE shall have been approved, subject to official notice of issuance; and (iii) no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the transaction related thereto, including the transfers of assets and liabilities contemplated by the separation and distribution agreement that we will enter into to effect the spin-off (the “Separation and Distribution Agreement”), shall be in effect. We note that other than the federal securities laws, there are no federal or state regulatory requirements with which we must comply to effect the spin-off. If Newcastle’s board of directors were to waive a material condition to or abandon the distribution, Newcastle would notify its stockholders of the decision by filing a Current Report on Form 8-K.
 
 
Does New Senior Investment Group plan to pay dividends?
We intend to make regular quarterly distributions of an amount at least equal to all or substantially all of our REIT taxable income to holders of our common stock out of assets legally available for this purpose, subject to satisfactory financial performance and approval by New Senior Investment Group’s board of directors. However, our ability to pay dividends is subject to a number of risks and uncertainties, including actual results of operations, liquidity and financial condition restrictions under Delaware law, our financial condition, our taxable income, the annual distribution requirements under the REIT provisions of the Code, our operating expenses and other factors our directors may deem relevant. As such, there can be no assurance regarding whether we will pay dividends in the future. For more information, see “Distribution Policy” included elsewhere in this Information Statement.

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Will New Senior Investment Group have any debt?
Yes. Our portfolio is currently financed with non-recourse mortgage debt. New Senior Investment Group may also seek other forms of financing. For additional information relating to our planned financing arrangements, see “Business—Financing Strategy” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” included elsewhere in this Information Statement.
 
 
What will the spin-off cost?
Newcastle estimates that it will incur costs of approximately $8 million in connection with the spin-off.
 
 
How will the spin-off affect my tax basis and holding period in Newcastle common stock?
Your tax basis in shares of Newcastle held at the time of the distribution will be reduced (but not below zero) to the extent the fair market value of the shares of our common stock distributed by Newcastle in the distribution exceeds Newcastle’s current and accumulated earnings and profits, as adjusted to take account of other distributions made by Newcastle in the taxable year that includes this distribution. Your holding period for such Newcastle shares will not be affected by the distribution. Newcastle will not be able to advise stockholders of the amount of earnings and profits of Newcastle until after the end of the 2014 calendar year. See “Our Spin-off from Newcastle—Certain U.S. Federal Income Tax Consequences of the Spin-off” included elsewhere in this Information Statement.
 
 
 
You should consult your own tax advisor as to the particular tax consequences of the distribution to you, including the applicability of any U.S. federal, state, local and non-U.S. tax laws.
 
 
What will my tax basis and holding period be for shares of New Senior Investment Group that I receive in the distribution?
Your tax basis in the shares of our common stock received will equal the fair market value of such shares on the distribution date. Your holding period for such shares will begin the day after the distribution date. See “Our Spin-off from Newcastle—Certain U.S. Federal Income Tax Consequences of the Spin-off” included elsewhere in this Information Statement.
 
 
 
You should consult your own tax advisor as to the particular tax consequences of the distribution to you, including the applicability of any U.S. federal, state, local and non-U.S. tax laws.
 
 
What will be the relationships between Newcastle and New Senior Investment Group following the spin-off?
Before the spin-off, we will enter into a Separation and Distribution Agreement to effect the spin-off. This agreement will provide for the allocation between us and Newcastle of Newcastle’s assets, liabilities and obligations (including tax-related assets and liabilities) attributable to periods prior to the spin-off. We cannot assure you that this agreement will be on terms as favorable to us as agreements with independent third parties. See “Certain Relationships and Transactions with Related Persons, Affiliates and Affiliated Entities” included elsewhere in this Information Statement.
 
 
Will I receive physical certificates representing shares of New Senior Investment Group ’s common stock following the spin-off?
No. Following the spin-off, neither Newcastle nor New Senior Investment Group will be issuing physical certificates representing shares of New Senior Investment Group common stock. Instead, Newcastle, with the assistance of American Stock Transfer & Trust Company, LLC, the distribution agent, will electronically issue shares of our common stock to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form. The distribution agent will mail you a book-entry account statement that reflects your shares of New Senior Investment Group common stock, or your bank or brokerage firm will credit your account for the shares. A benefit of issuing stock electronically in book-entry form is that there will be none of the physical handling and safekeeping responsibilities that are inherent in owning physical stock certificates.

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What if I want to sell my Newcastle common stock or my New Senior Investment Group common stock, and where will I be able to trade shares of New Senior Investment Group common stock?
You should consult with your financial advisors, such as your stockbroker, bank or tax advisor. Neither Newcastle nor New Senior Investment Group makes any recommendations on the purchase, retention or sale of shares of Newcastle common stock or the New Senior Investment Group common stock to be distributed.
 
If you decide to sell any shares before the distribution, you should make sure your stockbroker, bank or other nominee understands whether you want to sell your Newcastle common stock, the New Senior Investment Group common stock you will receive in the distribution, or both.
 
 
 
There is not currently a public market for New Senior Investment Group’s common stock. New Senior Investment Group has applied to list its common stock on the NYSE under the symbol “SNR.” We anticipate that trading in shares of our common stock will begin on a “when-issued” basis on or shortly before the record date and will continue through the distribution date and that “regular-way” trading in shares of our common stock will begin on the first trading day following the distribution date. If trading begins on a “when-issued” basis, you may purchase or sell our common stock up to and including through the distribution date, but your transaction will not settle until after the distribution date. If the distribution is cancelled, your transaction will not settle and will have to be disqualified. For more information, see “Our Spin-off from Newcastle—Market for Common Stock—Trading Between the Record Date and Distribution Date” in this Information Statement.
 
 
Will the number of Newcastle shares I own change as a result of the distribution?
No. The number of shares of Newcastle common stock you own will not change as a result of the distribution. However, the reverse stock split is expected to be effected prior to the distribution and will result in the number of shares of Newcastle common stock held by you being reduced proportionately based on the one-for-two reverse stock split ratio.
 
 
What will happen to the listing of Newcastle common stock?
Nothing. It is expected that after the distribution of New Senior Investment Group common stock, Newcastle common stock will continue to be traded on the NYSE under the symbol “NCT.”
 
 
Will the distribution affect the market price of my Newcastle shares?
Yes. As a result of the distribution, we expect the trading price of shares of Newcastle common stock immediately following the distribution to be lower than immediately prior to the distribution, because the trading price will no longer reflect the value of New Senior Investment Group’s assets. Furthermore, until the market has fully analyzed the value of Newcastle without New Senior Investment Group’s assets, the price of Newcastle shares may fluctuate significantly. In addition, although Newcastle believes that over time following the spin-off, the common stock of the separated companies should have a higher aggregate market value than the combined company, on a fully distributed basis and assuming similar market conditions pre- and post-spin-off, there can be no assurance in this regard. It is possible that the combined trading prices of Newcastle common stock and New Senior Investment Group common stock after the distribution may be equal to or less than the trading price of Newcastle common stock before the distribution.
 
 
Are there risks to owning New Senior Investment Group common stock?
Yes. Our business is subject to a variety of risks that are described in the “Risk Factors” section of this Information Statement beginning on page 21. We encourage you to read that section carefully.

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Where can Newcastle stockholders get more information?
Before the distribution, if you have any questions relating to the distribution, you should contact:
 
 
Newcastle Investment Corp.
Investor Relations
1345 Avenue of the Americas
New York, New York 10105
Tel: 212-479-3195
www.newcastleinv.com
 
 
 
After the spin-off, if you have any questions relating to our common stock, you should contact:
 
 
 
New Senior Investment Group Inc.
Investor Relations
1345 Avenue of the Americas
New York, New York 10105
Tel: 212-479-3140
www.newseniorinv.com

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The Spin- o ff

The following is a summary of the material terms of the spin-off and other related transactions.

Distributing company
Newcastle Investment Corp.
 
 
 
After the distribution, Newcastle will not own any shares of our common stock.
 
 
Distributed company
New Senior Investment Group Inc.
 
 
 
We are a Delaware corporation and, prior to the spin-off, a wholly owned subsidiary of Newcastle. After the distribution, we will be an independent publicly traded company and intend to conduct our business as a REIT for U.S. federal income tax purposes.
 
 
Distribution ratio
Each holder of Newcastle common stock will receive one share of our common stock for each share of Newcastle common stock held on October 27, 2014, after giving effect to a one-for-two reverse stock split of Newcastle common stock.
 
 
Distributed securities
All of New Senior Investment Group’s shares of common stock owned by Newcastle, which will be 100% of New Senior Investment Group’s common stock outstanding immediately prior to the distribution.
 
 
Record date
The record date for the distribution is the close of business on October 27, 2014.
 
 
Distribution date
The distribution date is November 6, 2014.
 
 
Distribution
On the distribution date, Newcastle, with the assistance of American Stock Transfer & Trust Company, LLC, the distribution agent, will electronically issue shares of our common stock to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form. You will not be required to make any payment, surrender or exchange your shares of Newcastle common stock or take any other action to receive your shares of our common stock. If you sell shares of Newcastle common stock in the “regular-way” market through the distribution date, you will be selling your right to receive shares of New Senior Investment Group common stock in the distribution. Registered stockholders will receive additional information from the distribution agent shortly after the distribution date. Following the distribution, stockholders whose shares are held in book-entry form may request that their shares of New Senior Investment Group common stock be transferred to a brokerage or other account at any time, without charge. Beneficial stockholders that hold shares through brokerage firms will receive additional information from their brokerage firms shortly after the distribution date.
 
 
Conditions to the distribution
The distribution of our common stock is subject to the satisfaction of the following conditions:
the SEC shall have declared effective our registration statement on Form 10, of which this Information Statement is a part, under the Exchange Act, and no stop order relating to the registration statement is in effect;
the listing of our common stock on the NYSE shall have been approved, subject to official notice of issuance; and
no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the transactions related thereto, including the transfers of assets and liabilities contemplated by the Separation and Distribution Agreement, shall be in effect.

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Newcastle has the right not to complete the distribution if, at any time, its board of directors determines, in its sole discretion, that the distribution is not in the best interests of Newcastle or that market conditions are such that it is not advisable to separate New Senior Investment Group from Newcastle.
 
 
Stock exchange listing
We have applied to list our shares of common stock on the NYSE under the ticker symbol “SNR.” We anticipate that on or prior to the record date for the distribution, trading of shares of our common stock will begin on a “when-issued” basis and will continue up to and including the distribution date. See “Our Spin-off from Newcastle—Market for Common Stock—Trading Between the Record Date and Distribution Date” included elsewhere in this Information Statement.
 
 
 
It is expected that after the distribution of New Senior Investment Group common stock, Newcastle common stock will continue to be traded on the NYSE under the symbol “NCT.”
 
 
Distribution agent
American Stock Transfer & Trust Company, LLC.
 
 
Tax considerations
The distribution of our common stock will not qualify for tax-free treatment, and an amount equal to the fair market value of the shares received by you on the distribution date will be treated as a taxable dividend to the extent of your ratable share of any current or accumulated earnings and profits of Newcastle. The excess will be treated as a non-taxable return of capital to the extent of your tax basis in Newcastle common stock and any remaining excess will be treated as capital gain. Your tax basis in shares of Newcastle held at the time of the distribution will be reduced (but not below zero) to the extent the fair market value of our shares distributed by Newcastle in the distribution exceeds Newcastle’s current and accumulated earnings and profits. Your holding period for such Newcastle shares will not be affected by the distribution. Newcastle will not be able to advise stockholders of the amount of earnings and profits of Newcastle until after the end of the 2014 calendar year. See “Our Spin-off from Newcastle—Certain U.S. Federal Income Tax Consequences of the Spin-off,” included elsewhere in this Information Statement.
 
 
 
You should consult your own tax advisor as to the particular tax consequences of the distribution to you, including the applicability of any U.S. federal, state, local and non-U.S. tax laws.
 
 
Separation and Distribution Agreement
Before the distribution, we will enter into a Separation and Distribution Agreement to effect the spin-off. This agreement will provide for the allocation between us and Newcastle of Newcastle’s assets, liabilities and obligations (including tax-related assets and liabilities) attributable to periods prior to our spin-off from Newcastle. For a discussion of these arrangements, see “Certain Relationships and Transactions with Related Persons, Affiliates and Affiliated Entities” included elsewhere in this Information Statement.
 
 
Equitable adjustment of o ptions in connection with the distribution
In connection with the distribution, each Newcastle option held as of the date of the distribution by our Manager or by the directors, officers, employees, service providers, consultants and advisors of our Manager will be converted into an adjusted Newcastle option and a new New Senior Investment Group option. The exercise price of each adjusted Newcastle option and New Senior Investment Group option will be set to collectively maintain the intrinsic value of the Newcastle option immediately prior to the distribution and to maintain the ratio of the exercise price of the adjusted Newcastle option and the New Senior Investment Group option, respectively, to the fair market value of the underlying shares as of the distribution. The terms and conditions applicable to each New Senior Investment Group option will be substantially similar to the terms and conditions otherwise applicable to the Newcastle option as of the date of distribution. The grant of such New Senior Investment Group options will not reduce the number of shares of our common stock otherwise available for issuance under the Plan (as defined below).

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SUMMARY CONSOLIDATED AND COMBINED HISTORICAL AND PRO FORMA
FINANCIAL INFORMATION

We were formed as Newcastle Senior Living Holdings LLC, a Delaware limited liability company and wholly owned subsidiary of Newcastle, in May 2012. We converted to a Delaware corporation on May 30, 2014 and changed our name to New Senior Investment Group Inc. on June 16, 2014. Prior to the spin-off, we have not operated our business separate from Newcastle.

The Company is comprised of senior housing properties acquired by Newcastle. The initial acquisition of properties (the “BPM Portfolio”) closed on July 18, 2012 (“Acquisition”) and are deemed as “Predecessor.” Subsequent to the Company’s initial acquisition of these properties (“Successor”), the Successor financial statements were prepared reflecting the acquisition accounting and other transaction adjustments resulting from the acquisition of the BPM Portfolio and other senior housing properties and are labeled “Successor.”

The summary historical consolidated financial data as of and for the three months and six months ended June 30, 2014 and for the three and six months ended June 30, 2013 is derived from the unaudited condensed consolidated financial statements of New Senior Investment Group. The summary historical consolidated financial data as of and for the year ended December 31, 2013 (Successor), as of December 31, 2012 (Successor), and for the period from July 18, 2012 to December 31, 2012 (Successor), is derived from the audited consolidated financial statements of New Senior Investment Group, which have been audited by Ernst & Young LLP, an independent registered public accounting firm. The summary historical combined financial data as of and for the year ended December 31, 2011 (Predecessor), and for the period from January 1, 2012 to July 17, 2012 (Predecessor), is derived from the audited combined financial statements of our Predecessor, which have been audited by Ernst & Young LLP, an independent registered public accounting firm.

As described in Note 2 of our consolidated financial statements included elsewhere in this Information Statement, we applied acquisition accounting as of July 18, 2012 in connection with the acquisition of the initial portfolio of senior housing properties by Newcastle. As a result, our financial data is not comparable to that of our Predecessor.

The summary unaudited pro forma consolidated financial information was derived from the application of pro forma adjustments to the consolidated financial statements of New Senior Investment Group. The summary unaudited pro forma consolidated statement of operations for the six months ended June 30, 2014 and for the year ended December 31, 2013 gives effect to the Pro Forma Transactions (as defined below) as if the Pro Forma Transactions had occurred or had become effective as of January 1, 2013. The summary unaudited pro forma consolidated balance sheet as of June 30, 2014 gives effect to the Pro Forma Transactions as if they had occurred on June 30, 2014. The pro forma operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2014 or for any future period.

The pro forma adjustments are based on available information and certain assumptions that we believe are reasonable in order to reflect, on a pro forma basis, the impact of the transactions listed below on our historical financial information. The summary consolidated and combined historical and pro forma financial information is provided for informational and illustrative purposes only and should be read in conjunction with the sections entitled “Unaudited Pro Forma Consolidated Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated and combined financial statements included elsewhere in this Information Statement. All amounts are presented in thousands unless otherwise noted.

The unaudited pro forma consolidated information set forth below reflects the historical information of New Senior Investment Group, as adjusted to give effect to the following transactions (collectively, the “Pro Forma Transactions”):

the acquisition of the Holiday Portfolio on December 23, 2013 and the triple net master leases of the Holiday Portfolio;
the acquisition of the TJM Portfolio on August 1, 2013;
the Management Agreement between us and the Manager to be executed upon distribution;
the contribution of approximately $242,539 of cash from Newcastle to New Senior Investment Group upon distribution, including proceeds from the issuance of $115,000 of additional secured mortgage notes on October 7, 2014; and
the issuance of New Senior Investment Group common stock.

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Operating Data

(dollars in thousands)
Successor
Predecessor
 
For the six months
ended June 30,
For the three months
ended June 30,
For the year ended
December 31,
For the
period from
July 18 to
December 31,
2012
For the
period from
January 1 to
July 17,
2012
For the
year ended
December 31,
2011
 
2014
2014
2013
2014
2013
2013
2013
 
Pro Forma
Historical
Historical
Historical
Pro Forma
Historical
Historical
Historical
Historical
 
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Resident fees and services
$
72,814
 
$
72,814
 
$
26,488
 
$
37,277
 
$
13,509
 
$
112,905
 
$
83,218
 
$
18,000
 
$
19,680
 
$
36,419
 
Rental revenue
 
44,644
 
 
44,644
 
 
 
 
22,346
 
 
 
 
89,287
 
 
1,918
 
 
 
 
 
 
 
Total revenues
 
117,458
 
 
117,458
 
 
26,488
 
 
59,623
 
 
13,509
 
 
202,192
 
 
85,136
 
 
18,000
 
 
19,680
 
 
36,419
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating expenses
 
51,905
 
 
51,905
 
 
18,459
 
 
26,214
 
 
9,255
 
 
81,459
 
 
60,452
 
 
13,011
 
 
13,778
 
 
25,512
 
Depreciation and amortization
 
46,012
 
 
46,012
 
 
8,067
 
 
23,177
 
 
4,034
 
 
84,888
 
 
26,933
 
 
5,784
 
 
1,203
 
 
2,418
 
Acquisition and transaction expenses
 
9,626
 
 
8,086
 
 
1,980
 
 
3,995
 
 
1,949
 
 
15,646
 
 
12,568
 
 
6,037
 
 
 
 
 
Interest
 
29,546
 
 
27,402
 
 
2,345
 
 
14,097
 
 
1,124
 
 
55,693
 
 
10,589
 
 
1,767
 
 
2,534
 
 
4,699
 
Management fee to affiliate
 
5,708
 
 
3,379
 
 
593
 
 
1,726
 
 
303
 
 
11,416
 
 
1,796
 
 
464
 
 
 
 
 
General and administrative expenses
 
1,655
 
 
1,655
 
 
640
 
 
817
 
 
484
 
 
3,379
 
 
2,188
 
 
274
 
 
20
 
 
16
 
Total Expenses
 
144,452
 
 
138,439
 
 
32,084
 
 
70,026
 
 
17,149
 
 
252,481
 
 
114,526
 
 
27,337
 
 
17,535
 
 
32,645
 
Income before income tax
 
(26,994
)
 
(20,981
)
 
(5,596
)
 
(10,403
)
 
(3,640
)
 
(50,289
)
 
(29,390
)
 
(9,337
)
 
2,145
 
 
3,774
 
Income tax expense
 
987
 
 
987
 
 
647
 
 
627
 
 
436
 
 
656
 
 
656
 
 
150
 
 
 
 
 
Net (loss) income
$
(27,981
)
$
(21,968
)
$
(6,243
)
$
(11,030
)
$
(4,076
)
$
(50,945
)
$
(30,046
)
$
(9,487
)
$
2,145
 
$
3,774
 
Other Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO (1)
 
N/A
 
$
18,709
 
$
1,583
 
$
9,472
 
$
(163
)
 
N/A
 
$
(5,365
)
$
(3,815
)
 
 
 
 
 
 
Normalized FFO (1)
 
N/A
 
 
26,795
 
 
3,563
 
 
13,467
 
 
1,786
 
 
N/A
 
 
7,203
 
 
2,222
 
 
 
 
 
 
 
Adjusted EBITDA (2)
 
N/A
 
 
60,519
 
 
6,796
 
 
30,866
 
 
3,467
 
 
N/A
 
 
20,700
 
 
4,251
 
 
 
 
 
 
 

Balance Sheet Data

(dollars in thousands)
Successor
 
June 30,
2014
Pro Forma
June 30,
2014
December 31,
2013
December 31,
2012
 
(Unaudited)
(Unaudited)
 
 
Total assets
$
1,967,334
 
$
1,771,184
 
$
1,549,595
 
$
196,330
 
Total liabilities
 
1,305,581
 
 
1,190,581
 
 
1,141,760
 
 
126,626
 
Total shareholders’ and member's equity
 
661,753
 
 
580,603
 
 
407,835
 
 
69,704
 

(1) We believe that net income, as defined by U.S. generally accepted accounting principles (“GAAP”), is the most appropriate earnings measurement. However, we consider FFO and Normalized FFO (as defined below) to be appropriate supplemental measures of operating performance of an equity REIT. We believe that Normalized FFO is useful because it allows investors, analysts and our management to compare our operating performance to the operating performance of other REITs and between periods on a consistent basis without having to account for differences caused by unanticipated items and events such as transaction costs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.”
We have a limited operating history and we acquired our first portfolio of senior housing properties on July 18, 2012. Since real estate investments have been remeasured to fair value as of the date of acquisition, the carrying amount of these assets on our consolidated balance sheets in the Successor periods increased significantly – as well as the related depreciation expense which, accordingly, cannot be meaningfully compared to depreciation expense for the Predecessor periods, as it is based on a lower historical cost basis. In addition, because we typically refinanced the mortgages associated with the senior housing properties that we acquire, interest expense for the Successor and Predecessor periods is not directly comparable. Also, our Parent has been a party to the Management Agreement with FIG LLC, a subsidiary of Fortress, and we were allocated a portion of the management fee during the Successor periods. We were not party to the Management Agreement during the Predecessor periods. As such, we believe the non-GAAP financial measures for the Predecessor

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periods are not meaningful to the investors, analysts and our management to assess the financial performance of the Company and have not been presented herein.

We use the National Association of Real Estate Investment Trusts (“NAREIT”) definition of FFO. NAREIT defines FFO as net income (computed in accordance with GAAP) excluding gains (losses) from sales of depreciable real estate assets, impairment charges of depreciable real estate, plus real estate depreciation and amortization (excluding depreciation on non-real estate assets, such as furniture, fixture and equipment), and after adjustments for unconsolidated entities and joint ventures to reflect FFO on the same basis.

We define “Normalized FFO” as FFO excluding the following income and expense items (which may be recurring in nature): (a) acquisition and transaction related expenses; (b) the write off of unamortized deferred financing fees, or additional costs, make whole payments, penalties or premiums incurred as a result of early retirement or payment of debt; and (c) changes in the fair value of contingent consideration and financial instruments.

FFO and Normalized FFO do not represent net income or cash flow from operating activities as determined in accordance with GAAP and should not be considered as alternative for measures reported in accordance with GAAP. These measures may not be identical or comparable to similar measures presented by other real estate companies as not all real estate companies use the same definitions.

The following table sets forth a reconciliation of net income (loss) to FFO and Normalized FFO for the six and three months ended June 30, 2014 and June 30, 2013 (Successor), the year ended December 31, 2013 (Successor) and the period from July 18, 2012 to December 31, 2012 (Successor):

(dollars in thousands)
Successor
 
For the six months
ended June 30,
For the three months
ended June 30,
For the
year ended
December 31,
2013
For the period
from July 18,
2012 to
December 31,
2012
 
2014
2013
2014
2013
Net loss:
$
(21,968
)
$
(6,243
)
$
(11,030
)
$
(4,076
)
$
(30,046
)
$
(9,487
)
Depreciation and amortization of real estate assets
 
40,677
 
 
7,826
 
 
20,502
 
 
3,913
 
 
24,681
 
 
5,672
 
FFO
$
18,709
 
$
1,583
 
$
9,472
 
$
(163
)
$
(5,365
)
$
(3,815
)
Acquisition and transaction expenses
 
8,086
 
 
1,980
 
 
3,995
 
 
1,949
 
 
12,568
 
 
6,037
 
Normalized FFO
$
26,795
 
$
3,563
 
$
13,467
 
$
1,786
 
$
7,203
 
$
2,222
 
(2) We consider adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as an important supplemental measure to net income because it provides another manner in which to evaluate our operating performance on an unleveraged basis. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, excluding acquisition and transaction expenses, gains (losses) on sales of real estate, impairment charges and changes in fair value of contingent consideration and financial instruments.

The following table sets forth a reconciliation of net income (loss) to Adjusted EBITDA for the six and three months ended June 30, 2014 and June 30, 2013 (Successor), the year ended December 31, 2013 (Successor), and the period from July 18, 2012 to December 31, 2012 (Successor):

(dollars in thousands)
Successor
 
For the six months
ended June 30,
For the three months
ended June 30,
For the
year ended
December 31,
2013
For the period
from July 18,
2012 to
December 31,
2012
 
2014
2013
2014
2013
Net loss
$
(21,968
)
$
(6,243
)
$
(11,030
)
$
(4,076
)
$
(30,046
)
$
(9,487
)
Interest expense
 
27,402
 
 
2,345
 
 
14,097
 
 
1,124
 
 
10,589
 
 
1,767
 
Income tax expense
 
987
 
 
647
 
 
627
 
 
436
 
 
656
 
 
150
 
Depreciation and amortization
 
46,012
 
 
8,067
 
 
23,177
 
 
4,034
 
 
26,933
 
 
5,784
 
Acquisition and transaction expenses
 
8,086
 
 
1,980
 
 
3,995
 
 
1,949
 
 
12,568
 
 
6,037
 
Adjusted EBITDA
$
60,519
 
$
6,796
 
$
30,866
 
$
3,467
 
$
20,700
 
$
4,251
 
Adjusted EBITDA does not represent, and should not be considered as an alternative to, net income as determined in accordance with GAAP. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.”

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RISK FACTORS

You should carefully consider the following risks and other information in this Information Statement in evaluating us and our common stock. Any of the following risks, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations or financial condition. The risk factors generally have been separated into the following groups: risks related to our business, risks related to our Manager, risks related to the spin-off, risks related to our taxation as a REIT and risks related to our common stock. However, these categories do overlap and should not be considered exclusive.

RISKS RELATED TO OUR BUSINESS

We have no operating history as an independent company and may not be able to successfully operate our business strategy or generate sufficient revenue to make or sustain distributions to our stockholders.

We have no experience operating as an independent company and cannot assure you that we will be able to successfully operate our business or implement our operating policies and strategies as described in this Information Statement. Furthermore, we were formed in 2012 and have a limited operating history. We completed our first investment in senior housing properties in July 2012. The timing, terms, price and form of consideration that we pay in future transactions may vary meaningfully from prior transactions.

Once we commence operations as an independent company, there can be no assurance that we will be able to generate sufficient returns to pay our operating expenses and make satisfactory distributions to our stockholders, or any distributions at all. Our results of operations and our ability to make or sustain distributions to our stockholders depend on several factors, including the availability of opportunities to acquire attractive assets, the level and volatility of interest rates, the availability of adequate short- and long-term financing, fluctuations in occupancy, Medicaid reimbursement, if applicable, and private pay rates; economic conditions; competition; federal, state, local, and industry-regulated licensure, certification and inspection laws, regulations, and standards; the availability and increases in cost of general and professional liability insurance coverage; state regulation and rights of residents related to entrance fees; and the availability and increases in the cost of labor (as a result of unionization or otherwise).

The financial information included in this Information Statement may not be indicative of the results we would have achieved as a separate stand-alone company and are not a reliable indicator of our future performance or results.

We did not operate as a separate, stand-alone company for the entirety of the historical periods presented in the financial information included in this Information Statement, which has been derived from Newcastle’s historical financial statements. Therefore, the financial information in this Information Statement does not necessarily reflect what our financial condition, results of operations or cash flows would have been had we been a separate, stand-alone public company prior to our spin-off from Newcastle. This is primarily a result of the following factors:

the financial results in this Information Statement do not reflect all of the expenses we will incur as a public company;
the working capital requirements and capital for general corporate purposes for our assets were satisfied prior to the spin-off as part of Newcastle’s corporate-wide cash management policies. Newcastle is not required, and does not intend, to provide us with funds to finance our working capital or other cash requirements, so we may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements; and
our cost structure, management, financing and business operations are significantly different as a result of operating as an independent public company. These changes result in increased costs, including, but not limited to, fees paid to our Manager, legal, accounting, compliance and other costs associated with being a public company with equity securities traded on the NYSE.

Our determination of how much leverage to apply to our investments may adversely affect our return on our investments and may reduce cash available for distribution.

We may leverage our assets through a variety of borrowings. Our investment guidelines do not limit the amount of leverage we may incur with respect to any specific senior housing property or pool of properties. The return we are

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able to earn on our investments and cash available for distribution to our stockholders may be significantly reduced due to changes in market conditions, which may cause the cost of our financing to increase relative to the income that can be derived from our assets.

The income from any senior housing properties is dependent on the ability of the property managers of such properties to successfully manage these properties.

Subject to maintaining our qualification as a REIT, we intend to continue to purchase senior housing properties and engage other parties (including affiliates of our Manager) to manage the operations or lease the properties. The income we recognize from any senior housing properties that we engage other parties to manage would be dependent on the ability of the property manager(s) of such properties to successfully manage these properties. The property manager(s) would compete with other companies on a number of different levels, including: the quality of care provided, reputation, the physical appearance of a property, price and range of services offered, alternatives for healthcare delivery, the supply of competing properties, physicians, staff, referral sources, location, the size and demographics of the population in surrounding areas, and the financial condition of tenants and managers. A property manager’s inability to successfully compete with other companies on one or more of the foregoing levels could adversely affect the senior housing property and materially reduce the income we would receive from an investment in such property.

Our inability to obtain financing on favorable terms, if at all, may impede our ability to grow.

We may not be able to fund all future capital needs from cash retained from operations. If we are unable to obtain enough internal capital, we may need to rely on external sources of capital (including debt and equity financing) to fulfill our capital requirements. If we cannot access these external sources of capital, we may not be able to make the investments needed to grow our business. Our ability to obtain financing depends upon a number of factors, some of which we have little or no control over, including but not limited to:

general availability of credit and market conditions, including rising interest rates and increasing borrowing cost;
the market price of the shares of our equity securities and the credit ratings of our debt and preferred securities;
the market’s perception of our growth potential and our current and potential future earnings and cash distributions;
our degree of financial leverage and operational flexibility;
the financing integrity of our lenders, which might impair their ability to meet their commitments to us or their willingness to make additional loans to us, and our inability to replace the financing commitment of any such lender on favorable terms, or at all;
the stability in the market value of our properties;
the financial performance and general market perception of our property managers and tenants (including the Master Tenants);
changes in the credit ratings on United States government debt securities or default or delay in payment by the United States of its obligations; and
issues facing the healthcare industry, including, but not limited to, healthcare reform and changes in government reimbursement policies.

If our access to financing is limited by these factors or other factors, it could impede our ability to grow and have a material adverse impact on our ability to fund operations, refinance our debt obligations, fund dividend payments, acquire properties and development activities.

Our ability to successfully manage a senior housing property depends on our ability to continue to maintain or improve occupancy levels, specifically in our Managed Properties segment.

Any senior housing property in which we invest may have relatively flat or declining occupancy levels due to falling home prices, declining incomes, stagnant home sales, and other economic factors. In addition, the senior housing segment may continue to experience a decline in occupancy due to the weak economy and the associated decision

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of certain residents to vacate a property and instead be cared for at home. A material decline in occupancy levels and revenues may make it more difficult for the manager of any senior housing property in which we invest to successfully generate income for us. Alternatively, to avoid a decline in occupancy, a manager may reduce the rates charged, which would also reduce our revenues and therefore negatively impact the ability to generate income.

We are not permitted to operate our properties and we are dependent on the property managers and tenants (including the Master Tenants) of our properties.

We are not permitted to operate our AL/MC properties, and we are dependent on the property managers of our AL/MC properties and on tenants (including the Master Tenants) for our triple net lease properties.

Because U.S. federal income tax laws generally restrict REITs and their subsidiaries from operating healthcare properties, we do not manage our AL/MC senior housing properties. Instead, AL/MC investments are structured to be compliant with the REIT Investment Diversification and Empowerment Act of 2007 (“RIDEA”).

The RIDEA structure permits a REIT to lease properties to a TRS if the TRS hires an “eligible independent contractor” (“EIK”) to manage the property. Under this structure, the REIT leases healthcare properties to the TRS and receives rent while the TRS earns income from the properties’ operations, and pays a management fee to the EIK and rent to the REIT property owner.

Accordingly, our TRSs have retained Holiday and Blue Harbor to manage properties that are leased to them by us. Although we have various rights pursuant to our property management agreements, we rely upon our property managers’ personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our senior housing operations efficiently and effectively. We also rely on our property managers to provide accurate property-level financial results for our properties in a timely manner and to otherwise operate our properties in compliance with the terms of our property management agreements and all applicable laws and regulations. We rely on Holiday and Blue Harbor to attract and retain skilled management personnel and property level personnel who are responsible for the day-to-day operations of our properties. Increases in labor costs and other property operating expenses, or significant changes in Holiday’s or Blue Harbor’s ability to manage our properties efficiently and effectively could adversely affect the income we receive from our properties and have a material adverse effect on us. As managers, our property managers do not lease our properties, and, therefore, we are not directly exposed to their credit risk in the same manner or to the same extent as our triple net tenants. However, any adverse developments in Holiday’s or Blue Harbor’s business and affairs or financial condition could impair its ability to manage our properties efficiently and effectively and could have a material adverse effect on us.

While we monitor our property managers’ and tenants’ (including the Master Tenants’) performance, we have limited recourse under our property management agreements if we believe that the property managers are not performing adequately. In addition, our property managers may manage, own or invest in, properties that compete with our properties, which may result in conflicts of interest. As a result, our property managers may make decisions regarding competing properties that are not in our best interests.

The triple net lease structure also provides us with a REIT-eligible structure for owning senior housing properties. The triple net lease structure permits a REIT to lease properties to an operator and collect rent from the operator. Unlike the RIDEA structure, the triple net lease structure creates credit risk from the tenant. We depend on our tenants (including the Master Tenants) to pay all insurance, taxes, utilities and maintenance and repair expenses in connection with the leased properties. Our tenants may not have sufficient assets, income and access to financing to enable them to make rental payments to us or to otherwise satisfy their respective obligations under our leases, and any inability or unwillingness by them to do so could have a material adverse effect on us. In addition, any failure by a tenant to effectively conduct its operations or to maintain and improve our properties could adversely affect its business reputation and its ability to attract and retain residents in our properties, which could have a material adverse effect on us. Our tenants have also agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their respective businesses, and we cannot assure you that they will have sufficient assets, income, access to financing and insurance coverage to enable it to satisfy its indemnification obligations.

Increases in labor costs at our senior housing properties may have a material adverse effect on us.

Wages and employee benefits represent a significant part of the expenses of any senior housing property. In connection with our RIDEA AL/MC properties and in connection with our IL-only properties that are managed by

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our property managers, we rely on our property managers to attract and retain skilled management personnel and property level personnel who are responsible for the day-to-day operations of our properties.

The market for qualified nurses and healthcare professionals is highly competitive. Periodic and geographic area shortages of nurses or other trained personnel may require our property managers to increase the wages and benefits offered to its employees in order to attract and retain these personnel or to hire more expensive temporary personnel. Also, our property managers may have to compete with numerous other employers for lesser skilled workers.

As we acquire additional properties, we may be required to pay increased compensation or offer other incentives to retain key personnel and other employees. Employee benefits costs, including employee health insurance and workers’ compensation insurance costs, have materially increased in recent years. Increasing employee health and workers’ compensation insurance costs may materially and negatively affect our earnings at our senior housing properties. We cannot assure you that labor costs at our senior housing properties will not increase or that any increase will be matched by corresponding increases in rates charged to residents. Any significant failure by our property managers to control labor costs or to pass on any such increased labor costs to residents through rate increases could have a material adverse effect on our business, financial condition and results of operations. In addition, if the Master Tenants of the Holiday Portfolio fail to attract and retain qualified personnel, their ability to satisfy their obligations to us could be impaired.

Termination of assisted living resident agreements and resident attrition could adversely affect our revenues and earnings at our senior housing properties.

State regulations governing assisted living properties typically require a written agreement with each resident. Most of these regulations also require that each resident have the right to terminate these assisted living resident agreements for any reason on reasonable notice. Consistent with these regulations, most resident agreements at our senior housing properties allow residents to terminate their agreements on 30 days’ notice. Thus, our property managers may be unable to contract with assisted living residents to stay for longer periods of time, unlike typical apartment leasing arrangements that involve lease agreements with terms of up to a year or longer. If a large number of residents elected to terminate their resident agreements at or around the same time, our revenues and earnings from our assisted living properties could be materially and adversely affected. In addition, the advanced ages of the residents at our senior housing properties makes the resident turnover rate in these properties difficult to predict.

We do not know if our tenants (including the Master Tenants) will renew their leases, and if they do not, we may be unable to lease the properties on as favorable terms, or at all.

We cannot predict whether our tenants (including the Master Tenants) will renew their leases at the end of their lease terms, which expire at various times. If these leases are not renewed, we would be required to find other tenants to occupy those properties or sell them. There can be no assurance that we would be able to identify suitable replacement tenants or enter into leases with new tenants on terms as favorable to us as the current leases or that we would be able to lease those properties at all.

Our property managers and tenants (including the Master Tenants) may be faced with significant potential litigation and rising insurance costs that not only affect their ability to obtain and maintain adequate liability and other insurance, but also may affect their ability to pay their lease payments and fulfill their insurance and indemnification obligations to us.

In some states, advocacy groups monitor the quality of care at assisted and independent living communities, and these groups have brought litigation against operators. Also, in several instances, private litigation by assisted and independent living community residents or their families have succeeded in winning very large damage awards for alleged neglect. The effect of this litigation and potential litigation has been to materially increase the costs of monitoring and reporting quality of care compliance. The cost of liability and medical malpractice insurance has increased and may continue to increase so long as the present litigation environment in many parts of the United States continues. This may affect the ability of some of our property managers and tenants (including the Master Tenants) to obtain and maintain adequate liability and other insurance and manage their related risk exposures. In addition to causing some of our property managers and tenants (including the Master Tenants) to be unable to fulfill their insurance, indemnification and other obligations to us under their property management agreements or leases and thereby potentially exposing us to those risks, these litigation risks and costs could cause some of our property managers and tenants (including the Master Tenants) to become unable to pay rents due to us. Such nonpayment could potentially affect our ability to meet future monetary obligations under our financing arrangements.

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The failure of our property managers and tenants (including the Master Tenants) to comply with laws relating to the operation of our property managers’ and tenants’ (including the Master Tenants’) properties may have a material adverse effect on the ability of our tenants (including the Master Tenants) to pay us rent, the profitability of our managed properties and the values of our properties.

We and our property managers and tenants (including the Master Tenants) are subject to or impacted by extensive, frequently changing federal, state and local laws and regulations. Some of these laws and regulations include: state and local licensure laws; laws protecting consumers against deceptive practices; laws relating to the operation of our properties and how our property managers and tenants (including the Master Tenants) conduct their operations, such as fire, health and safety laws and privacy laws; federal and state laws affecting communities that participate in Medicaid; the Americans with Disabilities Act and similar state and local laws; and safety and health standards set by the Occupational Safety and Health Administration. We and our property managers and tenants (including the Master Tenants) expend significant resources to maintain compliance with these laws and regulations, and responding to any allegations of noncompliance also results in the expenditure of significant resources. If we or our property managers or tenants (including the Master Tenants) fail to comply with any applicable legal requirements, or are unable to cure deficiencies, certain sanctions may be imposed and, if imposed, may adversely affect our tenants’ (including the Master Tenants’) ability to pay their rent, the profitability of affected properties managed by our property managers and the values of our properties. Further, changes in the regulatory framework could have a material adverse effect on the ability of our tenants (including the Master Tenants) to pay us rent (and any such nonpayment could potentially affect our ability to meet future monetary obligations under our financing arrangements), the profitability of our properties managed by our property managers and the values of our properties.

We and our property managers and tenants (including the Master Tenants) are required to comply with federal and state laws governing the privacy, security, use and disclosure of individually identifiable information, including financial information and protected health information. Under the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), we and our property managers and tenants (including the Master Tenants) are required to comply with the HIPAA privacy rule, security standards, and standards for electronic healthcare transactions. State laws also govern the privacy of individual health information, and these laws are, in some jurisdictions, more stringent than HIPAA. Other federal and state laws govern the privacy of individually identifiable information. If we or our property managers or tenants (including the Master Tenants) fail to comply with applicable federal or state standards, we or they could be subject to civil sanctions and criminal penalties, which could materially and adversely affect our business, financial condition and results of operations.

Our properties and their operations are subject to extensive regulations.

Various governmental authorities mandate certain physical characteristics of senior housing properties. Changes in laws and regulations relating to these matters may require significant expenditures. Our property management agreements and triple net leases generally require our managers and tenants (including the Master Tenants) to maintain our properties in compliance with applicable laws and regulations, and we expend resources to monitor their compliance. However, our property managers and tenants (including the Master Tenants) may neglect maintenance of our properties if they suffer financial distress. We may agree to fund capital expenditures in return for rent increases or other concessions. Our available financial resources or those of our property managers and tenants (including the Master Tenants) may be insufficient to fund the expenditures required to operate our properties in accordance with applicable laws and regulations. If we fund these expenditures, our tenants’ (including the Master Tenants’) financial resources may be insufficient to satisfy their increased rental payments to us or other incremental obligations.

Licensing and Medicaid laws may also require some or all of our senior housing property managers and tenants (including the Master Tenants) to comply with extensive standards governing their operations. In addition, certain laws prohibit fraud by senior housing operators and other healthcare communities, including civil and criminal laws that prohibit false claims in Medicaid and other programs and that regulate patient referrals. In recent years, the federal and state governments have devoted increasing resources to monitoring the quality of care at senior housing communities and to anti-fraud investigations in healthcare operations generally. When violations of applicable laws are identified, federal or state authorities may impose civil monetary damages, treble damages, repayment requirements and criminal sanctions. Healthcare communities may also be subject to license revocation or conditional licensure and exclusion from Medicaid participation or conditional participation. When quality of care deficiencies or improper billing are identified, various laws may authorize civil money penalties or fines; the suspension, modification, or revocation of a license or Medicaid participation; the suspension or denial of admissions of residents;

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the denial of payments in full or in part; the implementation of state oversight, temporary management or receivership; and the imposition of criminal penalties. We, our property managers and our tenants (including the Master Tenants) may receive notices of potential sanctions from time to time, and governmental authorities may impose such sanctions from time to time on our properties. If our property managers and tenants (including the Master Tenants) are unable to cure deficiencies which have been identified or which are identified in the future, these sanctions may be imposed, and if imposed, may adversely affect our tenants’ ability to pay rents to us (and any such nonpayment could potentially affect our ability to meet future monetary obligations under our financing arrangements), and our ability to identify substitute property managers or tenants. Federal and state requirements for change in control of healthcare communities, including, as applicable, approvals of the proposed operator for licensure, certificate of need (“CON”) and Medicaid participation, may also limit or delay our ability to find substitute tenants or property managers. If any of our property managers or tenants (including the Master Tenants) becomes unable to operate our properties, or if any of our tenants (including the Master Tenants) becomes unable to pay its rent because it has violated government regulations or payment laws, we may experience difficulty in finding a substitute tenant or property manager or selling the affected property for a fair and commercially reasonable price, and the value of an affected property may decline materially.

For more information regarding healthcare laws and regulations to which our senior living facilities are subject, see “Business—Senior Housing Industry—Government Regulations.”

The Master Tenants may be unable to cover their lease obligations to us, and there can be no assurance that the Guarantor will be able to cover any shortfall.

The Master Tenants are subject to various financial covenants pursuant to the lease agreements, including compliance with the Lease Coverage Ratio, which is defined as the ratio of facility level net operating income for the applicable trailing twelve (12) month period for the Facilities in the aggregate, to the Base Rent for such trailing twelve (12) month period and measured quarterly commencing with the quarter ending December 31, 2014.

If either of the Master Tenants is not able to satisfy its obligations to us, we would be entitled, among other remedies, to use any funds of Holiday then held by us and to seek recourse against the Guarantor under its guaranty of the applicable master lease. Such guaranty includes certain financial covenants of the Guarantor, including maintaining a minimum net worth of $150 million (book value plus accumulated depreciation, and certain other adjustments as defined in the guaranty), a minimum fixed charge coverage ratio of 1.10 and a maximum leverage ratio of 10 to 1. The Guarantor has guaranteed significant lease obligations of various other subsidiaries in addition to its guaranty of the Master Tenants’ obligations. In the future, the Guarantor may execute additional guaranties of the lease obligations of its subsidiaries without limitation, though subject to covenants. As of the closing of the Holiday acquisition, the Guarantor had a net worth (book value plus accumulated depreciation and certain other adjustments) of approximately $420 million (which amount includes a $43.4 million security deposit posted by the Master Tenants). There can be no assurance that the Guarantor will have the resources necessary to satisfy its obligations to us under its guaranty of the master leases in the event that either of the Master Tenants fails to satisfy its lease obligations to us in full, which could have a material adverse effect on us.

Our acquisitions of senior housing properties may not be successful.

We intend to acquire additional senior housing properties. We may not be able to consummate attractive acquisition opportunities and those that we do consummate may not be successful. We might encounter unanticipated difficulties and expenditures relating to any acquired properties. Newly acquired properties might require significant management attention. We might never realize the anticipated benefits of our acquisitions. Notwithstanding pre-acquisition due diligence, we do not believe that it is possible to fully understand a property before it is operated for an extended period of time. For example, we could acquire a property that contains undisclosed defects in design or construction. In addition, after our acquisition of a property, the market in which the acquired property is located may experience unexpected changes that adversely affect the property’s value. The occupancy of properties that we acquire may decline during our ownership, and rents or returns that are in effect or expected at the time a property is acquired may decline thereafter. Also, our property operating costs for acquisitions may be higher than we anticipate and acquisitions of properties may not yield the returns we expect and, if financed using debt or new equity issuances, may result in stockholder dilution. For these reasons, among others, any acquisitions of additional properties may not succeed or may cause us to experience losses.

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Competition may affect our property managers’ and tenants’ (including the Master Tenants’) ability to meet their obligations to us or make it difficult for us to identify and purchase, or develop, suitable senior housing properties to grow our investment portfolio.

We face significant competition from other REITs, investment companies, private equity and hedge fund investors, sovereign funds, healthcare operators, lenders, developers and other institutional investors, some of whom may have greater resources and lower costs of capital than we do. Increased competition makes it more challenging for us to identify and successfully capitalize on opportunities that meet our business goals and could improve the bargaining power of property owners seeking to sell, thereby impeding our investment, acquisition and development activities. If we cannot identify and purchase a sufficient quantity of senior housing properties at favorable prices or if we are unable to finance acquisitions on commercially favorable terms, it could have a material adverse effect on our business, financial condition and results of operations.

The healthcare industry is also highly competitive, and our property managers and tenants (including the Master Tenants) may encounter increased competition for residents and patients, including with respect to the scope and quality of care and services provided, reputation and financial condition, physical appearance of the properties, price and location. The operations of our RIDEA AL/MC properties and our IL-only properties depend on the competiveness and financial viability of the properties. If our managers are unable to successfully compete with other operators and managers by maintaining profitable occupancy and rate levels, their ability to generate income for us may be materially adversely affected. The operations of our triple net lease tenants (including the Master Tenants) also depend upon their ability to successfully compete with other operators and managers. If our tenants (including the Master Tenants) are unable to successfully compete, their ability to fulfill their obligations to us, including the ability to make rent payments to us, may be materially adversely affected. Future changes in government regulation may adversely affect the healthcare industry, including our senior housing properties and healthcare operations, property managers and tenants, and our property managers and tenants may not achieve and maintain occupancy and rate levels that will enable them to satisfy their obligations to us. Any adverse changes in the regulation of the healthcare industry or the competitiveness of our property managers and tenants could have a more pronounced effect on us than if we had investments outside the senior housing and healthcare industries.

Our tenants (including the Master Tenants) may become subject to bankruptcy or insolvency proceedings.

Our tenants (including the Master Tenants) may not be able to meet the rent or other payments due us, which may result in a tenant bankruptcy or insolvency, or that a tenant might become subject to bankruptcy or insolvency proceedings for other reasons. Although our operating lease agreements provide us with the right to evict tenants, demand immediate payment of rent and exercise other remedies, the bankruptcy and insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization. A tenant in bankruptcy or subject to insolvency proceedings may be able to limit or delay our ability to collect unpaid rent and to exercise other rights and remedies.

We may be required to fund certain expenses (e.g., real estate taxes and maintenance) to preserve the value of an investment property, avoid the imposition of liens on a property and/or transition a property to a new tenant. If we cannot transition a leased property to a new tenant, we may take possession of that property, which may expose us to certain successor liabilities. Should such events occur, our revenue and operating cash flow may be adversely affected.

Transfers of healthcare properties may require regulatory approvals and these properties may not have efficient alternative uses.

Transfers of healthcare properties to successor operators frequently are subject to regulatory approvals or notifications, including, but not limited to, change of ownership approvals under CON or determination of need laws, state licensure laws and Medicaid provider arrangements that are not required for transfers of other types of real estate. The replacement of a healthcare property operator could be delayed by the approval process of any federal, state or local agency necessary for the transfer of the property or the replacement of the operator licensed to manage the property. Alternatively, given the specialized nature of our properties, we may be required to spend substantial time and funds to adapt these properties to other uses. If we are unable to timely transfer properties to successor operators or find efficient alternative uses, our revenue and operations may be adversely affected.

Certain of our properties may require a license or registration to operate.

Failure to obtain a license or registration or loss of a required license or registration would prevent a property from operating in the manner intended by the property managers or tenants (including the Master Tenants). These events could materially adversely affect our property managers’ ability to generate income for us or our tenants’ ability to

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make rent payments to us. State and local laws also may regulate the expansion, including the addition of new beds or services or acquisition of medical equipment, and the construction or renovation of healthcare properties, by requiring a CON or other similar approval from a state agency.

The impact of the comprehensive healthcare regulation enacted in 2010 on us and our property managers and tenants (including the Master Tenants) cannot accurately be predicted.

The Health Reform Laws provide states with an increased federal medical assistance percentage under certain conditions. On June 28, 2012, The United States Supreme Court upheld the individual mandate of the Health Reform Laws but partially invalidated the expansion of Medicaid. The ruling on Medicaid expansion will allow states not to participate in the expansion—and to forego funding for the Medicaid expansion—without losing their existing Medicaid funding. Given that the federal government substantially funds the Medicaid expansion, it is unclear whether any state will pursue this option, although at least some appear to be considering this option at this time. The participation by states in the Medicaid expansion could have the dual effect of increasing our property managers’ and tenants (including the Master Tenants’) revenues, through new patients, but further straining state budgets. While the federal government will pay for approximately 100% of those additional costs from 2014 to 2016, states will be expected to begin paying for part of those additional costs in 2017. With increasingly strained budgets, it is unclear how states will pay their share of these additional Medicaid costs and what other healthcare expenditures could be reduced as a result. A significant reduction in other healthcare related spending by states to pay for increased Medicaid costs could affect our property managers’ and tenants’ (including the Master Tenants’) revenue streams, which could materially and adversely affect our business, financial condition and results of operations.

Risk factors related to properties under construction or development.

In the future, we might construct one or more new properties. Any failure by us, our property managers or tenants to obtain the required license, certification, contracts, governmental permits and authorizations, or to obtain financing on favorable terms, may impede our ability to earn revenues on the relevant properties. Additionally, we may have to wait years for significant cash returns on newly developed properties, and if the cash flow from operations or refinancing is not sufficient, we may be forced to borrow additional money to fund our cash distributions to stockholders. Furthermore, if our financial projections with respect to a new property are inaccurate due to increases in capital costs or other factors, the property may fail to perform as we expected in analyzing our investment.

Our investments are concentrated in senior housing real estate, making us more vulnerable economically to adverse changes in the real estate market and the senior housing industry than if our investments were diversified.

We invest primarily in senior housing properties. Our investment focus exposes us to greater economic risk than if our portfolio were to include real estate assets in other industries or non-real estate assets.

Any adverse changes in the regulation of the healthcare industry or the competitiveness of our property managers and tenants (including the Master Tenants) could have a more pronounced effect on us than if our investments were further diversified.

Real estate investments are relatively illiquid, and our ability to quickly sell or exchange our properties in response to changes in economic or other conditions is limited. In the event we desire or need to sell any of our properties, the value of those properties and our ability to sell at a price or on terms acceptable to us could be adversely affected by a downturn in the real estate industry or any weakness in the senior housing industry. We cannot assure you that we will recognize the full value of any property that we sell for liquidity or other reasons, and the inability to respond quickly to changes in the performance of our investments could adversely affect our business, results of operations and financial condition.

Overbuilding in markets in which our senior housing properties are located could adversely affect our future occupancy rates, operating margins and profitability.

The senior housing industry generally has limited barriers to entry, and, as a consequence, the development of new senior housing properties could outpace demand. If development outpaces demand for those asset types in the markets in which our properties are located, those markets may become saturated and we could experience decreased occupancy, reduced operating margins and lower profitability.

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If any of our properties are found to be contaminated, or if we become involved in any environmental or other types of disputes, we could incur substantial liabilities and costs as well as reputational damage .

Under federal and state environmental laws and regulations, a current or former owner of real property may be liable for costs related to the investigation, removal and remediation of hazardous or toxic substances or petroleum that are released from or are present at or under, or that are disposed of in connection with such property. Owners of real property may also face other environmental or similar liabilities, including government fines and penalties imposed by regulatory authorities and damages for injuries to persons, property or natural resources. Environmental laws and regulations often impose liability without regard to whether the owner was aware of, or was responsible for, the presence, release or disposal of hazardous or toxic substances or petroleum. In certain circumstances, environmental liability may result from the activities of a current or former operator of the property. Although we are generally indemnified by our property managers and tenants (including the Master Tenants) of our properties for contamination caused by them, these indemnities may not adequately cover all environmental costs. In addition, our residents, workers or other visitors may have serious health conditions or be exposed to health hazards at our properties such as medical waste or contagious ailments, which could create health and safety issues. We could face claims from these or other parties claiming damages as a result of any purported health and safety issues, and any such claims could negatively impact our reputation, prospects, results of operation or financial condition, regardless of whether the claims have merit or we are required to pay actual damages to settle such claims.

All of our revenue is attributable to properties managed by two property managers, Holiday and Blue Harbor, and tenants affiliated with Holiday.

As of December 31, 2013, either Blue Harbor or Holiday managed all of our managed properties. We pay annual property management fees pursuant to long-term property management agreements. Currently, all of our property management agreements have initial 10-year terms, with successive automatic 1-year renewal periods. For AL/MC properties, we pay base management fees equal to 6% of effective gross income for the first two years and 7% thereafter. For IL-only properties, we pay base management fees of 5% of effective gross income. As managers, Blue Harbor and Holiday do not lease our properties and, therefore, we are not directly exposed to their credit risk in the same manner or to the same extent as a triple net lease tenant. However, we rely on our managers’ personnel, expertise, technical resources and information systems, proprietary information, good faith and judgment to manage our senior housing operations efficiently and effectively. We also rely on our managers to set appropriate resident fees and to otherwise operate our senior housing communities in compliance with the terms of our property management agreements and all applicable laws and regulations. Although we have various rights as the property owner under our property management agreements, including various rights to set budget guidelines and to terminate and exercise remedies under those agreements as provided therein, Blue Harbor’s or Holiday’s failure, inability or unwillingness to satisfy its respective obligations under those agreements, to efficiently and effectively manage our properties or to provide timely and accurate accounting information with respect thereto could have a material adverse effect on us.

We may continue to purchase senior housing properties and engage the sellers of such facilities or other third parties under a triple net lease in which the rental payments are fixed with scheduled periodic increases that are either fixed or based on the Consumer Price Index with caps. The properties we currently lease to Holiday account for a significant portion of our total revenues and net operating income from our senior housing properties, and because our leases with Holiday are triple net leases, we depend on Holiday to pay all operating costs, including repairs, maintenance, capital expenditures, utilities, taxes, insurance, and payroll expense of property-level employees in connection with the leased properties. We cannot assure you that Holiday will have sufficient assets, income and access to financing to enable them to satisfy its obligations to us, and any failure, inability or unwillingness by Holiday to do so could have a material adverse effect on us. In addition, although a subsidiary of Holiday provided a lease guaranty in connection with the leases, and a subsidiary of Holiday agreed to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities arising in connection with their business, the guaranty may not be sufficient to satisfy Holiday’s obligations to us, and Holiday may not have sufficient assets, income and access to financing to enable it to satisfy its obligations to us. Our reliance on Holiday for a significant portion of our total revenues and net operating income from our senior housing investments creates credit risk. If Holiday becomes unable or unwilling to satisfy its obligations to us, our financial condition and results of operations could be weakened.

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The geographic concentration of our assets in Florida and Texas may result in losses due to our significant exposure to the effects of economic and real estate conditions in those markets.

As of June 30, 2014, approximately 22.5% and 20.6% of the beds in our senior housing portfolios are located in Florida and Texas, respectively. As a result of this concentration, a material portion of our portfolios are significantly exposed to the effects of economic and real estate conditions in those particular markets, such as the supply of competing properties, home prices, income levels, the financial condition of our tenants, and general levels of employment and economic activity. To the extent that weak economic or real estate conditions affect Florida or Texas more severely than other areas of the country, our financial performance could be negatively impacted.

We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.

We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information and to manage or support a variety of our business processes, including financial transactions and maintenance of records, which in the case of our business, may include personal identifying information. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmitting and storing this confidential information, such as individually identifiable information relating to financial accounts. Although we have taken steps to protect the security of the data maintained in our information systems, it is possible that our security measures will not be able to prevent the systems’ improper functioning, or the improper disclosure of personally identifiable information such as in the event of cyber-attacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. Any failure to maintain proper function, security and availability of our information systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could materially and adversely affect our business, financial condition and results of operations.

Some of our senior housing properties generate infectious medical waste due to the illness or physical condition of the residents.

The management of infectious medical waste, including handling, storage, transportation, treatment, and disposal, is subject to regulation under various laws, including federal and state environmental laws. These environmental laws set forth the management requirements, as well as permit, record-keeping, notice, and reporting obligations. Each of our senior housing properties has an agreement with a waste management company for the proper disposal of all infectious medical waste. The use of such waste management companies does not immunize us from alleged violations of such medical waste laws for operations for which we are responsible even if carried out by such waste management companies, nor does it immunize us from third-party claims for the cost to clean up disposal sites at which such wastes have been disposed. Any finding that we are not in compliance with these environmental laws could adversely affect our business, financial condition and results of operations. While we are not aware of non-compliance with environmental laws related to infectious medical waste at our senior housing properties, these environmental laws are amended from time to time and we cannot predict when and to what extent liability may arise. In addition, because these environmental laws vary from state to state, expansion of our operations to states where we do not currently operate may subject us to additional restrictions on the manner in which we operate our senior housing properties.

Changes in accounting rules could occur at any time and could impact us in significantly negative ways that we are unable to predict or protect against.

As has been widely publicized, the SEC, the Financial Accounting Standards Board and other regulatory bodies that establish the accounting rules applicable to us have recently proposed or enacted a wide array of changes to accounting rules. Moreover, in the future these regulators may propose additional changes that we do not currently anticipate. Changes to accounting rules that apply to us could significantly impact our business or our reported financial performance in negative ways that we cannot predict or protect against. We cannot predict whether any changes to current accounting rules will occur or what impact any codified changes will have on our business, results of operations, liquidity or financial condition.

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RISKS RELATED TO OUR MANAGER

We are dependent on our Manager and may not find a suitable replacement if our Manager terminates the Management Agreement.

We have no employees. Our officers and other individuals who perform services for us are employees of our Manager. We are completely reliant on our Manager, which has significant discretion as to the implementation of our operating policies and strategies, to conduct our business. We are subject to the risk that our Manager will terminate the Management Agreement and that we will not be able to find a suitable replacement for our Manager in a timely manner, at a reasonable cost or at all. Furthermore, we are dependent on the services of certain key employees of our Manager whose compensation is partially or entirely dependent upon the amount of incentive or management compensation earned by our Manager and whose continued service is not guaranteed, and the loss of such services could adversely affect our operations.

There are conflicts of interest in our relationship with our Manager.

Our Management Agreement with our Manager was not negotiated at arm’s-length, and its terms, including fees payable, may not be as favorable to us as if it had been negotiated with an unaffiliated third party.

There are conflicts of interest inherent in our relationship with our Manager insofar as our Manager and its affiliates—including investment funds, private investment funds, or businesses managed by our Manager, including Newcastle—invest in senior housing properties and whose investment objectives overlap with our investment objectives. Certain investments appropriate for us may also be appropriate for one or more of these other investment vehicles. Certain members of our board of directors and employees of our Manager who are our officers also serve as officers and/or directors of these other entities. Although we have the same Manager, we may compete with entities affiliated with our Manager or Fortress for certain target assets. From time to time, affiliates of Fortress focus on investments in assets with a similar profile as our target assets that we may seek to acquire. These affiliates may have meaningful purchasing capacity, which may change over time depending upon a variety of factors, including, but not limited to, available equity capital and debt financing, market conditions and cash on hand. Fortress has two funds primarily focused on investing in senior housing properties with approximately $1.9 billion in capital commitments in aggregate as of December 31, 2013, as well as other funds with significant investments in senior housing. Fortress funds generally have a fee structure similar to ours, but the fees actually paid will vary depending on the size, terms and performance of each fund. Fortress had approximately $63.8 billion of assets under management as of June 30, 2014.

Our Management Agreement with our Manager generally does not limit or restrict our Manager or its affiliates from engaging in any business or managing other pooled investment vehicles that invest in investments that meet our investment objectives. Our Manager intends to engage in additional senior housing properties related management and senior housing properties and other investment opportunities in the future, which may compete with us for investments or result in a change in our current investment strategy. In addition, our certificate of incorporation will provide that if Fortress or an affiliate or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty, to the fullest extent permitted by law, to offer such corporate opportunity to us, our stockholders or our affiliates. In the event that any of our directors and officers who is also a director, officer or employee of Fortress or its affiliates acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as a director or officer of ours and such person acts in good faith, then to the fullest extent permitted by law such person is deemed to have fully satisfied such person’s fiduciary duties owed to us and is not liable to us if Fortress or its affiliates pursues or acquires the corporate opportunity or if such person did not present the corporate opportunity to us.

The ability of our Manager and its officers and employees to engage in other business activities, subject to the terms of our Management Agreement with our Manager, may reduce the amount of time our Manager, its officers or other employees spend managing us. In addition, we may engage (subject to our investment guidelines) in material transactions with our Manager or another entity managed by our Manager or one of its affiliates, including Newcastle, which may present an actual, potential or perceived conflict of interest. It is possible that actual, potential or perceived conflicts could give rise to investor dissatisfaction, litigation or regulatory enforcement actions. Appropriately dealing with conflicts of interest is complex and difficult, and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential, actual or perceived conflicts of interest. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse effect on our reputation, which could

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materially adversely affect our business in a number of ways, including causing an inability to raise additional funds, a reluctance of counterparties to do business with us, a decrease in the prices of our equity securities and a resulting increased risk of litigation and regulatory enforcement actions.

The management compensation structure that we have agreed to with our Manager, as well as compensation arrangements that we may enter into with our Manager in the future (in connection with new lines of business or other activities), may incentivize our Manager to invest in high risk investments. In addition to its management fee, our Manager is currently entitled to receive incentive compensation. In evaluating investments and other management strategies, the opportunity to earn incentive compensation may lead our Manager to place undue emphasis on the maximization of such measures at the expense of other criteria, such as preservation of capital, in order to achieve higher incentive compensation. Investments with higher yield potential are generally riskier or more speculative than lower-yielding investments. Moreover, because our Manager receives compensation in the form of options in connection with the completion of our common equity offerings, our Manager may be incentivized to cause us to issue additional common stock, which could be dilutive to existing stockholders.

It would be difficult and costly to terminate our Management Agreement with our Manager.

It would be difficult and costly for us to terminate our Management Agreement with our Manager. After its initial ten-year term, the Management Agreement will be automatically renewed for one-year terms unless terminated (i) by a majority vote of at least two-thirds of our independent directors, or by a vote of the holders of a simple majority of the outstanding shares of our common stock, that there has been unsatisfactory performance by our Manager that is materially detrimental to us or (ii) a determination by a simple majority of our independent directors that the management fee payable to our Manager is not fair, subject to our Manager’s right to prevent such a termination by continuing to provide the services under the Management Agreement at a fee that a simple majority of our independent directors have reasonably determined to be fair. Our Manager will be provided 60 days’ prior notice of any termination and will be paid a termination fee equal to the amount of the management fee earned by the Manager during the 12-month period preceding such termination. In addition, following any termination of the Management Agreement, our Manager may require us to purchase its right to receive incentive compensation at a price determined as if our assets were sold for their then current fair market value or otherwise we may continue to pay the incentive compensation to our Manager. These provisions may increase the effective cost to us of terminating the Management Agreement, thereby adversely affecting our ability to terminate our Manager without cause.

Our board of directors will approve broad investment guidelines for our Manager and will not approve each investment decision made by our Manager. In addition, we may change our investment strategy without a stockholder vote, which may result in our making investments that are different, riskier or less profitable than our current investments.

Our Manager is authorized to follow broad investment guidelines. For more information about our investment guidelines, see “Business—Investment Guidelines” included elsewhere in this Information Statement. Consequently, our Manager has great latitude in determining the types and categories of assets it may decide are proper investments for us, including the latitude to invest in types and categories of assets that may differ from those in which we currently invest. Our board of directors will periodically review our investment guidelines and our investment portfolio. However, our board of directors does not review or pre-approve each proposed investment or our related financing arrangements. In addition, in conducting periodic reviews, our board of directors relies primarily on information provided to them by our Manager. Furthermore, transactions entered into by our Manager may be difficult or impossible to unwind by the time they are reviewed by our board of directors even if the transactions contravene the terms of the Management Agreement. In addition, we may change our investment strategy, including our target asset classes, without a stockholder vote.

Our investment strategy may evolve in light of existing market conditions and investment opportunities, and this evolution may involve additional risks depending upon the nature of the assets in which we invest and our ability to finance such assets on a short- or long-term basis. Investment opportunities that present unattractive risk-return profiles relative to other available investment opportunities under particular market conditions may become relatively attractive under changed market conditions and changes in market conditions may therefore result in changes in the investments we target. Decisions to make investments in new asset categories present risks that may be difficult for us to adequately assess and could therefore reduce our ability to pay dividends on our common stock or have adverse effects on our liquidity or financial condition. A change in our investment strategy may also increase our exposure to interest rate, real estate market or credit market fluctuations. In addition, a change in our investment strategy may

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increase the guarantee obligations we agree to incur or increase the number of transactions we enter into with affiliates. Our failure to accurately assess the risks inherent in new asset categories or the financing risks associated with such assets could adversely affect our results of operations and our financial condition.

Our Manager will not be liable to us for any acts or omissions performed in accordance with the Management Agreement, including with respect to the performance of our investments.

Pursuant to our Management Agreement, our Manager will not assume any responsibility other than to render the services called for thereunder in good faith and will not be responsible for any action of our board of directors in following or declining to follow its advice or recommendations. Our Manager, its members, managers, officers and employees will not be liable to us or any of our subsidiaries, to our board of directors, or our or any subsidiary’s stockholders or partners for any acts or omissions by our Manager, its members, managers, sub-advisers, officers or employees, except by reason of acts constituting bad faith, willful misconduct, gross negligence or reckless disregard of our Manager’s duties under our Management Agreement. We shall, to the full extent lawful, reimburse, indemnify and hold our Manager, its members, managers, officers and employees, sub-advisers and each other person, if any, controlling our Manager, harmless of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’ fees) in respect of or arising from any acts or omissions of an indemnified party made in good faith in the performance of our Manager’s duties under our Management Agreement and not constituting such indemnified party’s bad faith, willful misconduct, gross negligence or reckless disregard of our Manager’s duties under our Management Agreement.

Our Manager’s due diligence of investment opportunities or other transactions may not identify all pertinent risks, which could materially affect our business, financial condition, liquidity and results of operations.

Our Manager intends to conduct due diligence with respect to each investment opportunity or other transaction it pursues. It is possible, however, that our Manager’s due diligence processes will not uncover all relevant facts, particularly with respect to any assets we acquire from third parties. In these cases, our Manager may be given limited access to information about the investment and will rely on information provided by the target of the investment. In addition, if investment opportunities are scarce, the process for selecting bidders is competitive, or the timeframe in which we are required to complete diligence is short, our ability to conduct a due diligence investigation may be limited, and we would be required to make investment decisions based upon a less thorough diligence process than would otherwise be the case. Accordingly, investments and other transactions that initially appear to be viable may prove not to be over time, due to the limitations of the due diligence process or other factors.

RISKS RELATED TO THE SPIN-OFF

We may be unable to achieve some or all of the benefits that we expect to achieve from our spin-off from Newcastle.

We may not be able to achieve the full strategic and financial benefits that we expect will result from our spin-off from Newcastle or such benefits may be delayed or may not occur at all. For example, there can be no assurance that analysts and investors will regard our corporate structure as clearer and simpler than the current Newcastle corporate structure or place a greater value on our company as a stand-alone REIT than on our businesses being a part of Newcastle.

Our agreements with Newcastle may not reflect terms that would have resulted from arm’s-length negotiations among unaffiliated third parties.

The agreements related to our spin-off from Newcastle, including the Separation and Distribution Agreement, were negotiated in the context of our spin-off from Newcastle while we were still part of Newcastle and, accordingly, may not reflect terms that would have resulted from arm’s-length negotiations among unaffiliated third parties. The terms of the agreements we negotiated in the context of our spin-off related to, among other things, allocation of assets, liabilities, rights, indemnifications and other obligations among Newcastle and us. See “Certain Relationships and Transactions with Related Persons, Affiliates and Affiliated Entities.”

The ownership by our executive officers and some of our directors of shares of common stock, options, or other equity awards of Newcastle may create, or may create the appearance of, conflicts of interest.

Because some of our directors, officers and other employees of our Manager also currently hold positions with Newcastle, they own Newcastle common stock, options to purchase Newcastle common stock or other equity awards.

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Ownership by some of our directors and officers, after our spin-off, of common stock or options to purchase common stock of Newcastle, or any other equity awards, creates, or, may create the appearance of, conflicts of interest when these directors and officers are faced with decisions that could have different implications for Newcastle than they do for us.

The distribution of our common stock will not qualify for tax-free treatment and may be taxable to you as a dividend.

The distribution of our common stock will not qualify for tax-free treatment. An amount equal to the fair market value of our common stock received by you on the distribution date will be treated as a taxable dividend to the extent of your ratable share of any current or accumulated earnings and profits of Newcastle, with the excess treated first as a non-taxable return of capital to the extent of your tax basis in Newcastle common stock and then as capital gain. In addition, Newcastle or other applicable withholding agents may be required or permitted to withhold at the applicable rate on all or a portion of the distribution payable to non-U.S. shareholders, and any such withholding would be satisfied by Newcastle or such agent withholding and selling a portion of the New Senior Investment Group common stock otherwise distributable to non-U.S. shareholders or by withholding from other property held in the non-U.S. shareholder’s account with the withholding agent. Your tax basis in shares of Newcastle held at the time of the distribution will be reduced (but not below zero) to the extent the fair market value of our shares distributed by Newcastle to you in the distribution exceeds your ratable share of Newcastle’s current and accumulated earnings and profits. Your holding period for such Newcastle shares will not be affected by the distribution. Newcastle will not be able to advise stockholders of the amount of earnings and profits of Newcastle until after the end of the 2014 calendar year.

Although Newcastle will be ascribing a value to our shares in the distribution for tax purposes, this valuation is not binding on the Internal Revenue Service (the “IRS”) or any other tax authority. These taxing authorities could ascribe a higher valuation to our shares, particularly if our stock trades at prices significantly above the value ascribed to our shares by Newcastle in the period following the distribution. Such a higher valuation may cause a larger reduction in the tax basis of your Newcastle shares or may cause you to recognize additional dividend or capital gain income. You should consult your own tax advisor as to the particular tax consequences of the distribution to you.

We may compete with affiliates of our Manager, which could adversely affect our results of operations.

Affiliates of our Manager are primarily engaged in the business of real estate investment and finance, and invest in, and actively manage, portfolios of real estate securities, loans and other assets. Affiliates of our Manager are not restricted in any manner from competing with us. After the spin-off, affiliates of our Manager may decide to invest in the same types of assets that we invest in. Furthermore, after the spin-off, we will have the same Manager and directors and officers as Newcastle and certain of our Manager’s other affiliates. See “—Risks Related to Our Manager—There are conflicts of interest in our relationship with our Manager.”

RISKS RELATED TO OUR TAXATION AS A REIT

Our failure to qualify as a REIT would result in higher taxes and reduced cash available for distribution to our stockholders. Newcastle’s failure to qualify as a REIT could cause us to lose our REIT status.

Following the distribution, we intend to operate in a manner intended to qualify us as a REIT for U.S. federal income tax purposes. Our ability to satisfy the REIT asset tests depends upon our analysis of the fair market values of our assets, some of which are not susceptible to a precise determination, and for which we do not obtain independent appraisals. Our compliance with the REIT income and quarterly asset requirements also depends upon our ability to successfully manage the composition of our income and assets on an ongoing basis. Moreover, the proper classification of one or more of our investments may be uncertain in some circumstances, which could affect the application of the REIT qualification requirements. Accordingly, there can be no assurance that the IRS will not contend that our investments violate the REIT requirements.

If we were to fail to qualify as a REIT in any taxable year, we would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates, and distributions to stockholders would not be deductible by us in computing our taxable income. Any such corporate tax liability could be substantial and would reduce the amount of cash available for distribution to our stockholders, which in turn could have an adverse impact on the value of, and trading prices for, our stock. Unless entitled to relief under certain provisions of the Code, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we initially ceased to qualify as a REIT.

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If Newcastle were to fail to qualify as a REIT, the rule against re-electing REIT status following a loss of such status would also apply to us if we were treated as a successor to Newcastle for U.S. federal income tax purposes. Although, as described under the heading “Certain Relationships and Transactions with Related Persons, Affiliates and Affiliated Entities,” Newcastle expects to (i) represent in the Separation and Distribution Agreement that it has no knowledge of any fact or circumstance that would cause us to fail to qualify as a REIT and (ii) covenant in the Separation and Distribution Agreement to use its reasonable best efforts to maintain its REIT status for each of Newcastle’s taxable years ending on or before 2015 (unless Newcastle obtains an opinion from a nationally recognized tax counsel or a private letter ruling from the IRS to the effect that Newcastle’s failure to maintain its REIT status will not cause us to fail to qualify as a REIT under the successor REIT rule referred to above), no assurance can be given that such representation and covenant would prevent us from failing to qualify as a REIT. Although, in the event of a breach, we may be able to seek damages from Newcastle, there can be no assurance that such damages, if any, would appropriately compensate us. In addition, if Newcastle were to fail to qualify as a REIT despite its reasonable best efforts, we would have no claim against Newcastle. See “U.S. Federal Income Tax Considerations” for a discussion of material U.S. federal income tax consequences relating to us and our common stock.

Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

Dividends payable to domestic stockholders that are individuals, trusts and estates are generally taxed at reduced tax rates. Dividends payable by REITs, however, generally are not eligible for the reduced rates. The more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the stock of REITs, including our common stock. In addition, the relative attractiveness of real estate in general may be adversely affected by the favorable tax treatment given to non-REIT corporate dividends, which could affect the value of our real estate assets negatively.

Qualifying as a REIT involves highly technical and complex provisions of the Code.

Qualification as a REIT involves the application of highly technical and complex Code provisions for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Our qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. Compliance with these requirements must be carefully monitored on a continuing basis, and there can be no assurance that our Manager’s personnel responsible for doing so will be able to successfully monitor our compliance.

REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan.

We generally must distribute annually at least 90% of our REIT taxable income, excluding any net capital gain, in order for corporate income tax not to apply to earnings that we distribute. We intend to make distributions to our stockholders to comply with the REIT requirements of the Code. However, differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell assets or borrow funds on a short-term or long-term basis to meet the 90% distribution requirement of the Code. Certain of our assets may generate substantial mismatches between taxable income and available cash. As a result, the requirement to distribute a substantial portion of our REIT taxable income could cause us to: (i) sell assets in adverse market conditions; (ii) borrow on unfavorable terms; (iii) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt; or (iv) make taxable distributions of our capital stock or debt securities in order to comply with REIT requirements. Further, amounts distributed will not be available to fund investment activities. If we fail to obtain debt or equity capital in the future, it could limit our ability to satisfy our liquidity needs, which could adversely affect the value of our common stock.

We may be unable to generate sufficient revenue from operations to pay our operating expenses and to pay distributions to our stockholders.

As a REIT, we are generally required to distribute at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and not including net capital gain) each year to our stockholders. To qualify for the tax benefits accorded to REITs, we intend to make distributions to our stockholders in amounts such that we distribute an amount at least equal to all or substantially all of our REIT taxable income each year, subject to certain adjustments. However, our ability to make distributions may be adversely affected by the risk factors described herein.

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The stock ownership limit imposed by the Code for REITs and our certificate of incorporation may inhibit market activity in our stock and restrict our business combination opportunities.

In order for us to maintain our qualification as a REIT under the Code, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of each taxable year after our first taxable year. Our certificate of incorporation, with certain exceptions, will authorize our board of directors to take the actions that are necessary and desirable to preserve our qualification as a REIT. Unless exempted by our board of directors, no person may own more than 9.8% of the aggregate value of our outstanding capital stock, treating classes and series of our stock in the aggregate. Our board of directors may grant an exemption in its sole discretion, subject to such conditions, representations and undertakings as it may determine in its sole discretion. These ownership limits could delay or prevent a transaction or a change in our control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.

Even if we remain qualified for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. Moreover, if a REIT distributes less than 85% of its taxable income to its stockholders during any calendar year (including any distributions declared by the last day of the calendar year but paid in the subsequent year), then it is required to pay an excise tax on 4% of any shortfall between the required 85% and the amount that was actually distributed. Any of these taxes would decrease cash available for distribution to our stockholders. In addition, our TRSs will be subject to corporate level income tax at regular rates.

Complying with the REIT requirements may negatively impact our investment returns or cause us to forego otherwise attractive opportunities, liquidate assets or contribute assets to a TRS.

To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our stock. As a result of these tests, we may be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution, forego otherwise attractive investment opportunities, liquidate assets in adverse market conditions or contribute assets to a TRS that is subject to regular corporate federal income tax. Our ability to acquire investments will be subject to the applicable REIT qualification tests, and we may have to hold these interests through TRSs, which would negatively impact our returns from these assets. In general, compliance with the REIT requirements may hinder our ability to make and retain certain attractive investments.

Complying with the REIT requirements may limit our ability to hedge effectively.

The existing REIT provisions of the Code may substantially limit our ability to hedge our operations because a significant amount of the income from those hedging transactions is likely to be treated as non-qualifying income for purposes of both REIT gross income tests. In addition, we must limit our aggregate income from non-qualified hedging transactions, from our provision of services and from other non-qualifying sources, to less than 5% of our annual gross income (determined without regard to gross income from qualified hedging transactions). As a result, we may have to limit our use of certain hedging techniques or implement those hedges through total return swaps. This could result in greater risks associated with changes in interest rates than we would otherwise want to incur or could increase the cost of our hedging activities. If we fail to comply with these limitations, we could lose our REIT qualification for U.S. federal income tax purposes, unless our failure was due to reasonable cause, and not due to willful neglect, and we meet certain other technical requirements. Even if our failure were due to reasonable cause, we might incur a penalty tax.

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Distributions to tax-exempt investors may be classified as unrelated business taxable income.

Neither ordinary nor capital gain distributions with respect to our stock nor gain from the sale of stock should generally constitute unrelated business taxable income to a tax-exempt investor. However, there are certain exceptions to this rule. In particular:

part of the income and gain recognized by certain qualified employee pension trusts with respect to our stock may be treated as unrelated business taxable income if shares of our stock are predominantly held by qualified employee pension trusts, and we are required to rely on a special look-through rule for purposes of meeting one of the REIT ownership tests, and we are not operated in a manner to avoid treatment of such income or gain as unrelated business taxable income; and
part of the income and gain recognized by a tax-exempt investor with respect to our stock would constitute unrelated business taxable income if the investor incurs debt in order to acquire the stock.

The tax on prohibited transactions will limit our ability to engage in certain transactions which would be treated as prohibited transactions for U.S. federal income tax purposes.

Net income that we derive from a prohibited transaction is subject to a 100% tax. The term “prohibited transaction” generally includes a sale or other disposition of property that is held primarily for sale to customers in the ordinary course of our trade or business. We might be subject to this tax if we were to dispose of our property in a manner that was treated as a prohibited transaction for U.S. federal income tax purposes.

We intend to conduct our operations so that no asset that we own (or are treated as owning) will be treated as, or as having been, held for sale to customers, and that a sale of any such asset will not be treated as having been in the ordinary course of our business. As a result, we may choose not to engage in certain sales at the REIT level, even though the sales might otherwise be beneficial to us. In addition, whether property is held “primarily for sale to customers in the ordinary course of a trade or business” depends on the particular facts and circumstances. No assurance can be given that any property that we sell will not be treated as property held for sale to customers, or that we can comply with certain safe-harbor provisions of the Code that would prevent such treatment. The 100% prohibited transaction tax does not apply to gains from the sale of property that is held through a TRS or other taxable corporation, although such income will be subject to tax in the hands of the corporation at regular corporate rates. We intend to structure our activities to prevent prohibited transaction characterization.

New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify as a REIT.

The present U.S. federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time, which could affect the U.S. federal income tax treatment of an investment in us. The U.S. federal income tax rules dealing with REITs constantly are under review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, which results in statutory changes as well as frequent revisions to regulations and interpretations. Revisions in U.S. federal tax laws and interpretations thereof could affect or cause us to change our investments and commitments and affect the tax considerations of an investment in us.

Liquidation of assets may jeopardize our REIT qualification or create additional tax liability for us.

To qualify as a REIT, we must comply with requirements regarding the composition of our assets and our sources of income. If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any resultant gain if we sell assets that are treated as dealer property or inventory.

The lease of our properties to a TRS is subject to special requirements.

Under the provisions of the REIT Investment Diversification and Empowerment Act of 2007, we currently lease certain “qualified healthcare properties” (which generally include assisted living properties but not independent living properties) to our TRSs (or a limited liability company of which a TRS is a member). These TRSs in turn contract with an affiliate of our manager to manage the healthcare operations at these properties. The rents paid by the TRSs in this structure will be treated as qualifying rents from real property for purposes of the REIT requirements only if (i) they are paid pursuant to an arm’s-length lease of a qualified healthcare property and (ii) the operator

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qualifies as an “eligible independent contractor” with respect to the property. An operator will qualify as an eligible independent contractor if it meets certain ownership tests with respect to us, and if, at the time the operator enters into the property management agreement, the operator is actively engaged in the trade or business of operating qualified healthcare properties for any person who is not a related person to us or the TRS. If any of the above conditions were not satisfied, then the rents would not be considered income from a qualifying source for purposes of the REIT rules, which could cause us to incur penalty taxes or to fail to qualify as a REIT.

RISKS RELATED TO OUR COMMON STOCK

There can be no assurance that the market for our stock will provide you with adequate liquidity.

There can be no assurance that an active trading market for our common stock will develop or be sustained in the future, and the market price of our common stock may fluctuate widely, depending upon many factors, some of which may be beyond our control. These factors include, without limitation:

a shift in our investor base;
our quarterly or annual earnings, or those of other comparable companies;
actual or anticipated fluctuations in our operating results;
changes in accounting standards, policies, guidance, interpretations or principles;
announcements by us or our competitors of significant investments, acquisitions or dispositions;
the failure of securities analysts to cover our common stock;
changes in earnings estimates by securities analysts or our ability to meet those estimates;
the operating and stock price performance of other comparable companies;
overall market fluctuations; and
general economic conditions.

Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.

Substantial sales of common stock may occur in connection with the distribution, which could cause our stock price to decline.

The shares of our common stock that Newcastle intends to distribute to its stockholders generally may be sold immediately in the public market. Although we have no actual knowledge of any plan or intention on the part of any 5% or greater stockholder to sell our common stock following the distribution, it is possible that some Newcastle stockholders, including possibly some of our large stockholders, will sell our common stock received in the distribution. In addition, Newcastle stockholders may sell our stock because our business profile or market capitalization as an independent company does not fit their investment objectives or because our common stock is not included in certain indices after the distribution. The sales of significant amounts of our common stock or the perception in the market that this will occur may result in the lowering of the market price of our common stock.

Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and stock price.

As a public company, we will be required to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules. In addition, as a result of any new investment in senior housing properties, we may be required to consolidate additional entities, and, therefore, to document and test effective internal controls over the financial reporting of these entities in accordance with Section 404, which we may not be able to do. Even if we are able to do so, there could be significant costs and delays, particularly if these entities were not subject to Section 404 prior to being acquired by us. We cannot assure you that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective. If we are not able to maintain or document effective internal control over financial reporting, our

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independent registered public accounting firm will not be able to certify as to the effectiveness of our internal control over financial reporting. Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis, or may cause us to restate previously issued financial information, and thereby subject us to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements is also likely to suffer if we or our independent registered public accounting firm reports a material weakness in our internal control over financial reporting. This could materially adversely affect us by, for example, leading to a decline in our share price and impairing our ability to raise capital.

Your percentage ownership in our Company may be diluted in the future.

Your percentage ownership in our Company may be diluted in the future because of equity awards that we expect will be granted to our Manager, to the directors, officers and employees of our Manager who perform services for us, and to our directors, officers and employees, as well as other equity instruments such as debt and equity financing. We expect that our board of directors will approve a Nonqualified Stock Option and Incentive Award Plan (the “Plan”) providing for the grant of equity-based awards, including restricted stock, stock options, stock appreciation rights, performance awards, tandem awards and other equity-based and non equity-based awards, in each case to our Manager, to the directors, officers, employees, service providers, consultants and advisor of our Manager who perform services for us, and to our directors, officers, employees, service providers, consultants and advisors. We expect to reserve shares of our common stock for issuance under the Plan. On the first day of each fiscal year beginning during the ten-year term of the Plan and beginning with calendar year 2015, that number will be increased by a number of shares of our common stock equal to 10% of the number of shares of our common stock newly issued by us during the immediately preceding fiscal year (and, in the case of fiscal year 2014, the number of shares issued in the period after the effective date of the Plan). For a more detailed description of the Plan, see “Management—Nonqualified Stock Option and Incentive Award Plan.” Upon the successful completion of an offering of our common stock by us, we will issue to our Manager options (including cash-settled options) equal to 10% of the number of shares sold in the offering. Our board of directors may also determine to issue options to the Manager that are not subject to the Plan, provided that the number of shares underlying any options granted to the Manager in connection with capital raising efforts would not exceed 10% of the shares sold in such offering and would be subject to NYSE rules.

We may incur or issue debt or issue equity, which may negatively affect the market price of our common stock.

We may in the future incur or issue debt or issue equity or equity-related securities. Upon our liquidation, lenders and holders of our debt and holders of our preferred stock (if any) would receive a distribution of our available assets before common stockholders. Any future incurrence or issuance of debt would increase our interest cost and could adversely affect our results of operations and cash flows. We are not required to offer any additional equity securities to existing common stockholders on a preemptive basis. Therefore, additional issuances of common stock, directly or through convertible or exchangeable securities (including limited partnership interests in our operating partnership), warrants or options, will dilute the holdings of our existing common stockholders and such issuances, or the perception of such issuances, may reduce the market price of our common stock. Any preferred stock issued by us would likely have a preference on distribution payments, periodically or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to common stockholders. Because our decision to incur or issue debt or issue equity or equity-related securities in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. Thus, common stockholders bear the risk that our future incurrence or issuance of debt or issuance of equity or equity-related securities will adversely affect the market price of our common stock.

We have not established a minimum distribution payment level and we cannot assure you of our ability to pay distributions in the future.

We intend to make quarterly distributions of an amount at least equal to all or substantially all of our REIT taxable income to holders of our common stock out of assets legally available therefore. We have not established a minimum distribution payment level and our ability to pay distributions may be adversely affected by a number of factors, including the risk factors described in this Information Statement. Distributions will be authorized by our board of directors and declared by us based upon a number of factors, including actual results of operations, restrictions under

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Delaware law or any applicable debt covenants, our financial condition, our taxable income, the annual distribution requirements under the REIT provisions of the Code, our operating expenses and other factors our board of directors deems relevant. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions in the future.

Furthermore, while we are required to make distributions in order to maintain our REIT status (as described above under “Risks Related to our Taxation as a REIT—We may be unable to generate sufficient revenue from operations to pay our operating expenses and to pay distributions to our stockholders”), we may elect not to maintain our REIT status, in which case we would no longer be required to make such distributions. Moreover, even if we do elect to maintain our REIT status, we may elect to comply with the applicable requirements by, after completing various procedural steps, distributing, under certain circumstances, a portion of the required amount in the form of shares of our common stock in lieu of cash. If we elect not to maintain our REIT status or to satisfy any required distributions in shares of common stock in lieu of cash, such action could negatively affect our business and financial condition as well as the price of our common stock. No assurance can be given that we will pay any dividends on shares of our common stock in the future.

We may in the future choose to pay dividends in our own stock, in which case you could be required to pay income taxes in excess of the cash dividends you receive.

We may in the future distribute taxable dividends that are payable in cash and shares of our common stock at the election of each stockholder. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, stockholders may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. If a U.S. stockholder sells the stock that it receives as a dividend in order to pay this tax, the sale proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock.

It is unclear whether and to what extent we will be able to pay taxable dividends in cash and stock in later years. Moreover, various aspects of such a taxable cash/stock dividend are uncertain and have not yet been addressed by the IRS. No assurance can be given that the IRS will not impose additional requirements in the future with respect to taxable cash/stock dividends, including on a retroactive basis, or assert that the requirements for such taxable cash/stock dividends have not been met.

An increase in market interest rates may have an adverse effect on the market price of our common stock.

One of the factors that investors may consider in deciding whether to buy or sell shares of our common stock is our distribution rate as a percentage of our share price relative to market interest rates. If the market price of our common stock is based primarily on the earnings and return that we derive from our investments and income with respect to our investments and our related distributions to stockholders, and not from the market value of the investments themselves, then interest rate fluctuations and capital market conditions will likely affect the market price of our common stock. For instance, if market interest rates rise without an increase in our distribution rate, the market price of our common stock could decrease as potential investors may require a higher distribution yield on our common stock or seek other securities paying higher distributions or interest. In addition, rising interest rates would result in increased interest expense on our variable rate debt, thereby adversely affecting cash flow and our ability to service our indebtedness and pay distributions.

Provisions in our certificate of incorporation and bylaws and of Delaware law may prevent or delay an acquisition of our company, which could decrease the trading price of our common stock.

Our certificate of incorporation, bylaws and Delaware law will contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the raider and to encourage prospective acquirers to negotiate with our board of directors rather than to attempt a hostile takeover. These provisions include, among others:

a classified board of directors with staggered three-year terms;

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amendment of provisions in our certificate of incorporation and bylaws regarding the election of directors, classes of directors, the term of office of directors, the filling of director vacancies and the resignation and removal of directors only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon;
amendment of provisions in our certificate of incorporation regarding corporate opportunity only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon;
removal of directors only for cause and only with the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote in the election of directors;
our board of directors to determine the powers, preferences and rights of our preferred stock and to issue such preferred stock without stockholder approval;
advance notice requirements applicable to stockholders for director nominations and actions to be taken at annual meetings;
a prohibition, in our certificate of incorporation, stating that no holder of shares of our common stock will have cumulative voting rights in the election of directors, which means that the holders of a majority of the issued and outstanding shares of common stock can elect all the directors standing for election; and
a requirement in our bylaws specifically denying the ability of our stockholders to consent in writing to take any action in lieu of taking such action at a duly called annual or special meeting of our stockholders.

Public stockholders who might desire to participate in these types of transactions may not have an opportunity to do so, even if the transaction is considered favorable to stockholders. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or a change in our management and board of directors and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium. See “Description of Our Capital Stock—Anti-Takeover Effects of Delaware Law, Our Certificate of Incorporation and Bylaws.”

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Cautionary Statement Regarding Forward-Looking Statements

This Information Statement contains certain “forward-looking statements” that are subject to risks and uncertainties. These statements are not historical facts but instead represent only our belief regarding future events, many of which are inherently uncertain and outside of our control. These statements may address, among other things, our possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. When we use the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may,” “will” or similar expressions, we intend to identify forward-looking statements. Our actual results, liquidity and financial condition may differ from the anticipated results, liquidity and financial condition indicated in these forward-looking statements. The important factors, many of which are outside of our control, that could cause our actual results to differ, possibly materially, include, but are not limited to, the following:

our dependence on our property managers and tenants (including the Master Tenants) in our senior housing business;
the ability of our property managers and tenants (including the Master Tenants) to comply with laws, rules and regulations in the operation of our properties;
the ability of our property managers and tenants, as applicable, to effectively conduct their operations, maintain and improve our properties, to deliver high-quality services, to attract and retain qualified personnel and to attract residents;
increases in costs at our senior housing properties (including, but not limited to, the costs of labor, supplies, insurance and property taxes);
our occupancy rates;
the sale of properties, including our ability to close our anticipated dispositions on currently anticipated terms, or within currently anticipated timeframes, or at all, and realize currently anticipated benefits from such dispositions;
the ability and willingness of our tenants (including the Master Tenants) to renew their leases with us upon expiration of the leases;
our ability to reposition our properties on the same or better terms in the event of nonrenewal;
in the event we exercise our right to replace an existing tenant, the obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant;
year-over-year changes in the Consumer Price Index and the effect of those changes on the rent escalators contained in our leases, including the rent escalators for two of our triple net master lease agreements;
our ability and the ability of our property managers and tenants (including the Master Tenants) to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers;
changes of federal, state and local laws and regulations relating to fraud and abuse practices, Medicaid reimbursement and licensure, etc., including those affecting the healthcare industry that affect our costs of compliance or increase the costs, or otherwise affect the operations or our property managers or tenants;
the ability of our property managers and tenants (including the Master Tenants) to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit properties and other indebtedness;
reductions in cash flows received from our investments;
our ability to take advantage of investment opportunities at attractive risk-adjusted prices;
a lack of liquidity surrounding our investments which could impede our ability to vary our portfolio in an appropriate manner;
the relative spreads between the yield on the assets we invest in and the cost of financing;
changes in economic conditions generally and the real estate and bond markets specifically;
adverse changes in the financing markets we access affecting our ability to finance our investments;

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the quality and size of the investment pipeline and the rate at which we can invest our cash;
changes in interest rates and/or credit spreads, as well as the success of any hedging strategy we may undertake in relation to such changes;
the availability and cost of capital for future investments;
competition for tenants, including with respect to new leases and the renewal or rollover of existing leases;
availability of suitable properties to acquire at favorable prices and the competition for the acquisition and financing of those properties;
our ability to maintain our qualification as a REIT for U.S. federal income tax purposes and the potentially onerous consequences that any failure to maintain such qualification would have on our business; and
our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended (the “1940 Act”), and the fact that maintaining such exemption imposes limits on our operations.

We also direct readers to other risks and uncertainties referenced in this Information Statement, including those set forth under “Risk Factors.” We caution that you should not place undue reliance on any of our forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. Except as required by law, we are under no obligation (and expressly disclaim any obligation) to update or alter any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future events or otherwise.

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OUR SPIN-OFF FROM NEWCASTLE

GENERAL

The board of directors of Newcastle has determined upon careful review and consideration that the spin-off of New Senior Investment Group’s assets from the rest of Newcastle and the establishment of New Senior Investment Group as a separate, publicly traded company is in Newcastle’s best interests.

In furtherance of this plan, Newcastle will distribute all of the shares of our common stock held by Newcastle to holders of Newcastle common stock, subject to certain conditions. The distribution of the shares of our common stock will take place on November 6, 2014. On the distribution date, each holder of Newcastle common stock will receive one share of our common stock for each share of Newcastle common stock held at the close of business on the record date, as described below, after giving effect to a one-for-two reverse stock split of Newcastle common stock. Immediately following the distribution, Newcastle’s stockholders will own 100% of our common stock. You will not be required to make any payment, surrender or exchange your shares of Newcastle common stock or take any other action to receive your shares of our common stock.

The distribution of our common stock as described in this Information Statement is subject to the satisfaction or waiver of certain conditions. We cannot provide any assurances that the distribution will be completed. For a more detailed description of these conditions, see the section entitled “—Conditions to the Distribution” included elsewhere in this Information Statement.

The Number of Shares You Will Receive

For each share of Newcastle common stock that you owned at the close of business on October 27, 2014, the record date, you will receive one share of our common stock on the distribution date, after giving effect to a one-for-two reverse stock split of Newcastle common stock.

Transferability of Shares You Receive

The shares of New Senior Investment Group common stock distributed to Newcastle stockholders will be freely transferable, except for shares received by persons who may be deemed to be New Senior Investment Group “affiliates” under the Securities Act. Persons who may be deemed to be affiliates of New Senior Investment Group after the spin-off generally include individuals or entities that control, are controlled by or are under common control with New Senior Investment Group and may include directors and certain officers or principal stockholders of New Senior Investment Group. New Senior Investment Group affiliates will be permitted to sell their shares of New Senior Investment Group common stock only pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, such as the exemptions afforded by Rule 144.

When and How You Will Receive the Distributed Shares

Newcastle will distribute the shares of our common stock on November 6, 2014, the distribution date. American Stock Transfer & Trust Company, LLC will serve as distribution agent and registrar for our common stock and as distribution agent in connection with the distribution.

If you own Newcastle common stock as of the close of business on the record date, the shares of New Senior Investment Group common stock that you are entitled to receive in the distribution will be issued electronically, as of the distribution date, to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form. Registration in book-entry form refers to a method of recording stock ownership when no physical share certificates are issued to stockholders, as is the case in the distribution. No physical stock certificates of New Senior Investment Group will be issued.

If you sell shares of Newcastle common stock in the “regular-way” market prior to the distribution date, you will also sell your right to receive shares of our common stock in the distribution.

For more information see the section entitled “—Market for Common Stock—Trading Between the Record Date and Distribution Date” included elsewhere in this Information Statement.

Commencing on or shortly after the distribution date, if you hold physical stock certificates that represent your shares of Newcastle common stock, or if you hold your shares in book-entry form, and you are the registered holder of such shares, the distribution agent will mail to you an account statement that indicates the number of shares of our common stock that have been registered in book-entry form in your name.

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Most Newcastle stockholders hold their shares of Newcastle common stock through a bank or brokerage firm. In such cases, the bank or brokerage firm would be said to hold the stock in “street name” and ownership would be recorded on the bank’s or brokerage firm’s books. If you hold your Newcastle common stock through a bank or brokerage firm, your bank or brokerage firm will credit your account for the shares of our common stock that you are entitled to receive in the distribution. If you have any questions concerning the mechanics of having shares of our common stock held in “street name,” we encourage you to contact your bank or brokerage firm.

Results of the Distribution

After the distribution, we will be a separate, publicly traded company. Immediately following the distribution, we expect to have approximately 30 stockholders of record, based on the number of registered stockholders of Newcastle common stock on October 10, 2014, and 66,399,857 shares of our common stock outstanding, after giving effect to a one-for-two reverse stock split of Newcastle common stock. The actual number of shares to be distributed will be determined on the record date and will reflect any changes in the number of shares of Newcastle common stock between October 10, 2014 and the record date for the distribution.

Prior to the spin-off, we will enter into a Separation and Distribution Agreement to effect the spin-off and provide for the allocation between us and Newcastle of Newcastle’s assets, liabilities and obligations (including tax-related assets and liabilities) attributable to periods prior to our spin-off from Newcastle.

For a more detailed description of these agreements, see the section entitled “Certain Relationships and Transactions With Related Persons, Affiliates and Affiliated Entities.”

The distribution will not affect the number of outstanding shares of Newcastle common stock or any rights of Newcastle stockholders.

CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE SPIN-OFF

The following is a summary of certain U.S. federal income tax consequences of our spin-off from Newcastle, and in particular the distribution by Newcastle of our common stock to stockholders of Newcastle. For purposes of this section under the heading “—Certain U.S. Federal Income Tax Consequences of the Spin-off”: (i) any references to the “spin-off” shall mean only the distribution of shares of our common stock by Newcastle to stockholders of Newcastle; (ii) references to “New Senior Investment Group,” “we,” “our” and “us” mean only New Senior Investment Group Inc. and not its subsidiaries or other lower-tier entities, except as otherwise indicated; and (iii) references to Newcastle refer to Newcastle Investment Corp. This summary is based upon the Code, the regulations promulgated by the U.S. Treasury Department, rulings and other administrative pronouncements issued by the IRS, and judicial decisions, all as currently in effect, and all of which are subject to differing interpretations or to change, possibly with retroactive effect. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below. We have not sought and do not intend to seek an advance ruling from the IRS regarding any matter discussed herein. The summary is also based upon the assumption that Newcastle, New Senior Investment Group and their respective subsidiaries and affiliated entities will operate in accordance with their applicable organizational documents or partnership agreements and the agreements and other documents applicable to our spin-off from Newcastle. This summary is for general information only and is not legal or tax advice. The Code provisions applicable to the spin-off are highly technical and complex, and this summary is qualified in its entirety by the express language of applicable Code provisions, Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof. Moreover, this summary does not purport to discuss all aspects of U.S. federal income taxation that may be important to a particular investor in light of its investment or tax circumstances, or to investors subject to special tax rules, such as:

financial institutions;
insurance companies;
broker-dealers;
regulated investment companies;
partnerships and trusts;
persons who hold our stock on behalf of another person as a nominee;
persons who receive our stock through the exercise of employee stock options or otherwise as compensation;

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persons holding our stock as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment;

and, except to the extent discussed below:

tax-exempt organizations; and
foreign investors.

This summary assumes that investors will hold their Newcastle and New Senior Investment Group common stock as a capital asset, which generally means as property held for investment. This summary also assumes that investors will hold their Newcastle common stock at all times from the record date through the distribution date. Special rules may apply to determine the tax consequences to an investor that purchases or sells Newcastle common stock between the record date and the distribution date. You are urged to consult your tax advisor regarding the consequences to you of any such sale.

For purposes of this discussion under the heading “—Certain U.S. Federal Income Tax Consequences of the Spin-off,” a domestic holder is a stockholder of Newcastle that is for U.S. federal income tax purposes:

a citizen or resident of the U.S.;
a corporation created or organized in the U.S. or under the laws of the U.S., or of any state thereof, or the District of Columbia;
an estate, the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source; or
a trust if a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. fiduciaries have the authority to control all substantial decisions of the trust.

A “non-U.S. holder” is a stockholder of Newcastle that is neither a domestic holder nor a partnership (or other entity treated as a partnership) for U.S. federal income tax purposes. If a partnership, including for this purpose any entity that is treated as a partnership for U.S. federal income tax purposes, holds Newcastle stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. An investor that is a partnership and the partners in such partnership should consult their tax advisors about the U.S. federal income tax consequences of the spin-off.

THE U.S. FEDERAL INCOME TAX TREATMENT OF THE SPIN-OFF TO STOCKHOLDERS OF NEWCASTLE DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF COMPLEX PROVISIONS OF U.S. FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE AVAILABLE. IN ADDITION, THE TAX CONSEQUENCES OF THE SPIN-OFF TO ANY PARTICULAR STOCKHOLDER OF NEWCASTLE WILL DEPEND ON THE STOCKHOLDER’S PARTICULAR TAX CIRCUMSTANCES. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES TO YOU OF THE SPIN-OFF IN LIGHT OF YOUR PARTICULAR INVESTMENT OR TAX CIRCUMSTANCES.

Tax Classification of the Spin-off in General

For U.S. federal income tax purposes, the spin-off will not be eligible for treatment as a tax-free distribution by Newcastle with respect to its stock. Accordingly, the spin-off will be treated as if Newcastle had distributed to each Newcastle stockholder an amount equal to the fair market value of the New Senior Investment Group common stock received by such stockholder, determined as of the date of the spin-off (such amount, the “spin-off distribution amount”). The tax consequences of the spin-off on Newcastle’s stockholders are thus generally the same as the tax consequences of Newcastle’s cash distributions. The discussion below describes the U.S. federal income tax consequences to a domestic holder, a non-U.S. holder, and a tax-exempt holder of Newcastle stock upon the receipt of New Senior Investment Group common stock in the spin-off.

Although Newcastle will ascribe a value to the New Senior Investment Group shares distributed in the spin-off, this valuation is not binding on the IRS or any other tax authority. These taxing authorities could ascribe a higher valuation to the distributed New Senior Investment Group shares, particularly if, following the spin-off, those shares trade at prices significantly above the value ascribed to those shares by Newcastle. Such a higher valuation may affect the distribution amount and thus the tax consequences of the spin-off to Newcastle’s stockholders.

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Newcastle will be required to recognize any gain, but will not be permitted to recognize any loss, with respect to the New Senior Investment Group shares that it distributes in the spin-off.

Tax Basis and Holding Period of New Senior Investment Group Shares Received by Holders of Newcastle Stock

A Newcastle stockholder’s tax basis in shares of New Senior Investment Group common stock received in the spin-off generally will equal the fair market value of such shares on the date of the spin-off, and the holding period for such shares will begin the day after the date of the spin-off.

Tax Treatment of the Spin-off to Domestic Holders

The following discussion describes the U.S. federal income tax consequences to a domestic holder of Newcastle stock upon the receipt of New Senior Investment Group common stock in the spin-off.

Ordinary Dividends .    The portion of the spin-off distribution amount received by a domestic holder that is payable out of Newcastle’s current or accumulated earnings and profits and that is not designated by Newcastle as a capital gain dividend will generally be taken into account by such domestic holder as ordinary income and will not be eligible for the dividends received deduction for corporations. With limited exceptions, dividends paid by Newcastle are not eligible for taxation at the preferential income tax rates for qualified dividends received by domestic holders that are individuals, trusts and estates from taxable C corporations. Such domestic holders, however, are taxed at the preferential rates on dividends designated by and received from a REIT such as Newcastle to the extent that the dividends are attributable to:

income retained by the REIT in the prior taxable year on which the REIT was subject to corporate level income tax (less the amount of tax);
dividends received by the REIT from TRSs or other taxable C corporations; or
income in the prior taxable year from the sales of “built-in gain” property acquired by the REIT from C corporations in carryover basis transactions (less the amount of corporate tax on such income).

If any “excess inclusion income” (as defined for U.S. federal income tax purposes) from a taxable mortgage pool or real estate mortgage investment conduits (“REMIC”) residual interest is allocated by Newcastle to any stockholder of Newcastle, that income will be taxable in the hands of the stockholder and would not be offset by any net operating losses of the stockholder that would otherwise be available. As required by IRS guidance, Newcastle intends to notify its stockholders if a portion of a distribution paid by Newcastle is attributable to excess inclusion income.

Non-Dividend Distributions .    A distribution to Newcastle’s domestic holders in excess of Newcastle’s current and accumulated earnings and profits will generally represent a return of capital and will not be taxable to a stockholder to the extent that the amount of such distribution does not exceed the adjusted basis of the holder’s Newcastle shares in respect of which the distribution was made. Rather, the distribution will reduce the adjusted basis of the holder’s shares in Newcastle. To the extent that such distribution exceeds the adjusted basis of a domestic holder’s Newcastle shares, the holder generally must include such distribution in income as long-term capital gain, or short-term capital gain if the holder’s Newcastle shares have been held for one year or less.

Capital Gain Dividends .    A distribution that Newcastle designates as a capital gain dividend will generally be taxed to domestic holders as long-term capital gain, to the extent that such distribution does not exceed Newcastle’s actual net capital gain for the taxable year, without regard to the period for which the holder that receives such distribution has held its Newcastle stock. Corporate domestic holders may be required to treat up to 20% of some capital gain dividends as ordinary income. Long-term capital gains are generally taxable at reduced maximum federal rates in the case of domestic holders that are individuals, trusts and estates, and ordinary income rates in the case of stockholders that are corporations.

Tax Treatment of the Spin-off to Non-U.S. Holders

The following discussion describes the U.S. federal income tax consequences to a non-U.S. holder of Newcastle stock upon the receipt of New Senior Investment Group common stock in the spin-off.

Ordinary Dividends .    The portion of the spin-off distribution amount received by a non-U.S. holder that is (1) payable out of Newcastle’s earnings and profits, (2) not attributable to Newcastle’s capital gains and (3) not

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effectively connected with a U.S. trade or business of the non-U.S. holder, will be treated as a dividend that is subject to U.S. withholding tax at the rate of 30%, unless reduced or eliminated by treaty. Reduced treaty rates and other exemptions are not available to the extent that income is attributable to “excess inclusion income” allocable to the non-U.S. holder. Accordingly, Newcastle will withhold at a rate of 30% on any portion of a dividend that is paid to a non-U.S. holder and is or may be treated as attributable to that non-U.S. holder’s share of Newcastle’s excess inclusion income. As required by IRS guidance, Newcastle intends to notify its stockholders if a portion of a dividend paid by it is attributable to excess inclusion income.

In general, non-U.S. holders will not be considered to be engaged in a U.S. trade or business solely as a result of their ownership of Newcastle stock. In cases where the dividend income from a non-U.S. holder’s investment in Newcastle stock is, or is treated as, effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business, the non-U.S. holder generally will be subject to U.S. federal income tax at graduated rates, in the same manner as domestic holders are taxed with respect to such dividends. Such income must generally be reported on a U.S. income tax return filed by or on behalf of the non-U.S. holder. The income may also be subject to the 30% branch profits tax in the case of a non-U.S. holder that is a corporation.

Non-Dividend Distributions .    Unless Newcastle’s stock constitutes a U.S. real property interest (“USRPI”), the spin-off distribution amount, to the extent not made out of Newcastle’s earnings and profits, will not be subject to U.S. income tax. If Newcastle cannot determine at the time of the spin-off whether or not the spin-off distribution amount will exceed current and accumulated earnings and profits, the spin-off distribution will be subject to withholding at the rate applicable to ordinary dividends, as described above.

If Newcastle’s stock constitutes a USRPI, as described below, distributions that it makes in excess of the sum of (a) the stockholder’s proportionate share of Newcastle’s earnings and profits, plus (b) the stockholder’s basis in its Newcastle stock, will be taxed under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) in the same manner as if the Newcastle stock had been sold, and the collection of the tax would be enforced by a refundable withholding tax at a rate of 10% of the amount by which the distribution exceeds the stockholder’s share of Newcastle’s earnings and profits. In such situations, the non-U.S. holder would be required to file a U.S. federal income tax return and would be subject to the same treatment and same tax rates as a domestic holder with respect to such excess, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of non-resident alien individuals.

Subject to certain exceptions discussed below, Newcastle’s stock will be treated as a USRPI if, at any time during a prescribed testing period, 50% or more of its assets consist of interests in real property located within the United States, excluding, for this purpose, interests in real property solely in a capacity as a creditor. We expect that 50% or more of Newcastle’s assets will consist of USRPIs. Even if the foregoing 50% test is met, however, Newcastle’s stock nonetheless will not constitute a USRPI if Newcastle is a “domestically-controlled qualified investment entity.” A domestically-controlled qualified investment entity includes a REIT, less than 50% of value of which is held directly or indirectly by non-U.S. holders at all times during a specified testing period. It is anticipated that Newcastle will be a domestically-controlled qualified investment entity, and that a distribution with respect to Newcastle’s stock in excess of Newcastle’s earnings and profits will not be subject to taxation under FIRPTA. No assurance can be given that Newcastle will remain a domestically-controlled qualified investment entity.

In the event that Newcastle is not a domestically-controlled qualified investment entity, but its stock is “regularly traded,” as defined by applicable Treasury regulations, on an established securities market, a distribution to a non-U.S. holder nonetheless would not be subject to tax under FIRPTA, provided that the non-U.S. holder held 5% or less of Newcastle’s stock at all times during a specified testing period. It is anticipated that Newcastle’s stock will be regularly traded.

In addition, if a non-U.S. holder owning more than 5% of Newcastle’s common stock disposes of such stock during the 30-day period preceding the ex-dividend date of any dividend payment by Newcastle, and such non-U.S. holder acquires or enters into a contract or option to acquire Newcastle’s common stock within 61 days of the first day of such 30-day period described above, and any portion of such dividend payment would, but for the disposition, be treated as USRPI capital gain (as defined below) to such non-U.S. holder under FIRPTA, then such non-U.S. holder will be treated as having USRPI capital gain in an amount that, but for the disposition, would have been treated as USRPI capital gain.

Gain in respect of a non-dividend distribution that would not otherwise be subject to FIRPTA will nonetheless be taxable in the U.S. to a non-U.S. holder in two cases: (1) if the non-U.S. holder’s investment in Newcastle stock is

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effectively connected with a U.S. trade or business conducted by such non-U.S. holder, the non-U.S. holder will be subject to the same treatment as a domestic holder with respect to such gain, or (2) if the non-U.S. holder is a nonresident alien individual who was present in the U.S. for 183 days or more during the taxable year and has a “tax home” in the U.S., the nonresident alien individual will be subject to a 30% tax on the individual’s capital gain.

Capital Gain Dividends .    Under FIRPTA, a dividend that Newcastle makes to a non-U.S. holder, to the extent attributable to gains from dispositions of USRPIs that Newcastle held directly or through pass-through subsidiaries (such gains, “USRPI capital gains”), will, except as described below, be considered effectively connected with a U.S. trade or business of the non-U.S. holder and will be subject to U.S. income tax at the rates applicable to U.S. individuals or corporations. Newcastle will be required to withhold tax equal to 35% of the maximum amount that could have been designated as a USRPI capital gain dividend. Distributions subject to FIRPTA may also be subject to a 30% branch profits tax in the hands of a non-U.S. holder that is a corporation. A distribution is not a USRPI capital gain dividend if Newcastle held an interest in the underlying asset solely as a creditor.

Capital gain dividends received by a non-U.S. holder that are attributable to dispositions of Newcastle’s assets other than USRPIs are not subject to U.S. federal income tax, unless (1) the gain is effectively connected with the non-U.S. holder’s U.S. trade or business, in which case the non-U.S. holder would be subject to the same treatment as U.S. holders with respect to such gain, or (2) the non-U.S. holder is a nonresident alien individual who was present in the U.S. for 183 days or more during the taxable year and has a “tax home” in the U.S., in which case the non-U.S. holder will incur a 30% tax on his capital gains.

A dividend that would otherwise have been treated as a USRPI capital gain dividend will not be so treated or be subject to FIRPTA, and generally will not be treated as income that is effectively connected with a U.S. trade or business, but instead will be treated in the same manner as ordinary income dividends (discussed above), provided that (1) the dividend is received with respect to a class of stock that is regularly traded on an established securities market located in the U.S., and (2) the recipient non-U.S. holder does not own more than 5% of that class of stock at any time during the year ending on the date on which the dividend is received. Newcastle anticipates that its stock will be “regularly traded” on an established securities exchange.

Withholding of Amounts Distributable to Non-U.S. Holders in the Spin-off .    If Newcastle is required to withhold any amounts otherwise distributable to a non-U.S. holder in the spin-off, Newcastle or other applicable withholding agents would collect the amount required to be withheld by converting to cash for remittance to the IRS a sufficient portion of New Senior Investment Group common stock that such non-U.S. holder would otherwise receive or would withhold from other property held in the non-U.S. holder’s account with the withholding agent, and such holder may bear brokerage or other costs for this withholding procedure. A non-U.S. holder may seek a refund from the IRS of any amounts withheld if it is subsequently determined that the amounts withheld exceeded the holder’s U.S. tax liability for the year in which the spin-off occurred.

Other Withholding Rules .    Pursuant to legislation enacted in 2010 and existing guidance issued thereunder, withholding at a rate of 30% is required on dividends (including any portion of the spin-off distribution treated as a dividend) in respect of Newcastle common stock held by or through certain foreign financial institutions (including investment funds), unless such institution enters into an agreement with the Treasury to report, on an annual basis, information with respect to shares in, and accounts maintained by, the institution to the extent such shares or accounts are held by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold on certain payments. Accordingly, the entity through which Newcastle common stock is held will affect the determination of whether such withholding is required. Similarly, dividends in respect of Newcastle common stock held by an investor that is a non-financial non-U.S. entity that does not qualify under certain exemptions will be subject to withholding at a rate of 30%, unless such entity either (i) certifies to Newcastle that such entity does not have any “substantial United States owners” or (ii) provides certain information regarding the entity’s “substantial United States owners,” which Newcastle will in turn provide to the Secretary of the Treasury. An intergovernmental agreement between the United States and an applicable foreign country, or future Treasury regulations or other guidance, may modify these requirements. Newcastle will not pay any additional amounts to stockholders in respect of any amounts withheld. Non-U.S. holders are encouraged to consult their tax advisors regarding the possible implications of the legislation on their receipt of New Senior Investment Group common stock in the spin-off.

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Tax Treatment of the Spin-off to Tax-Exempt Entities

Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts, generally are exempt from U.S. federal income taxation. Such entities, however, may be subject to taxation on their unrelated business taxable income (“UBTI”). While some investments in real estate may generate UBTI, the IRS has ruled that dividend distributions from a REIT to a tax-exempt entity do not constitute UBTI. Based on that ruling, and provided that (1) a tax-exempt stockholder has not held Newcastle stock as “debt financed property” within the meaning of the Code (i.e., where the acquisition or holding of the property is financed through a borrowing by the tax-exempt stockholder), and (2) such Newcastle stock is not otherwise used in an unrelated trade or business, the spin-off generally should not give rise to UBTI to a tax-exempt stockholder.

To the extent that Newcastle (or a part of Newcastle, or a disregarded subsidiary of Newcastle) is a taxable mortgage pool for U.S. federal income tax purposes, or if Newcastle holds residual interests in a REMIC, a portion of the dividends paid to a tax-exempt stockholder that is allocable to excess inclusion income may be treated as UBTI. If, however, excess inclusion income is allocable to some categories of tax-exempt stockholders that are not subject to UBTI, Newcastle might be subject to corporate level tax on such income, and, in that case, may reduce the amount of distributions to those stockholders whose ownership gave rise to the tax. As required by IRS guidance, Newcastle intends to notify its stockholders if a portion of a dividend paid by it is attributable to excess inclusion income.

Tax-exempt stockholders that are social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans exempt from U.S. federal income taxation under sections 501(c)(7), (c)(9), (c)(17) and (c)(20) of the Code are subject to different UBTI rules, which generally require such stockholders to characterize distributions that Newcastle makes as UBTI.

In certain circumstances, a pension trust that owns more than 10% of Newcastle’s stock could be required to treat a percentage of the dividends as UBTI, if Newcastle is a “pension-held REIT.” Newcastle will not be a pension-held REIT unless (1) it is required to “look through” one or more of its pension stockholders in order to satisfy certain REIT requirements and (2) either (i) one pension trust owns more than 25% of the value of Newcastle’s stock, or (ii) a group of pension trusts, each individually holding more than 10% of the value of Newcastle’s stock, collectively owns more than 50% of Newcastle’s stock. Certain restrictions on ownership and transfer of Newcastle’s stock should generally prevent a tax-exempt entity from owning more than 10% of the value of Newcastle’s stock, and should generally prevent Newcastle from becoming a pension-held REIT.

Time for Determination of the Tax Impact of the Spin-off

The actual tax impact of the spin-off will be affected by a number of factors that are unknown at this time, including Newcastle’s final earnings and profits for 2014 (including as a result of the gain, if any, Newcastle recognizes in the spin-off), the fair market value of New Senior Investment Group’s common stock on the date of the spin-off, the extent to which Newcastle recognizes excess inclusion income during the year of the spin-off and sales of FIRPTA or other capital assets. Thus, a definitive calculation of the U.S. federal income tax impact of the spin-off will not be possible until after the end of the 2014 calendar year. Newcastle will notify its stockholders of the tax attributes of the spin-off (including the spin-off distribution amount) on an IRS Form 1099-DIV.

MARKET FOR COMMON STOCK

There is currently no public market for our common stock. A condition to the distribution is the listing on the NYSE of our common stock. We have applied to list our common stock on the NYSE under the symbol “SNR.”

Trading Between the Record Date and Distribution Date

Beginning shortly before the record date and continuing up to and through the distribution date, we expect that the New York Stock Exchange will establish three trading markets:

The “regular-way” market : In this market, shares of Newcastle common stock will trade with an entitlement to shares of our common stock distributed in the distribution. If you sell shares of Newcastle common stock in the “regular-way” market through the distribution date, you will also sell your right to receive our shares of common stock in the distribution.
The “ex-distribution” market : In this market, shares of Newcastle common stock will trade without an entitlement to shares of our common stock distributed in the distribution. If you own shares of Newcastle

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common stock at the close of business on the record date and sell those shares in the “ex-distribution” market through the distribution date, you will still receive the shares of our common stock that you would be entitled to receive pursuant to your ownership of the shares of Newcastle common stock on the record date.

The “when-issued” market : In this market, shares of our common stock to be distributed in the distribution will be traded. You may trade your entitlement to shares of our common stock, without trading the shares of Newcastle common stock you own, in the “when-issued” market. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued.

On the first trading day following the distribution date, “when-issued” trading with respect to our common stock will end and “regular-way” trading will begin. “Regular-way” trading refers to normal trading transactions, which are settled by delivery of the securities against payment on the third business day after the transaction. You are urged to consult your tax advisor regarding the treatment of the distribution to you if you purchase or sell Newcastle common stock between the record date and the distribution date.

CONDITIONS TO THE DISTRIBUTION

We expect that the distribution will occur on November 6, 2014, the distribution date, provided that, among other conditions described in this Information Statement, the following conditions shall have been satisfied:

our registration statement on Form 10, of which this Information Statement is a part, shall have become effective under the Exchange Act, and no stop order relating to the registration statement is in effect;
the listing of our common stock on the NYSE shall have been approved, subject to official notice of issuance; and
no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the transactions related thereto, including the transfers of assets and liabilities contemplated by the Separation and Distribution Agreement, shall be in effect.

Newcastle has the right not to complete the distribution if, at any time, the board of directors of Newcastle determines, in its sole discretion, that the distribution is not in the best interests of Newcastle or that market conditions are such that it is not advisable to separate New Senior Investment Group from Newcastle.

REASONS FOR THE SPIN-OFF

Newcastle’s board of directors periodically reviews strategic alternatives. The board determined upon careful review and consideration that the spin-off of New Senior Investment Group is in the best interests of Newcastle. The board’s determination was based on a number of factors, including those set forth below:

Creation of two focused companies .    After the spin-off, we will focus primarily on investments in senior housing properties, and Newcastle will focus primarily on harvesting its investments in commercial real estate related assets and making opportunistic investments.
Potential for a higher aggregate market value for stockholders .    The spin-off will enable potential investors and the financial community to evaluate the performance of our and Newcastle’s remaining portfolio separately, which we believe could result in a higher aggregate market value than Newcastle’s pre-spin value. We believe the spin-off will enable each business to cultivate a distinct identity and to appeal to different types of investors. For example, some traditional property REIT investors are currently restricted from investing in Newcastle due to its legacy collateralized debt obligations.
Tailored capital structure and financing options .    After the spin-off, we and Newcastle will have the flexibility to tailor our respective capital structures to our individual needs, and, as separate companies, we may each be able to attain more favorable financing terms and a lower blended cost of capital. In addition, tailored capital structures will facilitate our and Newcastle’s ability to pursue acquisitions and strategic alliances possibly using common stock as currency.

The anticipated benefits of the spin-off are based on a number of assumptions, and there can be no assurance that such benefits will materialize to the extent anticipated or at all. In the event that the spin-off does not result in such

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benefits, the costs associated with the transaction, including an expected increase in management compensation and general and administrative expenses, could have a negative effect on our and Newcastle’s financial condition and ability to make distributions to stockholders. For more information about the risks associated with the spin-off, see “Risk Factors.”

REASONS FOR FURNISHING THIS INFORMATION STATEMENT

This Information Statement is being furnished solely to provide information to Newcastle stockholders who are entitled to receive shares of New Senior Investment Group common stock in the distribution. The Information Statement is not, and is not to be construed as, an inducement or encouragement to buy, hold or sell any of our securities or securities of Newcastle. We believe that the information in this Information Statement is accurate as of the date set forth on the cover. Changes may occur after that date and neither Newcastle nor we undertake any obligation to update such information.

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DISTRIBUTION POLICY

We intend to make regular quarterly distributions of an amount at least equal to all or substantially all of our REIT taxable income to holders of our common stock out of assets legally available therefore. To qualify as a REIT we must distribute annually to our stockholders an amount at least equal to:

90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains (which does not necessarily equal net income as calculated in accordance with GAAP); plus
90% of the excess of our taxable income from foreclosure property (as defined in Section 856 of the Code) over the tax imposed on such income by the Code; less
Any excess non-cash income (as determined under the Code). See “U.S. Federal Income Tax Considerations.”

We will be subject to income tax on our taxable income that is not distributed and to an excise tax to the extent that certain percentages of our taxable income are not distributed by specified dates. See “U.S. Federal Income Tax Considerations—Taxation of New Senior Investment Group—Annual Distribution Requirements.” Income as computed for purposes of the foregoing tax rules will not necessarily correspond to our income as determined for financial reporting purposes.

Distributions will be authorized by our board of directors and declared by us based upon a number of factors, including actual results of operations, restrictions under Delaware law or applicable debt covenants, our financial condition, our taxable income, the annual distribution requirements under the REIT provisions of the Code, our operating expenses and other factors our directors deem relevant. Our ability to make distributions to our stockholders will depend upon the performance of our asset portfolio, and, in turn, upon our Manager’s management of our business. Distributions will be made in cash to the extent that cash is available for distribution. We may not be able to generate sufficient cash flow from operating activities to pay distributions to our stockholders. In addition, our board of directors may change our distribution policy in the future. See “Risk Factors.”

Distributions will generally be taxable to our stockholders as ordinary income. However, a portion of such distributions may be designated by us as long-term capital gain to the extent that such portion is attributable to our sale of capital assets held for more than one year. If we pay distributions in excess of our current and accumulated earnings and profits, such distributions will be treated as a tax-free return of capital to the extent of each stockholder’s tax basis in our common stock and as capital gain thereafter. We will furnish annually to each of our stockholders a statement setting forth distributions paid during the preceding year and their U.S. federal income tax status. For a discussion of the U.S. federal income tax treatment of our distributions, see “U.S. Federal Income Tax Considerations—Taxation of New Senior Investment Group” and “U.S. Federal Income Tax Considerations—Taxation of Stockholders.”

Our certificate of incorporation will allow us to issue preferred stock that could have a preference on distributions. We currently have no intention to issue any preferred stock, but if we do, the distribution preference on the preferred stock could limit our ability to make distributions to the holders of our common stock.

To the extent that our cash available for distribution is less than the amount required to be distributed under the REIT provisions of the Code, we may consider various funding sources to cover any such shortfall, including borrowing under available debt facilities, selling certain of our assets or using a portion of the net proceeds we receive in future offerings. Alternatively, we may satisfy this requirement paying dividends in stock. See “Risk Factors—Risks Related to Our Common Stock—We may in the future choose to pay dividends in our own stock, in which case you could be required to pay income taxes in excess of the cash dividends you receive.”

Our distribution policy enables us to review the alternative funding sources available to us from time to time.

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SELECTED HISTORICAL CONSOLIDATED AND COMBINED FINANCIAL INFORMATION

The table below provides selected historical consolidated (Successor) and combined (Predecessor) financial data as of and for the periods shown. The financial data as of and for the three months and six months ended June 30, 2014 (Successor) and for the three months and six months ended June 30, 2013 (Successor) have been derived from the unaudited condensed consolidated financial statements. The financial data as of December 31, 2013 (Successor) and December 31, 2012 (Successor) and for the year ended December 31, 2013 (Successor) and the period from July 18, 2012 to December 31, 2012 (Successor) have been derived from our audited consolidated financial statements for those dates and periods. The financial data for the period from January 1, 2012 to July 17, 2012 (Predecessor) and the year ended December 31, 2011 (Predecessor) have been derived from our audited combined financial statements for those dates and periods. The financial data as of December 31, 2011 (Predecessor) and as of and for the year ended December 31, 2010 (Predecessor) and December 31, 2009 (Predecessor) have been derived from unaudited combined financial statements of our Predecessor not included in this Information Statement. The selected financial data provided below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical consolidated and combined financial statements and related notes included in this Information Statement.

As described in Note 2 of our consolidated financial statements included in this Information Statement, we applied acquisition accounting as of July 17, 2012 in connection with the acquisition of the initial portfolio of senior housing properties by Newcastle. As a result, the financial data for the Successor periods is not comparable to that of our Predecessor.

Operating results for the periods presented are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2014 or for any future period. The impact of acquisitions, change in the Management Agreement and other changes due to the spin-off are discussed in greater detail within the “Unaudited Pro Forma Consolidated Financial Information” section of this Information Statement. The data should be read in conjunction with the consolidated and combined financial statements, related notes and other financial information included herein.

Operating Data

(dollars in thousands)
Successor
Predecessor
 
For the
six
months
ended
June 30,
2014
For the
six
months
ended
June 30,
2013
For the
three
months
ended
June 30,
2014
For the
three
months
ended
June 30,
2013
For the
year ended
December 31,
2013
For the
period from
July 18 to
December 31,
2012
For the
period from
January 1
to July 17,
2012
For the
year ended
December 31,
2011
For the
year ended
December 31,
2010
For the
year ended
December 31,
2009
 
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
 
 
 
 
(Unaudited)
(Unaudited)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Resident fees and services
$
72,814
 
$
26,488
 
$
37,277
 
$
13,509
 
$
83,218
 
$
18,000
 
$
19,680
 
$
36,419
 
$
34,570
 
$
34,070
 
Rental revenue
 
44,644
 
 
 
 
22,346
 
 
 
 
1,918
 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
117,458
 
 
26,488
 
 
59,623
 
 
13,509
 
 
85,136
 
 
18,000
 
 
19,680
 
 
36,419