falseQ320190001610114 0001610114 2019-11-05 2019-11-05


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
FORM 8-K
 
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 5, 2019
 
 
 
 
New Senior Investment Group Inc.
(Exact Name of Registrant as Specified in Charter)
 
 
 
Delaware
 
001-36499
 
80-0912734
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer
Identification Number)
55 West 46th Street
New York
NY
10036
(Address of principal executive offices)
(Zip code)

(646)
822-3700
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report) 
 
 
 
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
Trading Symbol:
Name of each exchange on which registered:
Common stock, $0.01 par value per share
SNR
New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
 
  
Emerging growth company
 
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o




Item 8.01. Other Events

On October 31, 2019, New Senior Investment Group Inc. (the "Company") and various subsidiaries entered into a Purchase and Sale Agreement (the "Sale Agreement”) with affiliates of ReNew REIT (the "Buyer") in which the Company agreed to sell 28 senior living facilities, which comprises the Company’s Assisted Living and Memory Care ("AL/MC") properties segment, for a gross sale price of $385 million, subject to certain prorations and/or adjustments as set forth in the Sale Agreement. The closing may occur on or before January 10, 2020, subject to the rights of each of the parties to extend the closing to a future date. The pro forma financial information, with respect to the probable disposition of the AL/MC segment, is filed as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.
    
Item 9.01. Financial Statements and Exhibits
(b)    Pro forma financial information.    

The following pro forma financial information reflecting the the transaction described above is filed as Exhibit 99.1 to this Form 8-K:

•
the Company's unaudited pro forma consolidated balance sheet dated as of September 30, 2019;

•
the Company's unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2019; and

•
the Company's unaudited pro forma consolidated statement of operations for the years ended December 31, 2018, December 31, 2017 and December 31, 2016.

(d)
Exhibits

Exhibit No.        Description                                        
99.1            Unaudited Pro Forma Financial Information
104            Cover Page Interactive Data File (embedded within the Inline XBRL document



2



SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
NEW SENIOR INVESTMENT GROUP INC.
 
 
 
 
Date: November 5, 2019
 
 
 
By:
 
/s/ Lori B. Marino
 
 
 
 
 
 
Lori B. Marino
 
 
 
 
 
 
Executive Vice President, General Counsel & Secretary


3

UNAUDITED PRO FORMA FINANCIAL INFORMATION



We prepared the following unaudited pro forma consolidated financial statements by applying certain pro forma adjustments to the historical consolidated financial statements of New Senior Investment Group Inc. (the "Company"). The pro forma adjustments give effect to the probable disposition of the Assisted Living and Memory Care ("AL/MC") segment (the "Disposition"). It is anticipated that these operations will qualify as discontinued operations and as a result would be reclassified from income (loss) from continuing operations to discontinued operations in accordance with Accounting Standards Codification 205-20, "Presentation of Financial Statements," in future filings.
These pro forma consolidated financial statements include adjustments for the AL/MC segment disposition because we believe the disposition is probable under the standards of Rule 11-01 of Regulation S-X.
The unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2019, and the years ended December 31, 2018, 2017 and 2016 give effect to the reclassification of the results of the AL/MC segment from continuing operations as of the beginning of each respective period. The unaudited pro forma balance sheet as of September 30, 2019 assumes the Disposition occurred on September 30, 2019.
The unaudited pro forma consolidated financial statements are presented for illustrative purposes only to reflect the Disposition and do not represent what our results of operations or financial position would actually have been had the Disposition occurred on the dates noted above, or project our results of operations or financial position for any future periods. The unaudited pro forma consolidated financial statements are intended to provide information about the continuing impact of the Disposition as if it had been consummated earlier and do not represent any conclusions about whether such operations of the AL/MC will be reported as discontinued operations. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable and are expected to have a continuing impact on our results of operations. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma consolidated financial statements have been made. The actual results may differ materially from the estimatets and assumptions within the accompanying unaudited pro forma consolidated financial statements.
The unaudited pro forma consolidated financial statements and the accompanying notes are based upon and should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on Februarry 26, 2019, and the Quarterly Report on Form 10-Q for the period ended September 30, 2019, filed with the SEC on November 5, 2019.


NEW SENIOR INVESTMENT GROUP INC. AND SUBSIDIARIES
PRO FORMA BALANCE SHEET (Unaudited)
(dollars in thousands, except share data)


 
As of September 30, 2019
 
SNR - As Reported
 
Disposition
 
 
 
Pro forma
Assets
 
 
 
 
 
 
 
Real estate investments:
 
 
 
 
 
 
 
Land
$
177,956

 
$
(43,313
)
 
(A)
 
$
134,643

Buildings, improvements and other
2,360,548

 
(395,695
)
 
(A)
 
1,964,853

Accumulated depreciation
(420,682
)
 
86,507

 
(A)
 
(334,175
)
Net real estate property
2,117,822

 
(352,501
)
 
 
 
1,765,321

Acquired lease and other intangible assets
8,638

 
(996
)
 
(A)
 
7,642

Accumulated amortization
(3,144
)
 
996

 
(A)
 
(2,148
)
Net real estate intangibles
5,494

 
—

 
 
 
5,494

Net real estate investments
2,123,316

 
(352,501
)
 
 
 
1,770,815

 
 
 
 
 
 
 
 
Cash and cash equivalents
35,399

 
110,026

 
(B)
 
145,425

Receivables and other assets, net
45,156

 
(10,067
)
 
(C)
 
35,089

Total Assets
$
2,203,871

 
$
(252,542
)
 
 
 
$
1,951,329

 
 
 
 
 
 
 
 
Liabilities, Redeemable Preferred Stock and Equity
 

 
 
 
 
 
 
Liabilities
 

 
 
 
 
 
 
Debt, net
$
1,836,062

 
$
(245,647
)
 
(D)
 
$
1,590,415

Accrued expenses and other liabilities
76,298

 
(25,881
)
 
(C)
 
50,417

Total Liabilities
1,912,360

 
(271,528
)
 
 
 
1,640,832

 
 
 
 
 
 
 
 
Commitments and contingencies


 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable preferred stock, $0.01 par value with $100 liquidation preference, 400,000 shares authorized, issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
40,506

 
—

 
 
 
40,506

 
 
 
 
 
 
 
 
Equity


 
 
 
 
 
 
Preferred stock, $0.01 par value, 99,600,000 shares (excluding 400,000 shares of redeemable preferred stock) authorized, none issued or outstanding as of September 30, 2019 and December 31, 2018
—

 
—

 
 
 
—

Common stock, $0.01 par value, 2,000,000,000 shares authorized, 82,964,438 and 82,148,869 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
830

 
—

 
 
 
830

Additional paid-in capital
900,432

 
—

 
 
 
900,432

Accumulated deficit
(642,990
)
 
18,986

 
(E)
 
(624,004
)
Accumulated other comprehensive loss
(7,267
)
 
—

 
 
 
(7,267
)
Total Equity
251,005

 
18,986

 
 
 
269,991

 
 
 
 
 
 
 
 
Total Liabilities, Redeemable Preferred Stock and Equity
$
2,203,871

 
$
(252,542
)
 
 
 
$
1,951,329




See notes to consolidated pro forma financial statements (unaudited).

NEW SENIOR INVESTMENT GROUP INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands, except share data)


 
For the Nine Months Ended September 30, 2019
 
SNR - As Reported
 
Disposition
 
 
 
Pro forma
Revenues
 
 
 
 
 
 
 
Resident fees and services
$
344,477

 
$
(89,534
)
 
(F)
 
$
254,943

Rental revenue
4,748

 
—

 
 
 
4,748

Total revenues
349,225

 
(89,534
)
 
 
 
259,691

 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
Property operating expense
227,489

 
(73,281
)
 
(F)
 
154,208

Depreciation and amortization
62,583

 
(11,279
)
 
 
 
51,304

Interest expense
69,864

 
(11,482
)
 
(G)
 
58,382

General and administrative expense
15,773

 
(26
)
 
(H)
 
15,747

Acquisition, transaction and integration expense
1,677

 
(508
)
 
(I)
 
1,169

Loss on extinguishment of debt
335

 
—

 
 
 
335

Other expense (income)
1,350

 
37

 
(J)
 
1,387

Total expenses
379,071

 
(96,539
)
 
 
 
282,532

Loss on sale of real estate
(122
)
 
 
 
 
 
(122
)
Litigation proceeds, net
38,226

 
 
 
 
 
38,226

Income before income taxes
8,258

 
7,005

 
 
 
15,263

Income tax expense (benefit)
188

 
(72
)
 
(K)
 
116

Net income
8,070

 
7,077

 
 
 
15,147

Deemed dividend on redeemable preferred stock
(1,802
)
 
—

 
 
 
(1,802
)
Net income (loss) attributable to common stockholders
$
6,268

 
$
7,077

 
 
 
$
13,345

 
 
 
 
 
 
 
 
Net income (loss) per share of common stock
 
 
 
 
 
 
 
Basic
$
0.08

 
$
—

 
 
 
$
0.16

Diluted
$
0.07

 
$
—

 
 
 
$
0.16

 
 
 
 
 
 
 
 
Weighted average number of shares of common stock outstanding
 
 
 
 
 
 
 
Basic
82,207,610

 
—

 
 
 
82,207,610

Diluted
83,588,648

 
—

 
 
 
83,588,648

 
 
 
 
 
 
 
 
Dividends declared per share of common stock
$
0.39

 
$
—

 
 
 
$
0.39

 


See notes to consolidated pro forma financial statements (unaudited).

NEW SENIOR INVESTMENT GROUP INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands, except share data)



 
Year Ended December 31, 2018
 
SNR - As Reported
 
Disposition
 
 
 
Pro forma
Revenues
 
 
 
 
 
 
 
Resident fees and services
$
404,891

 
$
(121,274
)
 
(F)
 
$
283,617

Rental revenue
39,407

 
—

 
 
 
39,407

Total revenues
444,298

 
(121,274
)
 
 
 
323,024

 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
Property operating expense
267,785

 
(95,299
)
 
(F)
 
172,486

Depreciation and amortization
95,950

 
(15,821
)
 
 
 
80,129

Interest expense
101,176

 
(15,533
)
 
(G)
 
85,643

Acquisition, transaction and integration expense
15,919

 
(15
)
 
 
 
15,904

Termination fee to affiliate
50,000

 
—

 
 
 
50,000

Management fees and incentive compensation to affiliate
14,814

 
—

 
 
 
14,814

General and administrative expense
13,387

 
(6
)
 
(H)
 
13,381

Loss on extinguishment of debt
66,219

 
(1,473
)
 
(L)
 
64,746

Impairment of real estate held for sale
8,725

 
—

 
 
 
8,725

Other expense (income)
3,974

 
(189
)
 
(J)
 
3,785

Total expenses
637,949

 
(128,336
)
 
 
 
509,613

Gain on lease termination
40,090

 
 
 
 
 
40,090

Income (Loss) before income taxes
(153,561
)
 
7,062

 
 
 
(146,499
)
Income tax expense
5,794

 
1,092

 
(M)
 
6,886

Net income (loss)
(159,355
)
 
5,970

 
 
 
(153,385
)
 
 
 
 
 
 
 
 
Net income (loss) per share of common stock
 
 
 
 
 
 
 
Basic and diluted
$
(1.94
)
 
$
—

 
 
 
$
(1.87
)
 
 
 
 
 
 
 
 
Weighted average number of shares of common stock outstanding
 
 
 
 
 
 
 
Basic and diluted
82,148,869

 
—

 
 
 
82,148,869

 
 
 
 
 
 
 
 
Dividends declared per share of common stock
$
0.78

 
$
—

 
 
 
$
0.78

 



See notes to consolidated pro forma financial statements (unaudited).

NEW SENIOR INVESTMENT GROUP INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands, except share data)


 
Year Ended December 31, 2017
 
SNR - As Reported
 
Disposition
 
 
 
Pro forma
Revenues
 
 
 
 
 
 
 
Resident fees and services
$
336,739

 
$
(124,665
)
 
(F)
 
$
212,074

Rental revenue
112,391

 
—

 
 
 
112,391

Total revenues
449,130

 
(124,665
)
 
 
 
324,465

 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
Property operating expense
230,045

 
(94,383
)
 
(F)
 
135,662

Depreciation and amortization
139,942

 
(19,163
)
 
 
 
120,779

Interest expense
93,597

 
(13,969
)
 
(G)
 
79,628

Acquisition, transaction and integration expense
2,453

 
(149
)
 
(I)
 
2,304

Management fees and incentive compensation to affiliate
18,225

 
—

 
 
 
18,225

General and administrative expense
15,307

 
(7
)
 
(H)
 
15,300

Loss on extinguishment of debt
3,902

 
(295
)
 
(N)
 
3,607

Other expense (income)
1,702

 
(977
)
 
(J)
 
725

Total expenses
505,173

 
(128,943
)
 
 
 
376,230

Gain on sale of real estate
71,763

 
—

 
 
 
71,763

Income before income taxes
15,720

 
4,278

 
 
 
19,998

Income tax expense (benefit)
3,512

 
(1,134
)
 
(M)
 
2,378

Net income
12,208

 
5,412

 
 
 
17,620

 
 
 
 
 
 
 
 
Net income per share of common stock
 
 
 
 
 
 
 
Basic
$
0.15

 
$
—

 
 
 
$
0.21

Diluted
$
0.15

 
$
—

 
 
 
$
0.21

 
 
 
 
 
 
 
 
Weighted average number of shares of common stock outstanding
 
 
 
 
 
 
 
Basic
82,145,295

 
—

 
 
 
82,145,295

Diluted
82,741,322

 
—

 
 
 
82,741,322

 
 
 
 
 
 
 
 
Dividends declared per share of common stock
$
1.04

 
$
—

 
 
 
$
1.04

 


See notes to consolidated pro forma financial statements (unaudited).

NEW SENIOR INVESTMENT GROUP INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands, except share data)


 
Year Ended December 31, 2016
 
SNR - As Reported
 
Disposition
 
 
 
Pro forma
Revenues
 
 
 
 
 
 
 
Resident fees and services
$
359,472

 
$
(126,992
)
 
(F)
 
$
232,480

Rental revenue
112,966

 
—

 
 
 
112,966

Total revenues
472,438

 
(126,992
)
 
 
 
345,446

 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
Property operating expense
243,027

 
(93,115
)
 
(F)
 
149,912

Depreciation and amortization
184,546

 
(26,497
)
 
 
 
158,049

Interest expense
91,780

 
(12,647
)
 
(G)
 
79,133

Acquisition, transaction and integration expense
3,942

 
5

 
 
 
3,947

Management fees and incentive compensation to affiliate
18,143

 
—

 
 
 
18,143

General and administrative expense
15,194

 
(2
)
 
 
 
15,192

Loss on extinguishment of debt
245

 
(245
)
 
(N)
 
—

Other expense (income)
727

 
(207
)
 
(J)
 
520

Total expenses
557,604

 
(132,708
)
 
 
 
424,896

Gain on sale of real estate
13,356

 
 
 
 
 
13,356

Income (Loss) before income taxes
(71,810
)
 
5,716

 
 
 
(66,094
)
Income tax expense (benefit)
439

 
(1,300
)
 
(M)
 
(861
)
Net income (loss)
(72,249
)
 
7,016

 
 
 
(65,233
)
 
 
 
 
 
 
 
 
Net income (loss) per share of common stock
 
 
 
 
 
 
 
Basic and diluted
$
(0.88
)
 
$
—

 
 
 
$
(0.79
)
 
 
 
 
 
 
 
 
Weighted average number of shares of common stock outstanding
 
 
 
 
 
 
 
Basic and diluted
82,357,346

 
—

 
 
 
82,357,346

 
 
 
 
 
 
 
 
Dividends declared per share of common stock
$
1.04

 
$
—

 
 
 
$
1.04

 


See notes to consolidated pro forma financial statements (unaudited).

NEW SENIOR INVESTMENT GROUP INC. AND SUBSIDIARIES
NOTES TO THE PRO FORMA CONSOLIDATED BALANCE SHEET AND STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands, except share data)



(A) Reflects real estate assets directly attributable to the properties included in the potential Disposition.

(B)Net increase in cash of $110.0 million consists of the following:
Gross sale price
$
385,000

Repayment of debt
(248,353
)
Capital adjustments/prorations
(20,815
)
Pre-payment penalty on debt
(5,806
)
Cash proceeds
$
110,026


(C)Current assets and liabilities directly attributable to the properties included in the potential Disposition, which are
expected to be settled at closing.

(D)Includes $248.4 million of debt specifically associated with the properties included in the probable Disposition, net of
deferred financing fees of $2.7 million associated with mortgage notes payable expected to be repaid or refinanced as a
result of the potential Disposition.

(E) Estimated increase in retained earnings is comprised of the following and and may be subject to change. It does not include
additional selling and transaction costs expected to be incurred prior to the potential Disposition.
Estimated gain on sale of real estate
27,498

Pre-payment penalty on debt
(5,806
)
Net deferred financing costs write off
(2,706
)
Total
$
18,986


(F) Resident fees and services revenue and Property Operating expense directly attributable to the properties included in the
potential Disposition.

(G) Interest expense on debt directly attributable to the properties included in the potential Disposition.

(H) Represents banks fees specifically attributable to the properties included in the potential Disposition.

(I) Represents costs related to transitioning properties included in the potential Disposition to new operators during the years
ended 2019 and 2017.

(J) Primarily represents casualty-related charges recorded with respect to properties included in the potential Disposition.

(K) Represents federal and state current income taxes attributable to the properties included in the potential Disposition for
the year ended 2019.

(L) Represents attributable portion of loss on early extinguishment of debt incurred with respect to the refinancing of
existing debt with the revolving credit facility during the year ended 2018.

(M) Represents federal and state income taxes attributable to the properties included in the potential Disposition for the
years ended 2018, 2017, and 2016,  including the impact of a valuation allowance recorded against deferred tax assets
during the year ended 2018.
      
(N) Represents attributable portion of the loss on early extinguishment of debt incurred on additional repayments of debt
required as a result of property sales during the years ended 2017 and 2016.