Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial information was derived from the application of pro forma adjustments to the consolidated financial statements of Newcastle Investment Corp. and its subsidiaries which are referred to collectively in this section as “Newcastle.” These unaudited pro forma condensed consolidated financial statements should be read in conjunction with the related notes to these financial statements and with Newcastle’s historical consolidated financial statements and the related notes included in Newcastle’s previous filings with the Securities and Exchange Commission.

The unaudited pro forma information set forth below reflects the historical information of Newcastle, as adjusted to give effect to the following transactions:

 

    The purchase and sale agreement Newcastle entered into with certain subsidiaries of Holiday Acquisition Holdings LLC (collectively, the “Seller”), to acquire a 52-property portfolio of independent senior living properties for approximately $1.01 billion.

 

    Each triple-net lease agreement that Newcastle signs will be with either NCT Master Tenant I LLC or NCT Master Tenant II LLC (each such tenant, the “Tenant”), affiliated entities of the Seller. Pursuant to each lease, the Tenant agrees to lease from us 26 of the 52 independent senior living properties for a period of 17 years and first-year rent equal to 6.5% of the purchase price with annual increases during the following three years of 4.5% and an annual increase of between 3.50% and up to 3.75% thereafter, as defined in the lease agreements.

 

    The offering of $             million of common stock assuming the underwriters do not exercise their option to purchase additional shares of Newcastle’s common stock.

The unaudited pro forma condensed consolidated statements of operations give effect to the potential transactions as if they occurred on January 1, 2012. The unaudited pro forma condensed consolidated balance sheet assumes that the acquisition occurred on September 30, 2013.

The historical statements of operations presented in the unaudited pro forma condensed consolidated financial information are for the nine months ended September 30, 2013 as presented in Newcastle’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2013, filed on November 1, 2013, and for the year ended December 31, 2012 as presented in Newcastle’s Current Report on Form 8-K dated August 7, 2013 which amended Newcastle’s Form 10-K filed on February 28, 2013 for the year ended December 31, 2012. The historical balance sheet presented in the unaudited pro forma condensed consolidated financial information is as of September 30, 2013 as presented in Newcastle’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2013.

In the opinion of management, all adjustments necessary to reflect the effects of the potential transactions described above and in the notes to the unaudited pro forma condensed consolidated financial statements have been included and are based upon available information and assumptions that Newcastle believes are reasonable.

Further, the historical financial information presented herein has been adjusted to give pro forma effect to events that Newcastle believes are factually supportable and which are expected to have a continuing impact on Newcastle’s results. However, such adjustments are estimates and may not prove to be accurate. Information regarding these adjustments is subject to risks and uncertainties that could cause actual results to differ materially from those anticipated.

These unaudited pro forma condensed consolidated financial statements are provided for information purposes only. The unaudited pro forma condensed consolidated statements of operations and the unaudited pro forma condensed consolidated balance sheet do not purport to represent what Newcastle’s results of operations would have been had such transactions been consummated on the dates indicated, nor do they represent the financial position or results of operations of Newcastle for any future date or period.

 

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NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

At September 30, 2013

 

          Pro Forma
Adjustments
       
    Historical(A)     Capital
Raise(B)
    Senior Housing
Portfolio
Acquisition
    Pro Forma  

Assets

       

Real estate securities, available-for-sale

  $ 825,499      $           —      $      $ 825,499   

Real estate related and other loans, held-for-sale, net

    795,297                      795,297   

Residential mortgage loans, held-for-investment, net

    260,463                      260,463   

Residential mortgage loans, held-for-sale, net

    2,236                      2,236   

Subprime mortgage loans subject to call option

    406,217                      406,217   

Investments in real estate, net of accumulated depreciation

    409,041               1,008,362 (C)      1,417,403   

Intangibles, net of accumulated amortization

    41,371                      41,371   

Equity method investment in Local Media Group

    57,384                      57,384   

Other investments

    25,133                      25,133   

Cash and cash equivalents

    92,134          (D )   

Restricted cash

    1,827                      1,827   

Derivative assets

    43,172                      43,172   

Receivables and other assets

    27,003                      27,003   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total Assets

  $ 2,986,777      $        $ 1,008,362      $     
 

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ Equity Liabilities

       

CDO bonds payable

  $ 718,473      $      $      $ 718,473   

Other bonds and notes payable

    153,798                      153,798   

Repurchase agreements

    376,886                      376,886   

Mortgage notes payable

    335,238                      335,238   

Financing of subprime mortgage loans subject to call option

    406,217                      406,217   

Junior subordinated notes payable

    51,239                      51,239   

Derivative liabilities

    17,115                      17,115   

Dividends Payable

    30,279                      30,279   

Due to affiliates

    4,911                      4,911   

Accrued expenses and other liabilities

    25,266               1,008,362 (D)      1,033,628   

Liabilities of discontinued operations

    2,380                      2,380   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities

  $ 2,121,802      $      $ 1,008,362      $ 3,130,164   
 

 

 

   

 

 

   

 

 

   

 

 

 

Stockholders’ Equity

       

Preferred stock

  $ 61,583      $      $      $ 61,583   

Common stock

    2,935              

Additional paid-in capital

    2,670,442              

Accumulated deficit

    (1,941,805                   (1,941,805

Accumulated other comprehensive income

    71,820                      71,820   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total Stockholders’ Equity

  $ 864,975      $        $      $     
 

 

 

   

 

 

   

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

  $ 2,986,777      $        $ 1,008,362      $     
 

 

 

   

 

 

   

 

 

   

 

 

 

 

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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

 

(A) Amounts as originally reported by Newcastle in its Quarterly Report filed on Form 10-Q for the quarter ended September 30, 2013.

 

(B) Represents the estimated net cash proceeds, common stock issued, and additional paid-in-capital from the issuance of 50,000,000 shares of Newcastle common stock at a public offering price of $             per share after deducting the estimated expenses of the offering, assuming the underwriters do not exercise their option to purchase additional shares of Newcastle common stock.

 

(C) Represents the estimated fair value of the assets to be acquired. Using weighted average allocations from Newcastle’s historical acquisitions since 2012 of senior housing portfolios, Newcastle allocated approximately 84% of the purchase price, or $844 million, to buildings with an estimated useful life of 40 years, approximately 11%, or $110 million, to land, approximately 4%, or $41 million, to furniture, fixtures and equipment with an estimated useful life of 5 years and approximately 1%, or $13 million, to site improvements with an estimated useful life of 10 years. As Newcastle is still finalizing the acquisition terms and expects to engage a third party provider to perform the purchase price allocation, the purchase price allocation is not complete and could be different from the assumptions used for these unaudited pro forma condensed consolidated financial statements.

 

(D) Represents the investment of the cash from the offering in the acquisition described in (C) above and the remaining purchase price payable after the use of the proceeds from the offering. Newcastle expects to fund approximately 70% of the total purchase price with non-recourse financing.

 

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NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Nine Months Ended September 30, 2013

 

 

          Pro Forma
Adjustments
       
    Historical (A)     Capital
Raise
    Senior Housing
Portfolio
Acquisition
    Pro
Forma
 

Interest income

  $ 171,642      $      $      $ 171,642   

Interest expense

    65,263               (C)      65,263   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

    106,379                      106,379   
 

 

 

   

 

 

   

 

 

   

 

 

 

Impairment/(Reversal)

       

Valuation allowance (reversal) on loans

    (11,473                   (11,473

Other-than-temporary impairment on securities

    4,405                      4,405   

Portion of other-than-temporary impairment on securities recognized in other comprehensive income (loss), net of the reversal of other comprehensive loss into net income

    44                      44   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total impairment (reversal)

    (7,024                   (7,024
 

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after impairment/reversal

    113,403                 113,403   

Other Revenues

       

Rental income

    44,344               67,402 (D)      111,746   

Care and ancillary income

    8,081                      8,081   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total other revenues

    52,425               67,402        119,827   
 

 

 

   

 

 

   

 

 

   

 

 

 

Other Income

       

Gain on settlement of investments, net

    6,451                      6,451   

Gain on extinguishment of debt

    4,565                      4,565   

Equity in earnings of Local Media Group

    1,045                      1,045   

Other income, net

    9,554                      9,554   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total other income

    21,615                      21,615   
 

 

 

   

 

 

   

 

 

   

 

 

 

Expenses

       

Loan and security servicing expense

    2,963                      2,963   

Property operating expenses

    32,576                      32,576   

General and administrative expense

    23,507                      23,507   

Management fee to affiliate

    24,879                     (B)          

Depreciation and amortization

    15,881               23,005 (E)      38,886   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    99,806          23,005     
 

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

    87,637          44,397     

Preferred dividends

    (4,185                   (4,185
 

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations after preferred dividend

  $ 83,452      $        $ 44,397      $     
 

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations per share of common stock, after preferred dividend

       

Basic

  $ 0.32            (F ) 
 

 

 

       

 

 

 

Diluted

  $ 0.31            (F ) 
 

 

 

       

 

 

 

Weighted Average Number of Shares of Common Stock Outstanding

       

Basic

    262,792,986            (F ) 
 

 

 

       

 

 

 

Diluted

    269,057,682            (F ) 
 

 

 

       

 

 

 

 

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NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Twelve Months Ended December 31, 2012

 

          Pro Forma
Adjustments
       
    Historical (A)     Capital
Raise
    Senior Housing
Portfolio
Acquisition
    Pro Forma  

Interest income

  $ 282,951      $      $      $ 282,951   

Interest expense

    109,924               (C)      109,924   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

    173,027                      173,027   
 

 

 

   

 

 

   

 

 

   

 

 

 

Impairment/(Reversal)

       

Valuation allowance (reversal) on loans

    (24,587                   (24,587

Other-than-temporary impairment on securities

    19,359                      19,359   

Portion of other-than-temporary impairment on securities recognized in other comprehensive income (loss), net of the reversal of other comprehensive loss into net income

    (436                   (436
 

 

 

   

 

 

   

 

 

   

 

 

 

Total impairment (reversal)

    (5,664                   (5,664
 

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after impairment/reversal

    178,691                 178,691   

Other Revenues

       

Rental income

    17,081               89,869 (D)      106,950   

Care and ancillary income

    2,994                      2,994   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total other revenues

    20,075               89,869        109,944   
 

 

 

   

 

 

   

 

 

   

 

 

 

Other Income

       

Gain on settlement of investments, net

    232,897                      232,897   

Gain on extinguishment of debt

    24,085                      24,085   

Other income, net

    5,312                      5,312   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total other income

    262,294                      262,294   
 

 

 

   

 

 

   

 

 

   

 

 

 

Expenses

       

Loan and security servicing expense

    4,260                      4,260   

Property operating expenses

    12,943                      12,943   

General and administrative expense

    17,247                      17,247   

Management fee to affiliate

    24,693                         (B)          

Depreciation and amortization

    6,975               30,674 (E)      37,649   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    66,118          30,674     
 

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

    394,942          59,195     

Preferred dividends

    (5,580                   (5,580
 

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations after preferred dividend

  $ 389,362      $                       $ 59,195      $                    
 

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations per share of common stock, after preferred dividend

       

Basic

  $ 2.70                             (F) 
 

 

 

       

 

 

 

Diluted

  $ 2.67                             (F) 
 

 

 

       

 

 

 

Weighted Average Number of Shares of Common Stock Outstanding

       

Basic

    144,146,370                             (F) 
 

 

 

       

 

 

 

Diluted

    145,766,413                             (F) 
 

 

 

       

 

 

 

 

5


NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

 

(A) Historical amounts as reported by Newcastle in its Quarterly Report filed on Form 10-Q for the quarter ended September 30, 2013 and Annual Report on Form 10-K for the year ended December 31, 2012 as amended by Form 8-K filed on August 7, 2013.

 

(B) Represents the estimated increase to the management fees Newcastle will pay Fortress Investment Group LLC as a result of the offering pursuant to the management agreement according to which Newcastle pays 1.5% of its gross equity, as defined in the management agreement.

 

(C) Newcastle expects to fund approximately 70% of the total purchase price with non-recourse financing. Newcastle will incur interest expense related to this financing which is currently being negotiated.

 

(D) Represents estimated rental income from the independent senior living properties to be acquired under a triple-net lease agreement for the nine months ended September 30, 2013 and the year ended December 31, 2012.

 

(E) Represents the estimated depreciation expenses for the nine months ended September 30, 2013 and the year ended December 31, 2012 based on the estimated fair value of the assets to be acquired and their estimated useful life. Actual fair value and useful life are subject to the completion of a purchase price allocation and may be materially different.

 

(F) Weighted average number of shares common stock outstanding and income from continuing operations per share of common stock, after preferred dividends, were adjusted to reflect the issuance of 50,000,000 shares. The pro forma weighted average diluted shares outstanding and diluted earnings per share have not been adjusted to reflect options issued in connection with the offering as if they had been issued on January 1, 2012 because the option exercise price is equal to the offering price. The estimated fair value of these options is $            , based on an offering price of $            .

 

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