Quarterly report pursuant to Section 13 or 15(d)

ACQUISITIONS

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ACQUISITIONS
 3 Months Ended
Mar. 31, 2014
Acquisitions  
ACQUISITIONS

2.   ACQUISITIONS
 
Acquisitions of Senior Housing properties
 

In January 2014, Newcastle completed the acquisitions of two senior housing properties for an aggregate purchase price of approximately $22.8 million plus acquisition costs. Each of these acquisitions was accounted for as a business combination, under which all assets acquired and liabilities assumed are recognized at their acquisition-date fair value with acquisition-related costs being expensed as incurred. Newcastle has retained Holiday to manage these properties. Pursuant to the property management agreements with Holiday, Newcastle pays management fees equal to either (i) 5% of the property’s effective gross income (as defined in the agreements) or (ii) 6% of the property’s effective gross income (as defined in the agreements) for the first two years and 7% thereafter. In addition, Newcastle will reimburse Holiday for certain expenses, primarily the compensation expense associated with the on-site employees.
 

The following table summarizes the allocation of the purchase price to the fair value of identifiable assets acquired and liabilities assumed at the date of acquisition, in accordance with the acquisition method of accounting:
Allocation of Purchase Price (A)
 
Investments in Real Estate
$
20,630

Resident Lease Intangibles
2,370

Other Assets, net of other Liabilities
(200
)
Total purchase price
$
22,800

 
 
Mortgage Notes Payable (B)
(17,250
)
Net assets acquired
$
5,550

Total acquisition related costs (C)
$
258


(A)
Due to the timing of the acquisition, Newcastle is still obtaining additional information relating to the purchase price allocation. Therefore, the review process of the purchase price allocation is not complete. Newcastle expects to complete this process within twelve months of the acquisition.
(B)
See Note 10.
(C)
Acquisition related costs are expensed as incurred and included within general and administrative expense on the consolidated statements of income.