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Here's Why New Senior Investment Group Is Soaring Today

By Matthew Frankel, CFP® - Feb 23, 2018 at 11:39AM

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The senior housing REIT is up after announcing a big strategic move.

What happened

New Senior Investment Group (SNR), a real estate investment trust focused on senior housing properties, reported its fourth-quarter and year-end earnings, and the stock shot up by as much as 14%. As of 11:40 a.m. EST Friday, the day of the earnings announcement, the stock was higher by more than 12%.

The earnings report wasn't terrible, but the numbers aren't worthy of such a huge upside move. Same-store NOI increased by 1%, including 4.4% growth in the company's triple-let leased properties (about half of the portfolio is managed, not leased). However, FFO -- the REIT version of earnings -- dropped by $0.03 per diluted share from the fourth quarter of 2016.

For sale sign in front of a building.

While we don't know exactly what strategic alternatives New Senior Investment Group is pursuing, a sale could be a realistic possibility. Image source: Getty Images.

So what

The big news that moved the stock was the announcement that the company has decided to "explore and evaluate a full range of strategic alternatives to maximize shareholder value."

While New Senior's press release also said that the company didn't intend to comment further until the review of these alternatives, the term "strategic alternatives" often means that the company is considering putting itself up for sale.

Since companies typically get acquired for more than their current share prices, this explains the big jump.

Now what

Whether a deal will be completed or not remains to be seen, and even if a sale does happen, there's no way to know how much the company's shareholders would get, or when it will occur.

Still, this likely comes as welcome news to investors after the drop in FFO as well as the decline in the stock price in recent years. If a sale is announced, it's certainly possible there could be more upside from here.

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