Newcastle Completes Spin of New Residential Investment Corp

Newcastle Investment Corp (NCT) recently completed the spinoff of New Residential Investment Corp (NRZ) on May 15th. The spinoff, first announced in January, created two separate REITs, with NRZ focused on the residential side and NCT playing in the commercial space. More specifically, NCT invests in two areas: Real Estate & Other Debt and Senior Housing (literally housing for seniors), while NRZ focuses on Excess Mortgage Servicing Rights (MSR), RMBS and a consumer loan portfolio. For much more information on the investment approach and the investments themselves, check out these two company presentations, here and here, and the Form 10 filing here.

The company listed three separate reasons for the spin:

  1. Creation of two focused companies
  2. Potential for a higher aggregate market value for stockholders
  3. Tailored capital structure and financing options

Typical boilerplate items and the companies should be able to take advantage of investor’s mad dash for yield as they both will offer hefty dividends. One item to note is the relationship with mega investment manager Fortress Investment Group (FIG) as both REITs are externally managed and advised by an affiliate of the firm.

The new company is currently trading on the NYSE under the ticker ‘NRZ’ and shareholders should have received 1 share of NRZ for every 1 share of NCT owned.

Disclosure: Author holds no position in any stock mentioned.