Exhibit 99.2
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 historical consolidated financial statements of Newcastle Investment Corp. and its subsidiaries (collectively, “Newcastle”). These unaudited pro forma condensed consolidated statements of operations and unaudited pro forma condensed consolidated balance sheet should be read in conjunction with the related notes to the pro forma financial information 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 transaction:
| • | The spin-off of New Senior Investment Group Inc. ("New Senior") from Newcastle on November 6, 2014; and |
| • | The contribution of approximately $239.5 million of cash from Newcastle to New Senior upon spin-off. |
The unaudited pro forma condensed consolidated statement of operations gives effect to the above transaction as if it occurred on January 1, 2011. The unaudited pro forma condensed consolidated balance sheet assumes that the New Senior spin-off occurred on September 30, 2014.
New Senior commenced its operations in July 2012 and there were no senior housing operations included in Newcastle historical consolidated financial statements prior to that date. Hence, no pro forma adjustments have been made to the Condensed Consolidated Statements of Operations for the year ended December 31, 2011.
In the opinion of management, all adjustments necessary to reflect the effects of the transaction described above 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 (i) directly attributable to the spin-off of New Senior, (ii) factually supportable and (iii) with respect to the unaudited pro forma consolidated statement of operations, 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.
The unaudited pro forma condensed consolidated financial information is provided for information purposes only. The unaudited pro forma condensed consolidated statements of operations do not purport to represent what Newcastle’s results of operations would have been had such transactions been consummated on the date indicated, nor do they represent the results of operations of either Newcastle or New Senior for any future date or period.
NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
At September 30, 2014
(dollars in thousands)
| New Senior | |||||||||||||
| Historical (A) | Spin-off (B) | Pro Forma | |||||||||||
| Assets | |||||||||||||
| Real estate securities, available-for-sale | $ | 310,639 | $ | — | 310,639 | ||||||||
| Real estate related and other loans, held-for-sale, net | 224,992 | — | 224,992 | ||||||||||
| Residential mortgage loans, held-for-sale, net | 4,036 | — | 4,036 | ||||||||||
| Subprime mortgage loans subject to call option | 406,217 | — | 406,217 | ||||||||||
| Investments in senior housing real estate, net of accumulated depreciation | 1,582,477 | (1,582,477 | ) | — | |||||||||
| Investments in real estate, net of accumulated depreciation | 245,510 | — | 245,510 | ||||||||||
| Intangibles, net of accumulated amortization | 201,909 | (114,522 | ) | 87,387 | |||||||||
| Other investments | 26,456 | — | 26,456 | ||||||||||
| Cash and cash equivalents | 257,584 | (239,533 | ) | (C) | 18,051 | ||||||||
| Restricted cash | 4,624 | — | 4,624 | ||||||||||
| Receivables and other assets | 111,996 | (76,851 | ) | 35,145 | |||||||||
| Assets of discontinued operations | 6,863 | — | 6,863 | ||||||||||
| Total Assets | $ | 3,383,303 | $ | (2,013,383 | ) | $ | 1,369,920 | ||||||
| Liabilities and Equity | |||||||||||||
| Liabilities | |||||||||||||
| CDO bonds payable | $ | 230,858 | $ | — | $ | 230,858 | |||||||
| Other bonds and notes payable | 82,063 | — | 82,063 | ||||||||||
| Repurchase agreements | 63,804 | — | 63,804 | ||||||||||
| Mortgage notes payable | 1,148,008 | (1,148,008 | ) | — | |||||||||
| Credit facilities and obligations under capital leases, golf | 160,692 | — | 160,692 | ||||||||||
| Financing of subprime mortgage loans subject to call option | 406,217 | — | 406,217 | ||||||||||
| Junior subordinated notes payable | 51,233 | — | 51,233 | ||||||||||
| Dividends payable | 40,770 | — | 40,770 | ||||||||||
| Accounts payable, accrued expenses and other liabilities | 249,065 | (82,580 | ) | 166,485 | |||||||||
| Liabilities of discontinued operations | 412 | — | 412 | ||||||||||
| Total Liabilities | $ | 2,433,122 | $ | (1,230,588 | ) | $ | 1,202,534 | ||||||
| Equity | |||||||||||||
| Preferred stock | $ | 61,583 | $ | — | $ | 61,583 | |||||||
| Common stock | 664 | — | 664 | ||||||||||
| Additional paid-in-capital | 3,171,983 | — | 3,171,983 | ||||||||||
| Accumulated deficit | (2,350,567 | ) | (782,795 | ) | (D) | (3,133,362 | ) | ||||||
| Accumulated other comprehensive income | 66,342 | — | 66,342 | ||||||||||
| Total Newcastle Stockholders' Equity | 950,005 | (782,795 | ) | 167,210 | |||||||||
| Noncontrolling interests | 176 | — | 176 | ||||||||||
| Total Equity | $ | 950,181 | $ | (782,795 | ) | $ | 167,386 | ||||||
| Total Liabilities and Equity | $ | 3,383,303 | $ | (2,013,383 | ) | $ | 1,369,920 | ||||||
| A. | Represents Newcastle's historical consolidated balance sheet at September 30, 2014. |
| B. | Represents New Senior's assets and liabilities at September 30, 2014. |
| C. | Represents the contribution of $239,533 of cash from Newcastle to New Senior upon spin-off. |
| D. | Represents a reduction of Newcastle’s equity as a result of the distribution of New Senior stock to Newcastle stockholders. |
NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine months ended September 30, 2014
(dollars in thousands, except share data)
| New Senior | |||||||||||||
| Historical (A) | Spin-off (B) | Pro Forma | |||||||||||
| Interest income | $ | 103,889 | $ | — | $ | 103,889 | |||||||
| Interest expense | 102,340 | (41,429 | ) | 60,911 | |||||||||
| Net interest income | 1,549 | 41,429 | 42,978 | ||||||||||
| Impairment/(Reversal) | |||||||||||||
| Valuation allowance (reversal) on loans | (1,243 | ) | — | (1,243 | ) | ||||||||
| Total impairment (reversal) | (1,243 | ) | — | (1,243 | ) | ||||||||
| Net interest income (loss) after impairment/reversal | 2,792 | 41,429 | 44,221 | ||||||||||
| Operating Revenues | |||||||||||||
| Rental income | 167,208 | (167,208 | ) | — | |||||||||
| Care and ancillary income | 17,555 | (17,555 | ) | — | |||||||||
| Golf course operations | 140,699 | — | 140,699 | ||||||||||
| Sales of food and beverages - golf | 52,333 | — | 52,333 | ||||||||||
| Other golf revenue | 33,832 | — | 33,832 | ||||||||||
| Total other revenues | 411,627 | (184,763 | ) | 226,864 | |||||||||
| Other Income | |||||||||||||
| Gain (loss) on settlement of investments, net | 49,742 | — | 49,742 | ||||||||||
| Gain (loss) on extinguishment of debt | (3,410 | ) | — | (3,410 | ) | ||||||||
| Other income, net | 25,258 | (1,457 | ) | 23,801 | |||||||||
| Total other income | 71,590 | (1,457 | ) | 70,133 | |||||||||
| Expenses | |||||||||||||
| Loan and security servicing expense | 1,424 | — | 1,424 | ||||||||||
| Property operating expenses | 74,092 | (74,092 | ) | — | |||||||||
| Operating expenses - golf | 191,119 | — | 191,119 | ||||||||||
| Cost of sales - golf | 23,183 | — | 23,183 | ||||||||||
| General and administrative expenses | 27,380 | (15,916 | ) | (C) | 11,464 | ||||||||
| Management fee to affiliate | 23,618 | (12,530 | ) | (D) | 11,088 | ||||||||
| Depreciation and amortization expense | 97,812 | (74,672 | ) | 23,140 | |||||||||
| Total expenses | 438,628 | (177,210 | ) | 261,418 | |||||||||
| Income from continuing operations before income tax | 47,381 | 32,419 | 79,800 | ||||||||||
| Income tax expense | 1,169 | (1,025 | ) | 144 | |||||||||
| Income (loss) from continuing operations | 46,212 | 33,444 | 79,656 | ||||||||||
| Income (loss) from discontinued operations, net of tax | (4,748 | ) | — | (4,748 | ) | ||||||||
| Net income | 41,464 | 33,444 | 74,908 | ||||||||||
| Preferred dividends | (4,185 | ) | — | (4,185 | ) | ||||||||
| Net loss attributable to noncontrolling interests | 711 | — | 711 | ||||||||||
| Income Applicable to Common Stockholders | $ | 37,990 | $ | 33,444 | $ | 71,434 | |||||||
| Income Applicable to Common Stock, per share | |||||||||||||
| Basic | $ | 0.63 | $ | 1.19 | |||||||||
| Diluted | $ | 0.62 | $ | 1.16 | |||||||||
| Weighted Average Number of Shares of Common Stock Outstanding | |||||||||||||
| Basic | 59,848,506 | 59,848,506 | |||||||||||
| Diluted | 61,630,175 | 61,630,175 | |||||||||||
| A. | Represents Newcastle's historical consolidated statement of operations for the nine months ended September 30, 2014. |
| B. | Represents New Senior's results of operations for the nine months ended September 30, 2014. |
| C. | General and administrative expenses include acquisition and transaction expenses of $12,800 for the nine months ended September 30, 2014. |
| D. | Represents property management fee of $6,766 paid to affiliates and management fee of $5,764 allocated pursuant to the Newcastle Management Agreement. |
NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2013
(dollars in thousands, except share data)
| New Senior | |||||||||||||
| Historical (A) | Spin-off (B) | Pro Forma | |||||||||||
| Interest income | $ | 213,715 | $ | (3 | ) | $ | 213,712 | ||||||
| Interest expense | 89,382 | (10,781 | ) | 78,601 | |||||||||
| Net interest income | 124,333 | 10,778 | 135,111 | ||||||||||
| Impairment/(Reversal) | |||||||||||||
| Valuation allowance (reversal) on loans | (25,035 | ) | — | (25,035 | ) | ||||||||
| Other-than-temporary impairment on securities | 5,222 | — | 5,222 | ||||||||||
| 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 (loss) | 44 | — | 44 | ||||||||||
| Total impairment (reversal) | (19,769 | ) | — | (19,769 | ) | ||||||||
| Net interest income (loss) after impairment/reversal | 144,102 | 10,778 | 154,880 | ||||||||||
| Other Revenues | |||||||||||||
| Rental income | 72,880 | (72,880 | ) | — | |||||||||
| Care and ancillary income | 12,387 | (12,387 | ) | — | |||||||||
| Total other revenues | 85,267 | (85,267 | ) | — | |||||||||
| Other Income (Loss) | |||||||||||||
| Gain (loss) on settlement of investments, net | 17,369 | — | 17,369 | ||||||||||
| Gain (loss) on extinguishment of debt | 4,565 | — | 4,565 | ||||||||||
| Other income, net | 13,367 | (11 | ) | 13,356 | |||||||||
| Total other income | 35,301 | (11 | ) | 35,290 | |||||||||
| Expenses | |||||||||||||
| Loan and security servicing expense | 3,857 | — | 3,857 | ||||||||||
| Property operating expenses | 52,713 | (52,713 | ) | — | |||||||||
| General and administrative expenses | 35,183 | (17,725 | ) | (C) | 17,458 | ||||||||
| Management fee to affiliate | 33,091 | (6,830 | ) | (D) | 26,261 | ||||||||
| Depreciation and amortization expense | 26,909 | (26,905 | ) | 4 | |||||||||
| Total expenses | 151,753 | (104,173 | ) | 47,580 | |||||||||
| Income from continuing operations before income tax | 112,917 | 29,673 | 142,590 | ||||||||||
| Income tax expense | 1,038 | (1,038 | ) | — | |||||||||
| Income (loss) from continuing operations | 111,879 | 30,711 | 142,590 | ||||||||||
| Income (loss) from discontinued operations, net of tax | 40,462 | — | 40,462 | ||||||||||
| Net income | 152,341 | 30,711 | 183,052 | ||||||||||
| Preferred dividends | (5,580 | ) | — | (5,580 | ) | ||||||||
| Net income attributable to noncontrolling interests | (928 | ) | — | (928 | ) | ||||||||
| Income Applicable to Common Stockholders | $ | 145,833 | $ | 30,711 | $ | 176,544 | |||||||
| Income Applicable to Common Stock, per share (E) | |||||||||||||
| Basic | $ | 3.16 | $ | 3.83 | |||||||||
| Diluted | $ | 3.09 | $ | 3.74 | |||||||||
| Weighted Average Number of Shares of Common Stock Outstanding (E) | |||||||||||||
| Basic | 46,146,882 | 46,146,882 | |||||||||||
| Diluted | 47,218,274 | 47,218,274 | |||||||||||
| A. | Represents Newcastle's historical consolidated statement of operations for the year ended December 31, 2013. |
| B. | Represents New Senior's results of operations for the year ended December 31, 2013. |
| C. | General and administrative expenses include acquisition and transaction expenses of $13,825 and general and administrative expense of $1,777, allocated by Newcastle for the year ended December 31, 2013. |
| D. | Represents property management fee of $5,034 paid to affiliates and management fee of $1,796 allocated pursuant to the Newcastle Management Agreement. |
| E. | Per share amounts and shares outstanding reflects the 1-for-3 reverse stock split, which was effective after the close of trading on August 18, 2014 and the 1-for-2 reverse stock split, which was effective after the close of trading on October 22, 2014. |
NEWCASTLE INVESTMENT CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2012
(dollars in thousands, except share data)
| New Senior | |||||||||||||
| Historical (A) | Spin-off (B) | Pro Forma | |||||||||||
| Interest income | $ | 282,951 | $ | — | $ | 282,951 | |||||||
| Interest expense | 109,924 | (1,688 | ) | 108,236 | |||||||||
| Net interest income | 173,027 | 1,688 | 174,715 | ||||||||||
| 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 (loss) | (436 | ) | — | (436 | ) | ||||||||
| Total impairment (reversal) | (5,664 | ) | (5,664 | ) | |||||||||
| Net interest income (loss) after impairment/reversal | 178,691 | 1,688 | 180,379 | ||||||||||
| Other Revenues | — | ||||||||||||
| Rental income | 15,032 | (15,032 | ) | — | |||||||||
| Care and ancillary income | 2,994 | (2,994 | ) | — | |||||||||
| Total other revenues | 18,026 | (18,026 | ) | — | |||||||||
| Other Income (Loss) | — | ||||||||||||
| Gain (loss) on settlement of investments, net | 232,897 | — | 232,897 | ||||||||||
| Gain (loss) on extinguishment of debt | 24,085 | — | 24,085 | ||||||||||
| Other income, net | 5,312 | 82 | 5,394 | ||||||||||
| Total other income | 262,294 | 82 | 262,376 | ||||||||||
| Expenses | — | ||||||||||||
| Loan and security servicing expense | 4,260 | — | 4,260 | ||||||||||
| Property operating expenses | 11,539 | (11,539 | ) | — | |||||||||
| General and administrative expenses | 17,236 | (5,997 | ) | (C) | 11,239 | ||||||||
| Management fee to affiliate | 24,693 | (1,546 | ) | (D) | 23,147 | ||||||||
| Depreciation and amortization expense | 5,784 | (5,784 | ) | — | |||||||||
| Total expenses | 63,512 | (24,866 | ) | 38,646 | |||||||||
| Income from continuing operations before income tax | 395,499 | 8,610 | 404,109 | ||||||||||
| Income tax expense | — | — | — | ||||||||||
| Income (loss) from continuing operations | 395,499 | 8,610 | 404,109 | ||||||||||
| Income (loss) from discontinued operations, net of tax | 38,611 | — | 38,611 | ||||||||||
| Net income | 434,110 | 8,610 | 442,720 | ||||||||||
| Preferred dividends | (5,580 | ) | — | (5,580 | ) | ||||||||
| Net income attributable to noncontrolling interests | — | — | — | ||||||||||
| Income Applicable to Common Stockholders | $ | 428,530 | $ | 8,610 | $ | 437,140 | |||||||
| Income Applicable to Common Stock, per share (E) | |||||||||||||
| Basic | $ | 17.84 | $ | 18.20 | |||||||||
| Diluted | $ | 17.64 | $ | 17.99 | |||||||||
| Weighted Average Number of Shares of Common Stock Outstanding (E) | |||||||||||||
| Basic | 24,024,395 | 24,024,395 | |||||||||||
| Diluted | 24,294,402 | 24,294,402 | |||||||||||
| A. | Represents Newcastle's historical consolidated statement of operations for the year ended December 31, 2012. |
| B. | Represents New Senior's results of operations for the year ended December 31, 2012. |
| C. | General and administrative expenses include acquisition and transaction expenses of $5,235 and general and administrative expense of $233, allocated by Newcastle for the year ended December 31, 2012. |
| D. | Represents property management fee of $1,082 paid to affiliates and management fee of $464 allocated pursuant to the Newcastle Management Agreement. |
| E. | Per share amounts and shares outstanding reflects the 1-for-3 reverse stock split, which was effective after the close of trading on August 18, 2014 and the 1-for-2 reverse stock split, which was effective after the close of trading on October 22, 2014. |