Newcastle Investment Corp. (NCT), Fortress Investment Group LLC (FIG): One REIT That’s Buying… Newspapers?

A company lacking direction
Having watched Newcastle for months, I’m left to wonder who Newcastle actually works for. Does it work for shareholders, or is it working for Fortress Investment Group LLC (NYSE:FIG), its investment manager?

Newcastle shareholders clearly want to own a portfolio of senior living assets, yet Newcastle seems to be most interested in anything but senior living properties.

This newspaper deal really benefits Fortress Investment Group LLC (NYSE:FIG), which can maintain control of its newspapers by directing Newcastle to invest in GateHouse’s distressed debt. Should Newcastle get the nod to spin off Newcastle Media Holdings, Fortress Investment Group LLC (NYSE:FIG) will continue to manage the assets, possibly rewarding itself with a hefty management fee along the way. Newcastle Investment Corp. and Newcastle Residential currently pay 1.5% of equity in annual management fees.

There are just too many questions about Newcastle Investment Corp. (NYSE:NCT)’s future to make an investment. Will the bankruptcy proceedings at GateHouse go through without a hitch? Can Newcastle spin off the assets as quickly as it expects?

And if shareholders cash in from a spin-off, can we trust that Newcastle will actually follow through on its stated promise to invest in senior housing? In its June investor presentation, the future transition to senior housing seemed so clear. Next week, I wouldn’t be surprised to learn Newcastle was sizing up a deal to buy a bike shop.

The article 1 REIT That’s Buying… Newspapers? originally appeared on Fool.com and is written by Jordan Wathen.

Fool contributor Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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