the acquisition of the Hawthorn Portfolio which comprises 17 private pay, IL-only properties (“Hawthorn Portfolio Acquisition”) and related financing on March 27, 2015;

the mortgage financing, which comprises the refinancing of mortgage loans (“Mortgage Loan Refinancing”) and the additional financing secured by existing properties (“Additional Financing”), on March 27, 2015; and

the continuing effect on management fees payable to FIG LLC (an affiliate of Fortress Investment Group LLC), the Company’s manager (the “Manager”), pursuant to the management agreement entered into between New Senior and the Manager effective as of the spin-off on November 6, 2014, as a result of the Hawthorn Portfolio Acquisition and related financing, Mortgage Loan Refinancing and Additional Financing transactions.

Revenues

Resident fees and services

Rental revenue

Total revenues

Expenses

Property operating expense

Depreciation and amortization

Interest expense

Acquisition, transaction and integration expense

Management fee to affiliate

General and administrative expense

Loss on extinguishment of debt

Other (income) expense

Total expenses

Loss Before Income Taxes

Income tax benefit

Net Loss

Loss Per Share of Common Stock

Basic and diluted

Weighted Average Number of Shares of Common Stock Outstanding

Basic and diluted

Revenues

Resident fees and services

Rental revenue

Total revenues

Expenses

Property operating expense

Depreciation and amortization

Interest expense

Acquisition, transaction and integration expense

Management fee to affiliate

General and administrative expense

Other (income) expense

Total expenses

Loss Before Income Taxes

Income tax expense

Net Loss

Loss Per Share of Common Stock

Basic and diluted

Weighted Average Number of Shares of Common Stock Outstanding

Basic and diluted

Reflects revenues and certain operating expenses of the Hawthorn Portfolio for the period from January 1, 2015 through March 26, 2015 and the year ended December 31, 2014 as adjusted for the items detailed in the footnotes below. The historical amounts were derived from the unaudited Statement of Revenues and Certain Operating Expenses of the Hawthorn Portfolio for the period from January 1, 2015 through March 26, 2015 (not included herein) and the audited Statement of Revenues and Certain Operating Expenses of the Hawthorn Portfolio for the year ended December 31, 2014 (included in Item 9.01(a)(3) of this Current Report on Form 8-K pursuant to Rule 3-14 of Regulation S-X), respectively.

Revenue:

Rent revenue

Certain operating expenses:

Facility operating expenses

Property management fee

Real estate taxes

Property operating expenses

Rent revenue has been classified as “Resident fees and services” to conform to the Company’s presentation.

The Hawthorn Portfolio has historically been charged a property management fee equal to 3.5% of rent revenue. Upon acquisition, the Company entered into new property management agreements for the Hawthorn Portfolio which provide for a property management fee equal to 5% of effective gross income. The effective gross income represents the rent revenue of the Hawthorn Portfolio, as defined in the respective property management agreements.

Resident fees and services

Property management fee rate

Pro forma property management fee

Less: historical Hawthorn Portfolio property management fee

Total adjustment to property management fee

Represents the pre-acquisition period from January 1, 2015 through March 26, 2015.

Reflects depreciation and amortization of the buildings, building improvements, furniture, fixtures and equipment and intangible assets based on our preliminary measurement of the fair value of the acquired net assets. The Company’s acquisition accounting for this transaction is still preliminary, and as a result, the related pro forma calculation for depreciation and amortization expense is preliminary and subject to completion. The acquired finite-lived intangible assets are being amortized over their estimated useful lives using the straight-line method. The following table summarizes the calculation of the pro forma adjustment for depreciation and amortization expense resulting from the Hawthorn Portfolio Acquisition:

Asset class

Real estate investments:

Land

Buildings

Building improvements

Furniture, fixtures & equipment

Amortized intangible assets:

In-place leases

Less: historical New Senior depreciation and amortization

Pro forma adjustment

The Hawthorn Portfolio Acquisition was financed in part with $326.8 million of additional borrowings (see note F for further information). Financing costs of approximately $2.9 million were attributable to the financing of the Hawthorn Portfolio Acquisition.

Principal balance

$ 326,815

Pro forma interest expense

Amortization of deferred financing costs

Less: historical New Senior interest expense

Pro forma adjustment to interest expense

Reflects the elimination of acquisition and transaction related costs of $0.9 million incurred in the three months ended March 31, 2015 by the Company directly attributable to the Hawthorn Portfolio Acquisition, which primarily consist of legal, consulting and accounting fees.

In March 2015, the Company obtained financing of $670.0 million (“Freddie financing”). The Freddie financing consists of (i) the Hawthorn Portfolio Acquisition related financing of $326.8 million (see note C); (ii) the Mortgage Loan Refinancing of $297.0 million, which replaced our existing floating and fixed rate mortgage loans; and (iii) Additional Financing of $46.2 million which is secured by our existing properties.

Principal balance

$ 343,185

Pro forma interest expense

Amortization of deferred financing costs

Less: historical New Senior interest expense

Pro forma adjustment to interest expense

Represents the impact to management fees as a result of the Hawthorn Portfolio Acquisition and related financing, Mortgage Loan Refinancing and Additional Financing.

Pro forma base management fee ⁽¹⁾

Pro forma incentive compensation ⁽²⁾

Less: historical New Senior management fee ⁽³⁾

Pro forma adjustment

The pro forma base management fee for the year ended December 31, 2014 reflects the continuing effect on management fees pursuant to the management agreement entered into between New Senior and the Manager in connection with the spin-off. This amount reflects the management fee for the period from January 1, 2014 through the date of the spin-off and is based on applying the base management fee rate payable by New Senior of 1.5% to the invested capital, which was set at the spin-off date. Subsequent to the spin-off date through December 31, 2014, and for the three months ended March 31, 2015, no pro forma adjustment has been calculated as the Hawthorn Portfolio Acquisition and related financing, the Mortgage Loan Refinancing and Additional Financing pro forma transactions had no impact on the base management fee.

Reflects the impact of the Hawthorn Portfolio Acquisition and related financing, Mortgage Loan Refinancing and Additional Financing pro forma transactions on the incentive compensation calculation.

Represents the allocated portion of management fees paid by Newcastle Investment Corp. for management services provided by the Manager during the period prior to the spin-off, pursuant to Newcastle’s management agreement with the Manager.

New Senior has been operating so as to qualify as a REIT for U.S. federal and state income tax purposes. Therefore, certain activities including the Hawthorn Portfolio Acquisition and related financing, Mortgage Loan Refinancing and Additional Financing would not be subject to income tax. Accordingly, no adjustment to pro forma income tax expense has been reflected in the pro forma statements of operations.