Annaly Capital Management, Inc. (NYSE: NLY) (“Annaly” or the “Company”) announced today that it has entered into a definitive agreement to sell its commercial real estate business to Slate Asset Management LP (“Slate”), a firm global investment and asset management focused on real estate.
The transaction is valued at $ 2.33 billion and represents substantially all of the assets that make up the Company’s commercial real estate business, including equity interests, credit assets and commercial mortgage-backed securities. Certain Annaly employees who primarily support the commercial real estate business are expected to join Slate upon completion of the sale, including Timothy Gallagher, director of commercial real estate, and Michael Quinn, director of commercial investments.
“The commercial real estate business has been an important component of Annaly’s differentiated investment model since 2013,” said David Finkelstein, Annaly’s CEO and Chief Investment Officer. “This transaction offers a compelling execution for our shareholders and will provide additional capacity to further expand our leadership and operational capabilities in all aspects of the residential mortgage finance market, which has been the cornerstone of Annaly’s strategy since our founding. On behalf of our entire Company and the Board of Directors, I want to sincerely thank all the employees who have supported and built our Commercial Real Estate business over the years. “
Annaly expects the transaction to have an immaterial impact on key financial metrics, including the Company’s book value, basic earnings, and dividend. At the closing of the transaction, the Company intends to use the proceeds from the sale to repay its financing facilities related to the commercial real estate assets being sold and to purchase specific assets in accordance with its capital allocation policy, which may include investments in Agency assets as well as residential and corporate credit assets. Annaly anticipates maintaining limited exposure to the commercial real estate sector through opportunistic and efficient strategies within the portfolio.
Subject to customary closing conditions, including applicable regulatory approvals, the transfer of the commercial real estate business is expected to be completed by the third quarter of 2021.
Evercore is serving as financial advisor and Ropes & Gray LLP is serving as legal advisor to Annaly. BMO Capital Markets is serving as financial advisor and Goodwin Procter LLP and McCarthy Tétrault LLP are serving as legal counsel to Slate.
Annaly is a leading diversified capital manager investing in and financing residential and commercial assets. Annaly’s main business objective is to generate net income to distribute to its shareholders and optimize its returns through prudent management of its diversified investment strategies. Annaly is internally managed and has chosen to be taxed as a real estate investment trust, or REIT, for federal income tax purposes. Additional information about the company can be found at www.annaly.com.
About Whiteboard Asset Management
Slate Asset Management is a leading alternative investment platform focused on real estate with approximately $ 6.5 billion in assets under management. Slate is a value-oriented manager and major sponsor of all of its publicly-traded and private investment vehicles, tailored to the unique goals and objectives of its investors. The company’s careful and selective investment approach creates long-term value with an emphasis on capital preservation and outsized returns. Slate is backed by exceptional people, flexible capital, and a proven ability to originate and execute a wide range of attractive investment opportunities. Visit slateam.com for more information.
This press release and our public documents to which we refer contain or incorporate by reference certain forward-looking statements that are based on various assumptions (some of which are beyond our control) and may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may”, “will”, “believe”, “expect”, “anticipate”, “continue” or similar terms or variations of those terms or the negatives of those terms. Actual results could differ materially from those set forth in the forward-looking statements due to a variety of factors, including, but not limited to, risks and uncertainties related to the COVID-19 pandemic, including those related to adverse economic conditions in real estate. related assets and financing conditions; changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability of mortgage-backed and other securities for purchase; the availability of financing and, if available, the terms of any financing; changes in the market value of our assets; changes in business conditions and the general economy; our ability to grow our commercial real estate business; our ability to grow our residential credit business; our ability to grow our middle market loan business; credit risks related to our investments in credit risk transfer securities, residential mortgage backed securities and related residential mortgage credit assets, commercial real estate assets and corporate debt; risks related to investments in mortgage service rights; our ability to fulfill any contemplated investment opportunity; changes in government regulations or policies that affect our business; our ability to maintain our REIT rating for US federal income tax purposes and our ability to maintain our exemption from registration under the Investment Company Act of 1940. For a discussion of risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our recent Annual Report on Form 10-K and any subsequent quarterly reports on Form 10-Q. We do not assume, and specifically disclaim any obligation, to publicly disclose the result of any revision that may be made to any forward-looking statement to reflect the occurrence of anticipated or unforeseen events or circumstances after the date of such statements, except as necessary. by law.
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