Annaly Capital Management, Inc. Announces Agreement to Sell Its Middle Market Lending Portfolio to Ares Management Corporation for $2.4 Billion
25 April 2022 - 10:15PM
Business Wire
Annaly Capital Management, Inc. (NYSE: NLY) (“Annaly” or the
“Company”) today announced that it has entered into a definitive
agreement to sell its Middle Market Lending portfolio to Ares
Capital Management LLC on behalf of funds managed by the Credit
Group of Ares Management Corporation (NYSE: ARES) (“Ares”), a
leading global alternative investment manager. The transaction is
valued at approximately $2.4 billion and represents substantially
all of the Company’s Middle Market Lending assets held on balance
sheet as well as assets managed for third parties. The Company’s
Middle Market Lending portfolio is comprised of predominantly 1st
and 2nd lien loans focused on defensive, counter-cyclical
industries.
“The sale of our Middle Market Lending portfolio represents a
successful outcome for Annaly’s shareholders and marks the latest
in a series of strategic actions – including the disposition of our
Commercial Real Estate business and investments into our Mortgage
Servicing Rights and Residential Credit businesses – that have
enhanced our focus and capabilities across our core housing finance
strategy,” remarked David Finkelstein, Annaly’s Chief Executive
Officer & President.
Annaly expects the transaction to be accretive to book value and
have an immaterial impact on other key financial metrics, including
earnings available for distribution and the Company’s dividend.
Upon closing of the transaction, the Company intends to use
proceeds from the sale to repay its financing facilities related to
the Middle Market Lending assets being sold and to purchase
targeted assets in accordance with its capital allocation policy,
including Agency MBS, Mortgage Servicing Rights and Residential
Credit assets.
Subject to customary closing conditions, the transfer of the
Middle Market Lending portfolio is expected to be completed by the
end of the second quarter of 2022.
Wells Fargo Securities, LLC is serving as financial advisor and
Hunton Andrews Kurth LLP is serving as legal advisor to Annaly.
Latham & Watkins LLP is serving as legal advisor to Ares.
About Annaly
Annaly is a leading diversified capital manager with investment
strategies across mortgage finance. Annaly’s principal business
objective is to generate net income for distribution to its
stockholders and to optimize its returns through prudent management
of its diversified investment strategies. Annaly is internally
managed and has elected to be taxed as a real estate investment
trust, or REIT, for federal income tax purposes. Additional
information on the company can be found at www.annaly.com.
About Ares Management Corporation
Ares Management Corporation is a leading global alternative
investment manager offering clients complementary primary and
secondary investment solutions across the credit, private equity,
real estate and infrastructure asset classes. Ares Management
Corporation seeks to provide flexible capital to support businesses
and create value for its stakeholders and within its communities.
By collaborating across its investment groups, Ares Management
Corporation aims to generate consistent and attractive investment
returns throughout market cycles. As of December 31, 2021, Ares
Management Corporation's global platform had approximately 2,100
employees operating across North America, Europe, Asia Pacific and
the Middle East and approximately $314 billion of assets under
management, including Ares Management’s acquisition of AMP
Capital’s Infrastructure Debt platform which closed February 10,
2022. For more information, please visit www.aresmgmt.com.
Forward-Looking Statements
This news release and our public documents to which we refer
contain or incorporate by reference certain forward-looking
statements which 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 on those
terms or the negative of those terms. Actual results could differ
materially from those set forth in forward-looking statements due
to a variety of factors, including, but not limited to, risks and
uncertainties related to the COVID-19 pandemic, including as
related to adverse economic conditions on 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 securities 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; operational risks or
risk management failures by us or critical third parties, including
cybersecurity incidents; our ability to grow our residential credit
business; the sale of our middle market lending business; credit
risks related to our investments in credit risk transfer
securities, residential mortgage-backed securities and related
residential mortgage credit assets and corporate debt; risks
related to investments in mortgage servicing rights; our ability to
consummate any contemplated investment opportunities; changes in
government regulations or policy affecting our business; our
ability to maintain our qualification as a REIT for U.S. federal
income tax purposes; and our ability to maintain our exemption from
registration under the Investment Company Act. For a discussion of
the risks and uncertainties which could cause actual results to
differ from those contained in the forward-looking statements, see
"Risk Factors" in our most recent Annual Report on Form 10-K and
any subsequent Quarterly Reports on Form 10-Q. The Company does not
undertake, and specifically disclaims any obligation, to publicly
release the result of any revisions which may be made to any
forward-looking statements to reflect the occurrence of anticipated
or unanticipated events or circumstances after the date of such
statements, except as required by law.
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Annaly Investor Contact Annaly Capital Management, Inc.
Investor Relations 1-888-8Annaly investor@annaly.com
Annaly Media Contact Brunswick Group Alex Yankus
212-333-3810 annaly@brunswickgroup.com
Ares Management Contact Carl Drake, +1 888-818-5298 or
Jacob Silber, +1 212-301-0376 media@aresmgmt.com
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