Annaly Capital Management, Inc. Announces Strategic Achievements Demonstrating Growth & Diversification Across Shared Capital...
January 16 2019 - 5:00PM
Business Wire
- Annaly opened the U.S. Capital
Markets on January 7th as the first company to raise
equity in 2019, raising approximately $840 million in gross
proceeds through an overnight common stock offering
- In December of 2018, for the
21st consecutive quarter, Annaly declared a dividend
of $0.30 demonstrating the stability and durability of its
diversified platform
- During 2018, Annaly completed $4.2
billion of originations and purchases across its three credit
businesses – an increase of approximately 65% year over
year
- Annaly ended 2018 with approximately
$8 billion in unencumbered assets, demonstrating the overall
strength of its liquidity position to continue to support
opportunistic portfolio expansion
Annaly Capital Management, Inc. (NYSE:NLY) (“Annaly” or the
“Company”) today announced a number of significant accomplishments
made during 2018 and the beginning of 2019 across the Company’s
diversified shared capital platform.
“To begin 2019, Annaly successfully raised $840 million of
equity to capitalize on the numerous investment opportunities in
our businesses. Following the volatility of the fourth quarter, we
targeted the beginning of 2019 as a prudent time to raise capital
to take advantage of emerging and attractive options across our
four investment strategies,” said Kevin Keyes, Chairman, Chief
Executive Officer and President of Annaly. “This transaction
follows a record year in 2018 in which Annaly continued to
successfully implement its diversification strategy by
opportunistically originating and purchasing over $4.2 billion in
investments across our three credit businesses with compelling
valuations and structures. These achievements are a testament to
the performance, scale and depth of our diversified and
complementary investment strategies,” continued Kevin Keyes. “As we
continue into 2019, our deep liquidity, evidenced by approximately
$8 billion of unencumbered assets as of year-end, provides us
additional capacity for further portfolio expansion in high quality
assets with attractive risk-adjusted returns.”
Capital Markets Leadership
Annaly began 2019 with the first common equity offering across
all industries in the U.S. In connection with this previously
announced public offering, Annaly issued 86,500,000 shares of
common stock, inclusive of 11,500,000 shares representing the full
exercise of the underwriters’ option. Giving effect to the sale of
these additional shares, the Company raised gross proceeds of
approximately $840 million before deducting estimated
offering expenses. Annaly intends to use the net proceeds of this
offering to acquire targeted assets under the Company’s capital
allocation policy, further diversifying its investments in Agency
assets as well as high quality residential, commercial and
corporate credit assets. Annaly also intends to use the net
proceeds for general corporate purposes, including, without
limitation, to pay down obligations and other working capital
items. Since the beginning of 2018, Annaly has grown its capital
base by an aggregate of $2.6 billion with the successful execution
of public equity and preferred offerings and the continuation of
its M&A consolidation strategy.
Credit Highlights
Annaly originated or purchased an aggregate of over $4.2
billion1 of loans, commercial mortgage-backed securities and equity
across its three credit businesses in 2018, an increase of 65%
year-over-year.
Residential Credit
- The Annaly Residential Credit Group
(referred to as “ARC”) acquired $1.6 billion2 of Expanded
Prime/Non-Qualified Mortgage and seasoned residential whole loans,
up approximately 76% year-over-year, for a weighted average return
on investment of 11.5% across the overall ARC portfolio.3
- Driven by expansion in its unique
partnership channels, ARC purchased $1.3 billion of residential
whole loans during the year in 36 separate pools, with an average
pool size of $36.1 million. Additionally, ARC exercised call rights
on three legacy securitizations in 2018, gaining access to $313
million of high-quality seasoned loans. Annaly’s first
securitization of 2018, OBX 2018-1, was comprised of approximately
$205 million of previously securitized collateral, coupled with
seasoned whole loans purchased outright.
- Overall, ARC completed three
residential whole loan securitizations for an aggregate of $1.1
billion through Annaly’s wholly-owned subsidiary, Onslow Bay
Financial LLC. ARC is currently pursuing an additional residential
whole loan securitization of approximately $400 million, which is
expected to close in the first quarter of 2019. The securitization
program serves as an additional source of liquidity for ARC and
better positions the platform for long-term scalability and
continued growth.
Commercial Real Estate
- The Annaly Commercial Real Estate Group
(referred to as “ACREG”) enhanced regional origination presence and
expanded capital markets efforts, which enabled ACREG to close over
$1.2 billion of commercial assets, up approximately 126%
year-over-year across the overall portfolio, for a weighted average
return on investment of 12.2%.3
- ACREG closed 16 debt transactions with
an average ACREG commitment size of $56 million. Noteworthy deals
included an ACREG originated $185 million floating-rate whole loan
secured by a 60-story, 1.5 million square foot, Class-A office
tower located in Dallas, Texas and a nearly $100 million
acquisition of the controlling interest in a commercial
mortgage-backed securities trust secured by a pool of full service
hotels across 16 states.
Middle Market Lending
- The Annaly Middle Market Lending
Group’s (referred to as “AMML”) established sponsor relationships
and capacity to underwrite significant first and second lien
investments, AMML completed $1.4 billion of loans, up approximately
85% year-over-year, for a weighted average return on investment of
11.4%.3
- AMML closed 18 new deals with an
average AMML commitment size of $63 million. The team demonstrated
their ability to lead transactions by acting as lead agent on 5 of
these deals, which had an average total facility size of $200
million.
- Most notably, AMML acted as the Sole
Lead Arranger and Administrative Agent on a $445 million senior
secured credit facility supporting an acquisition by a leading
private equity firm. AMML retained approximately 50% of the
transaction, post-syndication.
- Given the evolving market environment,
AMML increased its exposure to first lien, resulting in a split of
70% first lien and 30% second lien at year end.
Financing & Liquidity Highlights
Annaly’s credit businesses secured additional financing capacity
and improved the terms of existing arrangements throughout 2018,
further enhancing overall liquidity to support opportunistic
portfolio expansion. Representative of this liquidity, Annaly ended
2018 with approximately $8 billion in unencumbered assets. Since
the beginning of 2018, the credit businesses added two new
facilities and expanded the relationship with an existing lender,
adding an additional $700 million in aggregate capacity.
Additionally, Annaly’s credit businesses proactively extended term
and reduced financing costs across pre-existing facilities by 25 to
50 basis points (representing a pricing improvement between 13% and
22%), while improving terms and flexibility. Establishing new
financing relationships, optimizing existing facilities, utilizing
syndication opportunistically and accessing the securitization
markets all contributed to enhancing capital efficiency and the
growth of these businesses.
About Annaly
Annaly is a leading diversified capital manager that invests in
and finances residential and commercial assets. Annaly’s principal
business objective is to generate net income for distribution to
its stockholders and to preserve capital through the prudent
selection of investments and continued management of its portfolio.
Annaly has elected to be taxed as a real estate investment trust,
or REIT, for federal income tax purposes. Annaly is externally
managed by Annaly Management Company LLC. Additional information is
available at www.annaly.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, 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 financings; 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 lending 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 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 of 1940, as amended.
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. We do not undertake, and specifically disclaim 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.
1 Includes unfunded commitments of $161 million. 2 Whole
loan production represents the aggregate unpaid principal balance
of Annaly’s loan settlements as of December 31, 2018 and includes
loans obtained through legacy call rights. 3 Weighted average
return on investments represents annualized estimated projected
asset returns inclusive of imputed leverage and excluding the
impact of general and administrative costs.
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