Annaly Capital Management to sell CRE business in $2.33 billion deal

by Candyd Mendoza29 Mar 2021

Annaly Capital Management, one of the largest mortgage real estate investment trusts, plans to sell its commercial real estate business in a deal that is valued at $2.33 billion.

The firm announced Friday that it has entered an agreement to sell all the assets of its CRE business to Slate Asset Management, a real estate-focused investment firm. The assets include equity interest, loan assets, and commercial mortgage-backed securities. Upon closing, Annaly executives Timothy Gallagher, head of commercial real estate, and Michael Quinn, head of commercial investments, will join Slate.

Annaly said in a statement that the deal won’t have much of an impact on its financial metrics, including book value, core earnings, and dividends. The company intends to use the sale’s proceeds to repay its CRE-related financing facilities. It also wants to limit its exposure to the commercial real estate sector, doing business only “through opportunistic and efficient strategies” within its securities portfolio.

The transaction remains subject to regulatory approvals and is expected to close in the third quarter of 2021.

“The commercial real estate business has been an important component of Annaly’s differentiated investment model since 2013,” said David Finkelstein, CEO and chief investment officer of Annaly. “This transaction delivers compelling execution for our shareholders and will provide additional capacity to further expand our leadership and operational capabilities across 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 board of directors, I want to sincerely thank all of the employees who have supported and built our commercial real estate business over the years.”