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Annaly Capital To Sell Commercial Real Estate Unit For $2.33 Billion

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support@smarteranalyst.com (Ben Mahaney)
·2 min read
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Annaly Capital Management has agreed to sell its commercial real estate business to real estate asset manager Slate Asset Management for a consideration of $2.33 billion.

Annaly Capital’s (NLY) CEO and CIO, David Finkelstein said, “The Commercial Real estate business has been an important component of Annaly’s differentiated investment model since 2013.”

Finkelstein further added, “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.”

Annaly primarily invests in as well as finances residential and commercial properties. Slate Asset Management is a alternative investment platform with a focus on real estate and has assets under management of $6.5 billion.

Subject to approvals and closing conditions, Annaly Capital expects the transaction to close by 3Q. It does not expect the transaction to affect key financial metrics including dividends in a significant way.

Furthermore, the company plans to use the proceeds from the sale to pare down debt associated with the assets being sold and acquire selective assets according to Annaly’s capital allocation strategy. (See Annaly Capital stock analysis on TipRanks)

Recently, RBC Capital analyst Kenneth Lee reiterated a Buy rating on the stock and raised its price target to $9.50 (7.2% upside potential) from $8.50. Lee said, “We continue to favor Annaly’s diversified operating model, strong liquidity, and portfolio skew towards agency MBS amid current macro backdrop.”

Turning to rest of the Street, the stock has a Moderate Buy consensus rating alongside an average analyst price target of $9 based on 2 Buys and 1 Hold. This implies upside potential of around $1.6% from current levels. Shares have rallied 48.9% over the past year.

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