Two mortgage real estate investment trusts (“mREITs”), Annaly Capital Management, Inc. NLY and Hatteras Financial Corp HTS have inked a merger deal under which the former will acquire the latter for $1.5 billion. This strategic deal is likely to be beneficial for shareholders of both the companies.
For the New York-based Annaly, which primarily owns, manages and finances a portfolio of real estate related investment securities, this transaction further enhances and diversifies its investment portfolio. Further, the deal, expected to close by the end of third-quarter 2016, is anticipated to add to the book value of Annaly and boost its core earnings, going forward. Added to these, it is also likely to reinforce the status of Annaly as the leading mREIT in the world.
On the other hand, for the Winston Salem, NC-based Hatteras Financial, this transaction represents an attractive premium to its common stock price. Moreover, shareholders of Hatteras Financial are likely to benefit from a diversified portfolio, comprising agency and non-agency MBS, mortgage servicing rights, residential whole loans, corporate credit and commercial real estate debt and equity. Further, the operating scale, capital alternatives and liquidity of the larger merged entity are expected to have positive impact on investor sentiment.
Currently, while Annaly carries a Zacks Rank #2 (Buy), Hatteras Financial holds a Zacks Rank #3 (Hold). Investors interested in the mREIT industry may consider stocks like American Capital Mortgage Investment Corp. MTGE and Capstead Mortgage Corp. CMO. Each of these stocks holds the same Zacks Rank as Annaly.
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CAPSTEAD MTG (CMO): Free Stock Analysis Report
ANNALY CAP MGMT (NLY): Free Stock Analysis Report
HATTERAS FIN CP (HTS): Free Stock Analysis Report
AMER CAP MTGE (MTGE): Free Stock Analysis Report
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