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Annaly to be Internally Managed, Notifies Leadership Changes

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Annaly Capital Management, Inc. NLY announced the completion of the acquisition of its external manager, Annaly Management Company LLC, enabling the company to transform itself from an externally-managed real estate investment trust (REIT) to an internally-managed one.

Notably, it acquired the equity interests of its external manager and its affiliates for a nominal cash purchase price of $1. With this, it also purchased all assets and liabilities of the external manager that were insignificant.

As agreed upon per the Internalization Agreement as of Feb 12, 2020, the company has not paid out any termination fees that would otherwise be payable for the termination of the Management Agreement.

The internalization also calls for a change in management. On Aug 31, Glenn A. Votek will no longer serve as senior advisor 2020 but will continue to be a member of the company’s board of directors. Further, Steven F. Campbell has been immediately appointed as the company’s chief operating officer.

Per management, the internalization will strengthen Annaly’s corporate governance practices as well as align interests with management and shareholders. Moreover, the internalization will enhance disclosure and transparency.

When the agreement was announced in February, management expected the internalized structure to provide greater operating flexibility. Further, the internalization move is expected to create cost savings from economies of scale and provide a scope for incremental cost control and operating flexibility. These in turn would result in potential long-term earnings accretion. The company earlier expected these cost-saving benefits starting from 2021.

However, extreme market volatility and liquidity freeze across the mortgage market amid the virus outbreak have impacted the company’s performance. In fact, its tangible book value declined due to losses in its hedge portfolio and unrealized losses on account of a decline in fair value.

Moreover, shares of this Zacks Rank #1 (Strong Buy) company have slumped 29.8% over the past year compared with the industry’s decline of 38.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

 

Other Stocks to Consider

Ares Commercial Real Estate Corporation’A ACRE earnings estimates for the ongoing year have been revised 14.7% upward to $1.09 over the past 30 days. The company currently sports a Zacks Rank of 1.

Apollo Commercial Real Estate Finance’s ARI earnings estimates for 2020 have moved 4% upward to $1.28 over the past month. It currently flaunts a Zacks Rank of 1.

New Residential Investment Corp.’s NRZ Zacks Consensus Estimate for 2020 earnings has been unchanged at $1.22 over the past month. The company currently carries a Zacks Rank of 2 (Buy).

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