Annaly (NLY) Announces Public Offering of 60 Million Shares
Annaly Capital Management, Inc. NLY, the mortgage real estate investment trust (mREIT), has announced a public offering of nearly 60 million shares of common stock. In addition to the public offering, the underwriters have been given a 30-day option to purchase an additional 9 million shares. These shares will be offered in negotiated transactions at the negotiated price or at the market price prevailing at the time of sale.
Annaly will expend an uncapped amount of the net proceeds in targeted asset acquisitions under the company’s capital allocation guidelines. It will also be used for general corporate purposes, which may include trimming Annaly’s liabilities and working capital items. This public offering will help in diversifying the company’s investment options. In fact, as part of the diversification strategy, it will allocate a chunk of the stockholders’ equity in a variety of assets.
It may expand its Agency, residential, commercial and corporate credit assets investment such as middle market corporate loans, residential mortgage loans, Agency MBS pools, adjustable rate mortgages, TBA forward contracts, commercial real estate loans and securities and mortgage servicing rights. Particularly, the company is focused on expanding its commercial real estate investments. This, in turn, is likely to complement its agency investments by providing long-term floating-rate cash flows to the shareholders and make it less volatile.
Though a stock offering results in dilution of earnings, prudent investments in strategic assets are likely to help the company navigate through the challenging rate environment.
Annaly is a mortgage real estate investment trust (mREIT) that primarily owns, manages and finances a portfolio of real estate-related investment securities. Its investment portfolio includes agency MBS, agency pass-through certificates, collateralized mortgage obligations (CMOs), interest-only securities and inverse floaters. On Jul 12, 2016, the company closed the acquisition of Winston Salem, NC-based mREIT – Hatteras Financial Corp. – for $1.5 billion. This acquisition has fortified Annaly’s position in the mREIT space.
In addition, shares of Annaly underperformed the Zacks categorized REIT Mortgage Trust industry over the past three months. During this time frame, shares of the company climbed 0.6%, whereas the industry gained 1.2%.
The stock currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for second-quarter 2017 remained unchanged at 29 cents, whereas the full-year estimate moved up 1.7% to $1.17, over the last 30 days.
Stocks to Consider
A few better-ranked stocks in the broader REIT industry include ProLogs, Inc. PLD, Liberty Property Trust LPT and Ashford Hospitality Prime, Inc. AHP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While ProLogs, Inc. has expected long-term growth rate of 4.3%, Liberty Property Trust and Ashford Hospitality Prime, Inc. have expected long-term growth rates of 6% and 2%, respectively.
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