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Annaly (NLY) to Offer 75M Common Shares in Public Offering

Zacks Equity Research

Annaly Capital Management, Inc. NLY recently announced its plans to raise fresh capital by issuing 75 million shares of common stock through a public offering.

Further, it will give underwriters a 30-day option to purchase up to an additional 11,250,000 shares. Annaly plans to spend the proceeds for targeted asset acquisitions under its capital-allocation policy.

It will also be used for general corporate purposes, which may include reducing the company’s liabilities and working capital items. This public offering will also help diversify the company’s investment options.

In fact, as part of the diversification strategy, it will allocate a chunk of stockholders’ equity in a variety of assets. It may expand its Agency, residential, commercial and corporate credit asset investments, such as middle-market corporate loans, residential mortgage loans, Agency MBS pools, adjustable rate mortgages, to-be-announced forward contracts, commercial real estate loans and mortgage servicing rights.

The common stock offering boosts the company's financial flexibility and helps meet its financial obligations in an efficient way. Moreover, it provides ample scope for deploying capital for long-term growth opportunities and rewarding higher returns to stockholders, at the same time.

Particularly, Annaly 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 shareholders and make it less volatile.

Amid a challenging interest rate and volatile global economic environment, the company’s portfolio-diversification efforts augur well. It reduces Annaly’s dependence on a single investment or financing option, offering higher protection against net asset value fluctuations due to interest-rate changes.

Also, shares of this Zacks Rank #3 (Hold) company have lost 6.4%, narrower than its industry’s decline of 8.4%.


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