8-K
ANNALY CAPITAL MANAGEMENT INC (NLY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
April 25, 2022
Annaly Capital Management, Inc.
(Exact name of registrant as specified in its charter)
Commission file number 001-13447
| Maryland | 22-3479661 |
|---|---|
| (State of<br>incorporation) | (I.R.S. Employer<br>Identification No.) |
1211 Avenue of the Americas
New York, New York
10036
(Address of principal executive offices)
(212) 696-0100
Registrant’s telephone number, including area code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading<br>Symbol | Name of Each Exchange<br> <br>on Which Registered |
|---|---|---|
| Common Stock, par value $0.01 per share | NLY | New York Stock Exchange |
| 6.95% Series F Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock | NLY.F | New York Stock Exchange |
| 6.50% Series G Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock | NLY.G | New York Stock Exchange |
| 6.75% Series I Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock | NLY.I | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 8.01 | Other Events. |
|---|
Entry into Purchase Agreement
On April 25, 2022, certain subsidiaries and affiliates (the “Sellers”) of Annaly Capital Management, Inc., a Maryland corporation (the “Company” or “Annaly”), entered into a Commercial Loan Purchase Agreement (the “Purchase Agreement”) with Ares Capital Management LLC (the “Purchaser”) pursuant to which the Sellers will sell all of the commercial loan interests held by the Middle Market Lending (“MML”) business operated by Annaly (the “Transactions”).
Pursuant to the Purchase Agreement, the Purchaser will pay an aggregate purchase price of approximately $2.4 billion, subject to certain adjustments specified therein. The aggregate purchase price represents substantially all of the assets of the MML business held on the Company’s balance sheet as well as assets managed for third parties. The Purchase Agreement contains customary representations, warranties and covenants by each party that are subject, in some cases, to specified exceptions and qualifications contained in the Purchase Agreement.
Each party’s obligation to consummate the Transactions pursuant to the Purchase Agreement is subject to customary closing conditions as set out therein, including, among others, (i) subject to certain exceptions, the accuracy of the representations and warranties of the parties; (ii) performance in all material respects by each of the parties of its covenants and agreements; (iii) receipt of certain third-party consents; and (iv) the absence of any law or order from any governmental entity prohibiting consummation of the Transaction. The parties expect that the transfer of all of the commercial loan interests held by the Sellers will be completed by the end of the second quarter of 2022.
The Purchase Agreement includes certain customary termination rights for each of the Sellers and the Purchaser.
Press Release
On April 25, 2022, the Company issued a press release announcing the entry into the Purchase Agreement. A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
The information in Item 8.01 to this Current Report on Form 8-K (including Exhibit 99.1 attached hereto) shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in Item 8.01 to this Current Report on Form 8-K (including Exhibit 99.1 attached hereto) shall not be deemed incorporated by reference into any filing or other document under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing or document.
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| Item 9.01 | Financial Statements and Exhibits |
|---|
(d) Exhibits
The exhibits to this report are listed in the Exhibit Index below and are incorporated by reference herein.
Exhibit Index
| Exhibit<br>No. | Exhibit Description |
|---|---|
| 99.1 | Press Release, dated April 25, 2022 |
| 104 | Cover Page Interactive Data File (formatted in iXBRL in Exhibit 101) |
Forward- Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act and Private Securities Litigation Reform Act, as amended, including those relating to the expected consummation of the Transactions and other statements that are predictive in nature. These forward-looking statements are based on current expectations, forecasts and projections about the Transactions, industry and markets in which the Company operates and management’s current beliefs and assumptions. These statements may be identified by the use of forward-looking expressions, including, but not limited to, “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “potential,” “predict,” “project,” “should,” “would” and similar expressions and the negatives of those terms. These statements relate to future and involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include those set forth in the Company’s filings with the SEC. Prospective investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this Current Report on Form 8-K. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: April 25, 2022 | ANNALY CAPITAL MANAGEMENT, INC. <br>(Registrant) | |
|---|---|---|
| By: | /s/ Anthony C. Green | |
| Name: | Anthony C. Green | |
| Title: | Chief Corporate Officer & Chief Legal Officer |
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EX-99.1
Exhibit 99.1
Annaly Capital Management, Inc. Announces Agreement to Sell Its Middle Market Lending Portfolio to AresManagement Corporation for $2.4 Billion
April 25, 2022
NEW YORK — (BUSINESS WIRE) — Annaly Capital Management, Inc. (NYSE: NLY) (“Annaly” or the “Company”) today announced that it has entered into a definitive agreement to sell its Middle Market Lending portfolio to Ares Capital Management LLC on behalf of funds managed by the Credit Group of Ares Management Corporation (NYSE: ARES) (“Ares”), a leading global alternative investment manager. The transaction is valued at approximately $2.4 billion and represents substantially all of the Company’s Middle Market Lending assets held on balance sheet as well as assets managed for third parties. The Company’s Middle Market Lending portfolio is comprised of predominantly 1^st^ and 2^nd^ lien loans focused on defensive, counter-cyclical industries.
“The sale of our Middle Market Lending portfolio represents a successful outcome for Annaly’s shareholders and marks the latest in a series of strategic actions – including the disposition of our Commercial Real Estate business and investments into our Mortgage Servicing Rights and Residential Credit businesses – that have enhanced our focus and capabilities across our core housing finance strategy,” remarked David Finkelstein, Annaly’s Chief Executive Officer & President.
Annaly expects the transaction to be accretive to book value and have an immaterial impact on other key financial metrics, including earnings available for distribution and the Company’s dividend. Upon closing of the transaction, the Company intends to use proceeds from the sale to repay its financing facilities related to the Middle Market Lending assets being sold and to purchase targeted assets in accordance with its capital allocation policy, including Agency MBS, Mortgage Servicing Rights and Residential Credit assets.
Subject to customary closing conditions, the transfer of the Middle Market Lending portfolio is expected to be completed by the end of the second quarter of 2022.
Wells Fargo Securities, LLC is serving as financial advisor and Hunton Andrews Kurth LLP is serving as legal advisor to Annaly. Latham & Watkins LLP is serving as legal advisor to Ares.
About Annaly
Annaly is a leading diversified capital manager with investment strategies across mortgage finance. Annaly’s principal business objective is to generate net income for distribution to its stockholders and to optimize its returns through prudent management of its diversified investment strategies. Annaly is internally managed and has elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes. Additional information on the company can be found at www.annaly.com.
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About Ares Management Corporation
Ares Management Corporation is a leading global alternative investment manager offering clients complementary primary and secondary investment solutions across the credit, private equity, real estate and infrastructure asset classes. Ares Management Corporation seeks to provide flexible capital to support businesses and create value for its stakeholders and within its communities. By collaborating across its investment groups, Ares Management Corporation aims to generate consistent and attractive investment returns throughout market cycles. As of December 31, 2021, Ares Management Corporation’s global platform had approximately 2,100 employees operating across North America, Europe, Asia Pacific and the Middle East and approximately $314 billion of assets under management, including Ares Management’s acquisition of AMP Capital’s Infrastructure Debt platform which closed February 10, 2022. For more information, please visit www.aresmgmt.com.
Forward-Looking Statements
This news release and our public documents to which we refer contain or incorporate by reference certain forward-looking statements which are based on various assumptions (some of which are beyond our control) and may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “anticipate,” “continue,” or similar terms or variations on those terms or the negative of those terms. Actual results could differ materially from those set forth in forward-looking statements due to a variety of factors, including, but not limited to, risks and uncertainties related to the COVID-19 pandemic, including as related to adverse economic conditions on real estate-related assets and financing conditions; changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability of mortgage-backed securities and other securities for purchase; the availability of financing and, if available, the terms of any financing; changes in the market value of our assets; changes in business conditions and the general economy; operational risks or risk management failures by us or critical third parties, including cybersecurity incidents; our ability to grow our residential credit business; the sale of our middle market lending business; credit risks related to our investments in credit risk transfer securities, residential mortgage-backed securities and related residential mortgage credit assets and corporate debt; risks related to investments in mortgage servicing rights; our ability to consummate any contemplated investment opportunities; changes in government regulations or policy affecting our business; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; and our ability to maintain our exemption from registration under the Investment Company Act. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.
| Annaly Investor Contact | Annaly Media Contact |
|---|---|
| Annaly Capital Management, Inc. | Brunswick Group |
| Investor Relations<br><br><br>1-888-8Annaly<br><br><br>investor@annaly.com | Alex Yankus<br><br><br>212-333-3810<br><br><br>annaly@brunswickgroup.com |
| Ares Management Contact | |
| --- | |
| Carl Drake, +1<br>888-818-5298<br> <br>or | |
| Jacob Silber, +1<br>212-301-0376<br><br><br>media@aresmgmt.com |
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