Annaly Capital To Sell Its Middle Market Lending Portfolio To Ares Management For $2.4 Bln

Annaly Capital Management, Inc. (NLY) Monday said it agreed 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 (ARES) in a deal valued at about $2.4 billion.

The deal 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 1st and 2nd 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.

The company plans to use the 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.

The deal is expected to be completed by the end of the second quarter of 2022.

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