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Residential Mortgage Holder Buys Back Firm It Spun-Off To Invest in CRE Properties

February 6, 2013
Annaly Capital Management Inc. reached a definitive agreement to acquire CreXus Investment Corp., a company that Annaly had spun off as a separate entity, but still shared company officers.

Annaly will pay $13 per share in cash (plus a payment in lieu of a prorated dividend) for all the shares of CreXus that it does not currently own; Annaly holds 12.4% of outstanding.

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The transaction values CreXus at $996 million and represents a total consideration paid by Annaly of $872 million.

“This transaction represents a significant step toward Annaly’s commitment to investing directly in commercial real estate assets,” said Wellington Denahan, Annaly’s chairman and CEO. “We believe that wholly owning the commercial real estate platform we currently manage through FIDAC is complementary to our existing business and return profile and should provide stable and diversified risk-adjusted returns to our shareholders. This transaction is part of a broad evolution of our capital allocation strategy.”

Under Annaly’s current capital investment policy, at least 75% of its total assets must be comprised of high-quality, residential mortgage-backed securities and short-term investments. The remainder may be invested in lower rated securities.

CreXus is a specialty finance company that acquires, manages and finances commercial mortgage loans and other commercial real estate-related assets.

Under the terms of the agreement, CreXus may solicit, receive, evaluate and enter into negotiations with respect to alternative proposals from third parties through March 16, 2013.

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