Wellington Denahan, Chairman and Chief Executive Officer of Annaly Capital Management, Inc. (NYSE: NLY) (“Annaly” or the “Company”), made the following statement regarding Annaly's proposal, announced today, to acquire the shares of CreXus Investment Corp. that Annaly does not already own:
“Since our inception in 1997, Annaly has maintained the capacity to diversify its asset base to include real estate related assets in addition to Agency mortgage-backed securities if we determined that compelling other long-term investment opportunities exist relative to the Agency market. While we remain committed to the Agency market, given the current environment, we believe it is prudent to diversify a portion of our investment portfolio. Therefore, we may allocate up to 25% of our shareholders’ equity to real estate assets other than Agency mortgage-backed securities.
“A powerful step in this direction is the proposed acquisition of CreXus. 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. CreXus’ capabilities and growth may be significantly enhanced when coupled with Annaly’s broad capital base.
“Our commercial real estate expertise, as well as our expertise in a number of other asset classes, are valuable strategic tools, and we look forward to updating the market on our portfolio as it evolves.“This proposed transaction would be part of a broad evolution of our capital allocation strategy. Over the last 12 months, we have taken the following steps:
- Lowering our cost of capital by issuing $1.5 billion of preferred equity and convertible notes at a weighted average rate of 6.3%
- Extending the duration of our borrowings at September 30, 2012 to 220 days from 127 days at March 31, 2012
- Restructuring capital by repurchasing $447.1 million of convertible notes
- Announcing an up to $1.5 billion common stock repurchase program.”