Annaly Capital Agrees to Sell Middle Market Lending Portfolio for $2.4B

Annaly Capital Management Inc. agreed to sell its middle market lending portfolio to Ares Capital Management LLC, a subsidiary of Ares Management Corp.

Ares Capital Management entered into a definitive agreement to acquire, on behalf of funds managed by Ares Management's credit group, the middle market lending portfolio from Annaly for approximately $2.4 billion.

The transaction represents substantially all of Annaly's middle market lending assets held on the balance sheet and assets managed for third parties, according to a news release from the company. The middle market lending portfolio consists predominantly of first and second lien loans focused on defensive, countercyclical industries.

The transfer of the portfolio is expected to be completed by the end of the second quarter. Annaly anticipates the sale 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.

Annaly plans to use proceeds from the sale to repay its financing facilities related to the middle market lending assets being sold. The company also intends to purchase targeted assets in accordance with its capital allocation policy, including agency mortgage-backed securities, mortgage servicing rights and residential credit assets.

Wells Fargo Securities LLC is the financial adviser and Hunton Andrews Kurth LLP is the legal adviser to Annaly. Latham & Watkins LLP is the legal adviser to Ares Management.