Annaly Capital Management Inc. · NYSE:NLY
Annaly Capital Management — Barclays 2016 Global Financial Services Conference
22 slides from Annaly Capital Management's conference presentation, Sep 14, 2016
Slide 1: Barclays 2016 Global Financial Services Conference
Barclays 2016 Global Financial Services Conference September 14, 2016
Slide 2: Safe Harbor Notice
Safe Harbor Notice This presentation, other written or oral communications 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 referenc
Slide 3: Annaly is a Leading Real Estate Finance Company
Annaly is a Leading Real Estate Finance Company Largest mREIT with a $13 billion equity base, 15x the Business Profile (1) size of the median mREIT Sector Assets ($bn) Capital(2) ($bn) Sector Rank(3) Permanent capital solution for the redistribution of Agency(4) $93.9 $10.1 #1 mortgage-backed se
Slide 4: Diversified Business Model: $3 Trillion Total Market Opportunity
Diversified Business Model: $3 Trillion Total Market Opportunity Annaly is positioned as a permanent capital solution for the redistribution of MBS, residential credit, commercial real estate assets and corporate loans GSE (1) / Federal Reserve (2) CRE Maturities & New Originations(3) Corporate Loan
Slide 5: Sum-of-the-Parts Capital Diversification
Sum-of-the-Parts Capital Diversification Balancing the liquidity of the Agency strategy with the durability of multiple credit strategies Commercial Real Residential Middle Market Agency Estate Credit Lending Assets (1) $93.3bn $2.5bn $2.1bn $0.7bn Dedicated $10.1bn $1.4bn $1.0bn $0.7bn Capital (2)
Slide 6: Annaly vs. Other Yield Investments – Performance
Annaly vs. Other Yield Investments – Performance Annaly’s current investment team has outperformed all other yield options since 2014 60.0% 45.6% 40.0% 34.9% 29.2% 20.0% 10.9% Total Return 3.3% – (20.0%) (18.6%) (40.0%) (60.0%) Annaly mREITs Utilities MLPs Asset Managers Banks Note: Market data from
Slide 7: Annaly vs. Other Yield Investments – Valuation
Annaly vs. Other Yield Investments – Valuation Annaly pays a superior dividend yield with a more conservative valuation compared to other income-oriented sectors Asset mREITs Utilities MLPs Banks Managers Average $10.8 $1.6 $11.6 $6.3 $22.4 $51.1 Market Cap ($bn) Dividend Yield 11.0% 10.5% 3.7% 7.3%
Slide 8: Annaly Has Outperformed in Periods of Heightened Volatility
Annaly Has Outperformed in Periods of Heightened Volatility… China Stock Financial Greek Debt Market Recession Crisis Crisis Turbulence Brexit 90 800 80 700 70 600 60 500 Total Return 50 400 VIX Index 40 300 30 200 20 100 10 0 0 -100 Oct-97 Jan-99 Apr-00 Jul-01 Oct-02 Jan-04 Apr-05 Jul-06 Oct-07 Jan
Slide 9: While Providing Stable Earnings and Superior Returns Over Time
…While Providing Stable Earnings and Superior Returns Over Time 2014 – 2016 Total Return YTD(1) 13.1% 6.9% (4.0%) 4.0% (1.1%) (8.8%) 10.6% (1.9%) 12.6% 10.9% 45.6% S&P 2.6% 2.3% 2.3% 7.2% (2.1%) 1.7% (6.7%) 5.9% (5.1%) 2.1% 18.3% Financials $0.40 $0.33 $0.33 $0.34 $0.33 $0.30 $0.31 $0.30 $0.30 $0.29
Slide 10: Efficiency of Operating Model
Efficiency of Operating Model Annaly outperforms internally and externally managed mREITs From 2012 through annualized 1H 2016, Annaly significantly outperformed its mREIT peers with respect to operating expenditures as a percentage of equity and as a percentage of assets Annaly’s average expens
Slide 11: mREIT Industry Landscape - September 2015 vs. Today
mREIT Industry Landscape - September 2015 vs. Today 20% Fewer Mortgage REITs with $4.5 Billion Higher Industry Market Capitalization $12 Current mREIT Total Market Cap: $55.3bn NLY as % of Total Market Cap: 20.1% $9 Market Cap ($bn) $6 $3 – CLNY PMT CYS CMO DX AGNC TWO AJX MITT RSO ORC ORM STWD AMTG
Slide 12: Progress on Our Strategy in 2016
Progress on Our Strategy in 2016 On July 12, 2016 Annaly completed its acquisition of Hatteras Financial Corp. for approximately $1.5 billion External Growth Represents largest mREIT acquisition in history Added complementary assets to Annaly’s existing investment portfolio Focused Agency MB
Slide 13: Agency MBS Portfolio Update
Agency MBS Portfolio Update As of Q2 2016, the market value of Agency portfolio was approximately $93.9 billion in assets, inclusive of the TBA position Approximately 92% of the portfolio is positioned in securities with prepayment protection MBS performed well over the course of Q2 2016 in li
Slide 14: Residential Credit Portfolio Update
Residential Credit Portfolio Update As of Q2 2016, the portfolio grew to just over $2.1 billion in assets and is comprised of the following sectors: Credit Risk Transfer (CRT): Expect supply to remain in line with expectations in coming months and pick up modestly in Q4/early 2017 as faster prep
Slide 15: Commercial Real Estate Portfolio Update
Commercial Real Estate Portfolio Update As of Q2 2016, the commercial real estate portfolio was approximately $2.5 billion in assets(1) The combination of a significant decline in new acquisition activity by sponsors, a volatile marketplace and a cautious stance on credit led us to slow originat
Slide 16: Middle Market Lending Portfolio Update
Middle Market Lending Portfolio Update As of Q2 2016, the middle market lending portfolio grew to approximately $700 million in assets A combination of repeat sponsor business, sectors of origination focus and larger ownership positions have garnered demonstrably increased new deal flow during t
Slide 17: Annaly Acquisition of Hatteras Financial Corp
Annaly Acquisition of Hatteras Financial Corp Largest Mortgage REIT to Mortgage REIT Transaction Ever, by Deal Value and Target Asset Value Closed $1.5 Billion Third Largest Transaction in the Entire REIT Sector Acquisition of Since the Financial Crisis, by Target Asset Value Third Largest Spe
Slide 18: Significant Financing Advantages
Significant Financing Advantages Annaly has a variety of potential financing sources for each asset class in which the Company invests Agency Commercial Real Resi Credit Middle MMLMarket Agency Residential Credit Estate Lending Securitization Potential Repo Credit Facilities Repo Credit Fa
Slide 19: Macro Economic & Interest Rate Market Outlook
Macro Economic & Interest Rate Market Outlook Geopolitical Risks and Record Monetary Accommodation Keep Yields at Record Lows Heightened Uncertainty Means Hesitant Central U.S. Yields Are Strongly Impacted by Overseas Banks Developments U.S. election, rises in nationalism, continued Brexit Conti
Slide 20: Annaly is an Industry Leading, Liquid Alternative Asset Manager
Annaly is an Industry Leading, Liquid Alternative Asset Manager Recent Hatteras (“HTS”) Size and Acquisition Demonstrates External 15x Size of Median mREIT Consolidator Liquidity Growth and Ability to be Opportunistic Four Distinct Operating Valuation More Attractive than Diversification Bus
Slide 21: Appendix: Non-GAAP Reconciliation
Appendix: Non-GAAP Reconciliation 21 21
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations Unaudited, dollars in thousands except per share amounts For the quarters ended June 30, March 31, Dec. 31, Sept. 30, June 30, March 31, Dec. 31, Sept. 30, June 30, March 31, 2016 2016 2015 2015 2015 2015 2014 2014 2014 2014 GAAP to Core Reconciliation GAAP net income (loss)
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