Annaly Capital Management Inc. · NYSE:NLY
Annaly Capital Management — Merger or Acquisition (May 2016)
18 slides from Annaly Capital Management's merger presentation, May 4, 2016
Slide 1: Safe Harbor
Safe Harbor This Presentation includes forward-looking statements. These forward-looking statements generally can be identified by phrases such as “will,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. Similarly, statements herein that des
Slide 2: Annaly Capital Management, Inc.: Largest mREIT in the World
Annaly Capital Management, Inc. Largest mREIT in the World – – PF Market Capitalization: $10.5 Billion PF Total Assets: $91 Billion Size Fixed Agency Floating – - - - - Agency ARMs Non-Agency Commercial RE Middle Market Lending Most Diversified – – Non-Agency Commercial RE Strategy Historically High
Slide 3: $3 Trillion Market Opportunity
$3 Trillion Market Opportunity Annaly is positioned as a permanent capital solution for the redistribution of MBS, residential credit, commercial real estate assets and institutional loans GSE (1) / Federal Reserve (2) CRE Maturities & New Originations(3) Institutional Loan Maturities $450 $250 $2,5
Slide 4: 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 Second Largest Transaction in the Entire REIT Sector Since the Financial Crisis, by Target Asset Value Second Largest Specialty Finance Transaction Since the Fi
Slide 5: Pro Forma Portfolio – Accretive to Earnings and Book Value
Pro Forma Portfolio – Accretive to Earnings and Book Value Hatteras’ floating rate investment portfolio complements Annaly’s predominantly fixed rate Agency portfolio Annaly Hatteras Pro Forma 0% 2% 2% 1% 0% 1% 17% 17% 17% 16% 4% 6% 7% 8% Asset Type 67% 77% 57% 15-Year Fixed 20-Year Fixed 30-Year Fi
Slide 6: Annaly's Evolution
Annaly’s Evolution Annaly’s diversified platform is now built to manage various rate environments globally value evolved over time various rate ever Barbelled portfolio EuroDollar Futures leverage profile Source: Bloomberg and Company filings. 7 (1) (2) 2016 data as of Q1 2016, pro forma for Annaly’
Slide 7: Sum-of-the-Parts Capital Diversification
Annaly Sum-of-the-Parts Capital Diversification Balancing the liquidity of the Agency strategies with the durability of multiple credit strategies Commercial Real Estate Residential Credit Middle Market Lending Agency 14% view Stable profile High carry, floating Better market Repo cost Note: Data as
Slide 8: Poised for Future Fed Policy
Annaly Poised for Future Fed Policy Lower interest rate sensitivity due to diversification Absolute Tightening Benign Relative to 2004 - 2006 Portfolio Better Positioned for Rate Hike Markets price flat curve at low levels similar to the 2004 - 2006 rate hike cycle However, we foresee that the Fed w
Slide 9: Significant Financing Advantage
Significant Financing Advantage Annaly has a variety of potential financing sources for each asset class in which the Company invests Lending CLO attractive risk-unlevered basis exists for bank Note: Potential financial sources and target leverage represent Annaly’s current views on financing. 10 Ag
Slide 10: Efficiency of Operating Model
Efficiency of Operating Model Annaly outperforms internally and externally managed mREITs From 2012 through the end of 2015, Annaly significantly outperformed its mREIT peers with respect to operating expenditures as a percentage of assets and as a percentage of equity Annaly’s average expense level
Slide 11: Annaly is the Industry Leader
Annaly is the Industry Leader Industry Leader Diversified Business Model Most Liquid mREIT Operating Efficiency Track Record of Execution Note: Data as of April 28, 2016. (1) Represents weekly total return of Annaly against the S&P 500 since October 10, 1997. 12 Hatteras acquisition enables Annaly t
Slide 12: Comparative Performance and Valuation
Comparative Performance and Valuation 13
Slide 13: Annaly vs. Other Yield Investments - Performance
0 Annaly vs. Other Yield Investments - Performance ================================ as well as other yield focused investments ----., 40.0% L. _35_1 28.9% 30.0% 20.0% 13.3% 5.5% 1.1% 10.0% ='"' .E (li (10.0%) f-; (20.0%) (25.8%) (30.0%) (40.0%) (50.0%) - Annaly-mREITs Utilities MLPs AssetManagers Ba
Slide 14: Annaly vs. Other Yield Investments – Risk vs. Reward
Annaly vs. Other Yield Investments – Risk vs. Reward Annaly’s performance, leverage and yield profiles are superior to other yield asset classes, yet valuation still lags the other yield sectors Total Return: 12.0x 12.0% 11.6% 10.0x 10.0x 10.0% 8.7x 8.0x 8.0% 7.4% 6.7x 5.7x 6.0x 6.0% 3.7% 4.0x 4.0%
Slide 15: Stability of Return – Market Sharpe Ratios
NLY Stability of Return – Market Sharpe Ratios Over the past two years, Annaly’s shareholders have earned a more attractive risk-adjusted return than the mortgage REIT universe and numerous other yield sectors 3.50x Asset Managers 3.00x 2.50x Utilities 2.00x MLPs 1.50x Commercial mREITs 1.00x 0.50x
Slide 16: Annaly vs. the VIX
Annaly vs. the VIX -----.' 40.0% 60 ' / 35.0% I I \ I 50 \ 30.0% 25.0% 40 = p::: <... 20.0% J 30 = X ..... 15.0% ----------------------------- - --------1 I 0 f-" I 1 20 I I 10.0% ------------------------------------H+ I --+H h---5.0% 10 (5.0%) 0 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Jan-14 Jul-14 Jan-
Slide 17: The Annaly Track Record
The Annaly Track Record Annaly has paid out $14.0 billion in dividends since inception 700% Dividends 600% 500% 400% 300% 200% 100% 0% (100%) Annaly S&P 500 Bloomberg mREIT Index MSCI US REIT Index S&P Financials Berkshire Hathaway Source: Company filings and Bloomberg. Weekly data from October 10,
Slide 18: The Annaly Track Record
The Annaly Track Record as paid out $ Price otal Dividends Total — Return a Berkshire Hathaway scoot S&P 500 16% os 206% MSCI US REIT Index om we 116% Bloomberg mREIT Index (638) 189% 106% sox S&P Financials 13% Si oo 300% 200% 100% o a008) ¥oy%Y%Y yee e i’ EAOe &He EER Analy SP 500 Bloomberg mRETT
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