Annaly to Acquire Healthcare Real Estate Specialist MTGE for $900M in REIT Merger

Capital Healthcare Investments, a wholly owned subsidiary of MTGE Investment Corp., acquired The Retreat at Sunbrook (pictured) last year. The assisted living community is located in St. George, Utah.

NEW YORK AND BETHESDA, MD. — New York-based Annaly Capital Management Inc. (NYSE: NLY) has agreed to acquire Bethesda-based real estate investment trust MTGE Investment Corp. (NASDAQ: MTGE) for $900 million in cash and stock.

The transaction values healthcare real estate specialist MTGE at $19.65 per share. Under the deal, MTGE shareholders will have the option to receive cash, stock or a combination of the two. In addition, Annaly will assume the existing $55 million in MTGE preferred stock. The transaction is expected to close in the third quarter.

“The acquisition of MTGE adds complementary assets, deepens the breadth of our investment alternatives, is accretive to earnings and provides immediate cost savings and efficiencies to shareholders,” says Kevin Keyes, chairman, CEO and president of Annaly.

MTGE invests in and manages a portfolio of mortgage-backed securities and investments in triple net leased healthcare real estate. The company is externally managed and advised by MTGE Management LLC, an affiliate of AGNC Investment Corp. As of Dec. 31, MTGE’s portfolio included $6.6 billion in assets.

With approximately $104.3 billion in assets as of March 31, Annaly’s portfolio includes securities, loans and equity in the residential and commercial markets. The transaction marks Annaly’s third acquisition since 2013, bringing the company’s pro-forma equity base to more than $14 billion.

Wells Fargo Securities LLC and Sandler O’Neill + Partners LP served as financial advisors to Annaly, and Wachtell, Lipton, Rosen & Katz served as legal counsel. Barclays Capital Inc. served as financial advisor to MTGE Special Committee, and Cooley LLP served as legal counsel.

MTGE’s stock price closed at $17.95 per share on Wednesday, May 2, up from $17.90 per share a year ago.

Annaly’s stock price closed at $10.30 per share on Wednesday, May 2, down from $11.53 a year prior.

— Camren Skelton

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