Annaly Capital Management, Inc. and Capital Impact Partners Announce Launch of Second Social Impact Investing Joint Venture
NEW YORK & ARLINGTON, VA — (BUSINESS WIRE) (January 16, 2019) — Annaly Capital Management, Inc. (NYSE:NLY) (“Annaly”) and Capital Impact Partners (“Capital Impact”) today announced the launch of a new joint venture (“Venture”) with a $25 million commitment to support affordable housing and other community development projects in Washington, D.C. (“D.C.”). This Venture represents Annaly’s second impact investing partnership since 2017 with Capital Impact, a national mission-driven non-profit community development financial institution.
As an innovative structure in the mortgage REIT sector, the Venture provides direct financing for socially responsible projects in low-income communities while simultaneously enabling Capital Impact to further expand its efforts in key cities like Washington, D.C. Annaly’s commitment will support Capital Impact’s management of the D.C. Affordable Housing Preservation Fund in partnership with the city’s Department of Housing and Community Development. The Venture is closely aligned with Annaly’s focus on housing finance given Capital Impact’s work in preserving affordable housing. Various community development projects will also benefit from the Venture within the D.C. area. For example, the Venture will enable several charter schools to finance expansion into new grades, increase student enrollment and improve current operations.
“We are excited to announce our second social impact venture with Capital Impact Partners. Our commitment is aimed at improving economic opportunity while helping to preserve and protect affordable housing and foster education in Washington, D.C.” said Kevin Keyes, Chairman, Chief Executive Officer and President of Annaly. “Housing and educational opportunity are fundamental to the economic health of individuals and communities. We are proud of this Venture and look forward to continuing to deliver long-term benefits and diversified returns to our shareholders through our social impact investment strategies.”
“Supporting the kinds of high-impact projects that build equity and inclusion and help fuel inclusive growth requires a variety of dedicated partners. That is why we are proud to partner once again with Annaly Capital Management,” said Ellis Carr, President and CEO of Capital Impact Partners. “I am excited to amplify our previous work by focusing our efforts in Washington, D.C., and engaging with residents to build communities of opportunity that provide a bright future for all those that call the city home.”
Capital Impact and Annaly have created a strong, long-term partnership through two joint ventures with a combined $50 million of commitments, which are designed to invest in loans that are cash flow generating, seasoned assets owned by Capital Impact. The investments represent a diverse mix of projects within the social impact investing landscape. Each joint venture is structured to make investments over a five-year period from the respective launch, and Capital Impact and Annaly have the option to increase their overall investment as each venture matures.
Update to Initial Social Impact Joint Venture with Capital Impact
Annaly’s initial partnership with Capital Impact, announced in November 2017, supports nearly 500,000 square feet in community development projects across the U.S. in housing, education, health care, job training and healthy foods, employing 1,200 individuals. The charter schools funded through this partnership educate approximately 3,000 students, with 80% qualifying for free and reduced-priced lunches. The community health centers and eldercare residences supported by the joint venture provide care for nearly 30,000 patients, with 3,420 elders and nearly 14,000 below the poverty line served. Finally, the initial venture supports retail grocery that provides access to healthy foods in low-income areas and food production services.
Annaly is a leading diversified capital manager that invests in and finances residential and commercial assets. Annaly’s principal business objective is to generate net income for distribution to its stockholders and to preserve capital through prudent selection of investments and continuous management of its portfolio. Annaly has elected to be taxed as a real estate investment trust, or REIT, for federal income tax purposes. Annaly is externally managed by Annaly Management Company LLC. Additional information on the company can be found at www.annaly.com.
About Capital Impact
Through capital and commitment, Capital Impact Partners helps people build communities of opportunity that break barriers to success. We champion social and economic justice for underserved communities to foster good health, economic opportunity, and interconnectedness. Through mission-driven lending, incubating social impact programs, impact investing, and policy reform we partner with local communities to create equitable access to health care and education, healthy foods, affordable housing, and dignified aging for those most in need. We have disbursed more than $2.5 billion to revitalize communities over the past 35 years. Our leadership in delivering financial and social impact has resulted in Capital Impact earning a “AA-” rating from S&P Global and being recognized by Aeris since 2005 for our performance. Headquartered in Arlington, VA, Capital Impact Partners operates nationally, with local offices in Detroit, MI, and Oakland, CA. Learn more at www.capitalimpact.org.
This news release 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 reference to a future period or periods or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “anticipate,” “continue,” or similar terms or variations on those terms or the negative of those terms. Actual results could differ materially from those set forth in forward-looking statements due to a variety of factors, including, but not limited to, changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability of mortgage-backed securities and other securities for purchase; the availability of financing and, if available, the terms of any financings; changes in the market value of our assets; changes in business conditions and the general economy; our ability to grow our commercial real estate business; our ability to grow our residential credit business; our ability to grow our middle market lending business; credit risks related to our investments in credit risk transfer securities, residential mortgage-backed securities and related residential mortgage credit assets, commercial real estate assets and corporate debt; risks related to investments in mortgage servicing rights; our ability to consummate any contemplated investment opportunities; changes in government regulations or policy affecting our business; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes; and our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. We do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law.
 The Affordable Housing Preservation fund activities are being funded in partnership with the District of Columbia Department of Housing and Community Development.
Examples of two projects in Washington, D.C. that the Venture is investing in include:
A new future for those living at Terrace Manor, a multifamily building located in D.C.’s Ward 8, was launched when the residents recently joined together to rescue their homes after years of deferred maintenance under the previous property owner. The tenants partnered with a developer who has long history of working in Southeast D.C., including most recently building a new cultural center and grocery store.
Once rehabilitated, residents will enjoy high-quality, energy-efficient affordable housing. As access to affordable housing in D.C. has decreased, this important redevelopment will create more than 168 units of housing for residents living below 50 percent of the Area Median Income. The project will further provide stability and economic opportunity for working families living in this historical African American community by ensuring connectivity to transportation, shops, and employment opportunities.
Capital Impact provided $2 million in financing as part of a larger $6.9 million loan. With further support from the city and other local groups, it is anticipated that the property will return to full occupancy and profitability once complete.
With $8 million in financing from Capital Impact, as part of a larger $55 million investment, the D.C. International School (“DCIS”) was able to move into a new, permanent campus. DCIS is a high-performing charter school providing a multilingual education to 400 students in 6-8th grades, with plans to expand to 1,400 students in 6-12th grades. Roughly 50% of this socio-economically diverse student body qualify for free and reduced lunch (FRL).
This project will allow the school to be part of a larger, mixed-use redevelopment of the Walter Reed Medical Center in Northwest Washington, D.C., while still remaining close to five bilingual charter elementary feeder schools.