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Annaly Falls After Offer for Crexus to Counter Fed Influence

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Nov. 12 (Bloomberg) -- Annaly Capital Management Inc., the largest real-estate investment trust that buys mortgage debt, fell in New York trading after saying it plans to buy the shares of Crexus Investment Corp. it doesn’t own for $838.8 million.

The REIT dropped 0.7 percent to $14.87 as of 4:15 p.m., while Crexus, which is managed by a unit of Annaly, advanced 12 percent to $12.43. Annaly offered $12.50 for each of the 67.1 million shares, or 12.4 percent, of the company it doesn’t already hold. Chimera Investment Corp., another REIT managed by Annaly, gained 8.6 percent. The firms are all based in New York.

Annaly announced its bid to buy Crexus, a commercial-mortgage investor, as part of a broadening of its strategy after Federal Reserve purchases of government-backed residential debt reduced yields in a market it has focused on since its 1997 initial public offering. It now may allocate as much as 25 percent of shareholder equity to other investments, Chairman and Chief Executive Officer Wellington Denahan said in a statement.

“A powerful step in this direction is the proposed acquisition of CreXus,” Denahan, who this month assumed sole control of the top role at the company after the death of founding chief Michael A.J. Farrell, said in the statement.

Annaly tumbled 13 percent through last week, assuming reinvested dividends, after the Fed announced on Sept. 13 it would expand its buying of agency mortgage bonds by $40 billion a month to bolster the economy. The REIT had $141.6 billion of assets on Sept. 30.

Crexus, which Annaly started in 2009, had $968.4 million of assets as of the end of September. Chimera, a New York-based investor in so-called non-agency housing debt started by Annaly in 2007, rose today to $2.77 a share. It had $9.7 billion of assets.

To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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