Annaly remains the largest sponsor of Non-QM securities in Q2 2024
Real estate investment trust (REIT) Annaly Capital Management generated ample dividend coverage in the second quarter, delivering a strong economic return year-to-date.
Annaly’s Residential Credit Portfolio totaled $5.9 billion in assets at the end of Q2 2024, a decrease of 4% compared to Q1 2024. This consisted of a $4.5 billion securities portfolio and a $1.4 billion whole loan portfolio.
"Despite modest widening in Agency MBS spreads, Annaly produced a positive economic return in the second quarter, supported by our diversified capital allocation, balanced hedge portfolio and responsible leverage position. Notably, Annaly generated a 5.7% economic return year-to-date, demonstrating the strength of our housing finance model," remarked Annaly's Chief Executive Officer and Chief Investment Officer David Finkelstein. "During the quarter, we opportunistically added to our Agency MBS portfolio given attractive spread levels, while we continue to expand our complementary Residential Credit and MSR platforms."
This most recent earnings report solidifies Annaly Residential Credit Group’s place as the largest non-bank issuer and second largest issuer overall of Prime Jumbo and Expanded Credit MBS, pricing 13 residential whole loan securitizations totaling $6.7 billion in proceeds since the beginning of 2024.
Its wholly-owned subsidiary Onslow Bay Financial remains one of the largest and most liquid sponsors of residential credit securitizations, holding over 25% of Non-QM issuance and 10% of total gross Non-Agency Issuance YTD.
The company’s loan lock volume of $7.8 billion YTD in 2024 has already surpassed its total lock volume for all of 2023, which stood at $7.6 billion. Second to Annaly for Q2 volume was Invictus Capital Partners, which reported total Non-QM securitizations of $3.911 million YTD.
Additionally, Onslow Bay reported the lowest delinquency rates among the top 10 Non-QM issuers in Q2, with declines across all product types.
"We are encouraged by recent inflation data and signaling from the Federal Reserve, which suggest a near-term rate cut is increasingly likely," Finkelstein added. "As interest rate volatility appears poised to moderate and more dovish monetary policy is on the horizon, we remain well-positioned for further growth given our substantial liquidity, prudent leverage and nimble capital structure."