Annaly Takes Losses on Rebalanced Portfolio

Annaly Mortgage Management, a New York-based real estate investment trust, has announced a rebalancing of its portfolio through asset sales and a reinvestment of proceeds that resulted in total losses of approximately $148 million in the fourth quarter.The REIT said about $83 million of the total stemmed from noncash losses on securities reclassified as other-than-temporarily impaired, and the other $65 million was a realized loss resulting from the sale of $2.3 billion (in face amount) of securities. "Certain assets that were purchased in the much lower interest rate environment of 2003 and 2004 are unlikely to recover to their amortized cost basis," said Michael A. J. Farrell, Annaly's chairman, chief executive officer, and president. "However, the returns for new capital invested in short-duration assets have improved significantly. As a result, we are taking advantage of the current market conditions by either selling or reducing the cost basis of these assets, and by repositioning the portfolio into higher-yielding investments." The REIT can be found online at http://www.annaly.com.