Real estate investor Annaly Capital Management Inc. (NYSE: NLY) is buying all the shares of CreXus Investment Corp. (NYSE: CXS), that it does not currently own, for $872 million.

The deal, announced Jan. 31, has been approved by the CreXus board and values the New York-based target at about $996 million.

CreXus, which invests mainly in commercial mortgage loans and commercial mortgage-backed securities, has approximately 76.6 million shares of common stock outstanding, of which Annaly holds more than 9.5 million shares. That’s roughly 12.4 percent.

Annaly, also based in New York, had raised its offer by 50 cents to $13 per share from its original proposal on Nov. 9. The transaction is part of the company’s goal to invest directly in commercial real estate assets.

As part of the agreement, Annaly’s tender offer will not begin until after a 45-day period, during which CreXus will be able to seek higher bids—a process that may be successful considering the evident resilience of the real estate sector.

"With a rebound in commercial and residential real estate and real estate finance, we are seeing a significant uptick in M&A and private equity activity in these sectors," says Bob Zinn, global co-head of M&A at K&L Gates LLP, the law firm advising Annaly.

Investment banks Lazard and Bank of America Merrill Lynch are advising CreXus and Annaly, respectively.

For more, see "Private Equity Perspective: Rising House Prices Lift All Funds?"

Real estate