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UBS analyst Doug Harter initiated coverage of Granite Point Mortgage Trust (New York Stock Exchange: GPMT) shares with a Buy rating based on the commercial mortgage REIT's improving liquidity outlook.
The company's “liquidity prospects have improved with the repayment of its 2 converts over the past year,” Harter wrote in a Tuesday note.
What's more, it sees potential upside to its return on equity as “GPMT moves forward in resolving current problem assets and removing the burden of unproductive capital.”
GPMT advanced 1.4% in late morning operations.
At the same time, the sell-side analyst initiated coverage on six other commercial mREITs, giving Neutral ratings to Ares Commercial Real Estate (ACRE), Apollo Commercial Real Estate Finance (ARI), Blackstone Mortgage Trust (BXMT), Claros Mortgage Trust. (CMTG), Ready Capital (RC) and Starwood Property Trust (STWD).
The broader sector “is trading at a discount to book value and we believe this is explained by market concerns around commercial real estate and the potential for additional losses to drive book values lower,” Harter said. He doesn't expect such concerns to subside anytime soon.
