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UBS analyst Doug Harter started coverage of Granite Point Mortgage Trust (NYSE:GPMT) stock with a Buy rating on the basis of the commercial mortgage REIT’s improved liquidity outlook.
The company’s “liquidity outlook has improved with the repayment of its 2 converts over the past year,” Harter wrote in a Tuesday note.
What’s more, he sees potential upside to its return on equity as “GPMT makes progress on resolving current problem assets and removes the drag from unproductive capital.”
GPMT advanced 1.4% in late morning trading.
At the same time, the sell-side analyst initiated coverage on six other commercial mREITs, handing out 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 overall sector “is trading at discount to book value we believe this is explained by the market concerns around commercial real estate and the potential for additional losses to move book values lower,” Harter said. He doesn’t expects such concerns to ease in the short-term.