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On Tuesday, JMP Securities analysts maintained a positive outlook on Ladder Capital Corp (NYSE:LADR), reiterating a Market Outperform rating with a steady price target of $13.50. Currently trading at $11.59 with a market capitalization of $1.47 billion, the stock appears slightly undervalued according to InvestingPro analysis. The analysts highlighted the company’s shift towards a more aggressive growth strategy, after a period of caution due to economic and interest rate volatility. Ladder Capital has recently initiated $129 million in new bridge loans during the last quarter and is expected to continue its capital deployment throughout the year.
The firm’s analysts believe that Ladder Capital shares present a compelling opportunity for total return investment as the company focuses on expanding its core transitional loan portfolio and realizing gains from mature net lease real estate assets. With an attractive dividend yield of 7.94% and a track record of maintaining dividend payments for 11 consecutive years, this strategy is anticipated to lead to stable or increasing distributable earnings up to 2026.
Moreover, JMP Securities suggests that a stabilizing interest rate environment could enhance Ladder Capital’s fee-based commercial mortgage-backed securities (CMBS) conduit lending business. The analysts have forecasted an earnings outlook that could allow for a slight increase in dividends and a gradual rise in book value per share over the forthcoming eight quarters.
Ladder Capital’s move to capitalize on the more favorable conditions and its strategic growth initiatives are expected to underpin its financial performance. The company’s focus on bridge loan origination and the potential for enhanced earnings from its CMBS lending are key factors in JMP Securities’ continued endorsement of the stock at its current price target.
In other recent news, Ladder Capital Corp has secured a new $725 million revolving credit facility, as indicated in a recent SEC filing. This new credit agreement, facilitated by JPMorgan Chase (NYSE:JPM) Bank, replaces the previous arrangement that had $324 million in undrawn capacity. The facility is set to mature on December 20, 2028, with the option for two six-month extensions. Interest rates for the new facility are determined by a credit rating pricing grid, with varying margins for different types of borrowings. The agreement includes financial maintenance covenants and offers the potential for incremental increases up to $1.25 billion under specific conditions. A notable feature of the agreement is that certain covenants will terminate if Ladder Capital’s senior notes achieve an investment grade rating from at least two rating agencies. This financial move is designed to enhance the company’s financial flexibility and support ongoing operations. Management has not provided further details on how this will impact future business activities.
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