Wunderlich analyst Merrill Ross on April 6 downgraded to "sell"from "buy," saying the company will give up 90% of its profit interestsin assets funded by its recently announced jointventure agreement, which compromises its ability to create value forshareholders.
Ross said Jernigan Capital executed the joint venture becauseit was struggling to obtain funding to meet its $115 million forward commitments.The analyst said the joint venture partners protected their interests by reservingthe right to approve all major decisions, including each investment of capital,incurrence of debt, sale or disposition of assets, and the replacement of the companyas the manager. Jernigan Capital intends to obtain a credit facility that may containcovenants that can lead to a suspension of dividends, the analyst said, and sheexpects its cash flows will continue to be negative.
Ross lowered the price target on the company's stock to $10 from$18. The analyst's core EPS estimate for 2016 is 65 cents.