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JMP Group downgrades RAIT Financial after Q2 results

JMP Group has downgraded RAIT Financial Trust after the company posted poor second-quarter financial results.

The company reported a net loss of $125.8 million, or $1.38 per share, versus a loss of $7.6 million, or 8 cents per share, a year ago. Results included noncash asset and goodwill impairment charges of $94.2 million, primarily related to an adjustment to the carrying value of certain legacy properties. The company also recorded a provision for loan losses against certain legacy commercial real estate loans of $20.9 million for the 2017 second quarter.

The earnings release was accompanied by an announcement that the company cut its second-quarter dividend by 4 cents per share.

Based on the uncertain GAAP and cash available for distribution earnings streams being generated, and the diminished expected recovery on the disposition of the Urban Retail unit, analyst Steven DeLaney believes the company's shares may be overvalued. He lowered RAIT Financial to "market underperform."

The analyst's core EPS estimates are 20 cents for 2017 and 25 cents for 2018.