GLTA
SM
TD Securities’ Graham Ryding upgraded Timbercreek Financial Corp. (
) to “buy” from “hold” and raised his target to $8.50 from $7, while National Bank’s Jaeme Gloyn increased his target to $7.50 from $7 with a “sector perform” recommendation. The average is $8.06.
“Although Q4-23 results were largely in line, we view recent developments on the impaired loan portfolio, a more optimistic growth outlook, and a special dividend of $0.0575 per share as key to building positive investor sentiment,” said Mr. Gloyn. “Notably, impaired loans (i.e., Stage 2, Stage 3, and “real estate inventory”) decreased to $202 million at Q4-23, or 21 per cent of mortgage investments plus real estate inventory. This is down from 34 per cent last quarter primarily as loans tied to Groupe Huot of $146 million returned to Stage 1 (and were then sold in Q1-24). Management remains confident of full recovery on nearly all impaired loans, which demonstrates the strength of underwriting. Management presented an optimistic growth outlook given an aging downcycle in commercial real estate markets, rent inflation, and lower interest rates. TF boasts $350-million of capacity on its renewed credit facility. The payout ratio on distributable income was a healthy 89 per cent in 2023 (incl. the special). Overall, the outlook bodes well for investors stepping in today at 90 per cent of book value.”