Granite Point Mortgage Trust (GPMT) Q1 2025 Earnings Call May 07, 2025 11:00 AM ET Speaker0 Good morning. My name is Paul, and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust First Quarter twenty twenty five Financial Results Conference Call. All participants will be in a listen only mode. After the speakers' remarks, there will be a question and answer period. Please note, today's call is being recorded. I would now like to turn the call ...

Legal Disclosures First Quarter 2025 Earnings Supplemental May 7, 2025 This presentation contains, or incorporates by reference, not only historical information, but also forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve numerous risks and uncertainties. Our actual results may differ from our beliefs, expectations, estimates, projections and illustrations and, consequently, you should not rely on these forward-looking st ...

Financial Performance - For the three months ended March 31, 2025, the company recorded a GAAP net loss of $(10.6) million, or $(0.22) per basic share[160]. - Distributable loss for the same period was $(27.7) million, or $(0.57) per basic share, which includes $(24.6) million in write-offs[160]. - GAAP net loss attributable to common stockholders was $(10.6) million in Q1 2025, an improvement from $(42.4) million in Q4 2024[240]. - Net interest income for the three months ended March 31, 2025, was $8.04 million, with a net interest rate spread of (0.8)%[217]. - Total interest income decreased to $35.14 million in Q1 2025 from $38.72 million in Q4 2024, primarily due to a lower average balance of interest-earning assets[235]. - Total interest expense decreased to $27.10 million in Q1 2025 from $31.15 million in Q4 2024, mainly due to a lower average balance of interest-bearing liabilities[236]. - Provision for credit losses was $(3.77) million in Q1 2025, significantly lower than $(37.19) million in Q4 2024, indicating improved credit quality[237]. - Revenue from REO operations was $3.1 million in Q1 2025, a slight decrease from $3.3 million in Q4 2024 due to lower variable rent income[238]. - Total operating expenses increased to $14.31 million in Q1 2025 from $12.50 million in Q4 2024, with compensation and benefits rising significantly[239]. Loan Portfolio - The company maintained a portfolio of 50 loan investments with an aggregate unpaid principal balance of $1.9 billion and total commitments of $2.0 billion[160]. - The total loan commitments as of March 31, 2025, were $2.037 billion, with an unpaid principal balance of $1.945 billion and unfunded loan commitments of $92.7 million[174]. - The carrying value of the loan portfolio was reported at $1.760 billion[174]. - The weighted average risk rating of the loan portfolio improved to 3.0 from 3.1 as of December 31, 2024[171]. - The average loan-to-value (LTV) ratio for the portfolio is 69.4%, with a stabilized LTV of 64.5%[178]. - The portfolio includes a total of 177.3 million in allowance for credit losses[178]. - The average term of the loans in the portfolio is 3.1 years[178]. - The portfolio consists of various property types, including multifamily, office, and industrial, with significant balances in each category[178]. Capitalization and Financing - As of March 31, 2025, the company had unrestricted cash of $85.7 million and $123.8 million of unlevered REO assets[157]. - The total debt-to-equity ratio was 2.2:1.0 as of March 31, 2025, with a recourse leverage ratio of 0.9:1.0[211]. - The company had secured repurchase facilities with outstanding borrowings of $0.5 billion, with a weighted average borrowing rate of 7.7%[198]. - The total capacity of the secured repurchase facilities was $1.23 billion, with $534.5 million outstanding and $693.4 million in unused capacity as of March 31, 2025[199]. - The company financed $0.8 billion through two CRE CLOs, which accounted for 48.8% of the total loan portfolio principal balance[203]. - The company has $92.7 million in unfunded loan commitments and must manage liquidity needs for interest and principal payments under $1.4 billion of outstanding borrowings[255]. Market Conditions and Challenges - The office property market is facing higher vacancies and slower leasing activity due to remote work arrangements, impacting property values[153]. - The company continues to face challenges from inflation, elevated interest rates, and geopolitical uncertainty, impacting loan repayments and originations[220]. - The Federal Reserve's interest rate adjustments in response to inflation have influenced the company's performance, with rates remaining elevated as of the second half of 2024[260]. - The company is actively exploring additional funding facilities to diversify its financing sources amid market volatility[221]. Cash Flow and Liquidity - Cash and cash equivalents decreased by approximately $14.0 million to $100.4 million as of March 31, 2025[258]. - Cash flows from operating activities decreased cash balances by approximately $5.7 million, primarily due to equity compensation and amortization[259]. - Cash flows from investing activities increased cash balances by approximately $80.1 million, mainly driven by repayments of loans held-for-investment[259]. - The company had unrestricted cash liquidity of $85.7 million, exceeding the required minimum of $30 million[210].

Facility Details - The Facility Amount is set at $250,000,000[10] - The Stated Facility Expiration Date is April 27, 2026[22] - The First Extension Period can extend the expiration date to April 26, 2027, and the Second Extension Period to April 24, 2028[25] Amendment Provisions - The Amendment includes a reaffirmation of the Guaranty by the Guarantor[37] - Seller must pay all reasonable legal fees and expenses related to this Amendment within ten business days of receipt of the invoice[41] - The Original Repurchase Agreement remains in full force and effect except as expressly amended[45] - Seller is required to notify Purchaser of its exercise of the Extension Option 30 to 90 days prior to the Stated Facility Expiration Date[26] - No monetary or material non-monetary Default or Event of Default shall have occurred as of the date notice is given[27] - The Amendment is governed by the laws of the State of New York[43] - Each Seller agrees to pay all reasonable out-of-pocket costs and expenses incurred by Purchaser in connection with this Amendment[46] - The Amendment, Repurchase Agreement, and other Transaction Documents constitute the entire agreement among the parties, superseding all prior agreements[49] - Each provision of the Amendment shall be interpreted to be effective under applicable law, ensuring the validity of the remaining provisions[50] - The Amendment and all covenants, agreements, representations, and warranties shall survive the consummation of the Transaction and remain in effect as long as obligations are outstanding[51] - The Amendment may be executed in counterparts, with electronic signatures having the same legal effect as manual signatures[52] - The headings in the Amendment are for convenience only and do not affect its interpretation[53] - The execution and effectiveness of the Amendment do not limit or impair any rights or remedies of the Purchaser under the Repurchase Agreement[55] - The Amendment is a Transaction Document executed pursuant to the Repurchase Agreement and shall be construed accordingly[53] Parties Involved - The parties involved in the Amendment include GP Commercial CB LLC, GP Commercial CB SL Sub LLC, Citibank, N.A., and Granite Point Mortgage Trust, Inc.[58][59][60]

Core Viewpoint - The article revisits Granite Point Mortgage Trust Inc. (NYSE: GPMT) after a 1.5-year hiatus, focusing on the preferred shares and their investment potential [1]. Company Overview - Granite Point Mortgage Trust Inc. is highlighted as a company of interest for investors, particularly in the context of preferred shares [1]. Investment Strategy - The investment group European Small Cap Ideas emphasizes high-quality small-cap investment opportunities, focusing on capital gains and dividend income for continuous cash flow [1]. - The group offers two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1]. Analyst Position - The analyst has a beneficial long position in GPMT.PR.A shares, indicating a personal investment interest in the company [1].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 State or Other Jurisdiction of Incorporation or Organization (I.R.S. Employer Identification No.) 3 Bryant Park, Suite 2400A New York, New York 10036 (Address of Principal Executive Offices) (Zip Code) For the fiscal year ended December 31, 2024 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the ...

Financial Data and Key Metrics Changes - For Q4 2024, the company reported a GAAP net loss of $42.4 million or negative $0.86 per basic common share, which includes a provision for credit losses of $37.2 million or negative $0.75 per basic common share [30] - The attributable loss for the quarter was $98.2 million or negative $1.98 per basic common share, including write-offs of $95.2 million or negative $1.92 per basic common share [31] - The book value at December 31 was $8.47 per common share, representing a decline of about $0.78 per share from Q3 [32] Business Line Data and Key Metrics Changes - The total loan portfolio commitments at the end of Q4 were $2.2 billion, with an outstanding principal balance of $2.1 billion [17] - The loan portfolio yield for Q4 was approximately 6.6% net of the impact of nonaccrual loans, estimated to be about 214 basis points [18] - The company resolved nine loans totaling about $344 million during 2024, with significant activity in the third and fourth quarters [11] Market Data and Key Metrics Changes - The commercial real estate market showed improved liquidity in the second half of 2024, with a consensus that real estate prices have bottomed out [10] - Liquidity in the floating rate transitional middle market sector remains less robust, particularly among regional and community banks [11] Company Strategy and Development Direction - The company aims to optimize economic outcomes through a balanced portfolio management approach, focusing on timing, profitability, and liquidity [13] - There is an expectation to return to new originations in the latter part of 2025, with a focus on growing the portfolio and improving run rate profitability [16] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment remains challenging for the commercial real estate industry, but liquidity and transaction volume are expected to improve in 2025 [15] - The company anticipates that ongoing resolutions of nonperforming loans will exceed potential future credit events, leading to improved profitability over time [15] Other Important Information - The company repurchased about 2.4 million shares during 2024, reflecting confidence in the stock's undervaluation [14] - The aggregate CECL reserve at December 31 was about $201 million, down from $259 million in the previous quarter [32] Q&A Session Summary Question: Details on new five-rated assets and comfort on current ratings - Management expressed confidence in the current risk rankings and reserves, noting that the Louisville Student Housing Property was downgraded due to a lower-than-expected arbitration award [40][41] Question: Need for liquidity and rationale for leverage - Management indicated that maintaining liquidity is a priority, with no immediate targeted needs but a desire for flexibility [44] Question: Opportunities in the CLO market - Management acknowledged potential refinancing opportunities in the CLO market but indicated that such actions would not occur in the immediate term [50][52] Question: Concerns about asset management and credit downgrades - Management highlighted ongoing asset management efforts and the complexity of individual loan situations, particularly regarding the Kentucky asset [62][64] Question: Dividend policy and capital management strategy - Management discussed the decision to maintain the dividend while working towards covering it through resolutions and prepayments, emphasizing the importance of preserving valuable liabilities [72][74]

Q4 and Full Year 2024 Earnings Supplemental February 14, 2025 Legal Disclosures This presentation contains, or incorporates by reference, not only historical information, but also forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve numerous risks and uncertainties. Our actual results may differ from our beliefs, expectations, estimates, projections and illustrations and, consequently, you should not rely on these forward-l ...

Company Performance - Granite Point Mortgage Trust (GPMT) reported a quarterly loss of $1.98 per share, which was worse than the Zacks Consensus Estimate of a loss of $1.58, and a significant decline from earnings of $0.14 per share a year ago, indicating a negative earnings surprise of -25.32% [1] - The company posted revenues of $7.57 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 4.17%, and a decrease from year-ago revenues of $17.33 million [2] - Over the last four quarters, GPMT has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Market Comparison - GPMT shares have increased approximately 10% since the beginning of the year, outperforming the S&P 500's gain of 2.9% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.88 on revenues of $8.9 million, and for the current fiscal year, it is -$2.58 on revenues of $39.1 million [7] - The estimate revisions trend for GPMT is mixed, resulting in a Zacks Rank 3 (Hold), suggesting the shares are expected to perform in line with the market in the near future [6] Industry Context - The REIT and Equity Trust industry, to which GPMT belongs, is currently ranked in the bottom 46% of over 250 Zacks industries, indicating potential challenges ahead [8]

Financial Performance - Granite Point Mortgage Trust Inc. reported a GAAP net loss attributable to common stockholders of $(221.5) million, or $(4.39) per basic common share for the full year 2024[6]. - The company recognized distributable earnings (loss) of $(143.9) million, or $(2.85) per basic share, including write-offs of $(146.3) million for the full year 2024[6]. - The company recorded a net loss attributable to common stockholders of $42.44 million for the three months ended December 31, 2024, compared to a net loss of $17.07 million for the same period in 2023[20]. - Distributable Earnings (Loss) for the three months ended December 31, 2024, was $(98.16) million, reflecting a significant decline from $(6.41) million in the prior year[21]. - Basic (loss) earnings per weighted average common share for the three months ended December 31, 2024, was $(0.86), compared to $(0.33) for the same period in 2023[20]. Loan Portfolio and Credit Losses - The net loan portfolio activity for the full year 2024 showed a decrease of $(620.8) million in unpaid principal balance, with twelve full loan repayments totaling $(414.7) million[6]. - Granite Point resolved nonperforming loans totaling over $340 million in 2024, with additional resolutions expected in 2025[3]. - The provision for credit losses for the twelve months ended December 31, 2024, was $201.41 million, compared to $104.81 million for the same period in 2023, indicating a substantial increase in expected credit losses[21]. Assets and Cash Position - The total assets of Granite Point Mortgage Trust Inc. decreased to $2.115 billion as of December 31, 2024, down from $2.847 billion in 2023[19]. - The company ended the quarter with $87.8 million in unrestricted cash and a total leverage of 2.2x, with no corporate debt maturities remaining[6]. Shareholder Returns and Dividends - The company repurchased approximately 2.4 million common shares at an average price of $3.16 per share, totaling $7.6 million, resulting in book value accretion of approximately $0.28 per share[6]. - The company declared dividends of $0.05 per common share for the three months ended December 31, 2024, down from $0.20 per share in the same period of 2023[20]. Income and Expenses - For the three months ended December 31, 2024, Granite Point Mortgage Trust Inc. reported total interest income of $38.72 million, a decrease of 37.0% from $61.50 million in the same period of 2023[20]. - Total expenses for the three months ended December 31, 2024, were $12.50 million, an increase from $10.39 million in the same period of 2023[20]. Valuation and Metrics - The book value per common share was reported at $8.47, inclusive of $(4.12) per common share of total CECL reserve[6]. - Granite Point's loan portfolio carried a weighted average stabilized loan-to-value (LTV) ratio at origination of 64.4% and a realized loan portfolio yield of 6.6%[6]. - The weighted average number of basic common shares outstanding for the three months ended December 31, 2024, was 49,492,595, a decrease from 51,156,015 in the same period of 2023[20]. Non-GAAP Measures - Granite Point Mortgage Trust Inc. has adopted Distributable Earnings (Loss) as a non-GAAP measure to evaluate operating performance, which is intended to serve as a proxy for taxable income[21].