Granite Point Mortgage Trust Inc. · NYSE:GPMT
Granite Point Mortgage Trust — Investor Presentation (May 2023)
49 slides from Granite Point Mortgage Trust's investor presentation, May 2023
Slide 1: Investor Presentation May 2023
Investor Presentation May 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 ac
Slide 3: Cautionary Statement Regarding Endnotes
Cautionary Statement Regarding Endnotes You are encouraged to carefully read the endnotes that are a part of this presentation and start on slide 33 hereto. The endnotes include important information, including details regarding the assumptions we utilize to prepare the illustrative examples contain
Slide 4: Company Overview
Company Overview
Slide 5: Company Overview
Company Overview * • An internally-managed commercial real estate finance company operating as a REIT, that is focused on originating and investing in floating-rate, first mortgage loans secured by institutional-quality transitional properties. • Investment objective emphasizes preservation of capit
Slide 6: Corporate Snapshot
Corporate Snapshot $3.5 billion* 100% Loans $38 million 8.0% 62.9% Portfolio of 88 99% Senior Loans Average UPB Portfolio Yield** Weighted Loan Investments 98% Floating Rate Average LTV** $3.4 billion 2.5x 1.3x ~53% $232 million† Financing Capacity Total Debt-to-Equity Recourse Debt-to- Non-Mark-to-
Slide 7: Investment Highlights
Investment Highlights EXPERIENCED AND ▪ Each senior investment team member has over 20 years of experience in the commercial real estate debt CYCLE-TESTED markets: including extensive backgrounds in investment management and structured finance. SENIOR CRE TEAM ▪ Broad and long-standing direct relati
Slide 8: Experienced and Cycle-Tested Senior Leadership
Experienced and Cycle-Tested Senior Leadership YEARS OF JACK TAYLOR EXPERIENCE PRESIDENT AND CHIEF EXECUTIVE OFFICER • Previous experience: Head of Global Real Estate Finance, Prudential Real Estate Investors; earlier built and led real estate finance businesses at: Kidder, Peabody; PaineWebber; UBS
Slide 9: Seasoned and Cohesive Team with Top-Tier Multidisciplinary Expertise
Seasoned and Cohesive Team with Top-Tier Multidisciplinary Expertise DECADES OF BROAD EXPERIENCE SUCCESSFULLY NAVIGATING MANY ECONOMIC AND MARKET CYCLES ✓ Decades of balance sheet lending experience managing unlevered and levered portfolios of CRE debt investments and serving as a fiduciary for thir
Slide 10: Investment Strategy and Origination Platform
Investment Strategy and Origination Platform
Slide 11: Investment Strategy Targeting Senior Loans
Investment Strategy Targeting Senior Loans FLOATING RATE FIRST MORTGAGE LOANS PROVIDE EXPOSURE TO COMMERCIAL REAL ESTATE SECTOR AT AN ATTRACTIVE POSITION WITHIN A PROPERTY'S CAPITAL STRUCTURE • Our senior loans are senior to a property owner’s I L L U S T R AT I V E P R O P E R T Y C A P I TA L S T
Slide 12: Target Investments and Portfolio Construction
Target Investments and Portfolio Construction THE COMPANY HAS A SUCCESSFUL INVESTMENT PHILOSOPHY THAT HAS BEEN TESTED THROUGH MULTIPLE ECONOMIC, INTEREST RATE AND REAL ESTATE CYCLES K E Y T E N E T S O F ST R AT E GY P O R T FO L I O C O N ST RU C T I O N ✓ Long-term, fundamental, value-driven philo
Slide 13: Diversified Investment Portfolio with Scale
Diversified Investment Portfolio with Scale TARGETING LARGER INSTITUTIONAL MARKETS IN THE U.S., THAT OFFER COMPELLING INVESTMENT CHARACTERISTICS CONSISTENT WITH OUR OVERALL INVESTMENT THESIS • Diversification is a key tenet of our investment strategy • Search for relative value nationwide as we cons
Slide 14: Direct Origination Platform Supported by Strong Reputation and Longstanding Relationships
Direct Origination Platform Supported by Strong Reputation and Longstanding Relationships DIFFERENTIATED ORIGINATION STRATEGY TARGETING HIGH-QUALITY LOANS ON INSTITUTIONAL-QUALITY PROPERTIES ACROSS ATTRACTIVE MARKETS WITH WELL-CAPITALIZED AND EXPERIENCED SPONSORS • Borrowers range from large private
Slide 15: Rigorous and Highly Selective Investment Process
Rigorous and Highly Selective Investment Process ORIGINATION APPROACH PRODUCES A LARGE UNIVERSE OF OPPORTUNITIES FROM WHICH THE MOST ATTRACTIVE INVESTMENTS ARE SELECTED FOR OUR PORTFOLIO M U LT I P L E S O U R C I N G C H A N N E L S Billions of dollars of investment opportunities annually are sourc
Slide 16: Credit Culture Based on Key Principles
Credit Culture Based on Key Principles OUR CREDIT CULTURE HAS BEEN DEVELOPED AND NURTURED OVER OUR SENIOR CRE TEAM’S LONG TENURE IN COMMERCIAL REAL ESTATE DEBT MARKETS • Portfolio construction on a loan-by-loan basis with each investment standing on its own merits and adhering to our overall credit
Slide 17: Life Cycle of a Loan Investment
Life Cycle of a Loan Investment ORIGINATIONS AND OPERATIONS PROCESS INVOLVES CONTINUOUS COMMUNICATIONS ACROSS THE COMPANY FROM DEAL SOURCING THROUGH ASSET MANAGEMENT Ongoing Asset Sourcing Underwriting Closing Financing Management Members of the Investment Committee involved throughout • Broad indus
Slide 18: Coordinated and Comprehensive Approach to Asset Management
Coordinated and Comprehensive Approach to Asset Management ORIGINATION TEAM THAT SOURCES A LOAN REMAINS RESPONSIBLE FOR ASSET MANAGING IT THROUGHOUT ITS LIFECYCLE UNTIL REPAYMENT • 5-point loan risk rating system • Deal teams retain key decision-making authority on asset management (budgets, lease a
Slide 19: Portfolio Overview
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Slide 20: Investment Portfolio Diversification
Investment Portfolio Diversification PORTFOLIO DIVERSIFICATION IS A KEY TENET OF OUR INVESTMENT AND RISK MANAGEMENT STRATEGY At IPO December 31, 2019 March 31, 2023 Total Portfolio: $1.8 billion Total Portfolio: $5.0 billion Total Portfolio: $3.5 billion* Average Loan Balance: ~$42.8 million Average
Slide 21: Investment Portfolio as of March 31, 2023
Investment Portfolio as of March 31, 2023 Well-diversified portfolio comprised of over 99% senior loans with a weighted average stabilized LTV at origination of 62.9%*. KEY PORTFOLIO STATISTICS PROPERTY TYPE(1) Other, 2.7% Industrial, 5.8% Outstanding Principal Balance $3.3 billion Retail, 9.5% Tota
Slide 22: Portfolio Credit Overview
Portfolio Credit Overview • Weighted average portfolio risk rating of 2.6 as of March 31, 2023. CECL RESERVE BY QUARTER* GENERAL AND SPECIFIC CECL RESERVE* General Specific $133.0 $133.0 $86.6 $67.5 $85.6 $86.6 $39.3 $50.1 $65.5 $47.3 6/30/2022 9/30/2022 12/31/2022 3/31/2023 12/31/2022 3/31/2023 STA
Slide 23: Select Case Studies
Select Case Studies * Investment Chicago Multifamily Nashville Office Nashville Hotel Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date 12/2019 10/2019 02/2020 918 Unit Garden Style 161 Key Full-Service Collateral 461,541 SF Office Portfolio Mult
Slide 24: Select Case Studies (cont'd)
Select Case Studies (cont’d) * Investment Boston Industrial Birmingham Multifamily Denver Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date 03/2022 11/2021 02/2022 323 Unit Garden Collateral 586,590 SF Industrial Property 194,575 SF Office
Slide 25: Overview of Risk-Rated "5" Loans at March 31, 2023
Overview of Risk-Rated “5” Loans at March 31, 2023 • As of March 31, 2023, the Company had five collateral-dependent loans that were risk-rated “5” with an aggregate principal balance of $274.8 million, for which the Company recorded an allowance for credit losses of $67.5 million. • Actively pursui
Slide 26: Financial Highlights and Capitalization
Financial Highlights and Capitalization
Slide 27: Q2 2023 Business Update
Q2 2023 Business Update ▪ Through May 22, 2023, the Company funded approx. $6.4 million in prior commitments and realized approx. $75.3 million in loan repayments, and paydowns. PORTFOLIO ▪ In May 2023, the Company acquired 100% ownership in an approximately 256K square foot office property ACTIVITY
Slide 28: First Quarter 2023 Results
First Quarter 2023 Results ▪ GAAP net (loss)* of $(37.5) million, or $(0.72) per basic share, inclusive of a $(46.4) million, or $(0.89) per basic share, provision for credit losses. FINANCIAL ▪ Distributable Earnings** of $10.7 million, or $0.20 per basic share. SUMMARY ▪ Book value per common shar
Slide 29: Prudent and Proactive Balance Sheet Management
Prudent and Proactive Balance Sheet Management GPMT MAINTAINS A CONSERVATIVE FINANCIAL POLICY ✓ Generally, seek to match fund assets and liabilities to minimize interest-rate risk and duration ✓ Proven access to diverse sources of public and private equity and debt capital at the corporate and asset
Slide 30: Overview of Funding Sources Over Time
Overview of Funding Sources Over Time CONSERVATIVE MANAGEMENT OF BROADLY DIVERSIFIED FUNDING SOURCES FOCUSED ON NON-MARK-TO- MARKET LIABILITIES • Balance sheet management strategy emphasizes maintaining access to various sources of secured and unsecured funding while focusing on matching the term of
Slide 31: Diversified Capital Sources
Diversified Capital Sources WELL-DIVERSIFIED CAPITALIZATION PROFILE WITH MODERATE LEVERAGE FINANCING SUMMARY AS OF MARCH 31, 2023 LEVERAGE* Total Outstanding Wtd. Avg Advance Non- 3.0x 2.5x ($ IN MILLIONS) Capacity Balance(7) Coupon* Rate MTM* 2.0x Repurchase Facilities(8) $1,875 $1,184 S + 2.57% 69
Slide 32: Endnotes
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Slide 33: Endnotes
Endnotes 1) Mixed-use properties represented based on allocated loan amounts. 2) Max remaining term assumes all extension options are exercised and excludes four loans that have passed its maturity date and are not eligible for extension, if applicable. 3) Loan was placed on nonaccrual status as of
Slide 34: Appendix
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Slide 35: First Quarter 2023 Financial Summary
First Quarter 2023 Financial Summary SUMMARY INCOME STATEMENT SUMMARY BALANCE SHEET ($ IN MILLIONS, EXCEPT PER SHARE DATA) ($ IN MILLIONS, EXCEPT PER SHARE DATA, REFLECTS CARRYING VALUES) Net Interest Income $22.9 Cash $223.4 (Provision) for Credit Losses $(46.4) Loans Held-for-Investment, net $3,18
Slide 36: Key Drivers of First Quarter 2023 Earnings and Book Value Per Share
Key Drivers of First Quarter 2023 Earnings and Book Value Per Share • GAAP Net (Loss)* of $(37.5) million, or $(0.72) per basic share, inclusive of a $(46.4) million, or $(0.89) per basic share, of provision for credit losses. • Distributable Earnings** of $10.7 million, or $0.20 per basic share. •
Slide 37: Sensitivity to Short-term Interest Rates
Sensitivity to Short-term Interest Rates • Portfolio is over 98% floating rate. • Well positioned for further increases in short-term benchmark interest rates. QTR. NET INTEREST INCOME PER SHARE SENSITIVITY TO WEIGHTED AVERAGE LIBOR/SOFR FLOOR BY LOAN VINTAGE CHANGES IN 1-MO. U.S. LIBOR/SOFR AS OF M
Slide 38: Reconciliation of GAAP Net (Loss) Income to Distributable Earnings
Reconciliation of GAAP Net (Loss) Income to Distributable Earnings * ($ IN MILLIONS, EXCEPT PER SHARE DATA) (UNAUDITED) Q2 2022 Q3 2022 Q4 2022 Q1 2023 GAAP Net (loss) Income* $(17.4) $(29.1) $(9.9) $(37.5) Adjustments: Provision (Benefit from) for Credit Losses $13.6 $35.4 $16.5 $46.4 Loss (Gain) o
Slide 39: Financial Statements Impact of CECL Reserves
Financial Statements Impact of CECL Reserves • Total allowance for credit losses of $133.0 million, of which $4.5 million is related to future funding obligations and recorded in other liabilities. • Loans reported on the balance sheet are net of the allowance for credit losses. ($ in thousands) Q1
Slide 40: Summary of Investment Portfolio
Summary of Investment Portfolio Maximum Original Loan Principal Carrying Cash All-in Yield at Term Stabilized ($ IN MILLIONS) Commitment Balance Value Coupon* Origination* (Years)* Initial LTV* LTV* Senior Loans* $3,511.6 $3,307.1 $3,169.2 L +/S + 3.67% L +/S + 4.04% 3.1 66.5% 63.0% Subordinated Loa
Slide 41: Investment Portfolio Detail
Investment Portfolio Detail All-in Origination Maximum Loan Principal Carrying Cash Yield at Original Term Property ($ IN MILLIONS) Type* Date Commitment Balance Value Coupon* Origination* (Years)* State Type Initial LTV* Stabilized LTV* Asset 1 Senior 12/19 $111.1 $109.2 $109.0 L + 2.75% L + 3.23%
Slide 42: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets GRANITE POINT MORTGAGE TRUST INC. March 31, December 31, CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) 2023 2022 ASSETS (unaudited) Loans held-for-investment $ 3,310,830 $ 3,350,150 Allowance for credit losses (128,451) (82,335) Loans h
Slide 43: Condensed Consolidated Statements of Comprehensive Income (Loss)
Condensed Consolidated Statements of Comprehensive Income (Loss) GRANITE POINT MORTGAGE TRUST INC. Three Months Ended CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME March 31, (in thousands, except share data) 2023 2022 Interest income: (unaudited) (unaudited) Loans held-for-investm
Slide 44: Distributable Earnings
Distributable Earnings ▪ Beginning with our Annual Report on Form 10-K for the year ended December 31, 2022, and for all subsequent reporting periods ending on or after December 31, 2022, we have elected to present Distributable Earnings, a measure that is not prepared in accordance with GAAP, as a
Slide 45: Distributable Earnings (cont'd)
Distributable Earnings (cont’d) ▪ While Distributable Earnings excludes the impact of the unrealized non-cash current provision for credit losses, we expect to only recognize such potential credit losses in Distributable Earnings if and when such amounts are deemed non-recoverable. This is generally
Slide 46: Other Definitions
Other Definitions ▪ Provided for illustrative purposes only. Calculations of all-in yield at origination are based on a number of assumptions (some or all of Weighted which may not occur) and are expressed as monthly equivalent yields that include net origination fees and exit fees and exclude Avera
Slide 47: Other Definitions (cont'd)
Other Definitions (cont’d) ▪ The fully funded loan amount (plus any financing that is pari passu with or senior to such loan), including all contractually provided for future fundings, divided by the as stabilized value (as determined in conformance with USPAP) set forth in the original appraisal. A
Slide 48: Company Information
Company Information Granite Point Mortgage Trust Inc. is an internally-managed real estate finance company that focuses primarily on directly originating, investing in and managing senior floating rate commercial mortgage loans and other debt and debt-like commercial real estate investments. Granite
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