Granite Point Mortgage Trust Inc. · NYSE:GPMT
Granite Point Mortgage Trust — Investor Presentation (September 2023)
48 slides from Granite Point Mortgage Trust's investor presentation, Sep 8, 2023
Slide 1: Investor Presentation September 2023
Investor Presentation September 2023
Slide 2: 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 actual results may diffe
Slide 3: Cautionary Statement Regarding Endnotes
3 Cautionary Statement Regarding Endnotes You are encouraged to carefully read the endnotes that are a part of this presentation and start on slide 32 hereto. The endnotes include important information, including details regarding the assumptions we utilize to prepare the illustrative examples conta
Slide 4: Company Overview
Company Overview
Slide 5: 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 capital while generating
Slide 6: Strategy, Portfolio and Balance Sheet Overview
CLOs Repurchase Facilities Senior Convertible Notes Other Non-MTM Asset Specific Office, 41.8% Multifamily, 30.9% Retail, 9.3% Hotel, 8.7% Industrial, 6.4% Other, 2.9% • Originate and manage high-quality floating-rate first mortgage loans on transitional U.S. commercial real estate. • Long-term, fun
Slide 7: Investment Highlights
Investment Highlights 7 EXPERIENCED AND CYCLE-TESTED SENIOR CRE TEAM ▪ Each senior investment team member has over 20 years of experience in the commercial real estate debt markets, including extensive backgrounds in investment management and structured finance. ▪ Broad and long-standing direct rela
Slide 8: Experienced and Cycle-Tested Senior Leadership
Experienced and Cycle-Tested Senior Leadership 8 JACK TAYLOR 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; and Five Mile Ca
Slide 9: Seasoned and Cohesive Team with Top-Tier Multidisciplinary Expertise
Seasoned and Cohesive Team with Top-Tier Multidisciplinary Expertise 9 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 th
Slide 10: Investment Strategy and Origination Platform
Investment Strategy and Origination Platform
Slide 11: Investment Strategy Targeting Senior Loans
$100 million GPMT Senior Loan $65 million 100% 65% 48.75% GPMT Equity Investment $16.25 million Financing Facility Advance $48.75 million Borrower’s Equity $35 million LTV Investment Strategy Targeting Senior Loans 11 I L LU STR AT I VE P RO P E RT Y C A P I TAL ST RU C T UR E FLOATING RATE FIRST MO
Slide 12: Target Investments and Portfolio Construction
* See definition in the appendix Target Investments and Portfolio Construction 12 KEY TENETS OF STRATEGY PORTFOLIO CONSTRUCTION ✓ Long-term, fundamental, value-driven philosophy avoiding “sector bets” and “momentum investments” ✓ Emphasize durable and identifiable cash flow rather than sale value of
Slide 13: Diversified Investment Portfolio with Scale
Diversified Investment Portfolio with Scale 13 • Diversification is a key tenet of our investment strategy • Search for relative value nationwide as we construct our portfolio • Approximately 75% of our portfolio is secured by properties located in the largest 25 markets, offering compelling lending
Slide 14: Origination Relationships, Process and Results
Relationships •Directly sourcing a large volume of investment opportunities through established relationships, high-integrity reputation and extensive market knowledge and experience •Originating loans often involves multiple counterparties, including both operators and mortgage brokers, and establi
Slide 15: Rigorous and Highly Selective Investment Process
Rigorous and Highly Selective Investment Process 15 Billions of dollars of investment opportunities annually are sourced and reviewed. For every 100 transactions we source and review, on average, we do a deeper review on approximately 25% of them … … and historically, we close and fund 2-3% of the o
Slide 16: Credit Culture Based on Key Principles
Credit Culture Based on Key Principles 16 • Portfolio construction on a loan-by-loan basis with each investment standing on its own merits and adhering to our overall credit culture • Significant amount of resources are committed upfront to ensure comprehensive underwriting and structuring • Team or
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 17 Sourcing Underwriting Closing Financing Ongoing Asset Management • Broad industry relationships with a variety of market participan
Slide 18: Coordinated and Comprehensive Approach to Asset Management
Coordinated and Comprehensive Approach to Asset Management 18 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, leas
Slide 19: Portfolio Overview
Portfolio Overview
Slide 20: Investment Portfolio Diversification
Northeast, 37.6% West, 19.8% Southwest, 18.8% Southeast, 18.7% Midwest, 6.1% Total Portfolio: $1.8 billion Average Loan Balance: ~$42.8 million Senior Loans: 89.6% Office, 50.8% Multifamily, 17.1% Retail, 15.9% Industrial, 9.3% Hotel, 6.9% Investment Portfolio Diversification 20 At IPO June 30, 2023
Slide 21: Loan Portfolio Overview as of June 30, 2023
Office, 41.8% Multifamily, 30.9% Retail, 9.3% Hotel, 8.7% Industrial, 6.4% Other, 2.9% Loan Portfolio Overview as of June 30, 2023 21 PROPERTY TYPE(1) REGION *See definition in the appendix. **See definition in the appendix. Includes nonaccrual loans. KEY PORTFOLIO STATISTICS Outstanding Principal B
Slide 22: Loan Portfolio Credit Overview
5.1% 49.6% 25.7% 11.7% 7.9% 1 2 3 4 5 Loan Portfolio Credit Overview 22 GENERAL AND SPECIFIC CECL RESERVE BY QTR.* CECL RESERVE AS % OF COMMITMENTS BY QTR. STABILIZED LTV** RISK RATINGS *$ in millions. **See definition in the appendix. • Weighted average portfolio risk rating of 2.7 as of June 30, 2
Slide 23: 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 Collateral 918 Unit Garden Style Multifamily Property 461,541 SF Office Portfolio 161 Key Full-Service Hotel
Slide 24: Select Case Studies (cont'd)
Investment Boston Industrial Birmingham Multifamily Atlanta Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date 03/2022 05/2021 08/2019 Collateral 586,590 SF Industrial Property 408 Unit Garden Style Multifamily Property 114,370 SF Medical O
Slide 25: Overview of Risk-Rated "5" Loans
Overview of Risk-Rated “5” Loans 25 San Diego, CA Office(3) Minneapolis, MN Office(4) Dallas, TX Office(5) Minneapolis, MN Hotel(6) Loan Structure Senior floating-rate Senior floating-rate Senior floating-rate Senior floating-rate Origination Date October 2019 August 2019 May 2017 December 2018 Coll
Slide 26: Financial Highlights and Capitalization
Financial Highlights and Capitalization
Slide 27: Financial Summary and Portfolio Activity
FINANCIAL SUMMARY ▪ GAAP net income* of $1.4 million, or $0.03 per basic share, inclusive of a $(5.8) million, or $(0.11) per basic share, provision for credit losses. ▪ Pre-loss Distributable Earnings of $10.2 million, or $0.20 per basic share. Distributable Earnings** of $6.0 million, or $0.12 per
Slide 28: Prudent and Proactive Balance Sheet Management
Prudent and Proactive Balance Sheet Management 28 GPMT MAINTAINS A CONSERVATIVE FINANCIAL POLICY ✓ Generally, seek to match fund assets and liabilities to minimize interest-rate risk and duration ✓ Proven access to diverse sources of public and private equity and debt capital at the corporate and as
Slide 29: Overview of Funding Sources Over Time
Overview of Funding Sources Over Time 29 CONSERVATIVE MANAGEMENT OF BROADLY DIVERSIFIED FUNDING SOURCES FOCUSED ON NON-MARK-TO- MARKET LIABILITIES • Balance sheet management strategy emphasizes maintaining access to various sources of secured and unsecured funding while focusing on matching the term
Slide 30: Funding Mix and Capitalization Highlights
CLOs Repurchase Facilities Senior Convertible Notes Other Non-MTM Asset Specific Funding Mix and Capitalization Highlights 30* See definition in the appendix. FINANCING SUMMARY AS OF JUNE 30, 2023 ($ IN MILLIONS) Total Capacity Outstanding Balance(7) Wtd. Avg Coupon* Advance Rate Non- MTM* Repurchas
Slide 31: Endnotes
Endnotes
Slide 32: Endnotes
Endnotes 32 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
Slide 33: Appendix
Appendix
Slide 34: Second Quarter 2023 Financial Summary
SUMMARY INCOME STATEMENT ($ IN MILLIONS, EXCEPT PER SHARE DATA) Net Interest Income $21.8 (Provision) for Credit Losses $(5.8) Revenue / (Expenses) from REO Operations, net $(1.2) Operating Expenses $(9.7) Dividends on Preferred Stock $(3.6) (Provision) for Income Taxes $(0.1) GAAP Net Income* $1.4
Slide 35: Key Drivers of Q2 2023 Earnings and Book Value Per Share
$14.08 $13.93 $0.27 $(0.11) $(0.07) $(0.20) $(0.04) $12.00 $13.00 $14.00 $15.00 3/31/2023 Pre-Provision Earnings (Provision for) Credit Losses Series A Preferred Dividend Declaration Common Stock Dividend Declaration Equity Compensation 6/30/2023 Key Drivers of Q2 2023 Earnings and Book Value Per Sh
Slide 36: Sensitivity to Short-term Interest Rates
13.7% 13.8% 34.8% 4.5% 19.0% 14.2% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% Pre-2018 2018 2019 2020 2021 2022 % o f P o rt fo li o 1 -M o n th U .S . S O F R % of Floating Rate Loan Portfolio Wtd. Avg. SOFR Floor by Loan Vintage Wtd. Avg.
Slide 37: Reconciliation of GAAP Net (Loss) Income to Distributable Earnings
Reconciliation of GAAP Net (Loss) Income to Distributable Earnings* 37 ($ IN MILLIONS, EXCEPT PER SHARE DATA) (UNAUDITED) Q3 2022 Q4 2022 Q1 2023 Q2 2023 GAAP Net (loss) Income* $(29.1) $(9.9) $(37.5) $1.4 Adjustments: Provision (Benefit from) for Credit Losses $35.4 $16.5 $46.4 $5.8 Loss (Gain) on
Slide 38: Financial Statements Impact of CECL Reserves
($ in thousands) At 9/30/22 At 12/31/22 At 3/31/23 At 6/30/23 ASSETS Loans Held-for-Investment $3,603,016 $3,350,150 $3,310,830 $3,096,500 Allowance for credit losses $(82,611) $(82,335) $(128,451) $(130,412) Carrying Value $3,520,405 $3,267,815 $3,182,379 $2,966,088 LIABILITIES Other liabilities im
Slide 39: Summary of Investment Portfolio
Summary of Investment Portfolio 39 ($ IN MILLIONS) Maximum Loan Commitment Principal Balance Carrying Value Cash Coupon* All-in Yield at Origination* Original Term (Years)* Initial LTV* Stabilized LTV* Senior Loans* $3,263.7 $3,091.7 $2,952.9 S + 3.76% S + 4.03% 3.1 66.2% 63.1% Subordinated Loans $1
Slide 40: Investment Portfolio
Investment Portfolio 40 ($ IN MILLIONS) Type* Origination Date Maximum Loan Commitment Principal Balance Carrying Value Cash Coupon* All-in Yield at Origination* Original Term (Years)* State Property Type Initial LTV* Stabilized LTV* Asset 1 Senior 12/19 $111.1 $109.2 $109.1 S + 2.80% S + 3.23% 3.0
Slide 41: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets 41 GRANITE POINT MORTGAGE TRUST INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) June 30, 2023 December 31, 2022 ASSETS (unaudited) Loans held-for-investment $ 3,096,500 $ 3,350,150 Allowance for credit losses (130,412) (82,335) Loans
Slide 42: Condensed Consolidated Statements of Comprehensive Income (Loss)
Condensed Consolidated Statements of Comprehensive Income (Loss) 42 GRANITE POINT MORTGAGE TRUST INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands, except share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Interest income: (unaudit
Slide 43: Distributable Earnings Definition
▪ 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 supplemental method of
Slide 44: Distributable Earnings and Credit Losses Definition
▪ 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 at the time a loan is repaid, o
Slide 45: Other Definitions
Other Definitions 45 Realized Loan Portfolio Yield ▪ Provided for illustrative purposes only. Calculations of realized loan portfolio yield are based on a number of assumptions (some or all of which may not occur) and are expressed as monthly equivalent yields that include net origination fees and e
Slide 46: Other Definitions (cont'd)
Other Definitions (cont’d) 46 Stabilized LTV ▪ 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 ori
Slide 47: Company Information
Company Information 47 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. Gran
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