Granite Point Mortgage Trust Inc. · NYSE:GPMT
Granite Point Mortgage Trust — Q3 2019 Earnings Presentation
28 slides from Granite Point Mortgage Trust's earnings presentation, Nov 13, 2019
Slide 1: Investor Presentation Third Quarter 2019
Investor Presentation Third Quarter 2019
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains, in addition to historical information, certain forward-looking statements that are based on our current assumptions, expectations and projections about future performance and events. In particular, statements regarding future economic performance, fi
Slide 3: Company Overview
Company Overview(1) • A commercial real estate finance company established in early 2015, initially part of Two Harbors Investment Corp. (NYSE: TWO), spun out in June 2017 with a concurrent IPO • Senior CRE leadership team with decades of lending experience across economic, credit and interest rate
Slide 4: Granite Point Investment Highlights
Granite Point Investment Highlights EXPERIENCED AND . Each senior CRE team member has over 20 years of experience in the commercial real estate debt CYCLE-TESTED markets. Includes extensive background in investment management and structured finance SENIOR CRE TEAM . Broad and long-standing direct re
Slide 5: Commercial Real Estate Market Overview
Commercial Real Estate Market Overview
Slide 6: Market Environment
Market Environment DEMAND FOR COMMERCIAL REAL ESTATE LOANS REMAINS HIGH… Over $1.5 trillion of loans maturing over the next several Sale transaction volume has recovered and remains strong (1) years (2) $500 post-global economic crisis $600 $400 $300 $500 U.S. Investors $200 $ in billions $100 $400
Slide 7: Market Environment (Cont'd)
Market Environment (Cont’d) …AND MARKET FUNDAMENTALS REMAIN STRONG Capitalization rates remain favorable versus historical Historically low level of new construction over past several averages(1) years has constrained supply of properties(3) 2.30% 11% 800 700 9% 2.15% 600 7% 500 2.00% 5% 400 1.85% 3
Slide 8: Investment Strategy and Origination Platform
Investment Strategy and Origination Platform
Slide 9: Investment Philosophy
Investment Philosophy OUR TEAM HAS DEVELOPED A SUCCESSFUL INVESTMENT PHILOSOPHY THAT HAS BEEN TESTED THROUGH SEVERAL ECONOMIC, INTEREST RATE AND REAL ESTATE CYCLES • Long-term, fundamental, value-driven investing philosophy; focus on relative value • Emphasize selectivity and diversification • Prior
Slide 10: Investing in Primary & Secondary Markets
Investing in Primary & Secondary Markets(1) PRIMARY AND SECONDARY MARKETS CONTINUE TO OFFER ATTRACTIVE INVESTMENT CHARACTERISTICS ALIGNED WITH OUR INVESTMENT THESIS • We target the top 25 and, generally, up to the top 50 MSAs, searching for value nationwide • We actively participate in the top 5 mar
Slide 11: Investment Strategy Overview
Investment Strategy Overview INVESTMENT STRATEGY PRIMARY VS SECONDARY MARKETS • Focus on generating stable and attractive • Active lender in both the primary and secondary earnings while maintaining a conservative risk markets profile • Direct origination of senior loans funding: • Property acquisit
Slide 12: Target Investments
Target Investments PRIMARY TARGET INVESTMENTS • Floating rate senior loans secured by income-producing U.S. commercial real estate • Loans of $25 million to $150 million (averaging $35-40 million) • Institutional-quality properties located in the primary and secondary markets • Secured by major prop
Slide 13: Investment Strategy Targeting Senior Loans
Investment Strategy Targeting Senior Loans SENIOR FLOATING RATE LOANS PROVIDE EXPOSURE TO COMMERCIAL REAL ESTATE SECTOR THROUGH A DE-RISKED POSITION WITHIN A PROPERTY'S CAPITAL STRUCTURE • Our senior loans are senior to our borrower’s ILLUSTRATIVE PROPERTY CAPITAL STRUCTURE significant equity invest
Slide 14: Origination Platform Overview
Origination Platform Overview OUR ORIGINATION APPROACH PRODUCES A LARGE UNIVERSE OF OPPORTUNITIES FROM WHICH WE CAN SELECT THE MOST ATTRACTIVE INVESTMENTS FOR OUR PORTFOLIO RELATIONSHIPS PORTFOLIO GROWTH OVER TIME(1) • Extensive and longstanding direct relationships with a $4,500 wide array of priva
Slide 15: 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 16: Portfolio Overview
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Slide 17: Investment Portfolio as of September 30, 2019
Investment Portfolio as of September 30, 2019 KEY PORTFOLIO STATISTICS PROPERTY TYPE(1) GEOGRAPHY Industrial, Other, Southeast, Outstanding 6.8% 0.9% 12.7% $3,988.2m Retail, Principal Balance 9.5% Northeast, Office, 31.2% Total Loan 43.6% Midwest, $4,655.2m Hotel, 14.7% Commitments 14.9% West, 15.9%
Slide 18: Sensitivity to 1-Month U.S. LIBOR
Sensitivity to 1-Month U.S. LIBOR ANNUAL NET INTEREST INCOME PER SHARE SENSITIVITY WEIGHTED AVERAGE LIBOR FLOOR BY LOAN VINTAGE TO CHANGES IN 1-MONTH U.S. LIBOR(1) 2.50% 35.0% 31.2% 30.0% 27.7% 2.00% 23.6% 25.0% $0.17 $0.12 $0.13 1.50% 20.0% $0.08 $0.05 $0.04 % % Portfolio of Month Month LIBOR U.S.
Slide 19: Case Studies
Case Studies(1) • $44 million floating rate, first • $54 million floating rate, first • $80 million floating rate, first mortgage loan secured by a mortgage loan secured by three mortgage loan secured by a newly- 34,900 SF mixed use (primarily Class A office buildings in Quantico, built, 357-unit Cl
Slide 20: Financial Highlights
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Slide 21: Third Quarter 2019 Earnings Summary
Third Quarter 2019 Earnings Summary SUMMARY INCOME STATEMENT GAAP NET INCOME TO CORE EARNINGS ($ IN MILLIONS, EXCEPT PER SHARE DATA) RECONCILIATION(1) ($ IN MILLIONS, EXCEPT PER SHARE DATA) Net Interest Income $27.1 GAAP Net Income $17.4 Other Income $- Adjustments: Operating Expenses ($9.7) Non-Cas
Slide 22: Financing & Liquidity as of September 30, 2019
Financing & Liquidity as of September 30, 2019 SUMMARY BALANCE SHEET FINANCING SUMMARY ($ IN MILLIONS, EXCEPT PER SHARE DATA) ($ IN MILLIONS) Total Outstanding Wtd. Avg Cash $137.4 Capacity Balance Coupon Repurchase $2,371.7(2) $1,724.9 L+2.03%(3) Investment Portfolio $3,959.5 Agreements(1) Asset-Sp
Slide 23: Summary of Investment Portfolio
Summary of Investment Portfolio Original Maximum Loan Principal Carrying Cash All-in Yield at Maturity Stabilized ($ in millions) Commitment Balance Value Coupon(1) Origination(2) (Years) Initial LTV(4) LTV(5) Senior Loans $4,594.5 $3,927.5 $3,898.8 L + 3.67% L + 4.36% 3.2 66.1% 63.7% Subordinated L
Slide 24: Diversified Capital Sources
Diversified Capital Sources WELL-DIVERSIFIED CAPITALIZATION PROFILE WITH MODERATE LEVERAGE LEVERAGE . Borrowing capacity of $2.5 billion across 6 CREDIT FACILITIES large institutional lenders(1) 4.0x 3.0x 3.0x COLLATERALIZED . GPMT 2018-FL1 – $479.2 million 1.8x LOAN 2.0x (2) . GPMT 2019-FL2 – $653.
Slide 25: Illustrative Senior Whole Loan Economics
Illustrative Senior Whole Loan Economics(1) LEVERED SENIOR WHOLE LOAN • We generally target low double-digit gross asset level returns that are also positively levered to increases in LIBOR L+8.75% • Applying moderate amount of leverage to a senior loan investment generates attractive risk adjusted
Slide 26: Appendix
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Slide 27: Investment Portfolio Detail
Investment Portfolio Detail Maximum All-in Original Origination Loan Principal Carrying Cash Yield at Maturity Property Stabilized ($ in millions) Type Date Commitment Balance Value Coupon(1) Origination(2) (Years) State Type Initial LTV(4) LTV(5) Asset 1 Senior 07/18 $144.2 $113.7 $113.0 L + 3.34%
Slide 28: Granite Point Mortgage Trust
GRANITE POINT. *' MORTGAGE TRUST
Granite Point Mortgage Trust — Q3 2019 Earnings Presentation on 6ix