Granite Point Mortgage Trust Inc. · NYSE:GPMT
Granite Point Mortgage Trust — Investor Presentation (May 2022)
55 slides from Granite Point Mortgage Trust's investor presentation, May 25, 2022
Slide 1: May 2022 Investor Presentation
May 2022Investor Presentation
Slide 2: Forward-looking statements
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 38 hereto. The endnotes include important information, including details regarding the assumptions we utilize to prepare the illustrative examples conta
Slide 4: Company Overview
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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: Balance Sheet and Strategy Overview
CLOs Repurchase Facilities Senior Convertible Notes Term Loan Term Financing Facility Asset Specific Office, 44.6% Multifamily, 27.6% Hotel, 12.4% Retail, 9.2% Industrial, 4.8% Other, 1.4% • Originate high quality floating-rate first mortgage loans on transitional U.S. commercial real estate. • Long
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: Recent Accomplishments Have the Ability to Meaningfully Improve Run-Rate Earnings
10 Recent Accomplishments Have the Ability to Meaningfully Improve Run-Rate Earnings OVER THE LAST FEW QUARTERS WE HAVE CONTINUED TO EXECUTE ON OUR STRATEGIC PRIORITIES, WHICH HAVE REPOSITIONED OUR BALANCE SHEET WITH THE GOAL OF IMPROVING OUR RUN-RATE EARNINGS(1) AND DIVIDENDS OVER TIME(2) ✓Resolved
Slide 11: Benefits of Our Actions Not Yet Fully Reflected in Financial Results
The Benefits of Our Actions Have Not Yet Been Fully Reflected in Our Financial Results (5) 11 Illustrative Estimated Impact on Quarterly Run-Rate Net Interest Income Per Share(6) Potential benefit from current investment pipeline (loans closing post-Q1 2022) ~$0.02 Potential cost of funds on proceed
Slide 12: Illustrative Sensitivity of Quarterly Net Interest Income Per Share
$(0.03) $(0.06) $(0.07) $(0.05) $(0.02) $0.03 $0.00 $(0.01) $0.01 $0.03 0.50% 1.00% 1.50% 2.00% 2.50% Illustrative Estimated Impact of Changes in Short-Term Interest Rates on Quarterly Net Interest Income Per Share Illustrative Potential Net Impact of Recent Actions on Quarterly Run-Rate Net Interes
Slide 13: Further Actions May Generate Additional Benefits
13 Further Actions May Generate Additional Benefits KEY PRIORITIES AND GOALS(10) • Resolving the one remaining nonaccrual loan and redeploying the capital invested in it into earning-assets can generate incremental run-rate profitability. – We are actively working to resolve our one remaining nonacc
Slide 14: Potential Attractive Total Return
ILLUSTRATIVE EXAMPLE WITH POTENTIAL TOTAL RETURN OF 68%(12) Potential Attractive Total Return (11) 14 • Our overall objective is to deliver attractive risk-adjusted total returns to our stockholders by generating an attractive dividend income stream while preserving our investors’ capital over time.
Slide 15: Investment Strategy and Origination Platform
Investment Strategy and Origination Platform
Slide 16: 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 16 I LLUSTR AT IVE PROPE RT Y CAP ITAL STRUCTUR E FLOATING RATE FIRST MORTGAGE LOANS
Slide 17: Target Investments and Portfolio Construction
* See definition in the appendix Target Investments and Portfolio Construction 17 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 18: High-quality Diversified Portfolio with Scale
High-quality Diversified Portfolio with Scale 18 • 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 lendi
Slide 19: Direct Origination Platform: Relationships, Process, 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 20: Rigorous and Highly Selective Investment Process
Rigorous and Highly Selective Investment Process 20 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 21: Credit Culture Based on Key Principles
Credit Culture Based on Key Principles 21 • 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 22: 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 22 Sourcing Underwriting Closing Financing Ongoing Asset Management • Broad industry relationships with a variety of market participan
Slide 23: Coordinated and Comprehensive Approach to Asset Management
Coordinated and Comprehensive Approach to Asset Management 23 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 24: Portfolio Overview
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Slide 25: Track Record of Investment Portfolio Expansion and 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% Track Record of Investment Portfolio Expansion and Diversifi
Slide 26: First Quarter 2022 Portfolio Activity
$3,797 $3,797 $- $1,000 $2,000 $3,000 $4,000 $5,000 12/31/2021 1Q22 Fundings & Deferrals 1Q22 Prepayments, Amortization & Loan Sale 3/31/2022 $ I n M il li o n s Q1 2022 PORTFOLIO ACTIVITY(14) First Quarter 2022 Portfolio Activity 26 * See definition in the appendix. ** See definition of “All-in Yie
Slide 27: Investment Portfolio as of March 31, 2022
9.0% 56.5% 17.4% 14.1% 3.0% 1 2 3 4 5 Investment Portfolio as of March 31, 2022 27 PROPERTY TYPE(13) GEOGRAPHY STABILIZED LTV* RISK RATINGS * See definition in the appendix. KEY PORTFOLIO STATISTICS Outstanding Principal Balance $3.8 billion Total Loan Commitments $4.2 billion Number of Investments
Slide 28: Select Case Studies
Investment Boston Industrial Arkansas Multifamily Atlanta Industrial Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date 03/2022 10/2021 10/2021 Collateral 586,590 SF Industrial Property 264 Unit Garden Style Multifamily Property 618,301 SF Industr
Slide 29: Select Case Studies
Investment Denver Office Pittsburgh Mixed Use Birmingham Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date 02/2022 11/2021 11/2021 Collateral 194,575 SF Office Building 258,385 SF Mixed-use Property 323 Unit Garden Style Multifamily P
Slide 30: Portfolio Developments and Watch List Loans
Portfolio Developments and “Watch List” Loans 30 Pasadena, CA Retail(17) Louisville, KY Student Housing Loan Structure Senior floating-rate Senior floating-rate Origination Date July 2018 August 2017 Collateral Property 463k square foot retail center 271-unit student housing community Total Commitme
Slide 31: Financial Highlights and Capitalization
Financial Highlights and Capitalization
Slide 32: Prudent and Proactive Balance Sheet Management
Prudent and Proactive Balance Sheet Management 32 GPMT MAINTAINS A CONSERVATIVE FINANCIAL POLICY ✓ Match funding of assets and liabilities to minimize interest-rate risk and maturities ✓ Proven access to diverse sources of public and private debt and equity capital ✓ Emphasis on liability management
Slide 33: Diversification of Funding Sources Over Time
Diversification of Funding Sources Over Time 33 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 t
Slide 34: First Quarter 2022 Financial Summary
FINANCIAL SUMMARY ▪ GAAP earnings* of $1.0 million, or $0.02 per basic share, inclusive of $(5.8) million, or $(0.11) per basic share, charge on early extinguishment of debt and $(3.7) million, or $(0.07) per basic share, provision for credit losses. ▪ Distributable Earnings** before write-off of $1
Slide 35: Diversified Capital Sources
CLOs Repurchase Facilities Senior Convertible Notes Term Loan Term Financing Facility Asset Specific Diversified Capital Sources 35* See definition in the appendix. FINANCING SUMMARY AS OF MARCH 31, 2022 ($ IN MILLIONS) Total Capacity Outstanding Balance(19) Wtd. Avg Coupon* Advance Rate Non- MTM* R
Slide 36: Portfolio Credit Quality, Activity and Capitalization
PORTFOLIO CREDIT QUALITY ▪ Defensively positioned and broadly diversified portfolio of 100% CRE loans (over 99% senior first mortgages) with weighted average stabilized LTV of 63.2%*. ▪ Strong collections of interest through April 2022, with 100% of borrowers making their contractual payments in acc
Slide 37: Endnotes
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Slide 38: Endnotes
Endnotes 38 1) Run-rate earnings defined as Distributable Earnings, as defined in the appendix and the Company’s SEC filings, excluding any realized losses and other one- time charges. Please see a reconciliation of Distributable Earnings to GAAP net income in the appendix. 2) As a result of the ext
Slide 39: Endnotes (cont'd)
Endnotes (cont’d) 39 11) For illustrative purposes only and should not be relied on as a guaranty of performance or financial guidance. This slide contains specific assumptions regarding performance. There can be no assurance the Company will perform as discussed. GPMT can provide no assurance regar
Slide 40: Appendix
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Slide 41: First Quarter 2022 Financial Summary
SUMMARY INCOME STATEMENT ($ IN MILLIONS, EXCEPT PER SHARE DATA) Net Interest Income $23.5 (Provision for) Credit Losses $(3.7) Loss on Early Extinguishment of Debt $(5.8) Fee Income $0.5 Operating Expenses $(9.9) Dividends on Preferred Stock $(3.6) GAAP Net Income* $1.0 Basic Wtd. Avg. Common Shares
Slide 42: Key Drivers of First Quarter 2022 Earnings and Book Value Per Share
$16.70 $16.39 $0.29 $(0.07) $(0.11) $(0.07) $(0.25) $(0.06) $(0.04) $14.50 $15.00 $15.50 $16.00 $16.50 $17.00 $17.50 12/31/2021 Pre-Provision, Pre- Loss Earnings (Provision for) Credit Losses Loss on Early Extinguishment of Debt Series A Preferred Dividend Declaration Common Stock Dividend Declarati
Slide 43: Distribution and Migration of LIBOR/SOFR Floors
5.1% 2.7% 8.8% 21.6% 36.4% 4.2% 17.7% 3.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 2015 2016 2017 2018 2019 2020 2021 2022 % o f P o rt fo li o 1 -M o n th U .S . L IB O R / S O F R % of Floating Rate Loan Portfolio Wtd. Avg. LIBOR/SOFR Floor by L
Slide 44: Reconciliation of GAAP Net Income to Distributable Earnings
Reconciliation of GAAP Net Income to Distributable Earnings* 44 ($ IN MILLIONS, EXCEPT PER SHARE DATA) (UNAUDITED) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 GAAP Net Income* $1.0 $6.7 $18.6 $14.2 $28.0 Adjustments: Provision (Benefit from) for Credit Losses $3.7 $(5.0) $(5.8) $(0.2) $(9.1) Loss on Ext
Slide 45: Financial Statements Impact of CECL Reserves
($ in thousands) At 3/31/21 At 6/30/21 At 9/30/21 At 12/31/21 At 3/31/22 ASSETS Loans and securities $3,859,269 $3,635,315 $3,659,691 $3,782,205 $3,784,624 Allowance for credit losses $(59,433) $(57,671) $(45,480) $(40,897) $(34,154) Carrying Value $3,799,836 $3,577,644 $3,614,211 $3,741,308 3,750,4
Slide 46: Summary of Investment Portfolio
Summary of Investment Portfolio 46 ($ 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* $4,155.0 $3,782.7 $3,737.3 L/S + 3.48% L/S+ 4.06% 3.1 66.2% 63.3% Subordinated Loans
Slide 47: Investment Portfolio Detail
Investment Portfolio Detail 47 ($ 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 12/15 120.0 120.0 118.7 L + 4.15% L + 4.43%
Slide 48: Condensed Balance Sheets
Condensed Balance Sheets 48 GRANITE POINT MORTGAGE TRUST INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) March 31, 2022 December 31, 2021 ASSETS (unaudited) Loans held-for-investment $ 3,784,624 $ 3,782,205 Allowance for credit losses (34,154) (40,897) Loans held-for-inv
Slide 49: Condensed Statements of Comprehensive Income (Loss)
Condensed Statements of Comprehensive Income (Loss) 49 GRANITE POINT MORTGAGE TRUST INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands, except share data) Three Months Ended March 31, 2022 2021 Interest income: (unaudited) (unaudited) Loans held-for-investment $ 47,2
Slide 50: Distributable Earnings definition
▪ Beginning with our Annual Report on Form 10-K for the year ended December 31, 2021, and for all subsequent reporting periods ending on or after December 31, 2021, we have elected to present Distributable Earnings, a measure that is not prepared in accordance with GAAP, as a supplemental method of
Slide 51: Distributable Earnings definition (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 at the time a loan is repaid, o
Slide 52: Other Definitions
Other Definitions 52 All-in Yield at Origination ▪ Provided for illustrative purposes only. Calculations of all-in yield at origination 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 exit
Slide 53: Other Definitions (cont'd)
Other Definitions (cont’d) 53 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 54: Company Information
Company Information 54 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
Slide 55: Granite Point Mortgage Trust
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