Granite Point Mortgage Trust Inc. · NYSE:GPMT
Granite Point Mortgage Trust — Q3 2020 Earnings Presentation
32 slides from Granite Point Mortgage Trust's earnings presentation, Nov 12, 2020
Slide 1: Investor Presentation Third Quarter 2020
Investor Presentation Third Quarter 2020
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: 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: Recent highlights: internalization, portfolio credit quality and liquidity
Company Update • On October 10, 2020, entered into an Internalization Agreement with our manager pursuant to which we will internalize our management function effective as of December 31, 2020 ▪ Defensively positioned portfolio comprised of 99% senior first mortgage loans with no exposure to securit
Slide 6: Commercial Real Estate Market Overview
Commercial Real Estate Market Overview
Slide 7: Market Environment
Market Environment PORTFOLIO TURNOVER AND PROPERTY SALES GENERATE HIGH DEMAND FOR L OANS Over $2.0 trillion of loans maturing over the next 5 Sale transaction volume rebounded strongly following the years(1) global economic crisis(2) $500 $700 $400 $300 $600 U.S. Investors $200 Foreign $ in billions
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 SINCE INCEPTION(1) • Extensive and longstanding direct relationships with a wide array of private equit
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
Portfolio Overview PT Aa dll eb 11
Slide 17: Investment Portfolio as of September 30, 2020
Investment Portfolio as of September 30, 2020 • High quality, well-diversified portfolio comprised of 99% senior first mortgage loans with a weighted average stabilized LTV at origination of 63.6%(3) KEY PORTFOLIO STATISTICS PROPERTY TYPE(1) GEOGRAPHY Industrial, Other, Outstanding 6.2% 1.0% $4,072.
Slide 18: Investment Portfolio LIBOR Floors
Investment Portfolio LIBOR Floors WEIGHTED AVERAGE LIBOR FLOOR BY LOAN VINTAGE 3.0% 45.0% 40.3% 40.0% 2.5% 35.0% 30.5% 30.0% 2.0% 25.0% 18.2% 20.0% 1.5% % Portfolio of Month Month U.S. LIBOR - 1 15.0% 10.0% 1.0% 5.1% 5.0% 2.6% 3.3% 0.5% 0.0% 2015 2016(1) 2017 2018 2019 2020 % of Floating Rate Loan P
Slide 19: Case Studies
Case Studies(1) • $102 million floating rate, first • $52 million floating rate, first • $28 million floating rate, first mortgage loan secured by a 918- mortgage loan secured by a mortgage loan secured by a unit garden style apartment 138,914 SF industrial property in 121,386 SF Class B+ office bui
Slide 20: Financial Highlights
Financial Highlights
Slide 21: Third Quarter 2020 Highlights
Third Quarter 2020 Highlights ▪ GAAP net loss of ($24.7) million, or ($0.45) per basic share, inclusive of ($43.7) million, or ($0.79) per basic share, of one-time restructuring charges related to the internalization process(1) FINANCIAL ▪ Core Earnings(2) of $15.0 million, or $0.27 per basic share,
Slide 22: Third Quarter 2020 Earnings Summary
Third Quarter 2020 Earnings Summary SUMMARY INCOME STATEMENT GAAP NET LOSS TO CORE EARNINGS RECONCILIATION(1) ($ IN MILLIONS, EXCEPT PER SHARE DATA) ($ IN MILLIONS, EXCEPT PER SHARE DATA) Net Interest Income $33.8 GAAP Net Loss $(24.7) Realized (loss) on sale of loans held- $(10.0) Adjustments: for-
Slide 23: Financing & Liquidity as of September 30, 2020
Financing & Liquidity as of September 30, 2020 SUMMARY BALANCE SHEET FINANCING SUMMARY ($ IN MILLIONS, EXCEPT PER SHARE DATA) ($ IN MILLIONS) Total Outstanding Wtd. Avg Cash $353.7 Capacity Balance Coupon(4) Repurchase Investment Portfolio, net $3,978.9 $2,354.1(2) $1,850.8 L+2.12% Agreements(1) Rep
Slide 24: Summary of Investment Portfolio
Summary of Investment Portfolio Original Maximum Loan Principal Carrying Cash All-in Yield at Maturity Stabilized ($ in millions) Commitment Balance Value Coupon(1) Origination(2) (Years) Initial LTV(4) LTV(5) Senior Loans $4,642.3 $4,045.9 $3,953.7 L + 3.50% L + 4.16% 3.1 66.1% 63.7% Subordinated L
Slide 25: Diversified Capital Sources
Diversified Capital Sources WELL-DIVERSIFIED CAPITALIZATION PROFILE WITH MODERATE LEVERAGE ▪ Outstanding borrowings of $1.9 billion across LEVERAGE REPURCHASE 5 large institutional lenders 4.0x FACILITIES ▪ Weighted average advance rate of 72.3% 3.2x 3.0x ▪ $928.6 million of fully term-matched, non-
Slide 26: Appendix
Appendix 7 HA He ee EI Eb 111
Slide 27: Third Quarter 2020 Earnings and Book Value
Third Quarter 2020 Earnings and Book Value • GAAP earnings were affected by ($43.7) million, or ($0.79) per basic share, of restructuring charges related to the internalization process and ($10.0) million, or ($0.18) per basic share, of realized loss on loan sales, offset by a reversal of allowance
Slide 28: Impact of Adoption and Implementation of CECL
Impact of Adoption and Implementation of CECL • Overall allowance for credit losses of $80.7 million, of which $7.4 million is related to future funding obligations and recorded in other liabilities, largely reflects an updated macroeconomic forecast that indicates continued impact of the COVID-19 p
Slide 29: Investment Portfolio Detail
Investment Portfolio Detail Maximum All-in Original Origination Loan Principal Carrying Cash Yield at Maturity Property Stabilized ($ in millions) Type Date Commitment Balance Value Coupon(1) Origination(2) (Years) State Type Initial LTV(4) LTV(5) Asset 1 Senior 07/18 $127.4 $110.8 $108.1 L + 3.34%
Slide 30: Condensed Balance Sheets
Condensed Balance Sheets GRANITE POINT MORTGAGE TRUST INC. September 30, December 31, CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) 2020 2019 ASSETS (unaudited) Loans held-for-investment $ 4,052,201 $ 4,226,212 Allowance for credit losses (73,339) — Loans held-for-investmen
Slide 31: Condensed Statements of Comprehensive Income
Condensed Statements of Comprehensive Income GRANITE POINT MORTGAGE TRUST INC. Three Months Ended Nine Months Ended CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME September 30, September 30, (in thousands, except share data) 2020 2019 2020 2019 Interest income: (unaudited) (unaudited) Loa
Slide 32: i jee <aagguit™ = Pe
i jee <aagguit™ = Pe ek fen ee intl le . at! aay , GRANITE POINT, *' MORTGAGE TRUST tal M
Granite Point Mortgage Trust — Q3 2020 Earnings Presentation on 6ix