Granite Point Mortgage Trust Inc. · NYSE:GPMT
Granite Point Mortgage Trust — Investor Presentation (March 2022)
47 slides from Granite Point Mortgage Trust's investor presentation, Mar 2, 2022
Slide 1: March 2022 Investor Presentation
March 2022Investor Presentation
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: Company Overview
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Slide 4: Company Overview
Company Overview(1) • 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 capi
Slide 5: Corporate Snapshot
Corporate Snapshot • Originate high quality floating-rate first mortgage loans on transitional U.S. commercial real estate. • Long-term, fundamental value-oriented philosophy. • Heavy focus on relative value; highly selective and emphasizing broad diversification. • Well-respected lending platform a
Slide 6: Well-Positioned for 2022 and Beyond
Well-Positioned for 2022 and Beyond ✓Recapitalized balance sheet by raising over $200 million of attractively priced preferred equity and grew the permanent capital base to over $1 billion. ✓New capital supports investment portfolio growth, which improves correlation to rising short-term rates. ✓Rep
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 LLUSTR AT IVE PROPE RT Y CAP ITAL STRUCTUR E FLOATING RATE FIRST MORTGAGE LOANS
Slide 12: Target Investments and Portfolio Construction
(1) 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
Slide 13: High-quality Diversified Portfolio with Scale
High-quality Diversified 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 lendi
Slide 14: 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 ORIGINATION APPROACH PRODUCES A LARGE UNIVERSE OF OPPORTUNITIES FROM WHICH THE MOST ATTRACTIVE INVESTMENTS ARE SELECTED FOR OUR PORTFOLIO Billions of dollars of investment opportunities annually are sourced and reviewed. For every 100 transactions
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
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Slide 20: Track Record of Investment Portfolio Expansion and Diversification
Office, 45.5% Multifamily, 28.4% Hotel, 12.4% Retail, 9.1% Industrial, 3.2% Other, 1.4% Northeast 37.2% West 19.6% Southwest 18.6% Southeast 18.5% Midwest 6.0% Total Portfolio: $1.8 billion Average Loan Balance: ~$42.8 million Senior Loans: 89.6% Office, 50.8% Multifamily, 17.1% Retail, 15.9% Indust
Slide 21: Fourth Quarter 2021 Portfolio Activity
$3,673 $3,797 $- $1,000 $2,000 $3,000 $4,000 $5,000 9/30/2021 4Q21 Fundings & Deferrals 4Q21 Prepayments & Amortization 12/31/2021 $ I n M il li o n s Q4 2021 PORTFOLIO ACTIVITY Fourth Quarter 2021 Portfolio Activity 21 (1) Mixed-use properties represented based on allocated loan amounts (2) “Self-s
Slide 22: Investment Portfolio as of December 31, 2021
6.5% 52.7% 19.7% 16.6% 4.3% 1 2 3 4 5 Investment Portfolio as of December 31, 2021 22 PROPERTY TYPE(2) GEOGRAPHY STABILIZED LTV(1) RISK RATINGS (1) See definition in the appendix. (2) Mixed-use properties represented based on allocated loan amounts. (3) Max remaining term assumes all extension optio
Slide 23: Select Case Studies
Investment Chicago Multifamily Houston Multifamily Greenwich Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date 12/2019 08/2021 07/2021 Collateral 918 Unit Garden Style Multifamily Property 351 Unit Garden Style Multifamily Property 173,834
Slide 24: Select Case Studies
Investment Quantico, VA Office Pittsburgh Mixed Use Denver Industrial Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date 06/2019 11/2021 01/2020 Collateral Three Class ‘A’ Office Buildings 258,385 SF Mixed Use Property 488,692 SF Industrial Proper
Slide 25: Strong Portfolio Performance Through the Pandemic
Strong Portfolio Performance Through the Pandemic 25 • Strong interest collections – in Q4’21, deferred and added to principal only $0.6 million of interest income related to loans that had been modified in prior quarters. • Weighted average portfolio risk rating of 2.6 at December 31, 2021, unchang
Slide 26: Financial Highlights and Capitalization
Financial Highlights and Capitalization
Slide 27: Resilience Through COVID-19
Resilience Through COVID-19 27 STRONG PE R FOR MANCE TH ROUGH COV ID -19 • Despite market disruption, GPMT demonstrated strong credit performance and active balance sheet management. • Asset management – Proactive portfolio management and constructive dialogue with borrowers resulted in 100% of cont
Slide 28: Proactive Financial Management
Proactive Financial Management 28 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 with over 75% n
Slide 29: Diversification of Funding Sources Over Time
Diversification 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 t
Slide 30: Financial Summary
FINANCIAL SUMMARY ▪ Q4 GAAP earnings(1) per basic share of $0.13, including $(0.17) per share charge on early extinguishment of debt. ▪ FY 2021 GAAP earnings(1) per basic share of $1.24, including $0.37 per share reduction of CECL reserves. ▪ Q4 Distributable Earnings(2) per basic share of $0.24. ▪
Slide 31: Diversified Capital Sources
CLOs Repurchase Facilities Senior Convertible Notes Term Loan Term Financing Facility Asset Specific Diversified Capital Sources 31 (1) Outstanding principal balance, excludes deferred debt issuance costs. (2) Does not include fees and other transaction related expenses. (3) Non-Mark-to-Market. (4)
Slide 32: Portfolio Credit Quality and Activity
PORTFOLIO CREDIT QUALITY ▪ Defensively-positioned and broadly-diversified portfolio of 100% CRE loans (over 99% senior first mortgages) with weighted average stabilized LTV of 63.5%(2). ▪ Strong collections of interest through February 2022, with 100% of borrowers making their contractual payments i
Slide 33: Appendix
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Slide 34: Fourth Quarter 2021 Financial Summary
SUMMARY INCOME STATEMENT ($ IN MILLIONS, EXCEPT PER SHARE DATA) Net Interest Income $20.0 Benefit from (Provision for) Credit Losses $5.0 Loss on Early Extinguishment of Debt $(8.9) Operating Expenses $(8.4) Benefit from (Provision for) Income Taxes $(0.2) Dividends on Preferred Stock $(0.7) GAAP Ne
Slide 35: Key Drivers of Fourth Quarter 2021 Earnings and Book Value Per Share
$17.33 $16.70 $0.21 $0.09 $(0.17) $(0.01) $(0.25) $(0.08) $(0.46) $0.04 $15.50 $16.00 $16.50 $17.00 $17.50 $18.00 9/30/2021 Pre-Provision, Pre-Loss Earnings Benefit from (Provision for) Credit Losses Loss on Early Extinguishment of Debt Series A Preferred Dividend Declaration Common Stock Dividend D
Slide 36: LIBOR Floors and Sensitivity of Net Interest Income
QUARTERLY NET INTEREST INCOME PER SHARE SENSITIVITY TO CHANGES IN 1-MONTH U.S. LIBOR(1) 36 LIBOR Floors and Sensitivity of Net Interest Income to Rising Short-Term Interest Rates (1) Represents estimated change in net interest income for theoretical (+) 25 basis points parallel shifts in 1-month U.S
Slide 37: Reconciliation of GAAP Net Income to Distributable Earnings
Reconciliation of GAAP Net Income to Distributable Earnings(1) 37 ($ IN MILLIONS, EXCEPT PER SHARE DATA) Q4 2021 Q3 2021 Q2 2021 Q1 2021 GAAP Net Income(1) $6.7 $18.6 $14.2 $28.0 Adjustments: (Benefit from) Provision for Credit Losses $(5.0) $(5.8) $(0.2) $(9.1) Loss on Extinguishment of Debt $8.9 $
Slide 38: Financial Statements Impact of CECL Reserves
($ in thousands) At 12/31/20 At 3/31/21 At 6/30/21 At 9/30/21 At 12/31/21 ASSETS Loans and securities $3,914,469 $3,859,269 $3,635,315 $3,659,691 $3,782,205 Allowance for credit losses $(66,666) $(59,433) $(57,671) $(45,480) $(40,897) Carrying Value $3,847,803 $3,799,836 $3,577,644 $3,614,211 $3,741
Slide 39: Summary of Investment Portfolio
Summary of Investment Portfolio 39 ($ IN MILLIONS) Maximum Loan Commitment Principal Balance Carrying Value Cash Coupon(1) All-in Yield at Origination(1) Original Term (Years)(1) Initial LTV(1) Stabilized LTV(1) Senior Loans(1) $4,185.4 $3,781.8 $3,728.4 L + 3.48% L + 4.07% 3.1 66.4% 63.6% Subordina
Slide 40: Investment Portfolio Detail
Investment Portfolio Detail 40 ($ IN MILLIONS) Type(1) Origination Date Maximum Loan Commitment Principal Balance Carrying Value Cash Coupon(1) All-in Yield at Origination(1) Original Term (Years)(1) State Property Type Initial LTV(1) Stabilized LTV(1) Asset 1 Senior 12/15 120.0 120.0 119.3 L + 4.15
Slide 41: Condensed Balance Sheets
Condensed Balance Sheets 41 GRANITE POINT MORTGAGE TRUST INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) December 31, 2021 December 31, 2020 ASSETS Loans held-for-investment $ 3,782,205 $ 3,914,469 Allowance for credit losses (40,897) (66,666) Loans held-for-investment,
Slide 42: Condensed Statements of Comprehensive (Loss) Income
Condensed Statements of Comprehensive (Loss) Income 42 GRANITE POINT MORTGAGE TRUST INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands, except share data) Three Months Ended December 31, Year Ended December 31, 2021 2020 2021 2020 Interest income: (unaudited) (unaudi
Slide 43: Distributable Earnings Definition
▪ Beginning with our Annual Report on Form 10-K for the year ended December 31, 2020, 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 44: Distributable Earnings Definition (continued)
▪ 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: Definitions
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 fees and exclude futu
Slide 46: Company Information
Credit Suisse Douglas Harter (212) 538-5983 JMP Securities Steven DeLaney (212) 906-3517 Keefe, Bruyette & Woods Jade Rahmani (212) 887-3882 Raymond James Stephen Laws (901) 579-4868 Company Information 46 Granite Point Mortgage Trust Inc. is an internally-managed real estate finance company that fo
Slide 47: Granite Point Mortgage Trust
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