Granite Point Mortgage Trust Inc. · NYSE:GPMT
Granite Point Mortgage Trust — Q4 2017 Earnings Presentation
31 slides from Granite Point Mortgage Trust's earnings presentation, Feb 20, 2018
Slide 1: Fourth Quarter 2017 Investor Presentation
Fourth Quarter 2017Investor Presentation
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 Formation Summary
Company Formation Summary • Granite Point was formed by Two Harbors Investment Corp. (NYSE: TWO) in a spin-out transaction in order to continue the commercial real estate lending business established by Two Harbors in 2015 • As part of the formation transaction in June 2017, we: – Completed an initi
Slide 4: Company Overview
Company Overview(1) 4 C YC LE -T EST ED S E N IO R I N V E STM E NT T E A M AT T RAC T I VE A N D S U STA I NABLE M A R KE T O P P O RTUNI T Y H I G H C R E D IT Q UA L IT Y P O RT FO L IO , M O D E ST L E V E RAGE A N D ST RO NG F I N ANC ING P R O F IL E D I F F ER E NT IATE D D I R E C T O R I G
Slide 5: Commercial Real Estate Market Overview
Commercial Real Estate Market Overview
Slide 6: Market Environment: Demand for CRE Loans Remains High
Banks 53.2% CMBS 16.5% Life Cos 11.5% GSE 7.2% Other 11.6% $- $100 $200 $300 $400 $500 $600 Sale transaction volume rebounded strongly following the global economic crisis(2) U.S. Foreign Market Environment 6 (1) Source: Trepp LLC and Federal Reserve Bank, dated as of 10/20/2017. (2) Source: Real Ca
Slide 7: Market Environment (Cont'd): Market Fundamentals Remain Strong
Market Environment (Cont’d) 7 …AND MARKET FUNDAMENTALS REMAIN STRONG 5.0% 7.0% 9.0% 11.0% 13.0% 15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 1Q 92 1Q 94 1Q 96 1Q 98 1Q 00 1Q 02 1Q 04 1Q 06 1Q 08 1Q 10 1Q 12 1Q 14 1Q 16 Va ca n cy ( % ) N O I G ro w th ( % ) Occupancies and rents continue to improve acro
Slide 8: Investment Strategy and Portfolio Overview
Investment Strategy and Portfolio Overview
Slide 9: Investment Philosophy
Investment Philosophy 9 • Long-term, fundamental value-oriented investing philosophy; heavy focus on relative value • Avoid “sector bets” and “momentum investments” • Emphasize selectivity and diversification • Prioritize income-producing, institutional quality properties and owners/sponsors • Cash
Slide 10: Primary and Secondary Markets Offer Attractive Investment Characteristics
10 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 markets, which are large and liquid • The next
Slide 11: Investment Strategy Overview
Investment Strategy Overview 11 INVESTMENT STRATEGY PRIMARY VS SECONDARY MARKETS • Focus on generating stable and attractive cash flows while preserving capital base – Primarily direct-originated investments funding: • Property acquisition • Refinancing • Recapitalization / restructuring • Repositio
Slide 12: Target Investments
Target Investments 12 PRIMARY TARGET INVESTMENTS • Floating rate first mortgage loans secured by income-producing commercial real estate • Primary and secondary markets in the U.S. • Transitional loans on a variety of property types • Sponsors typically have a business plan involving leasing and cap
Slide 13: 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 13 PORTFOLIO GROWTH OVER TIME(1) P o rt folio U P B ( $ in m il lio n s) RELATIONSHIPS • Extensive and longstanding direct rela
Slide 14: Credit Culture Based on Key Principles
Credit Culture Based on Key Principles 14 • Portfolio construction on a loan-by-loan basis with each investment standing on its own merit and adhering to our overall credit culture • Significant amount of resources are committed upfront to ensure underwriting and structuring are carried out diligent
Slide 15: Illustrative Investments
15 Illustrative Investments Note: The above loan examples are provided for illustration purposes only. • $47 million floating rate, first mortgage loan secured by an historic, boutique office building with ground floor retail • Well located in the Financial District of the Boston CBD, which has a su
Slide 16: Illustrative Investments
16 Illustrative Investments Note: The above loan examples are provided for illustration purposes only. • $120.5 million floating rate, first mortgage loan secured by a 1.3mm SF Class A office portfolio, with two in Las Colinas (Irving, TX) and one in CBD Richmond • Cross-collateralizing the three pr
Slide 17: Investment Portfolio as of December 31, 2017
Investment Portfolio as of December 31, 2017 17 PROPERTY TYPE GEOGRAPHY COUPON STRUCTURE INVESTMENT TYPE 1) Expressed as a monthly equivalent yield. Weighted average yield excludes fixed rate loans. 2) Includes mixed-use properties. KEY PORTFOLIO STATISTICS Outstanding Principal Balance $2.4b Total
Slide 18: Interest Rate Sensitivity
Interest Rate Sensitivity • A 100 basis point increase in U.S. LIBOR would increase our annual net interest income per share by approximately $0.18 18 PORTFOLIO FLOATING VS FIXED NET INTEREST INCOME PER SHARE SENSIVITY TO CHANGES IN US LIBOR(1) 1) Represents estimated change in net interest income f
Slide 19: Fourth Quarter 2017 Origination Highlights
$ 2,202 $ 2,379 - 500 1,000 1,500 2,000 2,500 9/30/17 Portfolio 4Q17 Fundings 4Q17 Prepayments & Amortization 4Q17 Portfolio $ i n M ill ion s Fourth Quarter 2017 Origination Highlights ORIGINATIONS OVERVIEW • 6 senior floating rate commercial real estate loans – Gross loan commitments of $334.7 mil
Slide 20: Financial Highlights
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Slide 21: Fourth Quarter 2017 Business Highlights
Fourth Quarter 2017 Business Highlights FOURTH QUARTER 2017 FINANCIAL HIGHLIGHTS • Delivered GAAP net income of $14.1 million or $0.33 per common share; Core Earnings of $14.5 million or $0.34 per common share(1); taxable income of $17.9 million or $0.41 per common share; dividend of $0.38 per commo
Slide 22: Capitalization & Liquidity as of 12/31/2017
Capitalization & Liquidity as of 12/31/2017 22 • Amended 2 financing facilities to increase borrowing capacity by a combined $350 million, bringing total borrowing capacity to over $2.3 billion • Issued $125 million of 5-year convertible notes in December, plus nearly $19 million in additional notes
Slide 23: Investment Portfolio as of 12/31/2017
Investment Portfolio as of 12/31/2017 23 ($ in millions) Maximum Loan Commitment Principal Balance Book Value Cash Coupon(1) Yield(2) Original Terms (Years) Initial LTV(3) Stabilized LTV Senior $2,558.0 $2,220.4 $2,200.4 L + 4.41% L + 4.97% 3.4 69.5% 64.1% Mezzanine $105.4 $103.8 $103.8 L + 8.17% L
Slide 24: Appendix
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Slide 25: Fourth Quarter 2017 Earnings Summary
Fourth Quarter 2017 Earnings Summary • Loan closings weighted towards the end of the fourth quarter • Dividend of $0.38 driven by Core Earnings but also taxable income recognized in the quarter • Taxable income was $17.9 million, or $0.41 per common share, and included $3.4 million of tax interest i
Slide 26: Overview: GAAP-to-Tax Difference
Overview: GAAP–to–Tax Difference • During our formation transaction, the contribution by Two Harbors of its commercial real estate lending business was treated as a sale for tax purposes – As a result, we recognized a lower tax basis than GAAP basis of approximately $22 million at the time of the tr
Slide 27: Investment Portfolio Detail
Investment Portfolio Detail (1) 27 1) As of December 31, 2017. 2) Cash coupon does not include origination or exit fees. Weighted average cash coupon excludes fixed rate loans. 3) Yield includes net origination fees and exit fees, but does not include future fundings, and is expressed as a monthly e
Slide 28: Average Balances and Yields/Cost of Funds
Average Balances and Yields/Cost of Funds 28 Quarter Ended December 31, 2017 (dollars in thousands) Average Balance(1) Interest Income/Expense Net Yield/Cost of Funds Interest-earning assets Loans held-for-investment First mortgages $2,109,498 $33,282 6.3% Subordinated loans 103,919 2,554 9.8% CMBS
Slide 29: Fourth Quarter 2017 Consolidated Balance Sheets
Fourth Quarter 2017 Consolidated Balance Sheets 29 (4) GRANITE POINT MORTGAGE TRUST INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) December 31, 2017 December 31, 2016 ASSETS (unaudited) Loans held-for-investment $ 2,304,266 $ 1,364,291 Available-for-sale securities, at fair value
Slide 30: Fourth Quarter 2017 Consolidated Statements of Comprehensive Income
Fourth Quarter 2017 Consolidated Statements of Comprehensive Income 30 (4) GRANITE POINT MORTGAGE TRUST INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands, except share data) Three Months Ended December 31, Year Ended December 31, 2017 2016 2017 2016 Interest income: (unaudited) (una
Slide 31: Granite Point Mortgage Trust
GRANITE POINT. * MORTGAGE TRUST
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