Granite Point Mortgage Trust Inc. · NYSE:GPMT
Granite Point Mortgage Trust — Q3 2017 Earnings Presentation
30 slides from Granite Point Mortgage Trust's earnings presentation, Nov 15, 2017
Slide 1: Third Quarter 2017 Investor Presentation
Third Quarter 2017Investor Presentation
Slide 2: Safe Harbor Statement
Safe Harbor Statement FORWARD LOOKING STATEMENTS This presentation includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results of Granite Point Mortgage Trust Inc. (“Granite Point,” “we,”
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 I N V E STM E NT P O RT FO L IO D I F F ER E NT IATE D D I R E C T O R I G INAT I O N P L ATFO R M LEADING COMMERCIAL REAL EST
Slide 5: Commercial Real Estate Market Overview
Commercial Real Estate Market Overview
Slide 6: Demand for Commercial Real Estate 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 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. • $30 million floating rate, first mortgage loan secured by two apartment buildings totaling 62 units in Brooklyn, NY • Strong, infill location benefitting from significant recent public and privat
Slide 16: Illustrative Investments
16 Illustrative Investments Note: The above loan examples are provided for illustration purposes only. • $120.4 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 September 30, 2017
Investment Portfolio as of September 30, 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 $2.2b Total
Slide 18: Interest Rate Sensitivity
Interest Rate Sensitivity • A 100 basis point increase in U.S. LIBOR would increase the annual net interest income per share on the existing portfolio by approximately $0.14 18 PORTFOLIO FLOATING VS FIXED Floating 97.5% Fixed 2.5% $0.00 $0.05 $0.10 $0.15 0.25% 0.50% 0.75% 1.00% NET INTEREST INCOME P
Slide 19: Third Quarter 2017 Origination Highlights
Third Quarter 2017 Origination Highlights ORIGINATIONS OVERVIEW • 11 senior floating rate commercial real estate loans • Gross loan commitments of $450.4 million • Funded $379.8 million of principal balance of loans and an additional $13.6 million of existing loan commitments, bringing total funding
Slide 20: Financial Highlights
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Slide 21: Capitalization and Liquidity
Capitalization and Liquidity 21 • Subsequent to quarter end, we amended our financing facility with Morgan Stanley to increase borrowing capacity by $100 million, bringing total borrowing capacity to $2.1 billion • In negotiations to amend a second financing facility to increase borrowing capacity b
Slide 22: Investment Portfolio Summary as of 9/30/17
Investment Portfolio Summary as of 9/30/17 22 ($ in millions) Maximum Loan Commitment Principal Balance Book Value Cash Coupon(1) Yield(2) Original Terms (Years) Initial LTV(3) Stabilized LTV Senior $2,312.4 $2,041.8 $2,023.9 L + 4.42% L + 4.97% 3.5 69.7% 64.2% Mezzanine $105.7 $104.1 $104.1 L + 8.1
Slide 23: Appendix
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Slide 24: Third Quarter 2017 Earnings Summary
Third Quarter 2017 Earnings Summary • Loan closings weighted towards the end of the third quarter • Dividend of $0.32 per share driven by core earnings but also taxable income recognized in the quarter • Taxable income was $14.3 million, or $0.33 per share, and included $2.6 million of amortization
Slide 25: 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 26: Investment Portfolio Detail as of September 30, 2017
Investment Portfolio Detail as of September 30, 2017 26 1) Cash coupon does not include origination or exit fees. Weighted average cash coupon excludes fixed rate loans. 2) Yield includes net origination fees and exit fees, but does not include future fundings, and is expressed as a monthly equivale
Slide 27: Third Quarter 2017 Average Balances and Yields/Cost of Funds
Third Quarter 2017 Average Balances and Yields/Cost of Funds 27 Three Months Ended September 30, 2017 (dollars in thousands) Average Balance(1) Interest Income/Expense Net Yield/Cost of Funds Interest-earning assets Loans held-for-investment First mortgages $1,776,641 $27,109 6.1% Subordinated loans
Slide 28: Third Quarter 2017 Balance Sheet
Third Quarter 2017 Balance Sheet 28 GRANITE POINT MORTGAGE TRUST INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) September 30, 2017 December 31, 2016 ASSETS (unaudited) Loans held-for-investment $ 2,127,954 $ 1,364,291 Available-for-sale securities, at fair value 12,814
Slide 29: Third Quarter 2017 Income Statement
Third Quarter 2017 Income Statement 29 GRANITE POINT MORTGAGE TRUST INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands, except share data) Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Interest income: (unaudited) (unaudited) Loans hel
Slide 30: Granite Point Mortgage Trust
GRANITE POINT. * MORTGAGE TRUST
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