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Granite Point Mortgage Trust Inc. Reports Second Quarter 2021 Financial Results and Post Quarter-End Update

Granite Point Mortgage Trust Inc. (NYSE: GPMT) ("GPMT," "Granite Point" or the "Company") today announced its financial results for the quarter ended June 30, 2021, and provided an update on its activities subsequent to quarter-end. A presentation containing second quarter 2021 financial highlights and activity post quarter-end can be viewed at www.gpmtreit.com.

Second Quarter 2021 Activity

  • GAAP net income of $14.2 million, or $0.26 per basic share, including a reversal of interest income of $(2.1) million, or $(0.04) per basic share related to three loans placed on nonaccrual status during the quarter.
  • Distributable Earnings(1) of $15.7 million, or $0.29 per basic share.
  • Book value of $17.27 per common share, inclusive of $(1.15) per share of allowance for credit losses.
  • Declared and paid a cash dividend of $0.25 per common share for the second quarter of 2021.
  • At June 30, 2021, carried a total allowance for credit losses of $62.9 million (or 1.54% of total loan commitments).
  • Closed seven loans with $203.8 million of total commitments and $163.4 million of initial fundings.
  • Funded an additional $30.4 million of principal balance on existing loan commitments.
  • Received loan repayments and principal amortization of $423.0 million in UPB.
  • Portfolio comprised of 100% loans with an outstanding principal balance of $3.6 billion and $4.1 billion in total commitments, comprised of 99% senior first mortgages and over 98% floating rate loans.
  • Portfolio has a weighted average stabilized LTV of 63.5%(2),a weighted average yield at origination of LIBOR + 4.13%(3) and a weighted average LIBOR floor on the loans of 1.55%.
  • Closed an $824 million CRE CLO with an initial advance rate of 83.25% and a weighted average interest rate at issuance of LIBOR + 1.62%, before transaction costs.
  • Extended the maturity of the Morgan Stanley repurchase facility to June 2022 and downsized the maximum facility size to $500 million, with an accordion feature to upsize it to $600 million.
  • Extended the maturity of the Wells Fargo repurchase facility to June 2022 and downsized the maximum facility size to $100 million, with an accordion feature to upsize it to $200 million.
  • Repurchased 0.3 million common shares in the open market at an average price per share of $14.16.

Post Quarter-End Update

  • Current forward pipeline of senior CRE loans with total commitments of over $280 million and initial fundings of over $265 million, which have either closed or are in the closing process, subject to fallout.
  • Since quarter end, funded approximately $12 million of principal balance on existing loan commitments.(4)
  • Extended the maturity of the Goldman Sachs repurchase facility to July 2023 and downsized the maximum facility size to $250 million, with an accordion feature to upsize it to $350 million.
  • Current liquidity of approximately $242 million(4) in cash on hand; option to borrow an additional $75 million in proceeds under the senior term loan facilities through September 2021.

“We are pleased to report that Granite Point delivered another quarter of solid operating results generated by our well diversified and defensively positioned portfolio of first mortgage loans. Our Distributable Earnings of $0.29 per share well covered our dividend of $0.25 per share and our book value per share grew to $17.27,” stated Jack Taylor, Granite Point’s President, Chief Executive Officer and Director. “With the closing of our third CRE CLO during the quarter, at an attractive cost of funds and leverage, we have further optimized our financing of our portfolio and have increased our non-mark-to-market borrowings to about 75%. We closed on over $200 million of new loan commitments during the quarter, currently have an additional $280 million either closed or are expected to close in the near term, and, with the combination of our liquidity and our highly experienced origination team, we intend to expand our strong forward pipeline.”

(1) Please see footnote (1) on page 6 for Distributable Earnings definition and a reconciliation of GAAP to non-GAAP financial information.

(2) Stabilized loan-to-value ratio (LTV) is calculated as 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 original appraisal. As stabilized value may be based on certain assumptions, such as future construction completion, projected re-tenanting, payment of tenant improvement or leasing commissions allowances or free or abated rent periods, or increased tenant occupancy.

(3) Yield includes net origination fees and exit fees, but does not include future fundings, and is expressed as a monthly equivalent yield.

(4) As of August 6, 2021.

Conference Call

Granite Point Mortgage Trust Inc. will host a conference call on August 10, 2021 at 10:00 a.m. ET to discuss second quarter 2021 financial results and related information. To participate in the teleconference, approximately 10 minutes prior to the above start time, please call toll-free (833) 255-2835 (or (412) 902-6769 for international callers), and ask to be joined into the Granite Point Mortgage Trust Inc. call. You may also listen to the teleconference live via the Internet at www.gpmtreit.com, in the Investor Relations section under the Events & Presentations link. For those unable to attend, a telephone playback will be available beginning August 10, 2021 at 12:00 p.m. ET through August 17, 2021 at 12:00 a.m. ET. The playback can be accessed by calling (877) 344-7529 (or (412) 317-0088 for international callers) and providing the Access Code 10158427. The call will also be archived on the Company’s website in the Investor Relations section under the Events & Presentations link.

About Granite Point Mortgage Trust Inc.

Granite Point Mortgage Trust Inc., a Maryland corporation focused on directly originating, investing in and managing senior floating rate commercial mortgage loans and other debt and debt-like commercial real estate investments. Granite Point is headquartered in New York, NY. Additional information is available at www.gpmtreit.com.

Forward-Looking Statements

This press release 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 differ from our beliefs, expectations, estimates and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements are not historical in nature and can be identified by words such as “anticipate,” “estimate,” “will,” “should,” “expect,” “target,” “believe,” “outlook,” “potential,” “continue,” “intend,” “seek,” “plan,” “goals,” “future,” “likely,” “may” and similar expressions or their negative forms, or by references to strategy, plans or intentions. By their nature, forward-looking statements speak only as of the date they are made, are not statements of historical facts or guarantees of future performance and are subject to risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify, in particular those related to the COVID-19 pandemic, including the ultimate impact of COVID-19 on our business, financial performance and operating results. Our expectations, beliefs and estimates are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs and estimates will prove to be correct or be achieved, and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

These forward-looking statements are subject to risks and uncertainties, including, among other things, those described in our Annual Report on Form 10-K for the year ended December 31, 2020 and any subsequent Form 10-Q and Form 8-K filings made with the SEC, under the caption “Risk Factors.” These risks may also be further heightened by the continued and evolving impact of the COVID-19 pandemic. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

This press release is for informational purposes only and shall not constitute, or form a part of, an offer to sell or buy or the solicitation of an offer to sell or the solicitation of an offer to buy any securities.

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this press release and the accompanying earnings presentation present non-GAAP financial measures, such as Distributable Earnings and Distributable Earnings per basic common share, that exclude certain items. Granite Point management believes that these non-GAAP measures enable it to perform meaningful comparisons of past, present and future results of the Company’s core business operations, and uses these measures to gain a comparative understanding of the Company’s operating performance and business trends. The non-GAAP financial measures presented by the Company represent supplemental information to assist investors in analyzing the results of its operations. However, because these measures are not calculated in accordance with GAAP, they should not be considered a substitute for, or superior to, the financial measures calculated in accordance with GAAP. The Company’s GAAP financial results and the reconciliations from these results should be carefully evaluated. See the GAAP to non-GAAP reconciliation table on page 6 of this release.

Additional Information

Stockholders of Granite Point and other interested persons may find additional information regarding the Company at the Securities and Exchange Commission’s Internet site at www.sec.gov or by directing requests to: Granite Point Mortgage Trust Inc., 3 Bryant Park, 24th Floor, New York, NY 10036, telephone (212) 364-5500.

GRANITE POINT MORTGAGE TRUST INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

June 30,

2021

 

December 31,

2020

ASSETS

(unaudited)

 

 

Loans held-for-investment

$

3,635,315

 

 

$

3,914,469

 

Allowance for credit losses

(57,671)

 

 

(66,666)

 

Loans held-for-investment, net

3,577,644

 

 

3,847,803

 

Cash and cash equivalents

236,953

 

 

261,419

 

Restricted cash

2,077

 

 

67,774

 

Accrued interest receivable

10,149

 

 

12,388

 

Other assets

27,645

 

 

30,264

 

Total Assets

$

3,854,468

 

 

$

4,219,648

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Liabilities

 

 

 

Repurchase facilities

$

717,196

 

 

$

1,708,875

 

Securitized debt obligations

1,446,603

 

 

927,128

 

Asset-specific financings

82,768

 

 

123,091

 

Term financing facility

142,414

 

 

 

Convertible senior notes

272,074

 

 

271,250

 

Senior secured term loan facilities

207,881

 

 

206,448

 

Dividends payable

13,963

 

 

25,049

 

Other liabilities

24,273

 

 

22,961

 

Total Liabilities

2,907,172

 

 

3,284,802

 

Commitments and Contingencies

 

 

 

10% cumulative redeemable preferred stock, par value $0.01 per share; 50,000,000 shares

authorized and 1,000 shares issued and outstanding ($1,000,000 liquidation preference)

1,000

 

 

1,000

 

Stockholders’ Equity

 

 

 

Common stock, par value $0.01 per share; 450,000,000 shares authorized and 54,790,186 and

55,107,657 shares issued and outstanding, respectively

548

 

 

552

 

Additional paid-in capital

1,056,364

 

 

1,058,298

 

Cumulative earnings

145,425

 

 

103,165

 

Cumulative distributions to stockholders

(256,166)

 

 

(228,169)

 

Total Granite Point Mortgage Trust, Inc. Stockholders’ Equity

946,171

 

 

933,846

 

Non-controlling interests

125

 

 

 

Total Equity

$

946,296

 

 

$

933,846

 

Total Liabilities and Stockholders’ Equity

$

3,854,468

 

 

$

4,219,648

 

 

GRANITE POINT MORTGAGE TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, except share data)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2021

 

2020

 

2021

 

2020

Interest income:

(unaudited)

 

(unaudited)

Loans held-for-investment

$

49,350

 

 

$

60,299

 

 

$

103,389

 

 

$

123,558

 

Loans held-for-sale

 

 

121

 

 

 

 

121

 

Available-for-sale securities

 

 

247

 

 

 

 

527

 

Held-to-maturity securities

 

 

236

 

 

 

 

546

 

Cash and cash equivalents

103

 

 

41

 

 

203

 

 

367

 

Total interest income

49,453

 

 

60,944

 

 

103,592

 

 

125,119

 

Interest expense:

 

 

 

 

 

 

 

Repurchase facilities

6,047

 

 

14,276

 

 

14,998

 

 

33,951

 

Securitized debt obligations

7,129

 

 

6,502

 

 

11,746

 

 

15,936

 

Convertible senior notes

4,544

 

 

4,525

 

 

9,062

 

 

9,041

 

Term financing facility

2,633

 

 

 

 

4,755

 

 

 

Asset-specific financings

668

 

 

939

 

 

1,545

 

 

2,061

 

Revolving credit facilities

 

 

320

 

 

 

 

562

 

Senior secured term loan facilities

5,653

 

 

 

 

10,933

 

 

 

Total interest expense

26,674

 

 

26,562

 

 

53,039

 

 

61,551

 

Net interest income

22,779

 

 

34,382

 

 

50,553

 

 

63,568

 

Other income (loss):

 

 

 

 

 

 

 

Benefit from (provision for) credit losses

193

 

 

(14,205)

 

 

9,312

 

 

(67,541)

 

Realized losses on sales of loans held-for-sale

 

 

(6,894)

 

 

 

 

(6,894)

 

Fee income

 

 

 

 

 

 

522

 

Total other income (loss)

193

 

 

(21,099)

 

 

9,312

 

 

(73,913)

 

Expenses:

 

 

 

 

 

 

 

Base management fees

 

 

3,959

 

 

 

 

7,866

 

Compensation and benefits

5,017

 

 

 

 

10,477

 

 

 

Servicing expenses

1,124

 

 

1,002

 

 

2,440

 

 

2,111

 

Other operating expenses

2,564

 

 

10,060

 

 

4,691

 

 

18,613

 

Total expenses

8,705

 

 

15,021

 

 

17,608

 

 

28,590

 

Income (loss) before income taxes

14,267

 

 

(1,738)

 

 

42,257

 

 

(38,935)

 

Benefit from income taxes

(2)

 

 

(5)

 

 

(3)

 

 

(11)

 

Net income (loss)

14,269

 

 

(1,733)

 

 

42,260

 

 

(38,924)

 

Dividends on preferred stock

25

 

 

25

 

 

50

 

 

50

 

Net income (loss) attributable to common stockholders

$

14,244

 

 

$

(1,758)

 

 

$

42,210

 

 

$

(38,974)

 

Basic earnings (loss) per weighted average common share

$

0.26

 

 

$

(0.03)

 

 

$

0.77

 

 

$

(0.71)

 

Diluted earnings (loss) per weighted average common share

$

0.24

 

 

$

(0.03)

 

 

$

0.71

 

 

$

(0.71)

 

Dividends declared per common share

$

0.25

 

 

$

 

 

$

0.50

 

 

$

 

Weighted average number of shares of common stock outstanding:

 

 

 

 

 

 

 

Basic

55,009,732

 

 

55,158,283

 

 

55,073,317

 

 

55,107,347

 

Diluted

58,526,985

 

 

55,158,283

 

 

72,564,914

 

 

55,107,347

 

Comprehensive income (loss):

 

 

 

 

 

 

 

Net income (loss) attributable to common stockholders

$

14,244

 

 

$

(1,758)

 

 

$

42,210

 

 

$

(38,974)

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities

 

 

3,712

 

 

 

 

(32)

 

Other comprehensive income (loss)

 

 

3,712

 

 

 

 

(32)

 

Comprehensive income (loss)

$

14,244

 

 

$

1,954

 

 

$

42,210

 

 

$

(39,006)

 

 

GRANITE POINT MORTGAGE TRUST INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(dollars in thousands, except share data)

 

 

Three Months Ended

June 30, 2021

 

(unaudited)

Reconciliation of GAAP net income to Distributable Earnings:

 

 

 

GAAP Net Income

$

14,244

 

Adjustments for non-distributable earnings:

 

(Benefit from) provision for credit losses

(193)

 

Non-cash equity compensation

1,639

 

Distributable Earnings(1)

$

15,690

 

 

 

Distributable Earnings per basic common share

$

0.29

 

Basic weighted average shares outstanding

55,009,732

(1) 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, 2020, we have elected to present Distributable Earnings, a measure that is not prepared in accordance with GAAP, as a supplemental method of evaluating our operating performance. Distributable Earnings replaces our prior presentation of Core Earnings with no changes to the definition. In order to maintain our status as a REIT, we are required to distribute at least 90% of our taxable income as dividends. Distributable Earnings is intended to serve as a general proxy for our taxable income, though it is not a perfect substitute for it, and, as such, is considered a key indicator of our ability to generate sufficient income to pay our common dividends and in determining the amount of such dividends, which is the primary focus of income-oriented investors who comprise a meaningful segment of our stockholder base. We believe providing Distributable Earnings on a supplemental basis to our net income (loss) and cash flow from operating activities, as determined in accordance with GAAP, is helpful to stockholders in assessing the overall performance of our business.

We use Distributable Earnings to evaluate our performance excluding the effects of certain transactions and GAAP adjustments we believe are not necessarily indicative of our current loan portfolio and operations. For reporting purposes, we define Distributable Earnings as net income (loss) attributable to our stockholders, computed in accordance with GAAP, excluding: (i) non-cash equity compensation expenses; (ii) depreciation and amortization; (iii) any unrealized gains (losses) or other similar non-cash items that are included in net income for the applicable reporting period (regardless of whether such items are included in other comprehensive income (loss) or in net income for such period); and (iv) certain non-cash items and one-time expenses. Distributable Earnings may also be adjusted from time to time for reporting purposes to exclude one-time events pursuant to changes in GAAP and certain other material non-cash income or expense items approved by a majority of our independent directors. The exclusion of depreciation and amortization from the calculation of Distributable Earnings only applies to debt investments related to real estate to the extent we foreclose upon the property or properties underlying such debt investments.

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, or in the case of foreclosure, when the underlying asset is sold, but nonrecoverability may also be concluded if, in our determination, it is nearly certain that all amounts due will not be collected. The realized loss amount reflected in Distributable Earnings will equal the difference between the cash received, or expected to be received, and the carrying value of the asset, and is reflective of our economic experience as it relates to the ultimate realization of the loan. During the six months ended June 30, 2021, we recorded a $9.3 million benefit from provision for credit losses, which has been excluded from Distributable Earnings consistent with other unrealized gains (losses) and other non-cash items pursuant to our existing policy for reporting Distributable Earnings referenced above.

Distributable Earnings does not represent net income (loss) or cash flow from operating activities and should not be considered as an alternative to GAAP net income (loss), or an indication of our GAAP cash flows from operations, a measure of our liquidity, or an indication of funds available for our cash needs. In addition, our methodology for calculating Distributable Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and, accordingly, our reported Distributable Earnings may not be comparable to the Distributable Earnings reported by other companies.

Contacts

Investors:

Marcin Urbaszek,

Chief Financial Officer

Granite Point Mortgage Trust Inc.

(212) 364-5500

investors@gpmtreit.com.

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