GPMT - Earnings call transcript Q1 2019 | Granite Point Mortgage Trust Inc.

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Operator

Good morning. My name is Mike and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust First Quarter 2019 Financial Results Conference Call. All participants will be in a listen-only mode. After the speakers' remarks, there will be a question-and-answer period. to conference like Mr. over now would turn call the to I Petta Granite for Investor Chris Relations Point. with Mr. the Petta floor is yours sir.

Chris Petta

of good introductory discuss Steve our market from CIO; summary our quarter President and Marcin Thank SEC. the our Alpart, this morning activities were me and our and will morning Marcin Jack our comments, and Taylor, of a you will key originations, call our and business brief After Thank COO. recap press call you release our Jack for filed on call the to and financial conditions; Plust, financial discuss Urbaszek, yesterday items Granite provide The and will XXXX highlight pipeline; first CEO; Steve Alpart tables with are Steve financials. today's Point's my our results. associated With first everyone. quarter joining our CFO; portfolio, with

measures. not a earnings them you release If our of in posted reconciliation may which the that website I and In have or website the non-GAAP you to in be find on financial this may our slides, is accessed being information on call we same urge our this Relations a are provided have in website sec.gov. our section of also Investor on now do SEC's at the review copy, website, like you conjunction GAAP to call. today's mention location. with We would to webcast and

conference statements. the slides Jack, Before during remarks like by to and I would remind supporting I this that to forward-looking made over include call you management may turn the call

not do expect, We any in of them or described as any differ future are inaccurate. obtained associated risks I to to materially be expectations. Forward-looking risks rely typically call consider now statements forward-looking from the They undertake not investors and website on which carefully words. or imply with results our Jack. and anticipate, you the We proved believe, and urge to words SEC statements. use actual events and caution forward-looking later such uncertainties may may be SEC's other our unduly We to regarding update reflect such estimate, filings obligation over turn events to the sec.gov. on the the if with statements will correct at views

Jack Taylor

balance $XXX growth million record we After the about active of to outstanding combined billion support quarter portfolio's first billion approach quarter, principal loans largely our investable growth to continue market call. originations the this would new Thank earlier all and transaction in strategy. welcome We in $XXX execute of excellent our we to $X.X slowdown end and XXXX the in deployed preserve resulted raised the our our year further about in with commitments. and which pronounced which inclusive funded funding business. of $X real we our our capital, first morning start you to asset had as on the investments during resulted common in quarter. off Notwithstanding an joining of everyone. the like a of attractive elevated to and lending for to fundings earnings and of estate These XXXX fourth strong you, in you approximately Chris our volatility Granite future the good year the during million at fourth quarter equity thank over had a first management quarter to Point are we XXXX activity

the maturity enhanced and the our was base. which two-year flexibility the financing us and CLO Currently, financed CLO extending term, has utility us the manage of with period to as markets reinvestment repeat CLOs issuer through CLO, further at was received This well-positioned about $XXX non-recourse, fixed February, an successfully providing second loan a our effectively we in broadened capital providing and Additionally, portfolio investor issued matched an stabilize, securitization financing the income non-mark-to-market began collateral our market. Point million to in well actively this half thereby, a be increasing attractive of vehicle. loan Granite to remains terms. transaction

$XXX financing. focuses facility. Our of of non-mark-to-market investment and the is strategy, our In structurally remains the term It end floating mix, type the matched note a mortgages, an financing which further fit April, on closed rate senior on good funding diversification market. CLO at for million commercial new financing and resembles A very we a

our pleased are to continue also diversifying growing portfolio, we and be mix. increasing the financing As we

actively the senior floating the of over in and rate Following generated million pipeline investment so slowdown building market, been $XXX we have loans. the far have

attractive to lending put end factors, the the and interest work attractive finance of the and We combined such overall to low to portfolio The the we state among offer the real opportunities allocations, slowdown, estate environment rather healthy on the year to real such loan the expect credit for pressure for originations markets generally have market flow the fund loans a for active extensive remain revival performing. portfolio real Values quality with for is the lenders are driven producing Granite others. real a desire by and our the we first rates, the to historical are the strong strong held money We still believe standards Competition we demand operating rest still space for renewed suggesting seen find and should as after more The CLO number originating the property opportunities powder relatively along loans Point. return rational. of with quarter attractive year. and spreads, remained over has new solid as capital remains dry backdrop, that generate economic by in commercial estate XXX% new continue estate. a of improve which of

our prospects We are confident about for the business.

and team, origination differentiated supported our attractive respected funding strategy, We for well-diversified by our mix. have relationships talented future well highly and Point of positioned power Granite growth, longstanding

off and We in start XXXX for to forward strong another to year are great we look Granite Point. a

investment discuss in our will Steve I call Now, detail. to activity the turn Alpart, more to over

Steve Alpart

you, Jack, We first I'll forward our joining. Thank this spend originations, your reviewing and appreciate thank pipeline. a you morning. our time our all quarter few portfolio for minutes and

In million. fourth the caused total XXXX, we originations Following the able we despite in first quarter to in closed year-end were higher grow slowdown the our by nine quarter, market of in and loans, first record continue lending commitments approximately $XXX quarter, portfolio transactional fee to prepayments our of the with volatility. the activities overall

are a of are quarterly X.XX%. million, our by well LIBOR and pre-existing XX% we average weighted anticipate $XXX million and loan. income-producing average the the of to period, property have loans don't The million about originations for from about from in loan target diversified $XX mix The plus LTV significantly approximately period portfolio about will secured the an across They loans, and we Our term. $XXX a million yield and across the $X properties office properties. near weighted and our vary but fundings hotel for high-quality, multi-family were first commitments markets of total comprised of changing fundings conditions in of our existing, market new upside closed quarter initial overall

we portfolio the quarters, of assets, unusual, year, level appropriate, just seasoning our example amended couple strong amending view in and borrower considering investments could early about the borrower our Last QX potentially enhancing repayments. realized our attractive which management, credit prepayments identified Even of in returns early but case of to first a expertise particular industrial approach largely with very million we where of a higher great the than by as protection. in one of relationships. prepayment low in though the quarter, loan. driven prepayments, $XX spread this emphasize payoff a lower our one were were million We also this exchange loan-structuring and and loan realized $XXX the active it monitoring, biggest for our slightly call portfolio. activity loans, proactively preserving to don't This is prior we and portfolio by we industrial During longer size repay our that as provide of not loan of

extended prepayment committed fully balance prepayments over grew first the at balance realized higher of we of yield period, $X and maintenance we the of the repaid, result our income to Despite principal quarter. outstanding the loan billion billion a the in $XXX,XXX fee $X.X As portfolio approximately when end. approximately to quarter

of quality over XX% and yield Our our of are investments credit to X.XX%. XX% average at strong plus LTV Senior asset floating LIBOR stabilized with continue loans a rate. exhibit and origination a investments weighted of average weighted XX% comprised

multi-family as Our investments. diversified type both well for property two-thirds across our and sponsorship and markets, with primary as portfolio secondary, of and geographic assets accounting remains office by

over which market rate closing we this overall made in to the close senior million $XXX have activity floating of of to we commitments anticipate in total conditions. end the Following so the of most far typical subject slowdown the the quarter, of towards year, QX earlier loans,

the equity the financial and the In to quarters, level new over forward. and summary, attractive I'll for review look a three continue quarterly grow be next more returns shareholders. we we Marcin the expect pipeline forward prepayments the to to of our With investment our detailed turn growing our are going over business raised to to realize call our now capital delivering of we results. will the new may during we quarter, depending deployed further funds two on

Marcin Urbaszek

Thank our about and In X% metrics, core everyone. earnings earnings you up will you, for leverage. financial our quarter, period quarter-over-quarter. Steve, prior the capitalization review overall good Thank joining I our first from morning, drawing with and now call. total the were

new the of call, next $XXX loans anticipate be raised outstanding equity discussed quarters, However, to our continue the to through growth closing and in by we process. as further affected capital the impacted shares move the over additional that results support as commit the quarter business. of per the couple our during We of capital we were our by the share will our million would we results new last

to specifics. Turning

$XX.X first Our first current for X.X%. declared and price of per million share. GAAP dividend core stock was our an $X.XX common approximately at of share, which share quarter earnings $X.XX our or the investors our a or were $X.XX million per yield per net income to We quarter attractive $XX offers

grants in XX at as March common $XX.XX the the January. share, restricted as value was stock per our dividend exceeding earnings, reflecting well book Our

terms. which much the since loan during which second addition and offering CLO, of structure. common the our at earlier, financed equity executed manage collateral period, also This has effectively of loans reinvestment In the to attractive to our Jack a million about we IPO, first efficiency more our $XXX increases the as quarter first CRE our flexibility mentioned underlying two-year transaction provides us

to quarter our of by fourth decreased as balance issuance, the XXst. just result over $X facilities outstanding billion a under $XXX March financing As CLO from million of our in the

on across total $X.X facilities have institutions. about borrowing We our capacity of billion six large

the the We these new X.X course our invest utilization we non-recourse We debt. times, expect quarter ratio with facilities of increase CLO a first to the total of the non-mark-to-market year our as debt-to-equity including capital. of ended over

was grow X.X Excluding March reflect about portfolio as leverage again new times our questions. equity metrics of the joining increase base ask only to the, the Both and open our capital. I currently levered call we our would to non-recourse at leverage for larger the securitizations, expect our now XXst. over Thank course And we you operator us a to will and the today. year

Operator

sir. Thank you,

go Jade Rahmani [Operator from begin Our will of question-and-answer ahead. We Instructions] session. the now first will Please come KBW. question

Jade Rahmani

comment very I there you I the loans? believe in on are loans portfolio defaulted the can those much. there any credit loans negative four two you the And to Thanks any quarter? if update rated an past two wanted on -- last Can risk were migration give in update you on an give or whether can quarter. see

Steve Alpart

for Hi, joining. morning. it's Steve Alpart. Jade, you Thank Good

was So, No high. It's on portfolio All performing. overall credit loans are status. quality a XXX% in current. cruel loans are the

credit good So overall, feel I very the the of quality about portfolio.

reserves loans, ratings those are expect well Regarding and throughout debt current QX. of both any Both that to the feel payments. two secured. risk loans We loans are on maintaining not these we're rated for previously do four risk we create

We are have that no or other risk ranked loans four five.

loans. faster have the nature some that performance the major business maintaining rating closely entire on We're know of slower go two portfolio. credit will you in But As go some this again is planned, we will monitoring risk than some no concerns and loans will than on general perform, these planned.

Jade Rahmani

that. of have that? in In to driving and terms Some of the renewed cited that driving pressure as loan on what's capital early all-in people year? REITs Is you really just wondering actually spreads, in mortgage rebuild commercial what's pipelines that and just yields the other seasonality so shown the their deploy loan look spreads, uptick

Jack Taylor

Hey, -- last your returned and on the basis to I'd as on CLO of not -- us earlier still CLO addition I've greater the strongly for money strong We've that the for I market, average. continues And market CLO compression multifamily coming the not but be Again in space. to bifurcate the starting this an private the mentioned and price your competition appeal loans spread earlier rather greater both question with commercial multifamily add for full pretty in points in think area And months XX in Thank stabilizing us. and assets would I seen said loan of investing, as Taylor. so CLO over is the joining assets to Luckily you on elevated. to that's allocation the debt force. desire the there of conviction including back of helping capital it's out -- pressure few a the now. put for has assets. by investors to probably say in estate Jack and structure. into on for with I question there's the things flows very precious vehicle a there's it's largely response bids to than the real I in acceleration public eligible with the only and being

Jade Rahmani

hear and being credit Okay. That's also good on quality to update hear stable. good to the

costs and to was the And the a that question basis? any fixed compensation? of with particular annualized line of where cover G&A that in Or acceleration stock we earnings there fully grants G&A core outlook other the in for should XQ Lastly, were related in number? do you stock when and earnings projects dividend? expect inclusive on regarding rate the year Is full

Marcin Urbaszek

it’s morning. joining Marcin. and Good for Jade, for your Hey, Thanks us question.

were So our multiple factors. by overall driven QX expenses for

for obviously, It being higher a our grew little were So methodology which non-cash quarter on change new in comp fee; we our this to first fees, portfolio and the accounting a restricted this the from raise where quarter management rules. price which CLO. the the grew based we grant those related equity recognized did was expenses We incentive also capital. prevailing – stock, just as to recognized expense an stock higher we went servicing are quarter,

in plus G&A We looking low And higher expense be forward, as capital the though which we grants office new million maybe I for move our as combined in expenses estimate share probably for the probably there related items G&A $X.XX costs. increased definitely that's so wouldn't we servicing costs QX say, variability costs quarter quarter-over-quarter. expect some to would of also it comp are how number space, onetime I that about also some January run new and double would a rate had that preparing we're incurred per well. so and higher. at had some some of includes $X to our we we kind rent few other going which a quarter including is X%

in would the Regarding deployed closer loans now, of earnings I second $XXX liquidity and sit dividend capital have the dividends core as a we the we probably get which the for as of year. today, that right to over expect million we we half have

Jade Rahmani

very much. Thanks

Marcin Urbaszek

you. Thank

Operator

a follow-up Jade from [Operator Instructions] And we have KBW. Rahmani,

Jade Rahmani

Hello, again.

earnings of you you decline cause In from this the Or a an the do in the second full $X.XX the will reported impact equity of terms quarter? anticipate earnings? uptick quarter raise in

Marcin Urbaszek

there's impact be It's of full a again. of to Marcin say. shares. – It's to Jade. the going the Obviously, hard Hey,

the his items towards away. of right will of I the onetime would on be. go what's loans we in slightly to of It's the earnings with expenses exactly to QX be some on pipeline hard end the mentioned portfolio in most predict think the closing remarks, Steve will now what the I the Based our quarter. prepared expect higher mentioned

would to will these again, hard out. mentioned be, will it's play predict factors exact So – but some what I I of numbers

Jade Rahmani

Thanks very much.

Marcin Urbaszek

you. Thank

Operator

JMP have we of Steve [Operator Delaney Instructions] Securities. Next

Chris Muller

Muller It's guys. Hey, today. Steve Chris actually for on

a the come in quick late going repayments a to quarter, a with repayments are Thanks. you closings is do that think quarter there later? mismatch in and on to closings Just there as bit little well? the be the the of one Or going expected come to a little

Steve Plust

in Chris. that occurred Alpart quarter. think A Hey, - respect quarter Steve Steve This say later that to should accurate is respect occur With Plust. originations, Yeah. I to prepayments to prepayments, With that the this Steve?

the the for will think say this towards end that So originations I quarter. QX, of of would occur most the I

Chris Muller

you. Thank it. Got

Operator

Instructions] [Operator Taylor, turn would now the conference to We'll questions. Jack this question-and-answer Mr. go to back time session. over Officer. showing no Mr. further ahead Taylor? conclude Executive Well, and Chief we're at call like I the

Jack Taylor

And soon. everyone today Operator. for forward and thank everyone's support our business. we with again for all look you, speaking Thank to you it. appreciate for we'd And truly like We to joining us

Operator

we the to call management today. again concluded. lines. day. you everyone. thank and conference Thank this your team now Take care. wonderful The Take and you has rest a At also and you time, And great may sir have the of care time for disconnect

Granite Point Mortgage Trust (GPMT) 7 May 192019 Q1 Earnings call transcript