GPMT - Earnings call transcript Q3 2020 | Granite Point Mortgage Trust Inc.

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Operator

[00:00:04] Good morning, everyone. My name is Jamie and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust, third quarter 2020 Financial results conference call. [00:00:18] All participants will be in a listen only mode after the speaker's remarks, there will be a question and answer period. At this time, I'd like to turn the conference call over to Chris Petta with Investor Relations for Grant a point, sir. begin. Please

Chris Petta

this will and discuss business financial Granit thank market filed Alpert financial our as Marcin points, have current were and me yesterday my you the and Jack copy. conditions. you us for highlight results. comments, Urbaszek, with will well morning, Taylor, brief introductory provide Plus on results. discuss John associated our form, call, Alpart, to third today's not release our call a portfolio of and recap our good CFO, our with key Thank and review our activities you everyone, joining a Puts our press Stephen financial [XX:XX:XX] President from the are Morrison tables CEO, thank CEO, Steve did our as and morning will Steve quarter, items The FCC, After XXXX CFO.

Web the may review of find of FCC in we gap on location. that site In our investor being dot call, now Web We measures. You non you information same may be to provided a urge and today's Web on webcast to conjunction in have them website, gap in earnings this section and relations are our with slides, website the gov. I posted to which and our our release site like financial also reconciliation is the would this mention call on accessed or

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

and investors We anticipate, differ use such and regarding views typically not actual may urge and looking to are looking who which to results including are, risks be do caution inaccurate. imply on now reports, any that such believe over to to on forward later associated from Tinku and statements. any as update proven with and turn obtained filings in reflect materially the of we the risks obligation Forward estimate to We We recent expectations. described the website, other consider They be our looking with uncertainties if or may events I'll statements events rely words. FCC. FCC, undertake statements future Jack. not FCC carefully the XXK words our you call most forward expect, our the

John Taylor

the term navigate we and long financial XXX flexibility balance and historic [XX:XX:XX] continues call. would I'm continue our you Thank and and you, we made they a challenges to as to economy. and bolstering progress welcome With everyone to to in report since thank joining our like secured the you that broader further sheet, everyone. last spoke safe of We advantage We hope stay and commitment for growth as financial our earnings substantial opportunities develop. market we we XXXX Chris, quarter of goal good future all to strategic dollars healthy. morning, million enhance a to third our take happy liquidity

generate the our cash liquidity, continues improved portfolio our flows. our as reinstated to strong With board dividend quarterly earnings,

deep business, team stockholders. preserve also we in a the partners and the believe strategy. working our ongoing lot in for and completed will of previously discuss to the our on remain manager monster is bit focused into our my market portfolio estate experienced company's actively agreement have that but only function. investment our firmly with our given We in we entered of We the to This expected which embedded I definitive values, value As our real managing year, dislocation remarks. disclosed, our a internalize within with be process through the not our and also to a by later assets, end

that We our term. are stockholders multiple tested our the over returns strong ultimately long managing to experience time will confident cycles deliver through

solid overall to remains Our business returns, as strong and the generate credit portfolio their our performance interruption. continues properties sponsors through protect

through XX service October payments third percent for not or payment we've the contractual quarter specific losses. a we collected or debt have loans our over risk dates, of During and and impairments quarter and any with loan any five the did there's reserves

and The [XX:XX:XX] credit one others, and the we liabilities. further the real long credit owners cycles for economy be impacts this for portfolio, potential on out. portfolio by fundamentals will lucky the recovery their conflict significantly lag been in drag have as values we the overall often We ultimate as of of the as and calls, that of However, properties. depend commercial borrower fatigue have and through of be real estate for our our the of negative to bolster As the path impacts careers mindful multiple to prior liquidity discussed over well unaffected environment our has strategic stabilize and of outcomes estate are our been [XX:XX:XX] economy. goals shifts on or those seen our would and persist

We a well-known that XXX respected obtained extremely investors. we pleased with and from institutional are the million financing dollar

provides positions our Our business around during a flexibility of our to financing the of vision well goal and and sophisticated us for was manage to has institution and the future partner with us operational a for and future. strong the understanding our with shares assets of beliefs financial This certain times actively business company. that the value our

We of further our stabilize considering third We holidays liabilities. our actions and our to with we as call extended have are during finance constructive to efforts with long margin continue dialog from also other counterparts and benefit continue our maintained our the relationships standing one lenders our quarter. our

in in we've markets class the yield, asset seen estate up. as estate, to of capital real with around of pick investors form Over commercial The incrementally States. activity continues safe improve. significant few United haven well to sentiment by pursuing past months, slowly continue capital the and transaction backed as amounts the A investments hard real the

rest in view the a well assets. pick reinforces which our our time year, but experienced is the of additional of may the to have the repayments, loan timing hard predict. quality of repayments credit of very We of experience exact We

As result the financing, Friday, loan healthy select activity, our a of XXX term million balance repayment of and last cash over of we sales as carried loan strategic dollars.

Going believe market opportunities. as elevated any forward, we it potential assess maintain well to new to level liquidity the of as an prudent continue investment we as

on primary our environment. quarter showed of the I'm further our the with remain entire conditions, very results strength performance in an actively third our pleased as proud current Given our [XX:XX:XX] our business work and of we the stabilizing investment of operating team strong this emphasis our Our managing will business and liabilities with generating and with focus overall our defensive, returns. through difficult portfolio portfolio.

that and multiple with over value primary strengthened opportunities. cycles our success strong relationships have delivering the for confident We We balance goal and remain managing returns assets will sheet and further extensive flexibility with the strong through while improving for significantly of future our our growth maintaining enhance our financial time. the experience lenders stockholders market and of and preserve current our for borrowers our

process. agreement into the manager In turning entered definitive to comment the like that a had October, to announced with briefly management call before internalize our to I'd Now, internalization Steve Halpert, on function. we the over we company's

the forty that Point million and negotiated cash internalization payment with XXXX. be was the in by At to term on the expected terminated make was of four is and transaction. The management of which time Granter time, forward. the company our a agreement, this of the longer manager between will transaction, approved the to board an half December were a effective dollars and part independent going committee XXst for of incentivized connection management agreement directors, manager completion As and one the

functions, Following team completion managed internally our will that including anticipate transition finance we an of its orderly interruption. timely operations intervention, estate all of the the retaining an excellent our normal business without real and commercial such company. continue be We will required

and highly granted of drive an point proposition company the board stockholders. enhance important and company's an managed will to for We benefits the believe internally team externalization that Our the are confident transition that milestone value directors and meaningful is management like activities I earnings in evolution Steve portfolio in call over our to more a realizing step growth our detail. now the discuss in lowering potential. more and recent costs turn and to fully and to would Valpak significant greater

Stephen Alpart

our [XX:XX:XX] you joining all Thank call you, morning. for this and Jack, thank

portfolio Our benefiting well results, mortgage loans first generally part in force. in perform of labor delivering quarter, senior the positive our from third

properties. their have us have supporting engaged worked in been Our borrowers highly and with

continue types, We payments So into Debt XX closely. and are with loans over hospitality challenges. on taking consideration QX, borrowers part with we to covid-XX due in again and service loans been ongoing We And engaged remain in that no collections discussions strategy. retail, percent current in to experience loans as were our our after strong September have mainly contractual management status. monitoring property impairments of our situations of no those particular had modified asset under certain significant that proactive XXth. non-accrual of many

decline XX During with dollar amount amendments, number loan million. the we a loans about balance saw principal in and quarter, the aggregate third modifying of an of XXX

has institutional secured the sponsors are markets business their vibrant time pandemic needed loans by properties general, extended Our plans. implement and in to with strong the

the waiver twenty interest, has the for the of and reserves from of approach million These who on remain for the their in at risk condition, risk deferral, of on retail also relief. the properties. provide surprising term of relatively amendments real secured We usually were portfolio risk fundamentals been our properties. in hundred four involve combination September balance equity loans loans same unchanged XX with Most are it commitments rated the our the aggregate about extension rankings XXth. ranking principal short quarter. and of rated risk of were So an our with an focused most to in unaffected or last sponsors maintain remained borrowers eight with by part, some for As not equity market that estate that coupled is the additional largely protecting [XX:XX:XX] quarter, reallocation QX hotel of

loans We have no that ranked five. are

the duration and the that current estate real fundamentals XXXX threats that dislocation the be remains unclear, may in lag credit the Given of often level market economy of elevated. broader

had September point As future four funding of XXX approximately billion a principal our discrete balance our of commitments. inclusive four diversified of investments point billion seven of XXth, one well and portfolio

of mortgage is with had securities, market first senior very geographic percent and We past widely [XX:XX:XX] XX weighted sale origination the at the highly commitments. loans become clear of The activity. was any sponsor was loans geographically XX comprised our a loan XXX pickup percent of in existing no principal funded part by distributed close was quarters. portfolio as of LTV as not the less previously in a liquidity and few than new to disclosed quarter portfolio during exposure decline our of average property of strategy, repayment That have did six loan of investments the diversified million balance. benefits types portfolio over stabilize well XX about by balance totaling granular, in the management a Our our and million driven

two loan repayments we various the million nine the activity. a During full of of our quarter, of in improving which the loan completing we slowly quality sales and over transaction Since types, as QX, additional end believe hundred we modest And two market. real repayments reflect of million loan an included saw positions. increase amortization our property CMBS principal the in high across have our repayments, realized loans, XXX refinancings estate borrowers realized and the credit of a we repayment

our turn of over to review pace, but repayments results. While Martin uncertain. repayments exact the year, our volume before few end we detailed may timing below realize additional for more now remains the financial a is a the historical of call I will significantly the loan of the

Marcin Urbaszek

a hundred dollars decline disclosed The our months. of [XX:XX:XX] was third everyone, per the or five Good today. you per reported realized mainly included million three decrease share loss three internalization sale driven dollars realized in seventy allowance outstanding four of ten by point cents point by was balance process, dollars represented twenty offset cents point which Yesterday of reserves, points cumulative eighty commitments. of was Thank seven end, nine previously the XX our loss nine charges us for afternoon, million got seven dollars seven which for our of million our thank forty and quarter restructuring partially a net share, and credit one you, joining basis in losses we share forty Steve. and per or seasonal morning, on of quarter related seventy the total on cents to At million losses cents or per million six five about point or portfolio. three our share dollars

was quarter cents credit the our charges, Our decline for and the core earnings well the excluding allowance as per XX time in share, or internalization restructuring one dollars XX as related million for losses. third

per per share Our XXth of September was sixteen adoption book three cents impact dollar to application dollars and cents Cecil. value the XX share. and And per at share ninety included related

Given improved undistributed the earnings of stock income. position per common was for XXth, in the rather liquidity strategy liquidity management had of largely twenty our half we in year in earnings. business. dividend taxable core our As our amount the September company, by we of driven dividend which first dollars At of by in significantly the reinstated suspension the the than quarter approximately was covered XX million our easily call, nine last third generation our common we our share, of the cents discussed [XX:XX:XX]

and will to and distribution board our measures maintain to satisfy our take taxable directors minimum with of We if continue ensure monitor reach income necessary, work we requirements. to status

Our total light by hundred continues to eight third at average of portfolio one our basis three portfolio debt real a of an term portfolio, our billion, estate five over in were the income of financing the times. about divestitures. our with to new relative fifty challenging by leverage asset perform points, about the Along libel loan market. offset decline end like the liquidity. point four balance on of net by interest weighted borrowings, laws loan well reflective percent the new and discussing stability, equity loans of XX associated remarks the and percent ratio Aided one rate the total despite showed quarter for two decline financing, in which pay to prepayments with conclude downs in partially of we my level balance the quarter I'd and point to

secured to settle given much and secured which under first business. extend cash. it additional issued has purchase warrants six and a of is exercise in gross our or of manage The subject borrow to We for the settled form and facilities, over an cannot warrants retain two five As of months, future stock. are up million five warrants depend payment six drawer's shares of million hundred Approximately year were on and natural [XX:XX:XX] half shares previously financing, million fee. year option of to up any be environment, these disclosed, an to with closing the Concurrently current term common we The draw little which option the a under our dollar attractive, initial strategic coupon million to of another subject this terms million can facilities. it the very six an one KARREN actively extension of from annual and months to to we in for year, company twenty XX facilities dollars, a the percent. capital senior with vesting, XXX the exercised us we financing view commitment warrants for in loan provides an six believe this proceeds flexibility the eight the

operator with expected ask existing to at loan our for now facilities, As today, commitments call potentially XXst. costs of Thank three our you continue financing that I We cash is will hundred the internalization decline pay six, we dollars our to December we further close and November twenty us end million fund year cash on the joining the associated had five balance as to through and process, open our deliver questions. hand. again will the which over of anticipate to

Operator

begin to may a time, your and withdraw a telephone we'll ask this then the you star session question, question at questions. answer gentlemen, and press one Ladies using and [XX:XX:XX] touchtone to

You star two. may in press

and to ask If the you, you best ensure pick is pressing handset numbers are that Once using then a question. do quality. Star to the speakerphone, one again, we a up the sound ask please before

comes Please Credit question. with first from Suisse. Harter Our go your ahead question today Doug from

Doug Harter

Thanks. [XX:XX:XX]

just Given loans. the you talked you liquidity potential mention new of uses didn't you know, funding Marsan, about,

think kind talk where of You how you portfolio you're when about that might about size kind and just the stabilize. thinking might about of

John Taylor

you. is Thank it answer actually This that from Right. good [XX:XX:XX] I'll you to Taylor, today. is hear Jack

making the be market. to but overall new and intend on we We're we our loans also a yet. progress not and in will more while portfolio, assets defensive We we of the focus grow current just liabilities and position monitor investment our while

of end we'll year the because in that not of prepayments capital, on at alternative depend would factors, our and and be when will I'd It's say of say I first new sometime time. pace originating attractiveness our to of reassessing. tend quarter assessment investments hard variety including start of the So say on the uses before to the a the portfolio, we'll loan

And difficult the going to but right monitoring before specify not So that it's beginning year. we'll now, end. year into constantly the of be

Doug Harter

of [XX:XX:XX] know, you is a stance more and and about And of a some you you're how level what into of the future. of do in move kind the I right then kind now just, at defensive know, know, when liquidity to you kind guess neutral you think kind ultimately, as of point positioning you more

Marcin Urbaszek

[XX:XX:XX] think we north and XXX probably be million Look, the dollars future. this for Martin morning. Hi, good Doug, will of I is foreseeable

this Canada, considering being that's time But environment decline. to I little over be million. bit defensive, future, to the the foreseeable I expect for As Jack mentioned, likely XXX over and a think would

Doug Harter

Marcia. Thanks, [XX:XX:XX]

Operator

from comes next with JMP ahead question question. Delaney your Our from Steve go [XX:XX:XX] Securities. Please

Steve DeLaney

board. you've everyone. dialog Marcin, the your reinstatement your dividend the the regarding progress the on Congrats of morning, and Good comments [XX:XX:XX] with made, ongoing and

us to in time? any at if at undistributed comment this income And give end. up range you, Can or fact, whether as have so, maybe estimate? taxable year some true mentioned You you

Marcin Urbaszek

joining we Thanks morning, for Steve. Sure. Sure, [XX:XX:XX] Marsat. us. have. Good Yes,

As we income I my undistributed prepared of million said have in through about September XX remarks, taxable XX. dollars

terms be to you discussing that how we'll So, you know, go in see as maintain what to options obviously, we status. And how manage the board looks know, want our we, we'll quarter like. fourth into our year. of different with And to

Why? So income, some have have TBD on taxable obviously. do we Yes, do undistributed we that.

Steve DeLaney

your missed do I you remarks. [XX:XX:XX] if into XXXX, flexibility, I in I'm rolling So but that in have mistaken. not believe, sorry Apologies, some of that some

your of assume mean. advantage plan So be take rollover we should not would of. that to Should we that that

John Taylor

as [XX:XX:XX] flexibility, will do have have but quiddity, necessary We value status, we is as the But any obviously much whatever help with options we to and at maintain solution. hard same we But some and most into will you as to the do we any as specifics of can. protect much we it's look at to come at optimal do book point. this just up get to the all time kind

Steve DeLaney

response. All my Thanks. question. [XX:XX:XX] was Well, Appreciate that right. detailed the primary

Operator

our from next from with And question question. ahead Rahmani [XX:XX:XX] Please comes your Jade KBW. go

Jade Rahmani

you much. Thank very [XX:XX:XX]

I around one think one, your a expectations maybe what your XXXX on you that are? XXXX you elaborate bit I elevated. comments cautious. threats, credit said seems credit think Can in

John Taylor

But to really on driven it often the Yesterday's Hi, we that of partners a going development the duration behind then growing but much longer that news lag the long looking the speak and economy, will of we're of experienced to it's over the we're through very the nature real couple in [XX:XX:XX] yesterday. and vaccine, would one last how a People. the very with we but estate kind XXXX by I'll sense duration be of and to of just a a That fundamentals pandemic. just because pandemic part more forward respect than of kind its Pfizer this There been the pandemic. the positive was overall see to the Jane, pass of was weeks idea ongoing that there's that in are reversed. where whipsaw. the saying it cautiously we're on to cycles related

to want elaborate, Steve. do you If

Stephen Alpart

at back look and morning. percent covers are to We that saw an running focused a How for retail our portfolio. XX you for jacket. around a the think four know, at slow ramp I mainly occupancy. us I of No, for lot hotels. are this the thanks expected hotels just hotels But up. hotels reopening. nationally, you [XX:XX:XX] if you and add It's XX And would still XX, percent there's joining

of Our it's again, see feeling a we'll it feel positive mentioned, have news, back. predict the too once just and has even But sector traveling feels early with timing recovery. we the been vaccine that come just to people yesterday's comfortable the

right comments retail generally we're a that outlook the and having cautious sector. So apply similar those to more now

Jade Rahmani

exposer? just saw are of significant And that thinking about the like you in households to to are work in portfolio? a XX office [XX:XX:XX] exposures something forward. million How there home terms of you a have office housing, plan thinking I is how expected about the from survey the be going amount

Stephen Alpart

seeing of Sure, our factor. some nothing the been and and a in the strong for have from early collections term, relief rent have short in much wide not our industry, industry there's saw coworking. to huge well, term strong pandemic our some short our exposure And of started. requests overall. have term, the [XX:XX:XX] borrowers. been the But We been We collections landlords, don't long it's from that we're is what since portfolio some

broader the predictions. Look, it that a that very feels I early You're and trends office market the really of is would market. some broad, from diverse home, work make at very these say getting to

also type hit is don't But as location the some of diversified have has I Our far and geographic to harder very mean, to covid by a secondary as office. broader we over that portfolio exposure markets, of And time. markets play the out lot trends, primary of markets.

Jade Rahmani

some the the for take which start mortgage on and financial growth dollar, that be that gave value market example, at many the the buy, investors [XX:XX:XX] multiple actually confidence. thrived did trajectory and know which that coming the accreting rates of Ok, crisis XX famously own them of global upwards survived allowed and legacy to cents to And out ones you and experience the North NRF were has a clothes mentioned able of of book cycles their on in advantage looking team did. as Star below management

about You originations the Are position. you points where XX seeing opportunities you know, or make outsized such purchases, you There's away are few a perhaps in close? granite is others know, similar value. accretive buying percent looking back of of percent investment any stock could that loan XX discounted at that including the book from G.P.A., some

John Taylor

our capital, buybacks or for broad any Aj, such we we their we creating with And we're with or [XX:XX:XX] we're like. is well. many to shareholder likely for what general comment it. policy liquidity actions. but uses on be on on that, potential of And attractive, generating to that management that always returns. a additional us Jack, be ourselves with And where is use not But use buybacks best activities balance our capital, we're other trading that to timing, respect something keeping not it's it's capital this clothes it our tomato stock think good thinking along to potential the additional for, the say to the I will position not a as now, on continue but it's possible eye that that's event, or a we would or of raised And our whether something the ability have looking other focused our stability and risk will it's and require focused some we're it's some sheet, deleveraging of and that adjusted question. the

Jade Rahmani

to it close one, liquidity in want mind final up, I Pine by River issue are to believe, to just of a that [XX:XX:XX] to either accretive [XX:XX:XX] expect time board's December the XX You a potentially have issues liquidity? credit any internalization that really a cash million full agreed of in elevated use prioritizing I when like Ok, run What you to don't be sounds transaction. make that it's XX justifies payment dollars could and you XXst. at postpone liquidity? ratio. and shares to earnings your at outset, management, yet rate use or the of because mind ask follow million if on least Why one you XXXX expense that one know, fully going

John Taylor

[XX:XX:XX] questions there's lot in of what just embedded Well, asked. that a would I answer you

internalization. the to the First, in in was arbitration making you stated this foreign decided liquidity company couple benefit that of panel. the terms see company's the we we run process at look we this with can was current the the that including try We just to don't taken account. payment to worth now, the binding amount believe, assess think our it an And adequate And the and to a of demands in I capital was process payable quite situation entered company investment. are of of as as manager the it was prepared sizing and you fact, it into meet we have the manager. the I'll substantial. the the Well that arbitration raised remarks, by in a into remind And benefits immediate next the of internalization quarters

dramatically most intention during internalization. this are benefits the every company that We for growing of have growing growth periods it the expressed and those

Jade Rahmani

much. you very thank [XX:XX:XX] Ok,

Operator

[XX:XX:XX] press may question. then again, please, question star ahead question, like would with And to ask JPMorgan. into. Please from your comes questions you press to one you your Once star and Charlie our go a next Oresteia if from withdraw

Unidentified Analyst

the today. taking that Appreciate [XX:XX:XX] floor provide. disclosures Hey, LIBOR morning, questions for thanks the guys good guys, you

this the twenty loans the slide are space, begin better to I might average at vintages those looking twenty, does as And and income of big where correctly, financing drive the overall be a roll your just facility seventeen the If the illustrating should in than pretty slower a interest sense think weighted the simple continued floor. a I'm Right, net benefit repayments given of higher. to jump from get floor job I'm nuance which there twenty, perspective. trying new a trends because than big, XX off, in Flor's. there's a of it floor anticipated, given nineteen the eighteen,

Marcin Urbaszek

really pay it earlier, of you think Martin. Charlie, we to know, we and All it's which Hey, do intend have, we on a can Again, repayments, loans think right. loans. I Jack you start of you way. lot depends in then, And [XX:XX:XX] originating if general know, as it mentioned you when. Yeah, the timing that know, new

return that. on from things it'll LIBOR of and depend what those look what like So like floors kind perspective, a loans

it's again, say. So, to hard

I hit important a point. think a on on you an on

right shrink You Right lot know, really you net know, interest now, we expense term as the with haven't recognized going loan we our at new of will related all. margin interest a forward.

The first full quarter QX. be of that will

that that'll you keep on the as it we'll forward. to be over happens But from we model earnings, do interest you expect going over now But quarter obviously, mind again, all five time. to our level floor, compress and in per impact million as what benefit expense. them please we dollars So see know,

Unidentified Analyst

Martin, maturity [XX:XX:XX] And property, retail the the Ok, the if largest I one I get it's color. an just was, for thanks, California portfolio in original on could and over then that update the the summer. believe,

us on just could So if asset curious that an how update performing. is you give

Stephen Alpart

as impacted. well to large [XX:XX:XX] operate assets, or a a with this capital result where like located in capacity. full we're are a particularly pandemic. to guys There Steve, hotels pandemic these of the protect And of and retail, how you? has dialog Look, was institutional very here whole certainly partners pandemic out. Petralia. our lifestyle on it's center, the well the ability with and Bavaro constant The plays position to the prior equity here. lot stay performing a open Operations it's were at limitations [XX:XX:XX] a was as

Unidentified Analyst

[XX:XX:XX] the Thanks for very questions. much taking

Operator

closing for and to with answer [XX:XX:XX] Jack to remarks. that, like and end conference any the back today's Taylor over will And ladies turn we call question I'd gentlemen, session.

John Taylor

Thank and community, be to be and joining [XX:XX:XX] to speaking all health We again. doing. to in I investment this time you today Most it. further again will us we're our throughout Jamie. you in community wish Thank us, we safety say very appreciate and particularly, updates we taking of you, really else want the you everybody look with how on to anybody and we good appreciate with the soon listening forward period. analyst

Operator

We call. conference that will gentlemen, and do today's for thank ladies And attending. you [XX:XX:XX] conclude

may disconnect lines. You your now

Granite Point Mortgage Trust (GPMT) 10 Nov 202020 Q3 Earnings call transcript