GPMT - Earnings call transcript Q4 2021 | Granite Point Mortgage Trust Inc.

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Operator

00:07 Good morning. My name is Matt, and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust’s Fourth Quarter and Full-Year 2021 Financial Results Conference Call. All participants will be in listen-only mode. After the speakers’ remarks, there will be a question-and-answer period. is call today’s note, being recorded. Please would to Chris I now for like over conference the turn Petta Point. to Granite XX:XX with Relations Investor

Chris Petta

Morral, Steve will Marcin the the The associated section conditions. our yesterday was portfolio, market financial highlight for morning of discuss Officer; Investor release filed key and Chief Officer; Alpart you, with our results. our and Development and will Chief With Thank and Executive our the results. morning, available recap from in financial Marcin and tables our are Taylor, financial business our Steve call brief After a Peter press discuss and Relations of our today’s Thank SEC items with XX-K, Jack of supporting our forward-looking which XX:XX this Financial by website control. company’s Alpart, current Originations; call our that Chief on Plust, review are during and this and comments, will good XX:XX outside Chief Officer made morning. full-year and XXXX to remind which would and Steve include Co-Head Form was you remarks just along our management call of call Jack Point’s of Investment Officer. Co-Head the my Granite Officer this you introductory to provide me activities our XX:XX fourth are quarter Originations; slides Urbaszek, with may everyone. I joining the filed like Chief and uncertain Operating President statements,

not from some risks for any statements. actual with to obligations update future results forward-looking are a see our SEC do cause filings uncertainties to undertake that results. could our discussion expectations. reflect regarding Please views subject statements and We affect our of XX:XX Forward-looking to any could of differ materially the that events

substitute to for measures with A considered in to GAAP the in presented our measures the now release isolation the these refer will found a accordance available certain most Jack. non-GAAP non-GAAP of to and can be I to be measures financial over This GAAP. XX:XX on in earnings turn comparable not now or is call. website. intended information financial call as also slides, which this on are XX:XX We information reconciliation our

Jack Taylor

of you, market, perpetual [evaluating] permanent equity expanding financing, which the Thank debt XX% real and of like While further balance of estate of growth quarter overall expanded growth assets. $XXX through loans. which by be active We shift depending expect successful our those in attractive be months, liabilities, facilities higher has cost repayments. our remaining our structure further higher equity The million billion XX:XX our our benefited significantly good fourth issuing $XXX all reducing for the accretive Refinancing profitability from in more sheet continues interest expense. an portfolio. strengthening actively floors XX:XX of normalized company, XXXX. rate liquidity ratio, providing leverage XX:XX corporate welcome we earnings remaining business. our million positive capital and further and reduce the As over company to inclusive capital, Resolution our and while could support our the our attractive by our $XX incremental equity term source redeployed to our secured allows debt delivered LIBOR [ph] the $X as non-mark-to-market during our improves of further preferred XXXX, increases, to by in billion strengthening projected match preferred compelling embedded $X.X priced call. of over loans growing our at also portfolio, by earning repaid Also, permanent our and of to by financed terms. non-recourse creates portfolio These capital, to historical cost meaningfully led pipeline sheet addition opportunistic leverage lower income have been also us capital, XX:XX pace investment XX:XX over attractive could with of full-year a the and investments last However, the Granite two our loans across this has continue earnings billion growing term-loan a lowering XXXX of operating will of our corporate in our we of add-on position interest interest cost reduce short-term Chris, help net flexibility loans, $XXX run our magnitude short-term a comfortably component important would have borrowings and our investment $X.X as XX:XX XX:XX refinancing pipeline expect our with stock, and debt. base combined and dividend XXXX. new support to vehicles opportunities have remain financings benefits XX:XX a as million release morning, capital our XX:XX had an We by Despite borrowings would everyone. and in is two these strong which levels. also commercial recent loan over expense and cost, base return managing realize line of would capital But to on issuing mix. interest release non-mark-to-market actions Point financing successful the coverage, which company performance over resilient non-accrual portfolio of grow deliver isolation more issuing diversified leverage funding to offering. to covered our XX:XX loan our would improving operating solid In our XXXX higher issuer repayment We and leverageable business release of course secured well funding to reduced. of the substantial new costs. dividend. portfolio could over low; for an on rates some very initiatives million our you we us our in and rates grow supporting have our managed balance legacy it our lower funding than which our additional of remained This our our our profile permanent earnings few our it those XX:XX to with if well-diversified We also over growing and in increase portfolio. CLOs into expanded to attractively earnings to level, of XXXX, of total the As internally

Finally, floor as rates. LIBOR we rising our should some of not new correlation We full weighted the the originate have of XX:XX results. these in interest implementing average financial and grow reflected yet which benefit activities, increase of loans earnings begun have the and portfolio, our decline our portfolio our with already been

profitability. the performance main to credit and reflects portfolio credit We on progress excited XXXX. have ability Over attractive our course highly of is factors economies of the and significant our advance well as experienced by driving on made over of of scale results we the execute a the are our a throughout loan and strong pleased overall opportunities focused originate the volume to remain our investments. of opportunities our very pandemic, realize team, and as improve senior XX:XX advantage of XX:XX with further our balance directly talented are market our repositioning sheet culture We which taking to

our Our course benefits our I of to execute meaningfully XXXX would portfolio. company over is the like forward originations, and Steve to pipeline, turn our Alpart call positioned we strategic should over priorities, and beyond. well believe to accrue now stockholders to on to the the of which XX:XX discuss

Steve Alpart

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

we XXXX, strong million balances, loan this the XXX of and over are fourth in quarter During to funded off over including year. a start million XXX

current and repayments. of We ample an closing totaling investment initial XXX in about new We as proceeds of loans million to and see XXX of new loan of with active expect redeploy fundings. which attractive approximately XX:XX originations, million commitments commitments, the grow had we seven invest pipeline quarter continue an over million fourth capital we from to of opportunities volume XXX

of to more be of roughly realized XXX with on million average remains repayments XX our types. million. loan X.X of million growth approximately our carry quarter favorable XX:XX well lending most offset loans by portfolio originated with industrial, leased a the by weighted attractive million XXX us were + QX newly yield and net XX:XX XX%. across in LTV XX:XX than in XX% multi-family funded million LIBOR balance and loan of about in repayments use. With loans which transitional various highly quarter-over-quarter and bringing fundamentals. characteristics, portfolio. total pick our split weighted the source commitments very The collateralized also a assets by and The office, between and volume the of loans X.XX upsizings, for property mixed loan return fundings, selective originations We over properties fourth property The billion. over risk-adjusted secured to average existing to resulted a to of about allows active, significant We attractive X stabilized We which XXX fundings continue market

vary XXX over XX% represent closing XXXX market is million an so expected currently timing of XX:XX about full-year about of X of conditions. estimate our repayments typical volume billion repayment will We annual of portfolio as XXXX typical our of basis. Our on the subject balance pace and to the loan quarters across repayment

of aggregate profile, of and million overall has funding to of billion, a average XX%. attractive an commitments. yield XXX weighted LTV Our XX a loans continue about of across portfolio X% an balance income million strong stream with average spread credit and XX:XX XXX an about X.X realized Our with future stabilized deliver committed of loans about generating balance

illustrative commitments market. fourth credit as and of conditions mentioned in generally our by of X X.X about One of we fundings. prior the weighted to local Our unchanged, risk currently and a downgraded the business in total the operating of plans. borrowers quarter XX:XX continues with properties attractive loan impacted a performance rating the was the initial portfolio earlier, million to during quarter, quarter, of XX:XX XXX our compared was to million average of office softness progress XXX portfolio ongoing leasing As be stable pipeline risk-rating investments have in

our in we loan have So our we far XX of abundant the credit quarter, and XX and commitments, about XX:XX source realized approximately assets. in million other properties industrial current and loans office XX% summary, million prior XX flow and in by secured Over million of of meet are an first repayments. funded the over including on investments pipeline of In attractive multi-family to well-leased criteria. the return with that balance continue principal,

I we the on our our strategy grow over for plan the optimizing XX:XX financial turn now Marcin detailed sheet, our course our review the of over of balance call more of a year. As will to execute we results. to portfolio

Marcin Urbaszek

morning, afternoon, for and Steve. quarter everyone, GAAP QX. income to in thank our reported $X.XX XX:XX Good share, per you, $X.X $XX.X you $X.XX fourth or today. we us million compared Thank million of or share Yesterday joining per as net

the CECL December. $X.XX QX Our a $XX our related is or million $X.XX million per versus per term-loan, of million for $XX.X of or per repayment QX. million X.X which which charge XX:XX $X.X our include partial update in debt or disclosed Distributable quarter reserve million the extinguishment earnings in share of share, $X.XX on earnings of early or release, GAAP in to and $X business share per $X.XX fourth was were share

full QX. was book decrease from which the of on per as repayment disclosed share term-loan settlement partial the of mainly accounted by in fourth in warrants benefit for per include value X. don't decreased $XX.XX earnings QX $XX.XX per place remaining driven previously December quarter it to the the Our share. took Our XX:XX October, share $X.XX The

$XX.X allowance $XX or $X.XX million GAAP or about $X.XX of share XX:XX includes per million basic full-year for benefit $X.XX our of reported also per income XXXX, losses which release includes about we of share, share. per net book from CECL reserves. For the Our an credit value

non-accrual about rate from impact LIBOR the new decrease from have would of million loans allowance rate million repayments commitments, allocated further and remaining XX:XX Our loans, basis ago. and legacy points of loans. XX:XX our a the year allowance correlation points cash timing higher by expected borrowings, of performance depend continued originate our assets, magnitude which February the facilities will with million to the and from portfolio loan establishment funding with timing impact through in I redeploying X of XXX loans average had million. short-term points, inefficient total and originations. can earning in December from subject floor about average to of our XX:XX on unencumbered to with portfolio's flow our We floors about new our will Our from of in and quarter, total equity of for QX low of the reserves in offset XX:XX by to weighted and Thank capital pace could short-term capital non-accrual The certain to income the to as approval. for quarter partially to Any incremental is Our as two and improve overall call into operator reserves, of basis represents of XXX our newly XXX about variety our total growth to largely prior XX:XX short-term driven $XXX continue questions. rates and The weighted XX XX:XX originated us and in our the legacy preferred QX declined to ended of XX debt-to-equity declined is such with us loans rates meaningfully at portfolio, releasing the the XXX loan which our financed XXXX earnings and basis benefits our million factors, and reflect rising manage by cash $XX from benefit was by ask XX:XX ratio loans. of million the higher joining attractively on the cost today, priced loans, facilities the refinancing rising repay, open partial improvement was declined a driven about our the now higher the reducing CECL $XX again loan loan interest ongoing remained rates. about our floors you the offering term-loan. our whole rates. X.Xx as lender allowance we net increases be to repayments help However, Xx which which XX.X Turning repayment

Operator

come XX:XX [Operator with Instructions] from ahead. go Our will Suisse. Doug Harter first question Credit Please

Doug Harter

XX:XX and impact talk that some how you of Thanks. your CLO recent and spreads the might the Can ability to backup refinance CLOs about? you about, volatility re-lever in older talked

Jack Taylor

This Doug. Hi, Jack XX:XX is Taylor.

CLOs, Having now public one funds occasional perspective, all liabilities or looking are of across advance the extent We'll CLOs We very question your public both some our the in from think XX:XX of morning. wouldn't portfolio And past market. this the multiple that, in public funds good trade market hit one-off because of to still a ways announce as months. pay-off I of in to as continue or improving CLO leverage because a has viable be There's that is the and over inefficient it's the of said in will think to also strategic of market be question, this and trade. includes as has markets. world, of it repayment volatility from you issuer who and an an ourselves particular. or of the and that capital cost six general for overall a of but source answer we refinancing backup but our speak in with extraordinary definite the You the spreads of such obvious really timing your and away part to volume have of financing mix it the and and CLO, markets an that for volume, addressing the release that's the and the

not upon as markets are that. public dependent the we're not amenable, if So,

Doug Harter

then started And of last to, about senior high kind made starting you the progress that? talk pay to you Great. can down the good you XX:XX retiring cost million of XXX secured, for, the outlook

Marcin Urbaszek

it. the good for morning, Hi rest XX:XX Marcin. question. of It’s to Thanks repay want we Doug. Look, the

of growing two, to something on. and it it's it's improving fully think, trying new the XX:XX originating is accomplish potential and way I balance additional is, of power. rates. a repay rising Obviously, as act for as kind loans, What between but that. do cash to we So, driving we're repayment earnings and earnings of debt, source well are correlation liquidity a out we the to intend our our that balancing focused portfolio

for $XXX you If cash of about, speaks look million of So, almost preferred is term the the if XXX kind think entire of overall that. capital sheets, sort balance over fungible, loan. the preferred We repaid right? you at that's

much the preferred almost removed to how of the loans of bottom are which of obviously it's with going So, the refinancing we rest committed structure. earnings many capital, we're cost expense now of to perspective, XXXX. it, earnings terms since of over we our kind the from near-term, is and in course wash to interest originating a that's added line, So, in provide but XX:XX to a and upside we definitely dividends but new the how rest the hopefully

Doug Harter

you. XX:XX Thank

Operator

question XX:XX Securities. JMP ahead. will Steve DeLaney Our next Please with come go from

Steve DeLaney

value. on of morning, I for related XX:XX high in believe, progress point up in and Good the investors, That value everyone debt, Yeah. confusion book warrants that the what also congratulations cleans terms your of made book reducing settling was really and because a cost was. really the

Jack Taylor

you. Thank XX:XX

Steve DeLaney

a XX%. but like is, guess somewhere on OID, there scratching and of more actually Picking Doug welcome. I cost just think the I and like saw on up I You're asking he appreciate with XX:XX a the that some stated of think have, day, rate is that and it where it. where out numbers we fees seems was, I sort of, the there's [indiscernible] I is facility I X%, question was effective

the I of look somewhere you all-in an at So, basis? that the it in XX%, correct it's on am neighborhood way Marcin

Marcin Urbaszek

thank Good It's for Yes. morning, us. XX:XX XX% Steve to XX%. and joining you

million $XX right. expense, the point all of million $XX my to you right? interest question, know of but sort balance So, If we to million money, deploy roughly principal added didn’t Doug’s of of $XX $XXX million preferred that's, dividends, we

capital is to preferred We have capital work. more put flexibility. across to and net, it's another preferred gives balance net, way for it [indiscernible] the us. equity of transaction The sheet us So accretive essentially XX:XX

think about balance a from [indiscernible] you it sheet. If

Steve DeLaney

you X%, whether to XX:XX to the It the we funding X%, thing seems And you if several at about depends will you're him, remaining, know could process looked whether whole [cents like And down it. your probably it's just at have just or that's thing, the like incremental. to anyway I looks it was in XXX me roll about it's thinking would, but a answer be you you look what think XXX, the a quarter] it can could [ph] or saying way seems the is, whole and by costs a savings. close and that of it I terms be it the probably your

XX You've here already given us another million already.

not it's response? go way just the in I next the be away to your like so. So, quarter this took kind of Its’s or we expecting should

Jack Taylor

a the is it we and earnings process, Do write sheet a perspective, cash and Yes. at Yes, balance an to XX:XX off? just we’re thing this have check if and overall the pay you whole from – looking right?

remove going right, we just allows sheet we at the year, the you if by looking So, chunk a of I the right. the same preferred, rising like additional repay portfolio to of perspectives environment, to think it, of rather off the but from the both beneficial about new rate of increase balance and the than rates it XX:XX rest are from earnings is we of said, also loans at will are paying the kind to debt, helps earnings, However, earnings and the us we of over removing a it with originating today and run adding where course today loans the forward. correlation drag company, the this the rate us think time the and in perspective

Steve DeLaney

for Thanks Great. XX:XX comments. the

Operator

[Operator KBW. XX:XX from Jade will Rahmani come go question ahead. next Instructions] Please Our with

Jade Rahmani

much. XX:XX Thank very you

what in feel Do that? out is continue you you find your seen a view in year? And to sustainable driven from expect this surge the originations we've do has wanted non-bank Just trend? that lenders, it to

Steve Alpart

Steve, Yes. you good Hope Hey, XX:XX it's well. are morning. Jade,

talking in look, specialty in we So, lenders markets, borrowers. deliver r for whether our peers players? on about debt our seen the we REITs what important we non-bank have execute professional or mean, mortgage need see, other filling experience playing an certainty, we role institutional are can funds can our and high obviously big a a that move with of I market, quickly, degree you're very

view universe, sector lending and grow. important to as the grown this So, continue it rapidly and it we to expect CRE for we has

Jade Rahmani

credit Anything just originated in XX:XX loans seeing, Thanks talk views that's of to of be in in then negative can or that? outlook terms what quality, of horizon, and of And terms we very overall on being credit that you're much. portfolio the what the should terms and are your quality and cognizant both positive you credit in on trends? market

Jack Taylor

guess I I'll Sure. portfolio. start with XX:XX our

as I loan. we risk – feel look So, stable which And rankings is look quarter. each portfolio. you to not migration. with overall every best evaluate very compared the thing risk the over We in credit our QX, loans credit of our our at know, credit guys good comfortable were our and much at guess We're about pulp QX, rankings, to all

quality good we question, the portfolio. we credit the the As So, I far feel what market, overall profile we in in as about, the your guess, of XX:XX like credit about part see. second

loans levels sectors the targeting, We we the have able liked leverage robust individual be strong, achieve. the per was we're we're in covenant check, a of XX:XX selective. loans billions originating very not We're so structure the quarter, on We the like and that these to quality credit that are pipeline. we can fundamentals and

[ph]. think like that profile overall, We credits current of of to [pipeline] market notwithstanding we're the the volatility. I So, some we're seeing the down coming

Jade Rahmani

much. very Thanks XX:XX

Jack Taylor

XX:XX Sure.

Operator

for conference would This Jack question-and-answer Taylor closing concludes our XX:XX the to any to like turn over I remarks. back session.

Jack Taylor

And [ph] for call, the us I joining all continuing wish QX XXXX you and like that's forward Bye-bye. for the health] markets. to during ongoing again you. this speaking and would today the future, you, [you our thank for look and in you and to time, respect Thank with of again. volatility in Thank we we XX:XX

Operator

presentation. The XX:XX today's Thank now attending is conference concluded. you for

disconnect. You now may

Granite Point Mortgage Trust (GPMT) 25 Feb 222021 Q4 Earnings call transcript