GPMT - Earnings call transcript Q3 2024 | Granite Point Mortgage Trust Inc.

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Operator

Good morning. My name is Christine, and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust's Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note, today's call is being recorded. I would now like to turn the call over to Chris Petta with Investor Relations for Granite Point.

Chris Petta

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

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

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

Jack Taylor

Thank you Point's Chris, like for and to welcome call. for you, We quarter Granite everyone. third earnings you would thank us and XXXX good morning, joining

I'd our Before CFO discussing take like transition. to briefly to our third quarter a upcoming results, discuss moment

and fit and with as history I left grateful I in As returns I Urbaszek Marcin a last Blake's the in with our as shareholder take you'll Point CFO. closely have the rejoined establishing firsthand will smooth very honesty, leadership business, serving all functions, Marcin character, at have the over our capabilities. who and that to and for had X, past indelible Granite the Blake work and ensuring on work the our very acumen our drive and we previously the company am for month, will Point. to Johnson, an been perfect that are the Point Blake expertise, his team admire back have in Blake chapter. At next has understanding industry early deep finance, transition. Having Blake of seen make month, and us financial have extensive on tax greatly and with we role Both of best his as him since to missed us initiatives confident at Blake intelligence and Granite his inception announced our mark Marcin be your advance friendship. Marcin, business dedication. of past hard time our team privilege come next our leadership CFO. his excited to during most December Granite and month, controller. an Marcin for depart wish integral same time, played and our recently you are accounting our also at

Now turning to our business activities.

real largely improving to of during marked period somewhat resolving The remains our which, Point, approach The and sentiment, cycle, estate supportive will long-awaited driven with and especially transitional overall estate proactive the interest larger cutting estate lenders for liquidity broader dependent for regional quarter conditions. forward that Granite by improving Reserve began large that part the the the market and rate attractive sector, substantial along point progress third robust, grow should in uncertain, this and banks commercial to a nonperforming mortgage CMBS sidelines. which market opportunities market macroeconomic significantly rate ongoing interest are the on loans. Liquidity Fed's But market market its time. generally valuations the middle The be Federal view nonbank rates, market commercial to of conditions and will their longer-term improving, forward. We the share strength community transaction real present focus has given in the loans though economy. of be the data real on particularly resiliency continues as the maintain grown floating path to over on activity our remains stronger less year, of for going

So far $XXX this end, quarter we with about repayments $XXX of most during occurring activity balance resolved the and about X principal totaling the loans and this through have million loan including paydowns, of year third realized loans, third quarter. million office

with at one have pipeline $XXX October million and across closed we importantly, the resolutions value of we thereafter. expect carrying fourth loan during most momentum be completed the More our assets, which of X in or rest for the forward of remainder shortly strong to year quarter beyond of of the a maintained and over

don't are value and We anticipate these resolve. book loans as reserved a material impact they adequately for

half of may take their challenging will processes are finalized in year, We are stages through those be given the dynamics. remaining some market though X-rated of our bit a pursuing resolutions transactions of first next of respective longer and anticipate local most loans, their which various

on addressed our we strategies. multiple the As we executed have different credit within resolution portfolio, have successfully issues

our the over balance term. We will economic our significantly and emphasizes Our potential needs optimizing long activity reached volume the between for company experience and coming with CECL the quarters, meaningfully on will may book various of a resolutions approach nonperforming impacts, confidence market, in reserve in credit profitability, We any although real outcomes commercial of loan the transaction liquidity stakeholders factors decline have and resolutions. portfolio momentum in timing, potential pickup the goal anticipate migration where point exceed idiosyncratic some value we management the events, balance future our given we the the other loan estate the the improving believe credit the a in future.

the any be bringing our shares most to to strategy which assets us portfolio shares, profitability We point our and potential to capital repaying to ones consistent driven all structure. To repositioning X.X factors, attractive, capital third opportunistic by our repurchased buybacks, during Board authorization stock belief that shares, undervalued. Moreover, for reinvesting executing about ongoing the run respect our with increased opportunistic quarter, debt, turning the expensive return further earning million allocation reflecting rate on buybacks. continues of our capital strategy providing strong additional of repayments seller turnover repurchase X capital available including over expect our remaining are flexibility the financing, our this with into improve those to XXX,XXX increases million by additional loans that our an return we total allowing common respect significantly to assessing remain from time, and and multiple that with and by an opportunities by

space. In of portfolio We last quarters, the nonperforming of our the made few proactively transitional progress is liquidity prolonged lending the our portfolio. improving end returning credit over and and getting meaningful overall stress credit the near focused the period remain through our have industry higher will managing capital resolutions of closer the believe of this to gradually on cycle We and the is extreme term, to we market profile loans. maintaining

what turnover future, our repayments the our beyond, in opportunities will profitability investment Steve return call to our portfolio through now driving returns. I next to while turn lending quarters activities believe attractive Alpart we and be business our driving to portfolio the will portfolio us to the like further over and more As our look shareholder improving detail. position of loan resolutions of run would we advantage towards rate take core attractive to and couple and of discuss total growing in

Stephen Alpart

We you total joining principal with for this outstanding and billion, of of only you, about commitments. accounts of $XXX billion about $X.X $X.X all X% fundings, Jack, an quarter morning. balance third the about commitments and thank portfolio with Thank for which million total future ended loan call our of

weighted and at average size portfolio LTV loan an types a XX% Our remains $XX well across and includes regions property with of XX investments and million of origination. about diversified loan average

be Our third estimate of the net quarter realized of we loans, portfolio the was about yield nonaccrual about which basis points. XXX impact X% to the loan for

balance principal loan existing and we and million $XX upsizes funded of paydowns in $XXX about of During realized the loan quarter, commitments resolutions. about and repayments, million

resolution. million have of in funded quarter, and a the fourth million far existing commitments $X loan loan realized So we about $XX

liquidity on year. this nonperforming Given balance re-growing the maintaining and capital, our portfolio and before the reinvesting re-leveraging expect lower we quarters the to later over emphasis begin coming trend loan loans, resolving our we

next X-rated to expect report few of results been the portfolio happy have and these the significant actively quarters. over addressing are We our in loans tangible assets to and most resolve

X office mixed-use our quarter, million nonaccrual in in the sold the a million of Angeles and securing and The variety restructured investing mezzanine over $XX UPB cash the was $XXX property retail through with $XX loan property. secured successfully We resolved million sponsor loans the mortgage multifamily property event-based capital in loan we During loan totaling Los million by Pittsburgh office for a into by strategies. a the senior a mixed-use and sponsor. $XX million into $XX additional

million totaled Chicago, new our the sold loans. Additionally, loans $XX principal providing without the owner. in $XXX of resolutions the balance financing million multifamily quarter, us about third property Through X located our was across securing to

feel good progress our very we about to-date. So

to million has X one resolved total loans Jersey X of by Now September the total, quarter carrying are resolving risk-rated property on as at In some office active end a out loans. at with balance been secured of New our in about of of October, processes. In million, in had X provide $XX $XXX loan resolved value we'd our we "X" UPB like of the an color and remaining XX. resolution was such the

on quarter, or During to a opportunistically the buy no financing an all-cash decided the basis received we pursue. which staple unsolicited to loan quick transaction, close with we third-party an in offer

a rating end. quarter to downgraded was loan risk the resolution, of pending at X the Given

Going forward, loans resolve to XXXX our expect remaining we through and most into year-end mid-XXXX. early to X-rated of

closed $XXX to of already X close the have resolutions few next assets one months of half to million have that more in anticipate two across over to follow either year. or are first and expected next We the in

and and York is to mixed-use is fourth New in million office during we property the contract previously, As anticipated disclosed under our sale loan quarter. retail $XX the securing the close

in loan million million mixed-use Rouge, million in $XX the Minneapolis, $XX in resolving the loan anticipate Boston the we $XX Baton office Denver. $XX loan months, coming million the office loan the in Additionally, hotel in and

the the may $XXX our million remains loan first securing discussed, XXXX. the In ongoing for the in property addition process sale office in just to of and $XX half Chicago we million conclude

Given a anticipate time million the we longer loan Minneapolis. our office market for $XX challenges, resolution in persistent local line

third in also remains located hotel and During million collateral and $XX we of predict. the outcome currently a is quarter, X a loan timing our process to to ultimate the of risk the property hard Minneapolis. early rating stages sale The downgraded in secured the by

REO our assets. to Turning

through to well potential as the source additional for Phoenix flow several perform of REO to increase The site. Both current tenant value the with the liquidity, on office we balance title, property cash continues took a we lease our unlevered we the further the largest property access plan optimize and pursue to to sheet a may in After suburban Boston operate financial our continue while quarter extended coming flexibility. remains also that the is and a ongoing. redevelopment office as of as portion and creating profile. serve of for months continue properties in strong a the property process large remain which and to office We end opportunities sale additional

their Market are and loans. looking and improving. invested for assets. is our We available and most and X-rated to continue sponsors Debt sentiment visibility and seasoned strong capital have transaction of get strong support equity most of to addressing activity our

our a remainder through maintaining optimistic the reinvesting to will start liquidity turn any result, XXXX. I issues, results us begin now new loans higher of in credit optionality are intend financial the work to originating for and which will of to allow prioritize the we capital discuss over capitalization. call our turn our to during more we and assets, near-term, address we the future about As the to as nonperforming business. In Marcin

Marcin Urbaszek

you, with serve has group since an very the highlight the and Granite It Point's Steve, people your been kind inception. It work my to and of thank career amazing Thank and you, as an Jack, to been has CFO way. words for been along earlier. honor fortunate of I've talented truly

to turning our Now financial results.

quarter the basic third per per for provision of X related related earlier. a resolutions $X.XX and previously a $XX loan million For GAAP the million were "X" basic risk-rated including mainly loss loans. of quarter, credit per to for was or nonaccrual we net $X.XX an losses write-offs discussed Distributable of written $X.X million to the $X.XX or million write-offs recovery $XX.X off. reported which certain of share, million $XX.X share, The includes loss amounts $XX basic share, or Steve

from a of which per loan buybacks accretive value provision loss about common per $X.XX book we share Our about by mainly common the was book the partially to quarter, during the which due value offset share per was at share. mentioned we QX, opportunistically by executed benefited September share, estimate $X.XX XX decline earlier, $X.XX

pressure Our that to million mainly our some on is on an about the million those $XXX driven of loans, loans aggregate additional assets. average was or allowance last resolutions, which assessed $XXX severity by to quarter. or CECL values. Over September an XX% about reserve implies individually million by were XX of reserve reflecting XX% in "X", decline related as the loss $X.XX total CECL our on the allocated risk-rated write-offs estimated in allowance $XXX property share offset was per partially to compared The increase at

for the With we believe the We depend which are anticipate over timing should over incurring discussed the actual quarter resolution near-term the closing will transactions. nonaccrual expected total resolutions reserve meaningfully and balance. of Jack as specific quarters, of realized reserved losses we the on of couple million earlier, losses appropriately our $XXX of reduce next CECL end these of

also being is $XXX nonaccrual September than of had loans about and on which interest to of these difficult resolutions interest on and million XX, to loan about repayments rate over rate the $X.XX the by dependent third the loan predict run anticipate reduce time, applied status. estimate the rates. Everything else is be short-term level to As continue to is profitability discussed earnings, being $X.X as exact improve equal, repay volume debt reinvest cost company rather of in recognized to in and we about we quarter. earlier capital loans nonearning that recovery expensive our to per to and Certain though share the the of $XXX resolve run timing principal incoming the quarter. We magnitude in of million million improve of of remain are will $X.XX and earnings nonaccrual estimated any assets, we be expected per

compared about X.Xx Turning mainly to QX repayments in decreased and modestly million due X.Xx paydowns. and ended total quarter We with to the unrestricted to loan liquidity capitalization. leverage cash and to of QX, $XXX in

Goldman terminated which Sachs quarter, limited mid-July use anticipated the financing in as near facility, we matured term. the we the in During

the enjoy relationships our We once to we highlighting return financing more to our we and support continue long-standing market strong to expand from originating lenders, actively. our loans new expect capacity in

some to that few REO in ago, unlevered increase I'd of like about for days the coming the open potential we call weeks $XX our and As loan we million cash of in expect now questions. to due financing to the a carried assets. And repayments

Operator

JMP. Instructions] Delaney question from of first with Our Steve line comes Citizens [Operator the

Steven Delaney

at, new that. us some I middle involved complicated. be But, what is and the lending, through on applaud because we for originations for here that I the if guess working understand to have things year? understand resolve to gave very I there begin you coming should is and of been before you're the in of I'm these offset out Jack, we additional into new become would efforts there heard to this are there? So attractive on just but want you assets. I about I'm problem have on. and to you don't time this. respond is when obviously, methodical based are should take putting repays? can't in market modeling, in opportunities trying what about get could the know hearing process process the frame. have start we no virtually going lending? you loans to to -- nonperformers sort to sort that that say, I guys all could Congrats possible These step loans hope terms you bar the Jack, loans time, thoughtful of about new a nonperforming you of fix clear we And your the loan be you precise to to next But resolutions, and you Or think project think way some you analysts it how

Jack Taylor

were to I'm you. Thank today. you join happy us able

think significantly. The on we not based borrowing reinvesting know do but portfolio. to that will quite investment as And our demand of that, and will we'll start from attractive significant. the we be advantage XXXX, re-grow large capital lending we our side community, we take which business that is what expect So during to yet opportunities, return core to today, grow And to expect very we the right? be

to have resolve longer. because a $X.X were of little from $X factors. into think have originations the based to say take occur I specifically, that Year the almost And a point can year. won't entire we the a question billion when I'll every And we'll your Now upon New timing answer those first more quarter of as to and necessarily we during we out, doing underwriting get we'll the assess some variety and billion team intact don't we no, asset

you and your purposes, that modeling So try move we be to I think expect of would we could for forward. precise can more midyear as

Steven Delaney

it's very clearly. express Pretty you it that what much That's helpful. to was hearing, but hear I helpful

buyback of has sitting book, your $XX I there's that continued going built between versus over Stocks sub-$X authorization? $XX like million, guess, a percent $XX the think. been XX-some at value, steady -- stock here down expect to Your to, book million, be $XX a of here maybe Should if stays what, utilization million. I little we that $X, that

Jack Taylor

temporary will stock if real I investors strong you me because fundamental the value we one try business out to factors of. And wouldn't the which a think for Well, of really price a the represents value our we believe steady that's book of our continue use and all let value in assessing parse. our market say opportunity main that are to take into But consideration that uncertainty, I prediction, is of best capital. we the will. we discount continued a given say climbing to the

things. And try liquidity, factors other we that so other maintenance against balance to and like

couple don't we'll pretty buybacks. on the and in we've of we're million while So think specifically the to continue you. buybacks, we open of We've been common context point really very what market like we our I last active that in back shares And I over X.X comment something respect potential with just years, to our told bought of assess the cheap. out it will historically

Operator

with from comes the of Your Doug next UBS. question line Harter

Douglas Harter

loans thinking Can continued progress resolving current but state we and others you're or X-rated on you X? to how your loans You've confidence us of of X-rated kind the have some of about backfilled see the migrations the in. they've the kind of kind down of made won't that nonaccruals, give --

Stephen Alpart

joining. for Thanks Alpart. Steve It's

that limited to loans on we're the all loans feel soon as or are as loans X-rated where right resolve be are or can't So I plan the is generally large further But obviously, always these are focused downward X. It's of That knows The quarter obviously, we've all loans, X there I similar possible. have X. We're doesn't mean behind them this there's ratings there's office migrate possible we think improving. we could on X-rated would XXXX these the hoping migrate that to some migration. loans credit discussed, have, that resolving appropriate. We're on hopefully think steps. We now, business just migration. majority But that of identified to although on the point, for issues. a working at with sponsors in potential the we and upward that some to say liquidity everyone next really

Douglas Harter

performance have help those just of this what Xs than think happened kind months kind been that or us had those -- led X understand ago to were when of the you Xs new If that happened, quarter kind the to led migrations about migration, worse of that? thinking Xs, you that a

Stephen Alpart

there were Sure. resolutions X Well, third migrations X-rated were quarter, the X there that quarter the -- were loans. during

to previously one the New it, that the we working to someone quarter. That but that by to a done. was kind one opportunistically We was So that resolved sell while. that did get were identified. looking loans the in we necessarily were those those a appropriate were thought that we really That done had fourth it. kind that to those on we quarter pursue to during one that's migration quarter. in began we we migrate of a one are fourth assess get happy it We've that And There that Jersey decided we that was and one X we office of asset. fourth quarter, the we was been one migrate. the happy approached We referenced asset for as to resolved during who the that weren't to was mentioned

Operator

Our of from Jade the Rahmani next Instructions] KBW. [Operator question comes line with

Jade Rahmani

higher be and the do what impact an that portfolio there'll on might treasury rates imply, on performance based think that? with you starting Just

Jack Taylor

joining Jade, your thank you you thank for question. for and us,

have would that in mean that refis I do upon in of volume seen repayments. But what regular and I deals have process say that not the an coming occurred. the of some takeout. the think it industry, some but that the there election turning will is the rates been improve. But pressure, for not I with the for increase think out we've pressure, general by the dependent are more that XX-year, trend continue some I with that think in way transaction that did backup as became of I our be to impact will of tick-up deals rates dependent in our the a because we really -- will certain resolution nature the be working fixed were some because it's achievable But that don't think upon occurred the portfolio I I there pressure think has the and resolutions in of to on there's on And much. going currently. rate down we're

Jade Rahmani

Appreciate which in that. billion office watch-list Currently, there of $X.XXX are million are $XXX about of loans loans. the portfolio

dollars So and loans. remaining when clearly And the it's maturities seeing million brokers everything that implies activity. look which from vintage road place it's at A, of office else, buildings. which that's rubber all up requires of amenitized XXXX. an tenants. lease in will I about now highly the office, new meets is portfolio suggests much date. And $XXX concentrated uptick office know we attract what is take And the years, And Class to maturity where in we're at leasing year-end predominance significant in in The X.X to between is very order the problem duration, inventory,

or next over happens maturities of so when this what what below, the $XXX office come years? X.X loans remaining viewpoint as your up risk-rated is And million to "X" those

Stephen Alpart

for you a Great Thank on Alpart. Steve It's of management. ours our big question. ongoing focus That's obviously asset joining.

XXXX the off those out maturity, into of up course. normal and for is coming including this look the the in office, some comment fourth going on we quarter are As of to all loans and pay into the out

office, actually are challenges them of notwithstanding the Some process to pay the off, in in including sector.

Some of of them right. as extend will

working off have that with they we will of as of extent borrowers be we decide that a a of buy may as we'll playbook for a for or a the in pay We'll can a and up job, asset, those to good don't resolving to to creating take where come we view a a equity, and the to our can case-by-case principal playbook cases limited right exchange for which committed of equity a on And time. structure, well. in we've Some extend playbook the additional more has number doing been is win-win paydown, those form a good basis. -- and that want not them borrower as -- solution there'll put with additional reserves, be a have more had borrower replenishing

majority of Borrowers time. assets, these office committed. conversations are need The the assets the good. are So more

off, we extend, Some will a resolving said think assets, again, of identified the will we playbook some but will time. modify. pay over for some this earlier, And problem as majority have we've think I we the

Operator

this Taylor, questions Mr. comments. turn would closing we you. for over further Thank have no at you time. I to floor like back to the

Jack Taylor

want and time. Blake again, wish nice very a and thank to the day. a We us Thank for that's you the to you to everybody very on to And you. we I such for smooth much, you with thank call operator. And taking Marcin transition today, you say you joining Thank us. really appreciate

Operator

Ladies conclude this and does today's teleconference. gentlemen,

wonderful You may day. participation for your disconnect at time. you this your a Thank lines and have

Granite Point Mortgage Trust (GPMT) 7 Nov 242024 Q3 Earnings call transcript