GPMT - Earnings call transcript Q4 2024 | Granite Point Mortgage Trust Inc.

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Operator

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

Chris Petta

morning, good and you, everyone. Thank joining Thank Point's to Granite call Quarter you and for Fourth results. Full discuss financial our Year XXXX me Officer. Officer; Officer; of Plust, this President With of and Originations; Investment call Co-Head Jack our Co-Head our the our Chief our Chief Johnson, Taylor, Officer Financial Officer morning and Steve and Morral, Alpart, Chief Originations; Stephen are Executive and Blake Operating our Peter Chief Chief on Development

a provide Alpart brief of my Investor and SEC portfolio, filed introductory and will After release earnings current in items Stephen available Jack and are capitalization. conditions activities. and key and were our our yesterday results supplemental will recap with section review our highlight comments, Relations the of market our financial associated the from Press call website. Blake with business will discuss today's

during to control. supporting which would and We that remarks expect weeks. coming of are to I management call file the our remind company's forward-looking the statements, you in outside may include XX-K this and like uncertain Form by slides the

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

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

now the Jack. call over turn I'll to

Jack Taylor

everyone. for XXXX morning, like Quarter thank for and you Point's and welcome would Granite Year Earnings joining Thank you, Call. us to you good Fourth We Chris, Full

of Board our Granite inception. to served a who our of superb greatly. Sanders, and miss to He our We our member, I'd month. will Board and ] take results, to Board member remember our trusted a passed like discussing since away a adviser Point [ Directors Before Reid moment him a last Reid man. was as company's

approach to to of industry Now going progress repayments. facilitate were outlook optimistic to for sheet resolving for our activities. with by a to XXXX marked volatility real less continued borrowers turning driven XXXX. business nonperforming Point substantial in for collaboratively and balance somewhat estate our year Banner loans be proactive eventually our asset working the into rates against with and the management. commercial that backdrop more challenging and Both

sectors estate in market. out, and has a commercial the sectors, have conduit real Liquidity recently, already that the anticipated, for consensus Reserve improve help rate estate cuts, growing in estate And markets than the in contributing and the reemerged there the bottomed year. to most while more is most more SASB, commercial Federal a second CLO The positive certain half did for significantly markets. real the of less sentiment liquidity in prices market real

remains just are particularly the middle now transitional robust, and on Meanwhile, improving remained as liquidity in sector, the starting floating who though banks reemerge. rate to market sidelines community regional largely had less

grow longer-term over active banks compared in cycles, opportunities their time. expect attractive will to which share prior We present nonbank less market for these remain direct lending to to lenders

and repayments, million X third of our about loans resolved principal $XXX million of and this near activity amortization realized during in at fourth loan totaling successfully paydowns we or value culminating much with about $XXX XXXX, the and In carrying balance quarters.

of million XXXX. $XXX a beginning resolutions loans, totaling total office more for $XX X of resolved since we XXXX, in of far million So about the

the to variety successfully on executed of particular resolution strategies fitted have each situation. a We

loans, rated finalized most of We of are X the these year, through pursuing will respective are this of We first of our in frames. time require we several transactions various their though be anticipate stages which some to resolutions others longer half processes. of remaining expect

management timing, deployed the Our stakeholders potential balance economic approach a value company impact, factors, and other for our optimizing liquidity point, to of and book into own have that we between goal continues term. long outcomes our profitability, emphasize with the over securities. the various portfolio opportunistically To capital

fourth XXXX, quarter, common that stock be repurchased undervalued. shares, significantly strong of belief purchased in we our X.X million X.X of our continues reflecting about During to million those our the

opportunistic buyback Fed we We pivots over currently respect quarters and have Overall higher. about past resulting and future to the to sentiment our remain with authorization, disappointment the existing improved trending few market rates despite intend activity. million X.X from any under the shares remaining has

As enters markets. for still most across XXXX more to types tempered year course outlook, fundamentals property believe with the will liquidity with we of many transaction the market though and positive the the market commercial real improve a estate improving continue over volume in

future made XXXX, XXXX have so we our far progress meaningfully potential continue the current resolutions in events. exceed in loan nonperforming credit of any volume With to and should

and ongoing With total down further and expensive turnover as our part we positioned that should driving return run more latter debt anticipate run we profitability grow resolutions, pay create improving our be portfolio rate in profitability, earning returns. assets. repayments, our originations new portfolio with we the while will these time the improve of shareholder loan attractive through rate and We over to year resolutions to

Alpart like now in Steve I the detail. to to more our turn call discuss activities portfolio over to would

Stephen Alpart

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

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

risk average portfolio remained stable rating X.X%. XX, weighted December As at our of

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

million commitments of resolution, upsizes plus new a During as and was million, a GAAP inclusive we from which quarter, treated property loan loan $XX the New about purposes. $XX loan mixed-use funded our for of assumption York $XX existing million

repayments, totaling We million. of had million, in loan portfolio about $XXX $XXX and an a active resolutions resulting of paydowns quarter net loan reduction

far totaling we So existing UPB. realized have of X million quarter, commitments of first about loan about the in and $X million funded resolutions loan $XX

later maintaining liquidity begin resolving before trend reinvesting Given portfolio year. remaining nonperforming we expect loans, coming our regrowing our releveraging capital, to our on quarters emphasis in our the balance loan we and lower this and

addressing loans during our about in resolutions the with rated of made fourth substantial an X loans progress the and portfolio quarter. have totaling year X active We $XXX million

X nonaccrual loans in through of $XXX resolved a During the quarter, UPB totaling variety of strategies. we million those about successfully

loan As sales $XX the a million were New a via a office October we mentioned earnings resolved property office securing sale. by property loan through was call, Jersey the sponsors. on by million in securing loan Denver The secured and resolved all property cash both our an loan Hotel a $XX third respective $XX quarter in Minneapolis million

loan million. underlying purchaser. to balance loan unpaid retail The was New with was office the from $XX reduction and of modified a by assumed loan property property a York the principal through a $XX resolved sale million The million $XX securing in a assumption mixed-use with the

of risk-rated X to loans. UPB we year-end, the like such provide a on we'd $XXX some total of loans Now our X At about balance color with had million.

we In title sale So million million about property. securing the resolved property totaling far loan. a took of UPB. secured In have resolved an $XX we to a these collateral of February, located X January, XXXX, Beach $XX Miami property $XX of loan by through in Boston we million office X loans, the office in a

during As result rated loans the million, resolve balance we X most we to resolutions, a of of these a next and quarters. few with expect X of have $XXX currently them

property $XX $XX for Minneapolis in $XX Hotel couple conclude loan mixed-use loan active securing million a may few in active office sale in securing next is ongoing loan an the quarters. next over property the process process Rouge the could over next Baton The Chicago the over months. quarters. could and remains million conclude is of The process that securing an million that The conclude few our currently an

challenges. and quarter, priorities. loan persistent $XX the by subject longer of $XX a been borrower secured between a housing to resolution remaining Kentucky remains loan multiyear given to local a Louisville, third downgraded these in parties. X the a million property Resolving risk anticipate time many rated our process We top property market had in arbitration student During our we X. The for a confidential of one weighting line Minneapolis million loans the

XX. REO held X assets December our to Turning at

ongoing, with and development coming strong currently and sheet flow significant access quarters. process property flexibility. may the we unlevered the potential Boston source a pursue months quarter Phoenix REO and for as has in properties increase office and our to further which end remain conclude which property serve the remains office to we a Both over of continue months the and potential additional exploring. We to optimize process profile of continues in as liquidity, are could a financial sale and perform well The suburban cash the that coming balance

over I during to will assets, of new we more the which, will begin will results prioritize loans these liquidity and for as to us Blake to continue turn half to discuss the financial We capitalization. resolve now allow maintaining XXXX. call higher optionality, originating our second

Blake Johnson

Thank us for thank today. everyone, you, joining morning, Steve. Good you and

our to financial results. Turning

net or credit or $XX.X includes per common quarter, negative for share, basic negative reported $X.XX For basic which we the per or fourth share, a common per of of share. million $XX.X million $X.XX basic common $XX.X negative $XX.X write-offs a of million $X.XX which [indiscernible] provision a includes million losses loss GAAP

Write-offs loan resolutions Steve earlier. were discussed nonaccrual that related X to

for estimate which per QX, was was losses offset value share by share, accretive $X.XX $X.XX by common at the for the buybacks benefited book a December Our about book executed due to $X.XX about quarter, which partially share primarily XX decline per share. per we during opportunistically credit we value provision of the represents common which

or our about driven allocated offset December compared million about of total Approximately Our million estimated on X were aggregate share $XXX of common $XX.X $X.XX million. to XX by losses resolutions, CECL $XX loss individually $XXX assets. allowance average share. decline per write-offs million last our $XXX increase to by reserve implies at XX% common which million reserve is as CECL or an $XX.X per related of credit was assessed severity in $X.XX to XX% partially those loans, quarter for million provision of of an was

reserve CECL resolutions write-off we believe We resolutions million, are X subsequent realized previously to occurred further expect that balance. of we reserved our to appropriately should recognize our a which approximately and allowance. in $XX.X reserved meaningfully reduce year-end, The total we for for

million being nonaccrual year-end, $XXX of and principal status. X is X of be applied recovery cost All any fourth interest we reduce in to quarter. $X.X about these As recognized loans loan had rather on about than and principal of to incoming is million and which estimated the are earnings, in balance loans

profitability resolve improve the short-term run of level of debt the also reinvest the of will company and repay of assets, though We rate exact predict, dependent volume the repayments be the capital magnitude rates. to to loan expense time, continue nonearning interest on we over and anticipate remain our difficult and to as the time and

quarter. ended from the prior liquidity Funding highlighting relationships. our remained about enjoy diversified unrestricted to and total million support long-standing remains capitalization. and lenders, continue at $XX well relative X.X with We we leverage of our to mix and unchanged continued to and the cash Turning stable, year

once expect actively. We to more loans new capacity our to return we expand financing originating

million potential to expect few operator open in the I As will cash ago, from near questions. line that the loan financing of ask about of unlevered term for increase we the REO a and now the further our $XX we days repayments in assets. to carried

Operator

Our comes Doug Harter first Instructions] [Operator with question from UBS.

Douglas Harter

X the kind and a you -- of comfort than resulted incremental provision be they detail give rated bit X downgrades quarters? just Hoping comfort current whether than the new go as help could to through there'll rated more today in incremental will provisioning in and coming rated whether little need as to X us for loans what that the better less on assets and -- be

Stephen Alpart

you it's call. Alpart. Steve the Doug, Thank joining for

your was that the part ratings question risk The say, second of CECL maybe which is go first through every quarter, through every go thing I'll all we quarter. the

comfortable feel information the the rankings now, with risk So we we and have with the reserves.

of that new we the as risk downgraded X our far fourth X that to Louisville one talked Property, the we mentioned, we Xs during Housing about quarter, prepared X. as As a during from rating remarks, the Student

than loan the was came third extended is sponsor out X. expected. the I the the arbitration and of fairly of think work a still with up And property award XXXX. to quarter. we That driver that in but parties. a of we said bit during auto had during gone borrower to a between arbitration the That early moving The November lower property. bunch could which concluded that, confidential through include from to that process we're of the lengthy resolution, X Also quarter, sale continuing really

[Audio The other Beach took to that we one We during that the Gap] was asset. the office Miami mentioned title property

is our means still maintain bring we we that's liquidity through mode as a to anything targeted this don't building liquidity, that us it have higher the say up need resolutions. are in is. for. it we that it maintaining to work We for than and have We But we liquidity see coming

other some of the maintain If set expect side for absorb it's it's will But more matter that the liquidity cash anticipating on flexibility. leverage will that not repays a We we'll particular it. through put in and of here the us flexibility just stuff, on, we're a have it maintain we weeks. some problems to

Operator

from question Delaney comes Citizens JMP. And our with Steven next

Steven Delaney

or the very have with CLOs, curious vintage. buyer there in and state -- we hearing as I'm your those you potentially transactional way, financing comments positive about more into you any Is to Is improve funding, on of some We're about leverage the X standpoint a words, XXXX the opportunity combined. market, X-plus CLO both extract demand. from old. years in opportunity [indiscernible] execution cost CLOs. XXXX go other there to, even the improve refinance, for in any

Jack Taylor

be in believe in and what in but that's of we welcome near recall, term. is its advantage We now. with very amounts portion and into past, exist, market, which, are acceleration December, combine the being CLO in to you're said originations were ones refinance we people FLX, That also has reason the the are market. repo the the to they of it's and -- in And now. the This the or first basis. CLO as manifested them smaller FLX you new on going-forward take take of refinance assets intend end a advantage lender, Jack. not But an independent and We be And X, existing intend year the nonarbitrage in CLOs a market our did with resurgence than assets a quarter as into that. also FLX, FLX past this far is yes, won't X that's that the that for to predicting and on next we answer even The the I've towards as possibility. but on activity, we of possible this taking it in to of and them the could a CLO referencing

Steven Delaney

Steve loans, Alpart's comment, I at for or have One hear. bucket? loans. year-end? that but follow-up rated big rated you X-rated about is that how Steve mentioned were And X loans you currently many -- you you great that X had to the How That's missed talking to

Stephen Alpart

at Sure. had X we $XXX UPB was and rated Yes, the X a million. loans little year-end, under

Steven Delaney

Great. buyback. -- close applaud very comment to I the much just

to of book done. think I XX% below is needs something be stock that at

and making the to liquidity against shareholders. on to that applaud have other obviously the there effort that You you're balance opportunities, of but behalf

we smoother saw XXXX maybe So in the than XXXX. sailing Wish you best. thanks. Hopefully in than all

Operator

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

Jade Rahmani

yet there's you the And there's I your the X and X through. vintage. presentation, only on through risk-rated been has mean are looking since that loans deal pre-XXXX that plenty side of XXXX. SEC last And that then are risk-rated loans just there's books Kentucky filing, The the went

and provide So with credit legacy we investors of large vintage downgrades management these and sense portfolio, to how such some and you your by the active an be reserves. in won't old asset surprised with really need is how

I to but addition many has not taken GPMT quite are been substantially all that, than of severities peers, loss of them. mean, that In many higher the the peers,

as just broadly this vintage on the the going if X level then Kentucky, an some the downgrade that's to now of asset management X such could on you why and guess old I the more through since rated provide risk So is happens sense to talk loans.

Jack Taylor

address. will, is Xs, full I'll a -- state, vintage is and portfolio, I'll you vintage, because of that much. there. deals that if amount lot if a to been brought there's management reworked these will, say more the lot question What not so nominal you the a et [indiscernible] in paydowns, of have cetera, through been over the they've asset that doing X modifications the including there's that loan you largely the years been We've story the have tremendous current a across

the pudding the running is the of very for is had in a amount that levels, to of 'XX, that a of of year. period including in Some office basis proportional at we've course XXXX, in the proof loans will high the 'XX, through in in expect XXs, at significant predictions our mid-XXs on high we this which 'XX continue prepayments -- teens high throughout the

the reworked So COVID of the is then we've them. or age and pre-COVID vintage loans

arbitrations will of a Secondly, time. And party insurers. counterparties, cetera. Steve that as mentioned very was that's just on various involved as and in complex. know have it. people reputable, dragged but process in it We that can some to highly develops, around party skilled here. happened was it be et a that, -- were between new for contractors were confidential And to not a in evidence what put range asset arbitration/mediation was to this we were many it with Kentucky, It was years grew respect not this, and developer litigation. This very And XX was -- the over owner we been an group who to

So of that of be process. We on and process. went weren't that to part the not allowed we were part

So expectations ago the of the we long as resolves way had put meeting it sponsor. a not that And a in time on unfortunately, arbitration a potential and downgrade. was

So in wanting to we detail asset, confidential not and X-rated this nature had very speak the I given of of defense any a in has found that reserve large process. about up the it process more affect difficult possibility, the to built a

over large increase amount to a was ended we incremental though amount. nominal what up a small what So it reserve even had, with we the already is

Jade Rahmani

I each then... in that its this I these this. so very the origination these now happens case, the long of of own surprising. understand each that But fact estate. the Okay. nature And guess one deals, real of that's things stories it's commercial like They're all -- rubik's is one cube, after

Jack Taylor

not understand me event, say, with wanted, mediation result that arbitration I it. what to was But the the you catalytic during if fourth the will, desired. was the owner the quarter, coming let conclusion predicted or had a

which catalytic was aware as to the of action with So take as that greater we the event, soon information that, were had. able we then that were we

Jade Rahmani

Okay. that best just and be than on to lender value assets, items way share buybacks debt, picture bigger value a drink it partially the strategic was two, a that. rather benefit in dividend number upside to sharp an own into potential you're per sharply, issuing a has value question, went book the spending do and any creation offset take say And your all to getting and normalized see ex aggressive down the more these Sternlicht says, in more still down why even why was REO one. but buyback, I mean, dividend book we're turnaround not management. cut from be Number don't these minus ] still than went is I off you your the though pursue seeing. it which rather the and like $X.XX and I there not [ next closer, always guess stock is would reductions lot blood. earnings $X.XX. [indiscernible] in money question the the Barry than lot participate capital with

consider assets can them you could should manage going you into and So REO. maybe dividend maybe some on and what's take I investors. that to And be no pivoting that upside than better think and aggressive give

Jack Taylor

sometime it's the start when, and discussed resolutions in dividend, hard upon given said, about to Board, something covering of we that reasons half, latter first. let with There's be me that we've of project it's XXXX. It's start variety be we which to So we able very originations, and decision. the candidly, it that expect, talk and of their be to the will dependent prepayments. sustain will as a dividend the And the though will

combined numbers. -- we're REO because much of have you a basically we as reserve larger number Secondly, the if into reserves, REO a about haven't substantial look competitors at REO. credit REO taken same number with of with plus our a much of at performance But running level reserve percentage we as

them. Now been they even we've we percentage we've at have believe of the the cases, a they're will they multiple work -- not are many part if even don't recovery. with or found want or such intensely of the acquired And we've an upside we to able And very in the many, borrower is worked them that we've and but solution. is we a in say with substantially maintained that situation relationships, but in problem, future excellent if out-of-the-money and borrower, I cases, for are to, taken risk, if with the they're

it So a different what in -- you addressed way. we've

the of asset. a right, I would maintain good some been in replacing be, maintaining more said, able distressed percentage liabilities very keeping what to situations, these much it Secondly, And office it the some cases, by in asset liabilities, a the it valuable not of as we've of -- into REO, instead for with expensive taking liabilities, upside. keeping say,

like the Miami wasn't the and where been saying that we're situation, the a taking borrower if like have certainly solution I because of when and as we it's properties in you part less back more what will, other -- we percentage REO acknowledge the in suburban in So we these Boston. But have been, situations you're carrying reserves, loans.

but on So are it's it's our of kind in the a is of cases, preserving percentage and that getting many upside. complex answer, valuable view it quite that's that a liabilities

Operator

there the to for hand questions this at closing are Jack floor And no now time. Taylor further back remarks. I'll

Jack Taylor

finally, thank who's call and us a your support thanks joined work and that very Well, like and Patrick you. operator. year Halter new much wish team members, the it. went accomplishing big Board everybody hard to Lazar on a so And I into I'd today Thank And to you, and for a thank you welcome of really to Also, all day our time and the thank Directors Nikolic. Board and big of weekend. company. our X want and attention the for your we nice holiday the this to

Operator

All today's a disconnect. And parties concludes good may you. that now day. Thank Have call.

Granite Point Mortgage Trust (GPMT) 14 Feb 252024 Q4 Earnings call transcript