Granite Point Mortgage Trust Inc. (NYSE: GPMT) ("GPMT,"
"Granite Point" or the "Company") today announced its financial
results for the quarter ending June 30, 2024, and provided an
update on its activities subsequent to quarter-end. An earnings
supplemental containing second quarter 2024 financial results can
be viewed at www.gpmtreit.com.
“We have made meaningful progress addressing our nonearning
assets over the last few months,” said Jack Taylor, President and
Chief Executive Officer of Granite Point. “We anticipate executing
on significant additional nonaccrual resolutions and realizing more
loan repayments through the rest of the year. The reduction in our
book value this quarter resulted from an increase in our allowance
for loan losses, as we progress towards more resolutions in the
context of greater transaction activity in the market. While we
continue to reposition the portfolio to take advantage of future
investment opportunities, we aim to drive economic returns for the
Company through our flexible capital allocation strategy. As such,
we repurchased 0.5 million common shares during the quarter
generating book value accretion and intend to remain opportunistic
with respect to future buybacks.”
Second Quarter 2024 Activity
- Recognized GAAP Net (Loss)(1) of $(66.7) million, or $(1.31)
per basic share, inclusive of a $(60.8) million, or $(1.19) per
basic share, provision for credit losses.
- Distributable (Loss)(2) of $(9.1) million, or $(0.18) per basic
share, inclusive of loan write-offs of $(6.6) million, or $(0.13)
per basic share. Distributable (Loss)(2) excluding write-offs of
$(2.5) million, or $(0.05) per basic share.
- Book value per common share was $9.84 as of June 30, 2024,
inclusive of $(5.27) per common share of total CECL reserve.
- Declared and paid a cash dividend of $0.05 per common share and
a cash dividend of $0.4375 per share of its Series A preferred
stock.
- Funded $17.5 million in prior loan commitments and
upsizes.
- Realized $103.7 million of total UPB in loan repayments,
paydowns, amortization, and resolutions.
- Resolved a $35.7 million loan through the acquisition of the
title to the collateral office property located in Maynard,
MA.
- Resolved an $11.6 million loan secured by a multifamily
property located in Milwaukee, WI, realizing a loss of approx.
$(2.4) million.
- Modified a $37.5 million loan secured by a design building in
New York. The resulting $4.2 million mezzanine note was deemed
uncollectible and written-off as of June 30, 2024.
- Carried at quarter-end a 98% floating rate loan portfolio with
$2.7 billion in total loan commitments comprised of over 99% senior
loans. As of June 30, 2024, portfolio weighted average stabilized
LTV was 63.7%(3) and realized loan portfolio yield was
7.0%(4).
- Weighted average loan portfolio risk rating was 3.0 at June 30,
2024, unchanged from the prior quarter.
- Total CECL reserve at quarter-end was $266.9 million, or 9.7%
of total loan portfolio commitments.
- Held two REO(5) properties with an aggregate carrying value of
$53.6 million, as of June 30, 2024.
- Repurchased 0.5 million shares of its common stock at an
average price of $3.10 per share for a total of approx. $1.6
million, resulting in a book value benefit of approx. $0.05 per
share.
- Extended the maturity of the Morgan Stanley financing facility
to July 2025.
- Ended the quarter with $86 million in unrestricted cash and a
total leverage ratio(6) of 2.5x, with no corporate debt maturities
remaining.
Post Quarter-End Update
- In July, the Company resolved a $37.1 million loan secured by a
mixed-use office and retail asset located in Los Angeles, CA. As a
result of this transaction, the Company expects to realize a
write-off of approx. $(22.2) million, which had been reserved for
through a previously recorded allowance for credit losses.
- In July, the Company resolved a $51.0 million loan secured by a
mixed-use multifamily, event space and office property located in
Pittsburgh, PA. The modification included, among other things, a
restructuring of the whole loan into a new $32 million senior loan
and a $19 million mezzanine note, and a capital infusion from the
sponsor to further support the collateral property.
- So far in Q3 2024, funded about $3 million on existing loan
commitments.
- Realized approx. $143 million in loan repayments, paydowns and
resolutions, which includes a $54 million office loan
repayment.
- As of August 2nd, carried approx. $92 million in unrestricted
cash and about $54 million in unlevered REO(5) assets.
(1)
Represents Net (Loss) Income
Attributable to Common Stockholders.
(2)
Please see page 6 for
Distributable (loss) and Distributable (loss) before realized
losses definition and a reconciliation of GAAP to non-GAAP
financial information.
(3)
Stabilized loan-to-value ratio
(LTV) is calculated as the fully funded loan amount (plus any
financing that is pari passu with or senior to such loan),
including all contractually provided for future fundings, divided
by the as stabilized value (as determined in conformance with
USPAP) set forth in the original appraisal. As stabilized value may
be based on certain assumptions, such as future construction
completion, projected re-tenanting, payment of tenant improvement
or leasing commissions allowances or free or abated rent periods,
or increased tenant occupancy.
(4)
Yield includes net origination
fees and exit fees, but does not include future fundings, and is
expressed as a monthly equivalent yield. Portfolio yield includes
nonaccrual loans.
(5)
REO represents "Real Estate
Owned".
(6)
Borrowings outstanding on
repurchase facilities, secured credit facility and CLO’s, less
cash, divided by total stockholders’ equity.
Conference Call
Granite Point Mortgage Trust Inc. will host a conference call on
August 6, 2024, at 11:00 a.m. ET to discuss second quarter 2024
financial results and related information. To participate in the
teleconference, please call toll-free (877) 407-8031, (or (201)
689-8031 for international callers), approximately 10 minutes prior
to the above start time, and ask to be joined into the Granite
Point Mortgage Trust Inc. call. You may also listen to the
teleconference live via the Internet at www.gpmtreit.com, in the Investor section under
the News & Events link. For those unable to attend, a telephone
playback will be available beginning August 6, 2024, at 12:00 p.m.
ET through August 20, 2024, at 12:00 a.m. ET. The playback can be
accessed by calling (877) 660-6853 (or (201) 612-7415 for
international callers) and providing the Access Code 13747704. The
call will also be archived on the Company’s website in the Investor
section under the News & Events link.
About Granite Point Mortgage Trust Inc.
Granite Point Mortgage Trust Inc. is a Maryland corporation
focused on directly originating, investing in and managing senior
floating rate commercial mortgage loans and other debt and
debt-like commercial real estate investments. Granite Point is
headquartered in New York, NY. Additional information is available
at www.gpmtreit.com.
Forward-Looking Statements
This press release contains, or incorporates by reference, not
only historical information, but also forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements involve numerous risks and
uncertainties. Our actual results may differ from our beliefs,
expectations, estimates, projections and illustrations and,
consequently, you should not rely on these forward-looking
statements as predictions of future events. Forward-looking
statements are not historical in nature and can be identified by
words such as “anticipate,” “estimate,” “will,” “should,” “expect,”
“target,” “believe,” “outlook,” “potential,” “continue,” “intend,”
“seek,” “plan,” “goals,” “future,” “likely,” “may” and similar
expressions or their negative forms, or by references to strategy,
plans or intentions. The illustrative examples herein are
forward-looking statements. By their nature, forward-looking
statements speak only as of the date they are made, are not
statements of historical facts or guarantees of future performance
and are subject to risks, uncertainties, assumptions or changes in
circumstances that are difficult to predict or quantify. Our
expectations, beliefs and estimates are expressed in good faith and
we believe there is a reasonable basis for them. However, there can
be no assurance that management's expectations, beliefs and
estimates will prove to be correct or be achieved, and actual
results may vary materially from what is expressed in or indicated
by the forward-looking statements.
These forward-looking statements are subject to risks and
uncertainties, including, among other things, those described in
our Annual Report on Form 10-K for the year ended December 31,
2023, under the caption “Risk Factors,” and any subsequent Form
10-Q or other filings made with the SEC. Forward-looking statements
speak only as of the date they are made, and we undertake no
obligation to update or revise any such forward-looking statements,
whether as a result of new information, future events or
otherwise.
This press release is for informational purposes only and shall
not constitute, or form a part of, an offer to sell or buy or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities.
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in
accordance with United States generally accepted accounting
principles (GAAP), this press release and the accompanying earnings
presentation present non-GAAP financial measures, such as
Distributable (Loss) Earnings and Distributable (Loss) Earnings per
basic common share, that exclude certain items. Granite Point
management believes that these non-GAAP measures enable it to
perform meaningful comparisons of past, present and future results
of the Company’s core business operations, and uses these measures
to gain a comparative understanding of the Company’s operating
performance and business trends. The non-GAAP financial measures
presented by the Company represent supplemental information to
assist investors in analyzing the results of its operations.
However, because these measures are not calculated in accordance
with GAAP, they should not be considered a substitute for, or
superior to, the financial measures calculated in accordance with
GAAP. The Company’s GAAP financial results and the reconciliations
from these results should be carefully evaluated. See the GAAP to
non-GAAP reconciliation table on page 6 of this release.
Additional Information
Stockholders of Granite Point and other interested persons may
find additional information regarding the Company at the Securities
and Exchange Commission’s Internet site at www.sec.gov or by directing requests to: Granite
Point Mortgage Trust Inc., 3 Bryant Park, 24th Floor, New York, NY
10036, telephone (212) 364-5500.
GRANITE POINT MORTGAGE TRUST
INC.
CONDENSED AND CONSOLIDATED
BALANCE SHEETS
(in thousands, except share
data)
June 30, 2024
December 31,
2023
ASSETS
(unaudited)
Loans held-for-investment
$
2,616,884
$
2,718,486
Allowance for credit losses
(264,140
)
(134,661
)
Loans held-for-investment, net
2,352,744
2,583,825
Cash and cash equivalents
85,916
188,370
Restricted cash
12,880
10,846
Real estate owned, net
42,820
16,939
Accrued interest receivable
10,725
12,380
Other assets
41,666
34,572
Total Assets
$
2,546,751
$
2,846,932
LIABILITIES AND STOCKHOLDERS’
EQUITY
Liabilities
Repurchase facilities
$
791,556
$
875,442
Securitized debt obligations
938,075
991,698
Secured credit facility
85,192
84,000
Dividends payable
6,335
14,136
Other liabilities
20,892
22,633
Total Liabilities
1,842,050
1,987,909
Stockholders’ Equity
7.00% Series A cumulative redeemable
preferred stock, par value $0.01 per share; 11,500,000 shares
authorized, and 8,229,500 and 8,229,500 shares issued and
outstanding, respectively; liquidation preference $25.00 per
share
82
82
Common stock, par value $0.01 per share;
450,000,000 shares authorized, and 50,684,117 shares and 50,577,841
issued and outstanding, respectively
507
506
Additional paid-in capital
1,198,894
1,198,048
Cumulative earnings
(69,696
)
67,495
Cumulative distributions to
stockholders
(425,211
)
(407,233
)
Total Granite Point Mortgage Trust Inc.
Stockholders’ Equity
704,576
858,898
Non-controlling interests
125
125
Total Equity
704,701
859,023
Total Liabilities and Stockholders’
Equity
$
2,546,751
$
2,846,932
GRANITE POINT MORTGAGE TRUST
INC.
CONDENSED AND CONSOLIDATED
STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands, except share
data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Interest Income:
(unaudited)
(unaudited)
Loans held-for-investment
$
46,882
$
66,217
$
98,847
$
131,508
Cash and cash equivalents
1,597
2,609
3,687
4,037
Total interest income
48,479
68,826
102,534
135,545
Interest expense:
Repurchase facilities
19,331
22,872
40,059
42,644
Secured credit facility
2,714
3,075
5,403
6,004
Securitized debt obligations
18,303
17,888
36,418
35,939
Convertible senior notes
—
2,332
—
4,643
Asset-specific financings
—
819
—
1,562
Total interest expense
40,348
46,986
81,880
90,792
Net interest income
8,131
21,840
20,654
44,753
Other income (loss):
Revenue from real estate owned
operations
1,111
462
2,253
462
Provision for credit losses
(60,756
)
(5,818
)
(136,308
)
(52,228
)
Gain (loss) on extinguishment of debt
(786
)
—
(786
)
238
Total other loss
(60,431
)
(5,356
)
(134,841
)
(51,528
)
Expenses:
Compensation and benefits
4,721
6,209
10,708
12,121
Servicing expenses
1,398
1,320
2,774
2,698
Expenses from real estate owned
operations
1,950
1,664
3,995
1,664
Other operating expenses
2,700
2,180
5,529
5,451
Total expenses
10,769
11,373
23,006
21,934
(Loss) income before income
taxes
(63,069
)
5,111
(137,193
)
(28,709
)
(Benefit from) provision for income
taxes
(1
)
70
(2
)
79
Net (loss) income
(63,068
)
5,041
(137,191
)
(28,788
)
Dividends on preferred stock
3,600
3,625
7,200
7,250
Net (loss) income attributable to
common stockholders
$
(66,668
)
$
1,416
$
(144,391
)
$
(36,038
)
Basic (loss) earnings per weighted average
common share
$
(1.31
)
$
0.03
$
(2.84
)
$
(0.69
)
Diluted (loss) earnings per weighted
average common share
$
(1.31
)
$
0.03
$
(2.84
)
$
(0.69
)
Dividends declared per common share
$
0.05
$
0.20
$
0.20
$
0.40
Weighted average number of shares of
common stock outstanding:
Basic
50,939,476
51,538,309
50,842,004
51,921,217
Diluted
50,939,476
51,619,072
50,842,004
51,921,217
Net (loss) income attributable to
common stockholders
$
(66,668
)
$
1,416
$
(144,391
)
$
(36,038
)
GRANITE POINT MORTGAGE TRUST
INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL INFORMATION
(dollars in thousands, except
share data)
Three Months Ended
June 30,
(in thousands, except share data)
(unaudited)
2024
Reconciliation of GAAP net (Loss)
income to Distributable (Loss):
GAAP net (Loss) income attributable to
common stockholders
$
(66,668
)
Adjustments:
Provision for credit losses
60,756
Depreciation and amortization on real
estate owned
1,174
Loss (Gain) on extinguishment of debt
786
Non-cash equity compensation
1,459
Distributable (Loss) before realized
losses
$
(2,493
)
Realized losses on write-offs, loan sales
and REO conversions
(6,566
)
Distributable (Loss)
$
(9,059
)
Distributable (Loss) per basic share of
common stock
$
(0.18
)
Distributable (Loss) per diluted share of
common stock
$
(0.18
)
Distributable (Loss) before realized
losses per basic share of common stock
$
(0.05
)
Distributable (Loss) before realized
losses per diluted share of common stock
$
(0.05
)
Basic weighted average common shares
50,939,476
Diluted weighted average common shares
50,939,476
(1) Beginning with our Annual
Report on Form 10-K for the year ended December 31, 2023, and for
all subsequent reporting periods ending on or after December 31,
2023, we have elected to present Distributable Earnings, a measure
that is not prepared in accordance with GAAP, as a supplemental
method of evaluating our operating performance. Distributable
Earnings replaces our prior presentation of Core Earnings with no
changes to the definition. In order to maintain our status as a
REIT, we are required to distribute at least 90% of our taxable
income as dividends. Distributable Earnings is intended to overtime
serve as a general, though imperfect, proxy for our taxable income.
As such, Distributable Earnings is considered a key indicator of
our ability to generate sufficient income to pay our common
dividends, which is the primary focus of income-oriented investors
who comprise a meaningful segment of our stockholder base. We
believe providing Distributable Earnings on a supplemental basis to
our net income and cash flow from operating activities, as
determined in accordance with GAAP, is helpful to stockholders in
assessing the overall operating performance of our business.
For reporting purposes, we define Distributable Earnings as net
income (loss) attributable to our stockholders, computed in
accordance with GAAP, excluding: (i) non-cash equity compensation
expenses; (ii) depreciation and amortization; (iii) any unrealized
gains (losses) or other similar non-cash items that are included in
net income (loss) for the applicable reporting period (regardless
of whether such items are included in other comprehensive income or
in net income (loss) for such period); and (iv) certain non-cash
items and one-time expenses. Distributable Earnings may also be
adjusted from time to time for reporting purposes to exclude
one-time events pursuant to changes in GAAP and certain other
material non-cash income or expense items approved by a majority of
our independent directors. The exclusion of depreciation and
amortization from the calculation of Distributable Earnings only
applies to debt investments related to real estate to the extent we
foreclose upon the property or properties underlying such debt
investments.
While Distributable Earnings excludes the impact of the unrealized
non-cash current provision for credit losses, we expect to only
recognize such potential credit losses in Distributable Earnings if
and when such amounts are deemed non-recoverable. This is generally
at the time a loan is repaid, or in the case of foreclosure, when
the underlying asset is sold, but nonrecoverability may also be
concluded if, in our determination, it is nearly certain that all
amounts due will not be collected. The realized loss amount
reflected in Distributable Earnings will equal the difference
between the cash received, or expected to be received, and the
carrying value of the asset, and is reflective of our economic
experience as it relates to the ultimate realization of the loan.
During the three months ended June 30, 2024, we recorded provision
for credit losses of $(60.8) million, which has been excluded from
Distributable Earnings, consistent with other unrealized gains
(losses) and other non-cash items pursuant to our existing policy
for reporting Distributable Earnings referenced above. During the
three months ended June 30, 2024, we recorded $(1.2) million, in
depreciation and amortization on REO and related intangibles, which
has been excluded from Distributable Earnings consistent with other
unrealized gains (losses) and other non-cash items pursuant to our
existing policy for reporting Distributable Earnings referenced
above. Distributable Earnings does not represent net income or cash
flow from operating activities and should not be considered as an
alternative to GAAP net income, or an indication of our GAAP cash
flows from operations, a measure of our liquidity, or an indication
of funds available for our cash needs. In addition, our methodology
for calculating Distributable Earnings may differ from the
methodologies employed by other companies to calculate the same or
similar supplemental performance measures, and, accordingly, our
reported Distributable Earnings may not be comparable to the
Distributable Earnings reported by other companies.
Distributable Earnings does not represent
net income (loss) or cash flow from operating activities and should
not be considered as an alternative to GAAP net income (loss), or
an indication of our GAAP cash flows from operations, a measure of
our liquidity, or an indication of funds available for our cash
needs. In addition, our methodology for calculating Distributable
Earnings may differ from the methodologies employed by other
companies to calculate the same or similar supplemental performance
measures, and, accordingly, our reported Distributable Earnings may
not be comparable to the Distributable Earnings reported by other
companies.
We believe it is useful to our
stockholders to present Distributable Earnings before realized
losses to reflect our run-rate operating results as (i) our
operating results are mainly comprised of net interest income
earned on our loan investments net of our operating expenses, which
comprise our ongoing operations, (ii) it helps our stockholders in
assessing the overall run-rate operating performance of our
business, and (iii) it has been a useful reference related to our
common dividend as it is one of the factors we and our Board of
Directors consider when declaring the dividend. We believe that our
stockholders use Distributable Earnings and Distributable Earnings
before realized losses, or a comparable supplemental performance
measure, to evaluate and compare the performance of our company and
our peers.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240805600520/en/
Investors: Chris Petta Investor Relations, Granite Point
Mortgage Trust Inc., (212) 364-5500, investors@gpmtreit.com.
Granite Point Mortgage (NYSE:GPMT)
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