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Granite Point Mortgage Trust Inc. Reports Fourth Quarter and Full Year 2020 Financial Results and Post Quarter-End Update

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Granite Point Mortgage Trust (GPMT) reported Q4 2020 GAAP net income of $23.1 million ($0.42/share) and distributable earnings of $18.4 million ($0.33/share). Net interest income fell to $27.4 million from $33.8 million due to a reduced portfolio balance. The company declared a cash dividend of $0.20 and a special dividend of $0.25. Full-year 2020 showed a GAAP net loss of $40.5 million, impacted by restructuring charges and credit loss provisions. Post-quarter, GPMT closed a $349 million refinancing and maintained a strong liquidity position with $235.6 million cash on hand.

Positive
  • Strong Q4 net income of $23.1 million, showing resilience amid pandemic challenges.
  • Declared cash dividend of $0.20 and additional special dividend of $0.25.
  • Improved liquidity with $260 million in cash at year-end and $235.6 million in early March 2021.
Negative
  • Decline in net interest income from $33.8 million to $27.4 million in Q4 2020.
  • Full-year 2020 GAAP net loss of $(40.5) million due to restructuring and credit losses.

Granite Point Mortgage Trust Inc. (NYSE: GPMT) ("GPMT," "Granite Point" or the "Company") today announced its financial results for the quarter and full year ended December 31, 2020, and provided an update on its activities subsequent to quarter-end. A presentation containing fourth quarter 2020 financial highlights and activity post quarter-end can be viewed at www.gpmtreit.com.

Fourth Quarter 2020 Activity

  • GAAP net income of $23.1 million, or $0.42 per basic share, inclusive of $0.16 release of prior CECL reserves and $(0.05) of internalization-related restructuring charges.
  • Distributable Earnings(1) of $18.4 million, or $0.33 per basic share.
  • Net interest income declined to $27.4 million during the three months ended December 31, 2020 as compared to $33.8 million for the prior quarter, mainly due to a decline in portfolio average principal balance and recognition of first full quarter of costs associated with the senior secured term loan facilities, which closed on September 25, 2020.
  • Book value of $16.92 per common share, inclusive of $(1.31) per share CECL reserve.
  • Declared a cash dividend of $0.20 per common share and a non-recurring special dividend of $0.25 per common share.
  • At December 31, 2020, carried an allowance for credit losses of $72.2 million (or 1.63% of total portfolio commitments), a decrease of $8.5 million from the prior quarter.
  • Downgraded a $67.1 million loan collateralized by a hotel property to a risk rating of “5” and recorded an allowance for credit loss of $8.1 million on the loan.
  • Received loan repayments and principal amortization of $195.6 million in UPB.
  • Funded $51.0 million of principal balance on existing loan commitments.
  • As of quarter end portfolio principal balance of $3.9 billion and $4.4 billion in total commitments, comprised of 99% senior first mortgage loans and over 98% floating rate; no exposure to securities.
  • Portfolio has a weighted average stabilized LTV of 63.3%(2),a weighted average yield at origination of LIBOR + 4.19%(3) and a weighted average LIBOR floor on the loans of 1.56%.
  • Ended Q4 with over $260 million in cash on hand.

Full Year 2020 Activity

  • GAAP net loss of $(40.5) million, or $(0.73) per basic share mainly reflecting an offset of earnings by $(0.84) of internalization-related restructuring charges and $(0.97) of provision for credit losses recorded during 2020.
  • Distributable Earnings(1) of $64.7 million, or $1.17 per basic share.
  • Originated four senior first mortgage loans with total commitments of $200.4 million and initial fundings of $125.2 million, weighted average stabilized LTV of 55% and weighted average yield of LIBOR + 3.81%.
  • Received repayments and principal amortization of approximately $517.3 million in UPB, including two CMBS positions repaid at par, totaling $24.5 million, and opportunistically sold seven loans totaling $211.1 million in UPB for liquidity purposes at a realized loss of $(16.9) million.
  • Funded an additional $239.0 million of principal balance on existing loan commitments.
  • Closed a strategic financing commitment of $300 million, in the form of five-year senior secured term loan facilities and 6.066 million warrants to purchase GPMT common stock(4), further enhancing liquidity and financial flexibility.
  • Finalized the transition to an internally-managed REIT by completing the internalization of the management function on December 31, 2020.

Post Quarter-End Update

  • On February 4, 2021, closed a $349 million non-mark-to-market and term-matched financing with Goldman Sachs Bank USA, which refinanced loans previously funded on the Goldman Sachs repurchase facility, increasing the percentage of credit non-mark-to-market financing to 51% of loan-level borrowings.
  • Current liquidity of approximately $235.6 million(5) in cash on hand; option to borrow an additional $75 million in proceeds under the term loan facilities through September 2021.(6)
  • Through March 3, 2021, funded approximately $24.7 million of principal balance on existing loan commitments.
  • Realized approximately $70.9 million of loan repayments through March 3, 2021.

Jack Taylor, Granite Point’s President, Chief Executive Officer and Director, said, “During the historic challenges brought on by the pandemic in 2020, the benefits of our highly diversified first mortgage loan portfolio and broad set of funding sources were illustrated by our strong credit performance and our ability to substantially increase our liquidity, delever our financing facilities, and further fortify our balance sheet by raising attractively priced and flexible capital. We are also very pleased that we simultaneously achieved a milestone by becoming an internally managed company, better positioning Granite Point for the opportunities ahead and as we start pursuing new loan investments again.”

(1)

Please see footnote (1) on page 6 for Distributable Earnings definition and a reconciliation of GAAP to non-GAAP financial information.

(2)

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.

(3)

Yield includes net origination fees and exit fees, but does not include future fundings, and is expressed as a monthly equivalent yield.

(4)

1.516 million warrants are subject to vesting depending on future draws of the term loan facilities pursuant to the terms of the facilities.

(5)

As of March 3, 2021.

(6)

Subject to exercise of extension option and payment of extension fee on or prior to March 25, 2021.

Conference Call

Granite Point Mortgage Trust Inc. will host a conference call on March 5, 2021 at 10:00 a.m. ET to discuss fourth quarter 2020 financial results and related information. To participate in the teleconference, approximately 10 minutes prior to the above start time, please call toll-free (833) 255-2835 (or (412) 902-6769 for international callers), 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 Relations section under the Events & Presentations link. For those unable to attend, a telephone playback will be available beginning March 5, 2021 at 12:00 p.m. ET through March 12, 2021 at 12:00 a.m. ET. The playback can be accessed by calling (877) 344-7529 (or (412) 317-0088 for international callers) and providing the Access Code 10151462. The call will also be archived on the company’s website in the Investor Relations section under the Events & Presentations link.

Granite Point Mortgage Trust

Granite Point Mortgage Trust Inc., 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 and projections 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. 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, in particular those related to the COVID-19 pandemic, including the ultimate impact of COVID-19 on our business, financial performance and operating results. 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, 2020 and any subsequent Form 10-Q and Form 8-K filings made with the SEC, under the caption “Risk Factors.” These risks may also be further heightened by the continued and evolving impact of the COVID-19 pandemic. 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 Earnings and Distributable 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 CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

December 31,
2020

 

December 31,
2019

ASSETS

(unaudited)

 

 

Loans held-for-investment

$

3,914,469

 

 

$

4,226,212

 

Allowance for credit losses

(66,666)

 

 

 

Loans held-for-investment, net

3,847,803

 

 

4,226,212

 

Available-for-sale securities, at fair value

 

 

12,830

 

Held-to-maturity securities

 

 

18,076

 

Cash and cash equivalents

261,419

 

 

80,281

 

Restricted cash

67,774

 

 

79,483

 

Accrued interest receivable

12,388

 

 

11,323

 

Other assets

30,264

 

 

32,657

 

Total Assets

$

4,219,648

 

 

$

4,460,862

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Liabilities

 

 

 

Repurchase agreements

$

1,708,875

 

 

$

1,924,021

 

Securitized debt obligations

927,128

 

 

1,041,044

 

Asset-specific financings

123,091

 

 

116,465

 

Revolving credit facilities

 

 

42,008

 

Convertible senior notes

271,250

 

 

269,634

 

Senior secured term loan facilities

206,448

 

 

 

Dividends payable

25,049

 

 

23,063

 

Other liabilities

22,961

 

 

24,491

 

Total Liabilities

3,284,802

 

 

3,440,726

 

10% cumulative redeemable preferred stock, par value $0.01 per share; 50,000,000 shares authorized and 1,000 shares issued and outstanding ($1,000,000 liquidation preference)

1,000

 

 

1,000

 

Stockholders’ Equity

 

 

 

Common stock, par value $0.01 per share; 450,000,000 shares authorized and 55,205,082 and 54,853,205 shares issued and outstanding, respectively

552

 

 

549

 

Additional paid-in capital

1,058,298

 

 

1,048,484

 

Accumulated other comprehensive income

 

 

32

 

Cumulative earnings

103,165

 

 

162,076

 

Cumulative distributions to stockholders

(228,169)

 

 

(192,005)

 

Total Stockholders’ Equity

933,846

 

 

1,019,136

 

Total Liabilities and Stockholders’ Equity

$

4,219,648

 

 

$

4,460,862

 

GRANITE POINT MORTGAGE TRUST INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands, except share data)

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

2020

 

2019

 

2020

 

2019

Interest income:

(unaudited)

 

 

 

(unaudited)

 

 

Loans held-for-investment

$

54,613

 

 

$

63,428

 

 

$

234,954

 

 

$

240,022

 

Loans held-for-sale

 

 

 

 

895

 

 

 

Available-for-sale securities

 

 

294

 

 

646

 

 

1,221

 

Held-to-maturity securities

 

 

435

 

 

659

 

 

2,239

 

Cash and cash equivalents

135

 

 

547

 

 

559

 

 

2,775

 

Total interest income

54,748

 

 

64,704

 

 

237,713

 

 

246,257

 

Interest expense:

 

 

 

 

 

 

 

Repurchase agreements

11,702

 

 

19,163

 

 

58,444

 

 

67,632

 

Securitized debt obligations

4,945

 

 

10,935

 

 

26,312

 

 

46,815

 

Convertible senior notes

4,522

 

 

4,512

 

 

18,092

 

 

17,971

 

Asset-specific financings

900

 

 

1,174

 

 

3,862

 

 

2,891

 

Revolving credit facilities

 

 

491

 

 

779

 

 

1,673

 

Senior secured term loan facilities

5,301

 

 

 

 

5,446

 

 

 

Total interest expense

27,370

 

 

36,275

 

 

112,935

 

 

136,982

 

Net interest income

27,378

 

 

28,429

 

 

124,778

 

 

109,275

 

Other income (loss):

 

 

 

 

 

 

 

Provision for credit losses

8,531

 

 

 

 

(53,710)

 

 

 

Realized losses on sales

 

 

 

 

(16,913)

 

 

 

Fee income

 

 

95

 

 

1,117

 

 

1,210

 

Total other income (loss)

8,531

 

 

95

 

 

(69,506)

 

 

1,210

 

Expenses:

 

 

 

 

 

 

 

Base management fees

3,946

 

 

3,841

 

 

15,786

 

 

14,854

 

Incentive fees

 

 

 

 

 

 

244

 

Servicing expenses

1,031

 

 

999

 

 

4,056

 

 

3,670

 

Other operating expenses

4,603

 

 

6,008

 

 

29,024

 

 

21,507

 

Restructuring charges

2,570

 

 

 

 

46,252

 

 

 

Total expenses

12,150

 

 

10,848

 

 

95,118

 

 

40,275

 

Income (loss) before income taxes

23,759

 

 

17,676

 

 

(39,846)

 

 

70,210

 

Provision for (benefit from) income taxes

608

 

 

 

 

593

 

 

(4)

 

Net income

23,151

 

 

17,676

 

 

(40,439)

 

 

70,214

 

Dividends on preferred stock

25

 

 

25

 

 

100

 

 

100

 

Net income (loss) attributable to common stockholders

$

23,126

 

 

$

17,651

 

 

$

(40,539)

 

 

$

70,114

 

Basic (loss) earnings per weighted average common share

$

0.42

 

 

$

0.32

 

 

$

(0.73)

 

 

$

1.32

 

Diluted (loss) earnings per weighted average common share

$

0.39

 

 

$

0.32

 

 

$

(0.73)

 

 

$

1.32

 

Dividends declared per common share

$

0.45

 

 

$

0.42

 

 

$

0.65

 

 

$

1.68

 

Weighted average number of shares of common stock outstanding:

 

 

 

 

 

 

 

Basic

55,205,082

 

 

54,853,205

 

 

55,156,482

 

 

53,087,395

 

Diluted

70,009,741

 

 

54,853,205

 

 

55,156,482

 

 

53,087,395

 

Comprehensive income (loss):

 

 

 

 

 

 

 

Net income (loss) attributable to common stockholders

$

23,126

 

 

$

17,651

 

 

$

(40,539)

 

 

$

70,114

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

Unrealized gain on available-for-sale securities

 

 

 

 

(32)

 

 

224

 

Other comprehensive income

 

 

 

 

(32)

 

 

224

 

Comprehensive income (loss)

$

23,126

 

 

$

17,651

 

 

$

(40,571)

 

 

$

70,338

 

GRANITE POINT MORTGAGE TRUST INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(dollars in thousands, except share data)

 

 

Three Months Ended
December 31, 2020

 

Year Ended
December 31, 2020

 

(unaudited)

 

(unaudited)

Reconciliation of GAAP net income (loss) to Distributable Earnings:

 

 

 

 

 

 

 

GAAP Net Income (Loss)

$

23,126

 

 

$

(40,539)

 

Adjustments for non-distributable earnings:

 

 

 

Provision for credit losses

(8,530)

 

 

53,710

 

Restructuring charges

2,570

 

 

46,252

 

Non-cash equity compensation

1,282

 

 

$

5,276

 

Distributable Earnings(1)

$

18,448

 

 

$

64,699

 

 

 

 

 

Distributable Earnings per basic common share

$

0.33

 

 

$

1.17

 

Basic weighted average shares outstanding

55,205,082

 

55,156,482

 

(1)

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 serve as a general proxy for our taxable income, though it is not a perfect substitute for it, and, as such, is considered a key indicator of our ability to generate sufficient income to pay our common dividends and in determining the amount of such 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 (loss) income and cash flow from operating activities, as determined in accordance with GAAP, is helpful to stockholders in assessing the overall performance of our business.

 

We use Distributable Earnings to evaluate our performance excluding the effects of certain transactions and GAAP adjustments we believe are not necessarily indicative of our current loan portfolio and operations. For reporting purposes, we define Distributable Earnings as net (loss) income attributable to our stockholders, computed in accordance with GAAP, excluding: (i) non-cash equity compensation expense; (ii) depreciation and amortization; (iii) any unrealized gains (losses) or other similar non-cash items that are included in net income for the applicable reporting period (regardless of whether such items are included in other comprehensive income or loss or in net income 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 year ended December 31, 2020, we recorded a $53.7 million of provision for credit losses, 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 as referenced above.

 

Distributable Earnings also excludes the impact of the restructuring charges recorded during the year ended December 31, 2020. These charges were related to our Internalization, discussed above, which we view as a one-time event. In assessing the reporting of Distributable Earnings, we determined that, consistent with our policy, the restructuring charges should be included within certain one-time expenses as referenced above. During the year ended December 31, 2020, we recorded $46.3 million of restructuring charges, which have been excluded from the Distributable Earnings.

 

Distributable Earnings does not represent net (loss) income or cash flow from operating activities and should not be considered as an alternative to GAAP net (loss) 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.

 

FAQ

What were Granite Point Mortgage Trust's Q4 2020 earnings?

GPMT reported Q4 2020 GAAP net income of $23.1 million, or $0.42 per basic share.

How much did GPMT declare in dividends for Q4 2020?

Granite Point declared a cash dividend of $0.20 per share and a special dividend of $0.25.

What was the financial performance for GPMT in 2020?

For 2020, GPMT reported a GAAP net loss of $(40.5) million, influenced by restructuring charges and credit loss provisions.

What is GPMT's liquidity status following Q4 2020?

As of early March 2021, GPMT had approximately $235.6 million in cash and options for additional borrowing.

Granite Point Mortgage Trust Inc.

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