Granite Point Mortgage Trust Inc. Reports Third Quarter 2024 Financial Results and Post Quarter-End Update

Rhea-AI Summary

Granite Point Mortgage Trust (NYSE: GPMT) reported a GAAP Net Loss of $(34.6) million, or $(0.69) per basic share, for Q3 2024, including a $(27.9) million provision for credit losses. The company's Distributable Loss was $(38.0) million, with book value per share at $9.25. The quarter saw $284.7 million in loan repayments and resolutions, with multiple nonaccrual loan resolutions. The company maintains a 97% floating rate loan portfolio with $2.5 billion in total loan commitments. Post-quarter, GPMT resolved a $32.9 million nonaccrual loan and expects to resolve five additional nonaccrual loans totaling over $250 million.

Positive

• Completed $284.7 million in loan repayments and resolutions
• Maintains strong portfolio with 99% senior loans
• Executed accretive share buybacks resulting in $0.10 per share book value accretion
• Strong liquidity position with $113 million in unrestricted cash
• Portfolio yield of 9.1% (stated) and 7.0% (realized)

Negative

• GAAP Net Loss of $(34.6) million in Q3 2024
• Distributable Loss of $(38.0) million
• Significant loan write-offs totaling $(44.6) million
• High CECL reserve at $259.0 million (10.5% of loan portfolio)
• Expected write-off of $(16.6) million from Fort Lee office property resolution

Insights

Financial Analyst

The Q3 2024 results reveal significant challenges for GPMT, with a GAAP net loss of $34.6 million ($0.69 per share) and a concerning distributable loss of $38.0 million. The $44.6 million in loan write-offs signals continued stress in the commercial real estate portfolio. The book value declined to $9.25 per share, with a substantial CECL reserve of $259.0 million (10.5% of loan commitments).

The company's active portfolio management strategy shows progress with $284.7 million in loan resolutions, though often at significant losses. The post-quarter update indicating plans to resolve $250 million in nonaccrual loans suggests continued portfolio cleanup, albeit likely with additional write-offs. The reduced dividend of $0.05 per share reflects ongoing earnings pressure.

Real Estate Investment Analyst

The portfolio metrics indicate structural concerns, with a weighted average risk rating of 3.1 and significant nonaccrual loans requiring resolution. While the 63.9% weighted average LTV appears manageable, the gap between stated yield (9.1%) and realized yield (7.0%) highlights collection challenges. The leverage ratio of 2.2x and $113 million cash position provide some financial flexibility, but continued losses from loan resolutions may pressure these metrics.

The focus on resolving troubled assets suggests a defensive posture, with minimal new lending activity ($9.8 million in prior commitments). Management's strategy to return to core lending in 2024 depends on successful problem loan resolutions and market improvement.

NEW YORK--(BUSINESS WIRE)-- Granite Point Mortgage Trust Inc. (NYSE: GPMT) ("GPMT," "Granite Point" or the "Company") today announced its financial results for the quarter ending September 30, 2024, and provided an update on its activities subsequent to quarter-end. An earnings supplemental containing third quarter 2024 financial results can be viewed at www.gpmtreit.com.

“Our third quarter results are highlighted by multiple nonaccrual loan resolutions, produced by our active portfolio management strategy, and accretive share buybacks,” said Jack Taylor, President and Chief Executive Officer of Granite Point. “This forward momentum has continued with over $280 million of nonaccrual loans that already have been or are expected to be resolved in the coming months. We will continue to reposition the business so as to return to our core lending strategy next year and benefit from the attractive investment opportunities that are beginning to emerge with the improving market conditions.”

Third Quarter 2024 Activity

• Recognized GAAP Net (Loss)⁽¹⁾ of $(34.6) million, or $(0.69) per basic share, inclusive of a $(27.9) million, or $(0.55) per basic share, provision for credit losses.
• Distributable (Loss)⁽²⁾ of $(38.0) million, or $(0.75) per basic share, inclusive of loan write-offs of $(44.6) million, or $(0.88) per basic share and recoveries of $8.8 million, or $0.17 per basic share. Distributable (Loss)⁽²⁾ excluding write-offs and recoveries of $(2.2) million, or $(0.04) per basic share.
• Book value per common share was $9.25 as of September 30, 2024, inclusive of $(5.18) 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 $9.8 million in prior loan commitments and upsizes.
• Realized $284.7 million of total UPB in loan repayments, paydowns, amortization, and resolutions.
  • Resolved a $33.3 million loan secured by a multifamily property located in Chicago, IL, realizing a loss of approximately $(3.3) million.
  • Resolved a $51.0 million loan secured by a mixed-use multifamily, event space and office property located in Pittsburgh, PA through a loan modification. The resulting $19.0 million mezzanine note was deemed uncollectible and written-off.
  • Resolved a $37.1 million loan secured by a mixed-use office and retail property located in Los Angeles, CA, realizing a loss of approximately $(22.3) million.
• Carried at quarter-end a 97% floating rate loan portfolio with $2.5 billion in total loan commitments comprised of over 99% senior loans. As of September 30, 2024, portfolio weighted average stabilized LTV at origination was 63.9%⁽³⁾ and a stated and realized loan portfolio yield⁽⁴⁾ of 9.1% and 7.0%, respectively.
• Weighted average loan portfolio risk rating was 3.1 at September 30, 2024.
• Total CECL reserve at quarter-end was $259.0 million, or 10.5% of total loan portfolio commitments.
• Held two unlevered REO⁽⁵⁾ properties with an aggregate carrying value of $53.6 million, as of September 30, 2024.
• Repurchased 0.7 million shares of its common stock at an average price of $2.73 per share for a total of $2.0 million, resulting in book value accretion of approximately $0.10 per share.
• Ended the quarter with $113 million in unrestricted cash and a total leverage ratio⁽⁶⁾ of 2.2x, with no corporate debt maturities remaining.

Post Quarter-End Update

• In October, the Company resolved a $32.9 million loan secured by an office property located in Fort Lee, NJ. As of September 30, 2024, the loan had a risk-rating of “5” and was on nonaccrual status. As a result of this transaction, the Company expects to realize a write-off of approximately $(16.6) million, which had been reserved for through a previously recorded allowance for credit losses.
• Over the next few months, the Company anticipates resolving five additional nonaccrual loans totaling over $250 million in principal balance.
• So far in Q4 2024, funded about $4 million on existing loan commitments.
• As of November 5, 2024, carried approximately $94 million in unrestricted cash.

(1)	Represents Net (Loss) Income Attributable to Common Stockholders.
(2)	Please see page 5 for Distributable (Loss) Earnings and Distributable (Loss) Earnings 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 November 7, 2024, at 11:00 a.m. ET to discuss third 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 November 7, 2024, at 12:00 p.m. ET through November 21, 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 13749367. 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 5 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, 24^th 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	$	2,340,332			$	2,718,486
Allowance for credit losses		(256,770	)			(134,661	)
Loans held-for-investment, net		2,083,562				2,583,825
Cash and cash equivalents		113,461				188,370
Restricted cash		11,243				10,846
Real estate owned, net		42,736				16,939
Accrued interest receivable		9,168				12,380
Other assets		41,214				34,572
Total Assets	$	2,301,384			$	2,846,932
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Repurchase facilities	$	705,590			$	875,442
Securitized debt obligations		816,103				991,698
Secured credit facility		85,192				84,000
Dividends payable		6,296				14,136
Other liabilities		20,291				22,633
Total Liabilities		1,633,472				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 49,957,557 shares and 50,577,841 issued and outstanding, respectively		500				506
Additional paid-in capital		1,199,432				1,198,048
Cumulative earnings		(100,720	)			67,495
Cumulative distributions to stockholders		(431,507	)			(407,233	)
Total Granite Point Mortgage Trust Inc. Stockholders’ Equity		667,787				858,898
Non-controlling interests		125				125
Total Equity		667,912				859,023
Total Liabilities and Stockholders’ Equity	$	2,301,384			$	2,846,932

GRANITE POINT MORTGAGE TRUST INC. CONDENSED AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (in thousands, except share data) (unaudited)
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2024				2023				2024				2023
Interest Income:
Loans held-for-investment	$	43,031			$	63,848			$	141,878			$	195,356
Cash and cash equivalents		1,266				2,839				4,953				6,876
Total interest income		44,297				66,687				146,831				202,232
Interest expense:
Repurchase facilities		17,365				21,986				57,424				64,630
Secured credit facility		2,753				3,178				8,156				9,182
Securitized debt obligations		16,521				18,414				52,939				54,353
Convertible senior notes		—				2,332				—				6,975
Asset-specific financings		—				862				—				2,424
Total interest expense		36,639				46,772				118,519				137,564
Net interest income		7,658				19,915				28,312				64,668
Other income (loss):
Revenue from real estate owned operations		3,792				1,056				6,045				1,518
Provision for credit losses		(27,911	)			(31,008	)			(164,219	)			(83,236	)
Gain (loss) on extinguishment of debt		—				—				(786	)			238
Fee income		—				81				—				81
Total other (loss)		(24,119	)			(29,871	)			(158,960	)			(81,399	)
Expenses:
Compensation and benefits		5,375				5,044				16,083				17,165
Servicing expenses		1,197				1,331				3,971				4,029
Expenses from real estate owned operations		4,827				2,233				8,822				3,897
Other operating expenses		3,166				2,358				8,695				7,809
Total expenses		14,565				10,966				37,571				32,900
(Loss) income before income taxes		(31,026	)			(20,922	)			(168,219	)			(49,631	)
(Benefit from) provision for income taxes		(2	)			15				(4	)			94
Net (loss) income		(31,024	)			(20,937	)			(168,215	)			(49,725	)
Dividends on preferred stock		3,600				3,600				10,800				10,850
Net (loss) income attributable to common stockholders	$	(34,624	)		$	(24,537	)		$	(179,015	)		$	(60,575	)
Basic (loss) earnings per weighted average common share	$	(0.69	)		$	(0.48	)		$	(3.53	)		$	(1.17	)
Diluted (loss) earnings per weighted average common share	$	(0.69	)		$	(0.48	)		$	(3.53	)		$	(1.17	)
Dividends declared per common share	$	0.05			$	0.20			$	0.25			$	0.60
Weighted average number of shares of common stock outstanding:
Basic		50,526,492				51,577,143				50,736,066				51,805,265
Diluted		50,526,492				51,577,143				50,736,066				51,805,265
Net (loss) income attributable to common stockholders	$	(34,624	)		$	(24,537	)		$	(179,015	)		$	(60,575	)

GRANITE POINT MORTGAGE TRUST INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION (dollars in thousands, except share data) (unaudited)
	Three Months Ended
	June 30,
	2024
Reconciliation of GAAP Net (Loss) Income to Distributable (Loss)(1):
GAAP Net (Loss) income attributable to common stockholders	$	(34,624	)
Adjustments:
Provision for credit losses		27,911
Depreciation and amortization on real estate owned		1,945
Non-cash equity compensation		2,534
Distributable (Loss) Earnings before realized losses and recoveries	$	(2,234	)
Realized losses on write-offs, loan sales and REO conversions		(44,580	)
Recoveries of previous write-offs	$	8,819
Distributable (Loss) Earnings	$	(37,995	)
Distributable (Loss) Earnings per basic share of common stock	$	(0.75	)
Distributable (Loss) Earnings per diluted share of common stock	$	(0.75	)
Distributable (Loss) Earnings before realized losses per basic share of common stock	$	(0.04	)
Distributable (Loss) Earnings before realized losses per diluted share of common stock	$	(0.04	)
Basic weighted average common shares		50,526,492
Diluted weighted average common shares		50,526,492
(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 (Loss) Earnings, a measure that is not prepared in accordance with GAAP, as a supplemental method of evaluating our operating performance. Distributable (Loss) 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 (Loss) Earnings is intended to overtime serve as a general, though imperfect, proxy for our taxable income. As such, Distributable (Loss) 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 (Loss) 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 operating performance of our business.
For reporting purposes, we define Distributable (Loss) Earnings as Net (Loss) Income 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 (Loss) Income for the applicable reporting period (regardless of whether such items are included in other comprehensive income or in Net (Loss) Income for such period); and (iv) certain non-cash items and one-time expenses. Distributable (Loss) 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 (Loss) 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 (Loss) 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 (Loss) 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 (Loss) 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 September 30, 2024, we recorded provision for credit losses of $(27.9) million, which has been excluded from Distributable (Loss) Earnings, consistent with other unrealized gains (losses) and other non-cash items pursuant to our existing policy for reporting Distributable (Loss) Earnings referenced above. During the three months ended September 30, 2024, we recorded $(1.9) million, in depreciation and amortization on REO and related intangibles, which has been excluded from Distributable (Loss) Earnings consistent with other unrealized gains (losses) and other non-cash items pursuant to our existing policy for reporting Distributable (Loss) Earnings referenced above.
Distributable (Loss) 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 (Loss) Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and, accordingly, our reported Distributable (Loss) Earnings may not be comparable to the Distributable (Loss) Earnings reported by other companies.
We believe it is useful to our stockholders to present Distributable (Loss) 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 (Loss) Earnings and Distributable (Loss) 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/20241106628447/en/

Investors: Chris Petta Investor Relations, Granite Point Mortgage Trust Inc., (212) 364-5500, investors@gpmtreit.com

Source: Granite Point Mortgage Trust Inc.

FAQ

What was GPMT's net loss per share in Q3 2024?

Granite Point Mortgage Trust reported a GAAP net loss of $(0.69) per basic share in Q3 2024.

How much in loan repayments did GPMT realize in Q3 2024?

GPMT realized $284.7 million in total loan repayments, paydowns, amortization, and resolutions during Q3 2024.

What is GPMT's book value per share as of Q3 2024?

GPMT's book value per common share was $9.25 as of September 30, 2024, including $(5.18) per share of total CECL reserve.

How many nonaccrual loans does GPMT expect to resolve post Q3 2024?

GPMT anticipates resolving five additional nonaccrual loans totaling over $250 million in principal balance in the coming months.