Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Granite Point Mortgage Trust Inc. Reports Second Quarter 2022 Financial Results and Post Quarter-End Update


Granite Point Mortgage Trust Inc. (NYSE: GPMT) ("GPMT," "Granite Point" or the "Company") today announced its financial results for the quarter ended June 30, 2022, and provided an update on its activities subsequent to quarter-end. A presentation containing second quarter 2022 financial highlights can be viewed at www.gpmtreit.com.

Second Quarter 2022 Activity

Post Quarter-End Update(5)

Jack Taylor, President, and Chief Executive Officer of GPMT, said: "During the second quarter, macroeconomic uncertainty and capital markets volatility dramatically increased, driven largely by sharp increases in short term interest rates. Despite this challenging environment, our business has delivered solid operating performance supported by our broad based and resilient portfolio of senior mortgage loans secured by institutional quality real estate. Our floating rate mortgage loans are now 100% positively correlated to any additional increases in short term interest rates. After growing our portfolio modestly in the second quarter, primarily in the multifamily sector, we are now reinforcing our balance sheet by increasing cash liquidity and being measured in adding new loans until there is more market stability."

(1)

Represents Net Income Attributable to Common Stockholders.

(2)

Please see page 6 for Distributable Earnings 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.

(5)

As of August 5, 2022.

Conference Call

Granite Point Mortgage Trust Inc. will host a conference call on August 9, 2022 at 11:00 a.m. ET to discuss first quarter 2022 financial results and related information. To participate in the teleconference, please call toll-free (833) 255-2835 (or (412) 902-6769 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 Relations section under the Events & Presentations link. For those unable to attend, a telephone playback will be available beginning August 9, 2022, at 12:00 p.m. ET through August 16, 2022, 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 6828661. The call will also be archived on the Company's website in the Investor Relations section under the Events & Presentations 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 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. 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, 2021, and any subsequent Form 10-Q and Form 8-K filings made with the SEC, under the caption "Risk Factors." 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)

 

June 30,
2022

 

December 31,
2021

ASSETS

 

 

 

Loans held-for-investment

$

3,877,294

 

 

$

3,782,205

 

Allowance for credit losses

 

(47,280

)

 

 

(40,897

)

Loans held-for-investment, net

 

3,830,014

 

 

 

3,741,308

 

Cash and cash equivalents

 

150,192

 

 

 

191,931

 

Restricted cash

 

69,492

 

 

 

12,362

 

Accrued interest receivable

 

11,455

 

 

 

10,716

 

Other assets

 

35,893

 

 

 

32,201

 

Total Assets (1)

$

4,097,046

 

 

$

3,988,518

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Liabilities

 

 

 

Repurchase facilities

$

1,271,659

 

 

$

677,285

 

Securitized debt obligations

 

1,425,556

 

 

 

1,677,619

 

Asset-specific financings

 

43,622

 

 

 

43,622

 

Term financing facility

 

?

 

 

 

127,145

 

Convertible senior notes

 

273,822

 

 

 

272,942

 

Senior secured term loan facilities

 

?

 

 

 

139,880

 

Dividends payable

 

17,008

 

 

 

14,406

 

Other liabilities

 

20,545

 

 

 

21,436

 

Total Liabilities (1)

3,052,212

 

 

 

2,974,335

 

Commitments and Contingencies (see Note 10)

 

 

 

10.00% 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

 

 

 

7.00% Series A cumulative redeemable preferred stock, par value $0.01 per share; 8,280,000 shares authorized, and 8,229,500 and 4,596,500 shares issued and outstanding, respectively; liquidation preference $25.00 per share

 

82

 

 

 

46

 

Common stock, par value $0.01 per share; 450,000,000 shares authorized, and 52,350,989 and 53,789,465 shares issued and outstanding, respectively

 

524

 

 

 

538

 

Additional paid-in capital

 

1,199,367

 

 

 

1,125,241

 

Cumulative earnings

 

162,423

 

 

 

171,518

 

Cumulative distributions to stockholders

 

(318,687

)

 

 

(284,285

)

Total Granite Point Mortgage Trust Inc. Stockholders' Equity

 

1,043,709

 

 

 

1,013,058

 

Non-controlling interests

 

125

 

 

 

125

 

Total Equity

$

1,043,834

 

 

$

1,013,183

Total Liabilities and Stockholders' Equity

$

4,097,046

 

 

$

3,988,518

 

GRANITE POINT MORTGAGE TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands, except share data)

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2022

 

2021

 

2022

 

2021

Interest income:

 

 

 

Loans held-for-investment

$

49,056

 

 

$

49,350

 

 

$

96,354

 

 

$

103,389

 

Cash and cash equivalents

 

223

 

 

 

103

 

 

 

246

 

 

 

203

 

Total interest income

 

49,279

 

 

 

49,453

 

 

 

96,600

 

 

 

103,592

 

Interest expense:

 

 

 

 

 

 

 

Repurchase facilities

 

10,380

 

 

 

6,047

 

 

 

15,388

 

 

 

14,998

 

Securitized debt obligations

 

10,844

 

 

 

7,129

 

 

 

20,576

 

 

 

11,746

 

Convertible senior notes

 

4,572

 

 

 

4,544

 

 

 

9,118

 

 

 

9,062

 

Term financing facility

 

340

 

 

 

2,633

 

 

 

1,713

 

 

 

4,755

 

Asset-specific financings

 

322

 

 

 

668

 

 

 

604

 

 

 

1,545

 

Senior secured term loan facilities

 

886

 

 

 

5,653

 

 

 

3,754

 

 

 

10,933

 

Total interest expense

 

27,344

 

 

 

26,674

 

 

 

51,153

 

 

 

53,039

 

Net interest income

 

21,935

 

 

 

22,779

 

 

 

45,447

 

 

 

50,553

 

Other (loss) income:

 

 

 

 

 

 

 

(Provision for) benefit from credit losses

 

(13,627

)

 

 

193

 

 

 

(17,315

)

 

 

9,312

 

Loss on extinguishment of debt

 

(13,032

)

 

 

?

 

 

 

(18,823

)

 

 

?

 

Fee income

 

461

 

 

 

?

 

 

 

954

 

 

 

?

 

Total other (loss) income

 

(26,198

)

 

 

193

 

 

 

(35,184

)

 

 

9,312

 

Expenses:

 

 

 

 

 

 

 

Compensation and benefits

 

5,770

 

 

 

5,017

 

 

 

11,586

 

 

 

10,477

 

Servicing expenses

 

1,500

 

 

 

1,124

 

 

 

2,961

 

 

 

2,440

 

Other operating expenses

 

2,185

 

 

 

2,564

 

 

 

4,799

 

 

 

4,691

 

Total expenses

 

9,455

 

 

 

8,705

 

 

 

19,346

 

 

 

17,608

 

(Loss) income before income taxes

 

(13,718

)

 

 

14,267

 

 

 

(9,083

)

 

 

42,257

 

Provision for (benefit from) income taxes

 

13

 

 

 

(2

)

 

 

12

 

 

 

(3

)

Net (loss) income

 

(13,731

)

 

 

14,269

 

 

 

(9,095

)

 

 

42,260

 

Dividends on preferred stock

 

3,625

 

 

 

25

 

 

 

7,250

 

 

 

50

 

Net (loss) income attributable to common stockholders

$

(17,356

)

 

$

14,244

 

 

$

(16,345

)

 

$

42,210

 

Basic (loss) earnings per weighted average common share

$

(0.32

)

 

$

0.26

 

 

$

(0.30

)

 

$

0.77

 

Diluted (loss) earnings per weighted average common share

$

(0.32

)

 

$

0.24

 

 

$

(0.30

)

 

$

0.71

 

Weighted average number of shares of common stock outstanding:

 

 

 

 

 

 

 

Basic

 

53,512,005

 

 

 

55,009,732

 

 

 

53,683,575

 

 

 

55,073,317

 

Diluted

 

53,512,005

 

 

 

58,526,985

 

 

 

53,683,575

 

 

 

72,564,914

 

 

 

 

 

 

 

 

 

Comprehensive (loss) income

$

(17,356

)

 

$

14,244

 

 

$

(16,345

)

 

$

42,210

 

GRANITE POINT MORTGAGE TRUST INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(dollars in thousands, except share data)

 

 

Three Months Ended
June 30, 2022

 

(unaudited)

Reconciliation of GAAP net (loss) to Distributable Earnings(1):

 

 

 

GAAP net (loss)

$

(17,356

)

Adjustments for non-distributable earnings:

 

Provision for credit losses

 

13,627

 

Recovery of amounts previously written off

 

512

 

Loss on extinguishment of debt

 

13,032

 

Non-cash equity compensation

 

1,906

 

Distributable Earnings(1)

$

11,721

 

 

 

Distributable Earnings(1) per basic common share

$

0.22

 

Basic weighted average shares outstanding

 

53,512,005

 

(1)

Beginning with our Annual Report on Form 10-K for the year ended December 31, 2021, and for all subsequent reporting periods ending on or after December 31, 2021, 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 income (loss) 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 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 for the applicable reporting period (regardless of whether such items are included in other comprehensive income (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 non-recoverability 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 and six months ended June 30, 2022, we recorded provision for credit losses of $(13.6) million and $(17.3) million, respectively, 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. Pursuant to our existing policy for reporting Distributable Earnings referenced above, during the three and six months ended June 30, 2022, we recorded a $0.5 million recovery of amounts previously written off in a prior period on a discounted payoff. Additionally, during the six months ended June 30, 2022 write-off on loan sale, which we included in Distributable Earnings because we did not collect all amounts due at the time the loan was sold. During the three and six months ended June 30, 2022, we recorded a $(13.0) million and $(18.8) million, respectively, loss on early extinguishment of debt, which has been excluded from Distributable Earnings consistent with certain one-time expenses pursuant to our existing policy for reporting Distributable Earnings as a helpful indicator in assessing the overall run-rate operating performance of our business.

 

 

 

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.

 


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