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Granite Point Mortgage Trust Inc. Reports Second Quarter 2019 Financial Results and Activity Post Quarter-End

Granite Point Mortgage Trust Inc. (NYSE: GPMT) today announced its financial results for the quarter ended June 30, 2019 and provided an update on its activities subsequent to quarter-end. A presentation containing second quarter 2019 highlights and activity post quarter-end can be viewed at www.gpmortgagetrust.com.

Second Quarter 2019 Summary

  • GAAP net income of $18.2 million or $0.34 per basic share; Core Earnings(1) of $19.4 million or $0.36 per basic share, based on 54.0 million wtd. avg. shares.
  • Book value of $18.74 per common share; declared and paid a dividend of $0.42 per common share.
  • Closed 10 senior commercial real estate loans with total commitments of $422.6 million having a weighted average stabilized LTV of 59%(2) and a weighted average yield of LIBOR + 3.74%(3); funded $416.0 million of principal balance of loans during the quarter (over $320 million in June), including $54.6 million on existing loan commitments, also upsized and funded 1 existing loan by $1.5 million.
  • Received prepayments and principal amortization of $152.2 million.
  • Portfolio principal balance of $3.6 billion; over 98% floating rate and compromised of over 98% senior commercial mortgage loans with a weighted average stabilized LTV of 63%.
  • Closed a new term-matched, non-mark-to-market credit facility with an initial borrowing capacity of up to $150.0 million.
  • Issued over 2.66 million shares of common stock at a weighted average price of $19.11 per share through the company's at-the-market equity issuance program.
  • Extended the maturity of our financing facilities with Goldman Sachs, Wells Fargo and JPMorgan to 2020, 2021 and 2022, respectively. These facilities also include extension options that range from 1 to 3 years.

Activity Post Quarter-End

  • Generated a pipeline of senior CRE loans, with total commitments of over $770 million and initial fundings of over $575 million, which have either closed or are in the closing process, subject to fallout. Funded over $150 million of principal balance of loans so far in the third quarter of 2019.
  • Extended the maturity of the Citi financing facility to 2022 and upsized its borrowing capacity to $400 million.
  • Extended the maturity of the $75 million Citi secured revolving financing facility to 2021, reduced its cost by 50bps and amended other terms.

(1) Core Earnings is a non-U.S. GAAP measure that we define as comprehensive income attributable to common stockholders, excluding “realized and unrealized gains and losses” (impairment losses, realized and unrealized gains or losses on the aggregate portfolio and non-cash compensation expense related to restricted common stock). We believe the presentation of Core Earnings provides investors greater transparency into our period-over-period financial performance and facilitates comparisons to peer REITs. Please see page 6 for a reconciliation of GAAP to non-GAAP financial information.

(2) Stabilized 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 occupancies.

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

Conference Call
Granite Point Mortgage Trust Inc. will host a conference call on August 6, 2019 at 10:00 a.m. ET to discuss second quarter 2019 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.gpmortgagetrust.com, in the Investor Relations section under the Events & Presentations link. For those unable to attend, a telephone playback will be available beginning August 6, 2019 at 12:00 p.m. ET through August 13, 2019 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 10132881. 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, is a real estate investment trust that is 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, and is externally managed by Pine River Capital Management L.P. Additional information is available at www.gpmortgagetrust.com.

Forward-Looking Statements
This release contains, in addition to historical information, certain forward-looking statements that are based on our current assumptions, expectations and projections about future performance and events. In particular, statements regarding future economic performance, finances, and expectations and objectives of management constitute forward-looking statements. Forward-looking statements are not historical in nature and can be identified by words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “anticipates,” “targets,” “goals,” “future,” “likely” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters.

Although the forward-looking statements contained in this presentation are based upon information available at the time the statements are made and reflect the best judgment of our senior management, forward-looking statements inherently involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to differ materially from anticipated future results. Important factors that could cause actual results to differ materially from expected results, including, among other things, those described in our filings with the Securities and Exchange Commission (“SEC”), including our annual report on form 10-K for the year ended December 31, 2018, and any subsequent Quarterly Reports on Form 10-Q under the caption “Risk Factors.” Factors that could cause actual results to differ include, but are not limited to: the state of the U.S. economy generally or in specific geographic regions; the general political, economic, and competitive conditions in the markets in which we invest; defaults by borrowers in paying debt service on outstanding indebtedness and borrowers' abilities to manage and stabilize properties; our ability to obtain financing arrangements on terms favorable to us or at all; the level and volatility of prevailing interest rates and credit spreads; reductions in the yield on our investments and an increase in the cost of our financing; general volatility of the securities markets in which we participate; the return or impact of current or future investments; allocation of investment opportunities to us by our Manager; increased competition from entities investing in our target assets; effects of hedging instruments on our target investments; changes in governmental regulations, tax law and rates, and similar matters; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes and our exclusion from registration under the Investment Company Act; availability of desirable investment opportunities; availability of qualified personnel and our relationship with our Manager; estimates relating to our ability to make distributions to our stockholders in the future; hurricanes, earthquakes, and other natural disasters, acts of war and/or terrorism and other events that may cause unanticipated and uninsured performance declines and/or losses to us or the owners and operators of the real estate securing our investments; deterioration in the performance of the properties securing our investments that may cause deterioration in the performance of our investments and, potentially, principal losses to us; and difficulty or delays in redeploying the proceeds from repayments of our existing investments. These forward-looking statements apply only as of the date of this press release. We are under no duty to update any of these forward-looking statements after the date of this presentation to conform these statements to actual results or revised expectations. You should, therefore, not rely on these forward-looking statements as predictions of future events.

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 investor presentation present non-GAAP financial measures, such as Core Earnings and Core 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) 364-3200

GRANITE POINT MORTGAGE TRUST INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

June 30,
2019

December 31,
2018

ASSETS

(unaudited)

Loans held-for-investment

$

3,560,117

$

3,167,913

Available-for-sale securities, at fair value

12,830

12,606

Held-to-maturity securities

22,020

26,696

Cash and cash equivalents

92,838

91,700

Restricted cash

76,149

31,723

Accrued interest receivable

9,924

10,268

Deferred debt issuance costs

6,099

3,924

Prepaid expenses

1,170

1,055

Other assets

23,189

15,996

Total Assets (1)

$

3,804,336

$

3,361,881

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities

Repurchase agreements

$

1,254,027

$

1,500,543

Securitized debt obligations

1,133,294

654,263

Asset-specific financings

75,060

Revolving credit facilities

75,000

Convertible senior notes

268,857

268,138

Accrued interest payable

6,204

6,394

Unearned interest income

584

510

Dividends payable

23,064

18,346

Other liabilities

14,510

10,156

Total Liabilities (1)

2,775,600

2,533,350

 

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

1,000

1,000

Stockholders’ Equity

Common stock, par value $0.01 per share; 450,000,000 shares authorized and 54,853,205 and 43,621,174 shares issued and outstanding, respectively

549

436

Additional paid-in capital

1,046,025

836,288

Accumulated other comprehensive income (loss)

32

(192

)

Cumulative earnings

127,008

91,875

Cumulative distributions to stockholders

(145,878

)

(100,876

)

Total Stockholders’ Equity

1,027,736

827,531

Total Liabilities and Stockholders’ Equity

$

3,804,336

$

3,361,881

(1) The condensed consolidated balance sheets include assets of consolidated variable interest entities, or VIEs, that can only be used to settle obligations of these VIEs, and liabilities of the consolidated VIEs for which creditors do not have recourse to Granite Point Mortgage Trust Inc. At June 30, 2019 and December 31, 2018, assets of the VIEs totaled $1,482,292 and $829,147, and liabilities of the VIEs totaled $1,134,493 and $654,952, respectively. See Note 3 - Variable Interest Entities for additional information.

The accompanying notes are an integral part of these condensed consolidated financial statements.

GRANITE POINT MORTGAGE TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except share data)

 

Three Months Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

Interest income:

(unaudited)

(unaudited)

Loans held-for-investment

$

58,133

$

42,359

$

114,798

$

81,152

Available-for-sale securities

311

285

619

557

Held-to-maturity securities

613

836

1,274

1,721

Cash and cash equivalents

907

29

1,418

56

Total interest income

59,964

43,509

118,109

83,486

Interest expense:

Repurchase agreements

13,529

14,934

30,518

31,128

Securitized debt obligations

13,554

3,875

23,413

3,875

Convertible senior notes

4,491

2,206

8,956

4,385

Asset-specific financings

598

598

Revolving credit facilities

165

220

860

220

Total interest expense

32,337

21,235

64,345

39,608

Net interest income

27,627

22,274

53,764

43,878

Other income:

Fee income

202

564

1,115

1,446

Total other income

202

564

1,115

1,446

Expenses:

Management fees

3,763

3,114

7,212

6,323

Incentive fees

244

Servicing expenses

885

494

1,658

952

General and administrative expenses

5,006

4,005

10,622

8,237

Total expenses

9,654

7,613

19,736

15,512

Income before income taxes

18,175

15,225

35,143

29,812

Benefit from income taxes

(2

)

(2

)

(3

)

(1

)

Net income

18,177

15,227

35,146

29,813

Dividends on preferred stock

25

25

50

50

Net income attributable to common stockholders

$

18,152

$

15,202

$

35,096

$

29,763

Basic earnings per weighted average common share

$

0.34

$

0.35

$

0.68

$

0.69

Diluted earnings per weighted average common share

$

0.33

$

0.34

$

0.68

$

0.67

Dividends declared per common share

$

0.42

$

0.40

$

0.84

$

0.78

Weighted average number of shares of common stock outstanding:

Basic

53,953,634

43,446,963

51,292,318

43,410,796

Diluted

67,624,395

50,634,463

51,292,318

50,598,296

Comprehensive income:

Net income attributable to common stockholders

$

18,152

$

15,202

$

35,096

$

29,763

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on available-for-sale securities

32

(16

)

224

Other comprehensive income (loss)

32

(16

)

224

Comprehensive income attributable to common stockholders

$

18,184

$

15,186

$

35,320

$

29,763

GRANITE POINT MORTGAGE TRUST INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(dollars in thousands, except share data)

 

Three Months Ended
June 30, 2019

(unaudited)

Reconciliation of GAAP net income to Core Earnings:

GAAP Net Income

$

18,152

Adjustments for non-core earnings:

Non-cash equity compensation

1,198

Core Earnings(1)

$

19,350

Core Earnings per basic common share

$

0.36

Basic weighted average shares outstanding

53,953,634

(1) Core Earnings is a non-U.S. GAAP measure that we define as comprehensive income attributable to common stockholders, excluding “realized and unrealized gains and losses” (impairment losses, realized and unrealized gains or losses on the aggregate portfolio and non-cash compensation expense related to restricted common stock). We believe the presentation of Core Earnings provides investors greater transparency into our period-over-period financial performance and facilitates comparisons to peer REITs.

Contacts:

Investors: Marcin Urbaszek, Chief Financial Officer, Granite Point Mortgage Trust Inc., (212) 364-3200, investors@gpmortgagetrust.com

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