Granite Point Mortgage Trust Inc. Q2 FY2025 earnings call

• Market Conditions: Continued improvement in commercial real estate sentiment and liquidity, with refinancing activity increasing and sales transaction volume picking up, though initial stall post deliberation day due to tariffs, but recovery resumed with spread stabilization and improved liquidity. • Asset Resolutions: Significantly reduced risk-rated 5 loans from 7 at year-end to 2, sold an office REO asset, resolved $132 million UPB of nonaccrual loans. • Financing: Extended 3 repurchase facilities for approximately 1 year and extended the secured credit facility maturity from December 2025 to December 2026, reducing the financing spread by 75 basis points and debt by $7.5 million. • Stock Repurchase: Repurchased 1.25 million shares of common stock in the second quarter, with about 2.6 million shares remaining under existing authorization for buyback.

During the second quarter, Granite Point had $1.9 billion in total loan commitments and $1.8 billion in outstanding principal balance with approximately $78 million in future fundings, accounting for about 4% of total commitments. The loan portfolio was well diversified across regions and property types, with 47 investments, an average UPB of about $39 million, and a weighted average stabilized LTV of 65%. The realized loan portfolio yield for the second quarter was 7.1%, which excluding nonaccrual loans would be 8.2%. There were 3 risk-rated 5 loans with a total UPB of about $223 million at June 30. Resolutions reduced the number of risk-rated 5 loans, with 2 remaining at $173 million. REO assets: The Phoenix office property was sold, leaving 2 remaining REO properties, and there were positive leasing successes at the suburban Boston property and active leasing discussions for the Miami Beach office property.

• Expect to return to core lending business and restart origination efforts towards the end of 2025 and into early 2026. • Ballpark originations for the period from the end of 2025 to the end of 2026 are expected to be between $750 million and $1 billion.

• Uncertain market conditions that could cause actual results to differ materially from expectations. • Macro factors such as less favorable macroeconomic forecast in the CECL model impacting the CECL reserve, as seen with a $11 million increase in the general reserve due to less favorable CRE price index forecast.

Q: On the outlook of remaining assets in the 4 rated bucket and timing of resolution?

A: Steve Alpart said they are monitoring each of the 4 rated assets, which are affected by different factors like being behind on business plan, local market challenges, etc. Timing is hard to predict; 2 are office assets with positive leasing trends in Manhattan, one is a multifamily deal in Atlanta with a new property manager and uptick in occupancy, and one is a hotel in the Phoenix-Tempe MSA where the sponsor is exploring a recap or sale.

Q: Outlook for originations, quantum and timing?

A: Steve Alpart said expecting to return to core lending towards the end of 2025 and early 2026, likely starting to quote in the fourth quarter. Jack Taylor mentioned ballpark originations from the end of 2025 to the end of 2026 would be $750 million to $1 billion.

Q: Trends in office portfolio assets?

A: Steve Alpart said there is slow but steady improvement in office leasing in many markets, capital is slowly returning to the sector, though tariff impact was an overhang, the sector is pushing forward, portfolio is diversified with Class A or recently renovated assets, and progress is being made in resolving issues.