Granite Point Mortgage Trust Inc. Q1 FY2026 earnings call

• U.S. commercial real estate markets had a positive trajectory in Q1 but were influenced by geopolitical developments tied to the Iran conflict. • Granite Point's primary objective is to capitalize on the improving environment to resolve legacy loans and regrow the portfolio in 2026. Accomplishments included full loan repayments, B note sale, resolution of Chicago retail loan, and sale of subordinate interest in debt. • They are pushing for repayments through property sales, refinancings, recapitalizations, and loan sales, which led to some loan downgrades. • REO assets are being invested in to improve outcomes and exit. • Loan portfolio has 40 investments with average UPB of about 38 million and weighted average stabilized LTV of 66% at origination. • Risk-rated loans: five rated-five loans with total UPB of about 265 million, reduced to four loans totaling 189 million post quarter-end; two loans with combined UPB of 69 million with risk ratings of four and on nonaccrual status. • REO assets: suburban Boston property has positive leasing successes and repositioning opportunities; Miami Beach office property has positive leasing discussions and plan to review sale alternatives.

Granite Point Mortgage Trust Inc. ended the first quarter with 1.6 billion in total loan portfolio commitments, inclusive of 1.5 billion in outstanding principal balance and about 68 million of future fundings. Realized loan portfolio yield for the first quarter was 6.5%, which, excluding nonaccrual loans, would be 7.9%, or 1.4% higher. They had an active quarter of loan repayments, paydowns, sales, and amortization totaling about 189 million. The loan portfolio remains diversified across regions and property types. Book value at March 31 was $7.05, a decline of $0.24 from Q4. Aggregate CECL reserve at March 31 was about 149 million, approximately 100 thousand higher than last quarter. Unrestricted cash ended the quarter at about 44 million, and total leverage decreased from 2.0 times to 1.7 times from the prior quarter.

• Expect earnings to meaningfully improve once capital is redeployed from collateral-dependent loans and REO into new originations at target leverage, expecting to increase quarterly EPS by approximately $0.17 to $0.19. • Intend to further improve earnings through expense reduction initiatives and expand into capital-light income sources like JV earning fees. • Best use of capital is to continue paying down higher-cost debt, resolve remaining nonaccrual loans and REO, and regrow the investment portfolio through new originations beginning later this year.

• Geopolitical developments tied to the Iran conflict are influencing U.S. capital markets, causing uncertainty about interest rate cuts and affecting securitization volumes. • Uneven market recovery with some markets seeing delayed recovery, which can lead to properties falling behind on business plans and loan downgrades. • Macro uncertainty leading to delays in payments and resolutions of loans. • Foreign capital requirements may cause pauses in some JV structure transactions.

Q: Hey, this is Jason Shapshaw on for Jade. Thanks for taking the question. It would be helpful to hear more about the loans that were downgraded to risk four. Just some more color on what drove the negative migration in your view.

A: Hey, Jason. Good morning. It is Steve Alpart. Thanks for joining the call this morning. You are asking about the four-rated loans, I believe, in aggregate, if I heard the question correctly? That is correct. High level, we had seven nonaccrual loans at the end of the quarter. After we resolved the Chicago retail loan, that left six. After that loan was resolved, that left five rated-five loans, and there are two additional nonaccrual loans. With respect to the fours that are part of that cohort, high level, what I would say is that we are generally seeing improving markets, but it is uneven, and some of the markets are seeing a delayed recovery. These properties are behind under business plans, and that is why they have been downgraded to a four. For each of these loans, we are in discussions with the borrowers, and we expect to have more color over the coming quarters.

Q: Great, thanks. And just on your multifamily book, do you have an expectation of getting higher repayments near term? Rent growth has been pretty muted overall for the sector, so it would be great to hear some color on overall performance for that part of your book.

A: Sure. It is Steve again. I will take that. Yes, we are seeing a pretty steady rate of multifamily loan repayments. We had one large multifamily loan payoff this quarter, so it has been a pretty steady pace. We like the multifamily sector. We are seeing generally stable fundamentals in most of the markets that we are in. It has been well reported that the new supply picture looks much better as we get out into the future. The trend line in certain markets, particularly in the Sun Belt, has been a little more sluggish than I think a lot of people were expecting. We are seeing the supply picture get better, but there are some ongoing headwinds. The supply is different in every market. Declining immigration has been a factor. Generally, we are seeing improving fundamentals, but it is really asset by asset. We are seeing some borrowers in some markets have more pricing power on rents. Even in cases where borrowers are not getting rent bumps all the way to what they were expecting, the general trend is that we are seeing progress. We have seen a few assets fall behind on business plans, but that has not been the general trend, and where that does happen, we are expecting that, over time, borrowers will be able to push rents. Going back to your question, there is good liquidity in the sector, sentiment is positive, we are seeing payoffs, and we are pushing hard for these older loans to pay off as well.

Q: Did you see any of the rate and geopolitical volatility have any impact on overall activity that may have impacted your book in the first quarter and so far in the second quarter? Have you seen that have any impact just overall?

A: Yes. Thank you for the question. I think the overall impact is just a higher degree of uncertainty in the market generally, and that has led to a delay in payments and in resolutions. Not a cessation, but deals are all taking longer because of a higher degree of macro uncertainty, and especially with respect to rates.

Q: Got it. That makes sense. And then just as my last question, it would be great to hear your current thoughts about the dividend. Given that DE has been below it, I understand that working through risk-five and some of the REO assets will be the main driver of earnings growth, but I wanted to hear your thoughts on the dividend.

A: Sure. It is a good question. We are always examining the overall market and what is happening in our loan book and our earnings and the like. Basically, we take a considered approach working with our Board. That is a Board decision and is made thinking about the long-term potential for the company. I would say with the burn-off of the nonaccrual loans, which has had a meaningful drag on our earnings, we expect that to be reduced as we work through them, and we will continue to evaluate the company dividend with respect to future quarters, and we are aware that we are under-earning, but we are looking at the longer-term prospects.

Q: Hey, guys. Thanks for taking the questions. I guess on the subsequent resolution, and sorry if I missed this in your prepared remarks, but did that property move to REO or was it repaid? And then will the entire 30 million write-off come out of the specific reserve balance, so that balance is around 90 million, which I think I heard?

A: Hi, good morning, Chris. This is Blake. Thanks for your question. Yes, so this property was not moved to OREO. This was held as a loan as of quarter-end, and as of March 31, the balance of the loan was 76 million. Jack Taylor: So when this resolved during early April, we did have that resulting write-off of around 30 million.

Q: And then just looking at the specific reserve balances quarter over quarter, it looks like it increased about 15 million. Was that due to just the New Haven hotel, or was that also the new four-rated loans that came up?

A: Yes. It is kind of interesting. I think it is best if you look at the entire reserve. It increased in total around 100 thousand. If you look at the primary drivers, we did have incremental losses on a certain number of collateral-dependent loans, and that was around 15 million in total. But it also included the shift of three of the loans from our general reserve in the previous quarter, which already had a substantial reserve as of December 31. So part of that shift included the balance that was previously in the general reserve.

Q: And then just the last one if I could squeeze it in. I hear your comments on looking at JVs and some other different ways to look at the business. Is there anything that you guys are looking at today that you could share? Just what type of JVs would you be interested in?

A: I can start first—do you want to take it, Jack? Okay. Thank you. So the point in our prepared remarks was we can introduce capital-light income and JVs, and this would actually help offset some of our operating expenses from an economic standpoint. If we started this today, for example, we would expect to see something between 2 million to 4 million in annual earnings in the first year. If you look at that on an EPS basis, it is around [inaudible] per share, quarterly. It really would increase from there because once you have the book JV start, you would see some momentum. As far as the actual structure itself, I can pass it to Jack, and he can provide some color. Jack Taylor: Yes, thank you. I would just add a couple of things. We have folks that we have known for a long time and some that are new acquaintances who have approached us, and they have a lot of capital. They would like to come into the market, and they know and trust us. So they are thinking and discussing with us what we are calling the capital-light strategies, which can take a number of forms: just originating for them directly where it is all their capital; it can be where it is part our capital and theirs; it could be a formal JV structure. The main point is that we have the infrastructure and the team to originate loans of the sorts—various forms actually—that these counterparties are interested in accessing without having to build their own team. We have been very pleased about the reverse inquiry. Some of them are on pause, in part because it would require us, as it is foreign capital, to carry quite sizable loans in cash for a period of time, so we are not yet able to transact on that type of structure. But others are still under consideration.

Q: Hey, guys, it is David on for Gabe. I wanted to ask a question around the vintage of some of your larger loans outstanding. How are conversations going with borrowers and their plans for repayment? Just wanted to get a feel for the playbook on some of these legacy office loans. Thanks.

A: Hey, it is Steve. I will take that question, and thank you for joining the call this morning. Great question. It is a big point of focus for us. We have made a lot of progress reducing the balance of some of these older vintages loans, including the office loans. We have a very proactive asset management approach. We are in constant dialogue with these borrowers, and we are setting clear expectations. We are now in an improved commercial real estate market environment. As we continue to think about addressing these pending maturity dates, as you heard us say earlier, we have been less inclined to provide borrowers with additional time, and we are pushing very hard for borrower repayments, whether that is through property sales, refinancings, or recaps. We are also selectively looking at some loan sales. We are in discussions with borrowers, delivering clear expectations about getting a process underway, whether that is a refinancing or an equity recap if it is an asset they want to hold; if not, a property sale. There are a few cases where, for credits that we like, we may consider modifying and extending a loan to keep it in the portfolio. And, again, case by case, if we see some upside potential, we may selectively take back properties through either a deed in lieu or possibly through a foreclosure. This applies not just to the office, but it is particularly true for the office loans that you mentioned. We are pushing hard to turn over the portfolio. We will continue to do that over the next couple of quarters, and we are looking to unlock capital so we can redeploy into higher-earning assets.