GPMT

Market Context

• U.S. commercial real estate credit fundamentals continued to improve in Q2 2026, but geopolitical tensions from the Iran conflict have pushed up energy prices and inflation uncertainty, shifting market expectations from near-term interest rate cuts to potential hikes, creating headwinds for property values.
• Capital continues to flow into commercial real estate, debt markets remain competitive, and lending spreads have tightened, which mitigates some risk from higher short-term rates for refinancing. Loan demand broadened for the first time since 2022, driven by a pickup in acquisition activity, and the CMBS market is strong with issuance on pace to exceed post-GFC records from 2025.
• Many office market fundamentals and liquidity are improving, which supports resolution of legacy office loans.

Portfolio Resolution Activity

• The firm's top priority is resolving legacy loans, and multiple resolutions were completed in Q2 2026: the full resolution of the $76 million Chicago retail loan above carrying value, repayment of a $37 million Richmond office loan, and sale of two loan participation interests for a Dallas office property totaling $31 million at a price in the low 90s.
• Total activity (repayments, resolutions, sales, amortization) reduced the loan portfolio by a net $122 million in Q2 2026, furthering the goal of reducing higher-cost debt.
• The firm holds two REO assets: it has positive leasing momentum at the suburban Boston property, and the Class A Miami Beach office property is targeted for sale in H2 2026, with ongoing positive leasing discussions.
• Five risk-rated 5 loans remain with a total UPB of $253 million, three of which are in active sales processes expected to complete in coming quarters.
• The CECL reserve increased in Q2 2026 due to a more negative macroeconomic forecast in the general reserve model and new specific reserves for changed borrower/collateral circumstances, but management expects near-term resolutions to offset most of this increase.

Financing Improvements

• Post-quarter end, the firm refinanced its legacy CLO assets by extending and upsizing the J.P. Morgan financing facility, reducing the cost of funds from SOFR + 238 bps to SOFR + 200 bps. This 38 bps reduction will cut annual interest expense by approximately $2 million, based on the $521 million outstanding balance.
• During Q2, the firm extended the Citibank and Morgan Stanley repurchase facilities by approximately one year, extended the secured credit facility to December 2027, and cut its cost of funds by 25 bps. Financing counterparties remain supportive, and the funding mix is diversified and stable.
• The minimum unrestricted cash covenant was revised down from $30 million to $20 million, and the minimum tangible net worth covenant was reduced from $600 million to $500 million.

Strategic Goals

• Management and the board believe the firm's current market valuation does not reflect the underlying value of its assets, and the firm is focused on closing this gap via disciplined execution, value-maximizing legacy asset resolution, cost of capital reduction, maintaining balance sheet flexibility, and positioning to redeploy capital into new attractive investments. The firm expects portfolio balance to trend lower until origination efforts restart.

• Management expects the majority of the $17 million Q2 2026 CECL reserve increase to be offset by near-term legacy loan resolutions, which will meaningfully reduce the total CECL reserve balance once completed.
• Three of the five remaining risk-rated 5 loans are in active sales processes, with resolutions expected over the coming quarters; the remaining two are also targeting resolution within the next two quarters, and the Minneapolis office loan is targeted for REO takeover in the near term.
• The Miami Beach REO office property is targeted for sale in H2 2026.
• The firm expects portfolio balance to continue trending downward until the firm restarts origination activity to regrow the portfolio.
• Management does not expect to fall below the new $20 million minimum unrestricted cash covenant and will remain in compliance with all financial covenants through the end of 2026.

Granite Point Mortgage Trust operates a single commercial real estate loan investment segment. As of Q2 2026, the firm had a total loan portfolio commitment of $1.5 billion, including $1.4 billion in outstanding unpaid principal balance and $57 million in future funding (4% of total commitments). The portfolio includes 38 diversified investments with an average unpaid principal balance (UPB) of $37 million and a weighted average stabilized loan-to-value (LTV) of 66% at origination. The realized loan portfolio yield for Q2 2026 was 6%, which rises to 7.4% when excluding non-accrual loans. The firm reported GAAP net loss attributable to common stockholders of $62 million, equal to negative $1.29 per basic common share, which included a $47 million provision for credit losses and a $6.1 million REO impairment loss. Distributable loss was $37.7 million, equal to negative 79 cents per basic common share. Total allowance for credit losses (CECL reserve) was $166 million at quarter end, a $17 million increase from Q1 2026: $10 million of the increase came from specific reserves, and $7 million came from general reserves. 78% of the total allowance was allocated to individually assessed loans. Risk-rated 5 loans had a total UPB of $253 million, with specific reserves of $120 million (47.4% of UPB). Unrestricted cash at quarter end was $58 million, and total leverage was 1.9x. Post-quarter end refinancing brought unrestricted cash to approximately $35.7 million.

• Geopolitical conflict in Iran has increased energy price volatility, inflation uncertainty, and interest rate volatility, shifting market expectations from rate cuts to potential hikes and creating downward headwinds for commercial real estate property values.
• Equity capital for commercial real estate, particularly for office assets and complex legacy situations, remains selective, and rising buyer return expectations have put downward pressure on asset pricing.
• The $65 million San Diego CBD office loan was downgraded from risk rating 4 to 5 after the sponsor paused further equity investment, as rising construction and financing costs made the original hotel redevelopment business plan unfeasible at this time.
• There is potential for temporary dips in unrestricted cash below the $20 million minimum covenant between Q3 and Q4 2026, though management does not expect this outcome to materialize due to upcoming expected resolutions and capital releases.
• Interest rate volatility can impact commercial real estate pricing and refinancing outcomes, creating uncertainty around legacy asset resolution valuations.
• The company's forward-looking statements are subject to inherent uncertainties that could cause actual results to differ materially from management expectations.

Q: Can you provide additional detail on the recently downgraded $65 million San Diego CBD office loan, including occupancy and expected resolution timelines? / A: The loan is secured by a 384,000 square foot property purchased for a mixed-use hotel redevelopment project, with significant equity already invested by the sponsor and a major hotel brand. Rising construction and financing costs have led the sponsor to halt further equity contributions, which prompted the risk rating downgrade. Occupancy is intentionally very low, as the property was already cleared for redevelopment. Management is in cooperative discussions with the borrower evaluating multiple resolution alternatives, but it is too early to share a specific timeline.

Q: The Miami Beach REO office property is now held for sale — have you received buyer interest, and can a sale close by the end of 2026? / A: The property is located in a strong market, and the firm has already built solid leasing traction as part of its value-maximization strategy. The property is currently under contract for sale, and management is still targeting completion of the sale in H2 2026.

Q: How is management thinking about the common dividend amid ongoing portfolio run-off prior to restarting originations, versus preserving capital? / A: The board evaluates the dividend on a quarterly basis alongside all competing capital uses, including balance sheet preservation and deleveraging. No final decision on future dividend levels has been made as of the Q2 earnings call.

Q: Can you explain the post-refinancing liquidity position, and address potential concerns about meeting the minimum cash covenant? / A: Unrestricted cash fell from $58.5 million at quarter end to $35.7 million post-refinancing, largely due to $12 million in debt paydown, $4 million in refinancing fees, $2.8 million in recurring operating spending on REOs and future fundings, and a $6 million dividend payment. The minimum unrestricted cash covenant was lowered to $20 million from $30 million, and management does not expect to fall below this minimum and will remain in compliance with all covenants through year-end, supported by expected upcoming loan resolutions.