Granite Point Mortgage Trust Inc.

Good morning, everyone. My name is Jamie, and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust's third quarter 2020 financial results conference call. All participants will be in a listen-only mode. After the speaker's remarks, there will be a question and answer period. At this time, I'd like to turn the conference call over to Chris Petta with Investor Relations for Granite Point. Sir, please begin. Thank you.

And good morning, everyone. Thank you for joining our call to discuss Granite Point's third quarter 2020 financial results. With me on the call this morning are Jack Taylor, our president and CEO, Marcin Urbasic, our CFO, Steve Alpert, our CIO, and Steve Plus, our COO. After my introductory comments, Jack will review our current business activities and provide a brief recap of market conditions. Steve Alport will discuss our portfolio, and Marcin will highlight key items from our financial results. The press release and financial tables associated with today's call, as well as our form 10-Q, were filed yesterday with the SEC. If you do not have a copy, you may find them on our website or on the SEC's website at sec.gov. In our earnings release and slides, which are now posted in the investor relations section of our website, we have provided a reconciliation of GAAP to non-GAAP financial measures. We urge you to review this information in conjunction with today's call. I would also like to mention that this call is being webcast and may be accessed on our website in the same location. Before I turn the call over to Jack, I would like to remind you that remarks made by management during this conference call and the supporting slides may include forward-looking statements. Forward-looking statements reflect our views regarding future events and are typically associated with the use of words such as anticipate, expect, estimate, and believe, or other such words. We caution investors not to rely on Boolean forward-looking statements. They imply risks and uncertainties, and actual results may differ materially from expectations. We urge you to carefully consider the risks described in our filings with the SEC. including our most recent 10-K and 10-Q reports, which may be obtained on the SEC's website at sec.gov. We do not undertake any obligation to update or correct any forward-looking statements if later events prove them to be inaccurate. I'll now turn the call over to Jack.

Thank you, Chris, and good morning, everyone. We would like to welcome you all and thank you for joining our third quarter 2020 earnings call. We hope everyone continues to stay safe and healthy. I'm happy to report that we made substantial progress since we last spoke as we continue to navigate the historic challenges in our market and the broader economy. With the goal of further bolstering our balance sheet, we secured a $300 million strategic long-term financing commitment to enhance our liquidity and financial flexibility and to take advantage of future growth opportunities as they develop. With the improved liquidity, our board reinstated our quarterly dividend as our portfolio continues to generate strong earnings and cash flows. As previously disclosed, we also entered into a definitive agreement with our manager to internalize the company's management function. This process is expected to be completed at the end of the year, which I will discuss a bit later in my remarks. We remain focused on actively managing our portfolio and working with our borrowers through the ongoing dislocation within the real estate market to preserve value for our stockholders. We firmly believe that we have a lot of embedded value not only in our assets, but also in our business, given our deep and experienced team and our investment strategy. We are confident that our time-tested experience managing through multiple cycles will ultimately deliver strong returns to our stockholders over the long term. Our portfolio continues to generate solid returns, and overall credit performance remains strong as our sponsors protect their properties through the business interruptions. During the third quarter and through the October payment dates, we have collected over 99% of our contractual debt service payments. And as of quarter end, we did not have any loans risk-rated 5 or any impairments or specific reserves for loan losses. However, we have been through multiple credit cycles over our long careers and have seen that real estate fundamentals and values often make shifts in the overall economy. We would be too lucky for our portfolio to be unaffected by this environment and are mindful of the potential for borrower fatigue as the negative impacts of the pandemic persist or drag out. The ultimate credit outcomes for our portfolio as well as those of others will significantly depend on the recovery path of the economy and the impacts on commercial real estate owners and their properties. As we discussed on prior calls, one of our strategic goals has been to bolster liquidity and further stabilize our liabilities. We are extremely pleased with the $300 million financing commitment we obtained from our well-known and respected institutional investors. Our goal was to partner with a sophisticated institution that has a strong understanding of our business and shares our beliefs around the value of our assets and vision for the future of the company. This financing provides us with broad financial and operational flexibility to actively manage our business during these uncertain times and positions us well for the future. We have also maintained our constructive dialogue with our financing counterparties and continue to benefit from our longstanding relationships with our lenders. During the third quarter, we extended one of our margin call holidays and are considering other actions as we continue our efforts to further stabilize our liabilities. Over the past few months, we've seen real estate transaction activity incrementally and slowly pick up. A significant amount of capital continued to form around commercial real estate, with investors pursuing yield as well as the safe haven of investments backed by a hard asset class in the United States. The sentiment in the capital markets continues to improve. We have experienced a pickup in loan repayments, which reinforces our view of the credit quality of our assets. We may well experience additional repayments over the rest of the year, but the exact timing and volume is very hard to predict. As a result of our strategic term loan financing, select loan sales, and repayment activity, as of last Friday, we carry the healthy cash balance of over $325 million. Going forward, we believe it prudent to maintain an elevated level of liquidity as we continue to assess the market as well as any potential new investment opportunities. Given current conditions, our primary focus will remain defensive, with an emphasis on further stabilizing our liabilities and actively managing our investment portfolio. I am very pleased with and proud of the performance of our business and our entire team as we work through this difficult environment. Our operating results in the third quarter show the overall strength of our business, with our portfolio generating strong returns. We have further strengthened our balance sheet while significantly improving our financial flexibility for the current market and for future success and growth opportunities. We remain confident that our extensive experience managing through multiple cycles and maintaining strong relationships with our borrowers and lenders will preserve and enhance the value of our assets with the primary goal of delivering strong returns for our stockholders over time. Now, before turning the call over to Steve Halpert, I'd like to briefly comment on the internalization process. In October, we announced that we had entered into a definitive agreement with our manager to internalize the company's management function. As part of this agreement, GrantaPoint will make a one-time cash payment of $44.5 million to the manager in connection with the completion of the internalization. The internalization transaction, which was negotiated and approved by an independent committee of our board of directors, is expected to be effective on December 31, 2020. At that time, the management agreement between the company and the manager will be terminated and Grand Point will no longer pay any management or incentive fees going forward. Following the completion of the internalization, we will be an internally managed commercial real estate finance company. We anticipate an orderly and timely transition of all required functions, including retaining our excellent team, such that our business will continue its normal operations without interruption. Our board of directors and the management team are highly confident that the internalization will enhance the company's value proposition and drive meaningful benefits for stockholders. We believe that transitioning Granite Point to an internally managed company is an important milestone in our evolution and a significant step in lowering costs, and more fully realizing Granite Point's growth and earnings potential. I would now like to turn the call over to Steve Alpert to discuss our portfolio and recent activities in more detail.