Granite Point Mortgage Trust Inc.

Good morning. My name is Chad and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust's fourth quarter and year end 2020 financial results conference call. All participants will be in a listening mode. After the speaker's remarks, there will be a question and answer period. Please note, today's call is being recorded. I would now like to turn the call over to Chris Peta with Investor Relations for Granite Point. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining our call to discuss Granite Point's fourth quarter and year-end 2020 financial results. After my introductory comments, Jack will review our current business activities and provide a brief recap of market conditions. Steve Alpert 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 were filed yesterday with the SEC, and our Form 10-K was filed this morning. If you do not have a copy, you might 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, which are uncertain and outside of the company's control. 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 similar expressions. We caution investors not to rely unduly on 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 will now turn the call over to Jack.

Thank you, Chris, and good morning, everyone. We would like to welcome you all to our fourth quarter and year-end 2020 earnings call. I am joined today by Steve Alpart, our CIO and co-head of Originations, Marcin Rybaczek, our CFO, Steve Klust, our COO, and Peter Morrell, our Co-Head of Bridge Nations and newly appointed Chief Development Officer. We hope everyone continues to be safe and healthy as we all navigate the ongoing impacts of the pandemic. 2020 was a challenging year for all on many fronts, particularly those arising from the global pandemic. Despite the disruptions to the overall economy and the commercial real estate market in particular, Our strategy, centered around delivering attractive risk-adjusted returns while providing significant downside protection, has been proving out, even through the severe market dislocations. Our defensively positioned and well-diversified investment portfolio, consisting of 99% senior first mortgage floating rate loans, has performed well despite the market turbulence. Through our active management of both sides of our balance sheets, Since the onset of the pandemic, we have proactively delivered our financing facilities, improved our liquidity position, and worked with our borrowers to help them navigate business plan interruptions at their properties. We believe our performance last year, as evidenced by the $1.17 per share of distributable earnings generated by our business, has demonstrated the resilience of our investment and financing strategy during even the most volatile and uncertain markets. Despite the significant challenges, we accomplished a great deal during 2020. Driven by the strong credit quality of our loans and our proactive asset management strategy, we received 99% of contractual interest payments and experienced no realized principal credit losses. We also benefited from our strong relationships with our financing partners and their trust in our conservative credit philosophy and the quality of our assets and borrowers. We worked proactively with our lenders to methodically deliver our credit facilities. This deliberative approach enabled us to be patient and secure a $300 million flexible strategic financing commitment at attractive terms to better position the company to take advantage of emerging investment opportunities in the current environment and for future growth prospects as they develop. With the enhanced liquidity and balance sheet stability, our board reinstated our quarterly dividend in the second half of 2020, as our portfolio continues to generate strong earnings and cash flows. Additionally, in December, the board declared a special cash dividend of 25 cents per common share, in addition to the regular quarterly dividend of 20 cents per share, reflecting the performance of our business. Lastly, we achieved a significant milestone by completing our transition to an internally managed commercial mortgage REIT at the end of the year. Internalization carries many benefits, including lower expenses, better transparency, and alignment of interest with our stockholders, while achieving greater economies of scale as we grow our business. Our actions last year were designed to position GranitePoint for strong performance in 2021 and beyond. Our priorities for this year include redeploying our excess liquidity into attractive investments to support our earnings and dividends, further diversifying our funding sources and increasing the proportion of credit non-market-to-market financing, and continuing the active management of our portfolio. We have already made notable progress towards these goals. Granted Point is reentering the loan origination market, along with the improvement in the broader capital markets, including that for commercial real estate CLOs. There has been an accelerating uptick in real estate transaction and lending activity that has so far been predominantly focused on select property types, but is expanding. Granted Point has an established reputation as a strong counterparty in the lending market. And as a result, over time, we have closed a meaningful number of repeat transactions with our borrowers. Over the last few years, we have proven our ability to generate a large volume of attractive investment opportunities meeting our underwriting and return criteria. While the origination volume in 2021 will depend on a variety of factors, we expect that the pace of our new originations will significantly depend on the amount of loan repayments we receive over the course of the year. As we previously announced on February 4th, we entered into a new credit agreement with Goldman Sachs. which provided us with about $349 million of term-matched and non-market-to-market financing while repaying all previously outstanding borrowings on our Goldman Sachs repurchase facility. This transaction illustrates the strength of our lender relationships and the credit quality of our loan. It also brings the percentage of our credit non-market-to-market financing to 51% of loan-level borrowings, which we expect to grow further over the course of the year. In addition, with respect to diversifying our funding sources, we have consistently viewed the CLO market as an attractive source of funding, providing us with non-market-to-market term-matched and non-recourse financing at a competitive cost of funds. Having been a repeat and well-respected issuer in the CLO market provides us with the ability to be opportunistic in our overall balance sheet management strategy. Subject to market conditions, We are positioned to and would anticipate accessing the CLO market during this year to further diversify our funding sources and improve our cost of funds while increasing our non-mark-to-market borrowings. The credit characteristics of our overall portfolio remain resilient. The ultimate credit outcome for our investments and other market participants will depend significantly on the recovery path of the overall economy and the commercial real estate sector in particular. We will continue to actively manage our investments and any potential credit events. We are pleased by the performance of our portfolio to date, believe that there's a lot of value embedded in it, and are quite encouraged by the continuing support of collateral properties by our borrowers. I'm very proud of our entire team's efforts and the resulting performance of our business last year. With the recent developments around COVID-19 vaccines and their distribution, and the expectation of continued monetary and fiscal support, we are optimistic about the future ahead for the economy and commercial real estate while understanding the ongoing nearer-term challenges. Our board of directors and the management team are excited about the future of Granite Point and are confident that we can deliver attractive returns for our stockholders over time, now as an internally managed REIT. I would now like to turn the call over to Steve Alpart to discuss our portfolio and recent activities in more detail.