Granite Point Mortgage Trust Inc.

Good morning. My name is Matt, 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 full year 2021 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. 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.

Thank you. And good morning, everyone. Thank you for joining our call to discuss Granite Point's fourth quarter and full year 2021 financial results. Meeting on the call this morning are Jack Taylor, President and Chief Executive Officer, Marcin Urbacic, our Chief Financial Officer, Steve Alport, our Chief Investment Officer and Co-Head of Originations, Peter Murau, our Chief Development Officer and Co-Head of Originations, and Steve Pluss, our Chief Operating Officer. 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 are available in the investor relations section of our website, along with our Form 10-K, which was just filed this morning. I would like to remind you that remarks made by management during this call and the supporting slides may include forward-looking statements, which are uncertain outside of the company's control. Forward-looking statements reflect our views regarding future events and are subject to uncertainties that could cause actual results to differ materially from expectations. We see our filings with the SEC for a discussion of some of our risks that could affect results. We do not undertake any obligation to update any forward-looking statements. We also refer to certain non-GAAP measures on this call. This information is not intended to be considered in isolation or a substitute for the financial information presented in accordance with GAAP. And reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in our earnings relief and slides, which are now available on our website. We'll 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 full year 2021 earnings call. Granted Point had a very successful 2021 across our business, led by the strong performance of our well-diversified, resilient, and growing investment portfolio, which continues to deliver solid earnings supporting our attractive dividends. We have been active in strengthening our balance sheet by adding over $1.5 billion of term-matched and non-mark-to-market financing, expanding our permanent capital base to over $1 billion by issuing perpetual preferred equity and meaningfully reducing secured higher-cost corporate debt. These actions, combined with our growing pipeline of attractive new loan investments, will continue to position the company for a successful 2022. While actively managing our portfolio and growing our pipeline of new loans, we have also further expanded our non-recourse and non-mark-to-market financings to over 75% of our total borrowings by issuing two commercial real estate CLOs during 2021, which financed over $1.4 billion of our loans on attractive terms. We expect to remain an opportunistic issuer in this market as it is a compelling source of financing for our portfolio and an important component of our well-diversified funding mix. In addition to further strengthening the profile of our liabilities, over the last few months we also repaid $125 million of our higher-cost secured corporate debt and expanded our permanent equity base by issuing over $200 million of attractively priced preferred stock, inclusive of the recent $90 million add-on offerings. This positive shift in our capital structure creates more flexibility by improving our interest coverage while providing us with permanent and leverageable equity capital to support a creative growth of our investment portfolio. As an internally managed company, it also allows us to realize operating leverage benefits by lowering our expense ratio, which improves overall profitability as we grow our business. Despite operating at a lower than historical leverage level, our run rate earnings comfortably covered our dividend in 2021. As short-term rates have remained low, our earnings have benefited from the LIBOR floors in our loans. But if, as projected, short-term interest rates increase over the course of 2022, depending on the pace and magnitude of those increases, our net interest income would in isolation be reduced. However, our company has substantial opportunities embedded in our balance sheet to further reduce debt costs, release incremental capital, and grow our portfolio. A refinancing or repayment of the remaining $100 million of higher-cost term loan borrowings would reduce interest expense. Resolution of the two remaining non-accrual loans would release additional capital, which could be redeployed into earning assets. Also, some of our legacy funding vehicles have significantly delivered through loan repayments. Refinancing those facilities could also release capital which could support further portfolio growth and lower our funding costs. We expect these initiatives to help return our liquidity and leverage to more normalized levels. Finally, as we originate new loans and grow our portfolio, our portfolio weighted average LIBOR floor should decline and increase the correlation of our earnings with rising interest rates. We have already begun implementing some of these activities, the full benefits of which have not yet been reflected in our financial results. We are very pleased with the progress we have made and are excited to advance and execute on our opportunities over the course of 2022. One of the main factors driving our overall results is the strong credit performance of our portfolio throughout the pandemic, which reflects the credit culture of our highly talented and experienced teams. as well as our ability to directly originate a significant volume of attractive senior loan investments. We remain focused on further repositioning our balance sheet by taking advantage of market opportunities to realize economies of scale and improve our profitability. Our company is well positioned to execute on our strategic priorities, which we believe should meaningfully accrue to the benefits of our stockholders over the course of 2022 and beyond. I would now like to turn the call over to Steve Alpart to discuss our originations, forward pipeline, and portfolio.