Granite Point Mortgage Trust Inc.

Good morning. My name is Vaishnavi, and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust's first quarter 2022 financial results conference call. All participants will be on a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After the speaker's remarks, there will be a question and answer period. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star, then two. Please note, today's call is being recorded. I would now like to turn over the call 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 first quarter 2022 financial results. With me on the call this morning are Jack Taylor, our President and Chief Executive Officer, Marcin Urbacic, our Chief Financial Officer, Steve Alpert, our Chief Investment Officer and Co-Head of Originations, Peter Morrell, our Chief Development Officer and Co-Head of Originations, and Steve Plus, our Chief Operating Officer. After my introductory comments, Jack will review our current business activities and provide a brief recap of market condition. 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-Q. I would like to remind you that remarks made by management during this call and the supporting sides 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 subject to uncertainties and could cause actual results to differ materially from expectations. We see our filings with the SEC for discussion of some of the risks that could affect results. We do not undertake any obligation to update any forward-looking statements. We will also refer to certain non-GAAP measures on this call. This information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. A reconciliation of these non-GAAP financial measures to the most comparable gap measures can be found in our earnings release and slides, which are available on our website. I'll now turn the call over to Jack.

Thank you, Chris, and good morning, everyone. We would like to welcome you all to our first quarter 2022 earnings call. We have made tremendous progress on our strategic priorities of repositioning our balance sheet and improving run rate earnings. As we discussed previously, we have been focused on deploying capital from loan repayments and the resolution of a few non-accrual loans into earning assets, refinancing our older, inefficient, and delevered loan-level funding vehicles to release and reinvest the capital trapped in these structures, and repaying our higher-cost term loan borrowings. We believe that our recent accomplishments in pursuing these priorities have the ability to meaningfully offset the earnings impact of rising short-term interest rates in the near term and also position us well for the second half of the year, as our portfolio loan yields are expected to increase if short-term rates continue to rise. We are very excited to report a number of steps we have recently taken to improve run rate profitability and close and surpass the gap between our current stock price and our book value. In late March, we sold our $54 million non-accrual senior loan on an office property located in Washington, D.C., which allowed us to redeploy capital into earning assets and repay expensive debt. At this point, we have resolved three of our four non-accrual loans. Our one remaining loan on non-accrual status is a first mortgage loan on a retail property in Pasadena, California, for which we are also actively pursuing various resolution strategies. In April, we refinanced about $590 million of loans from two of our legacy funding vehicles, our 2018 commercial real estate CLO, and the structured financing facility with Goldman Sachs, both of which had meaningfully delevered through repayments. The result of these transactions was a net release of about $180 million of capital at an attractive cost of funds. We are very pleased with this outcome as it lowered our cost of funds on the finance loans, helped us significantly relever a portion of our portfolio, and provided funds for repayment of higher cost borrowings and additional portfolio growth. With a portion of the capital released from the refinancing transactions, we recently fully repaid the $100 million of borrowings remaining under our senior secured term loan facilities, achieving yet another of our stated strategic goals. The full repayment of this higher cost corporate debt not only significantly reduced our cost of funds, which has not yet been fully reflected in our financial results, but also provided us with more balance sheet flexibility and the ability to further grow our portfolio. We believe that all of these actions, when fully reflected in our financial results in the coming quarters, have the ability to meaningfully improve our run rate profitability. Moreover, there are additional actions we intend to take which could provide even further benefits and drive attractive total returns for our stockholders. We are actively pursuing a few alternative resolutions with respect to the one remaining non-accrual loan, which is currently being held unlevered. Once resolved, redeploying the capital currently invested in this loan into earning assets should generate incremental earnings. We are also pursuing various opportunities to further rationalize our funding and increase our total leverage from 2.5 times at the end of Q1 closer to our target range of 3 to 3.5 times. which would afford incremental portfolio growth opportunities and could further improve our run rate profitability. Additionally, as an internally managed REIT, we are well positioned to realize operating leverage benefits as we grow our business. We continue to see a healthy flow of attractive lending opportunities and are focused on properties with favorable fundamentals. Given the ongoing uncertainties with respect to global events, the pandemic, supply chain disruptions, inflation, rising interest rates, and credit spreads, we remain disciplined in our approach to investing, underwriting, and loan structure. Given our liquidity and leverage, we are well positioned to take advantage of wider loan spreads and remain opportunistic in further improving our capitalization. With the amount of volatility global markets are experiencing, we believe that U.S. commercial real estate will continue to be viewed as a safe haven asset class by long-term fundamental investors, and our strategy of lending on a senior floating rate basis against institutional quality real estate should generate attractive risk-adjusted returns over time. In summary, our strategic plan has been working well, and we have already accomplished a lot over the last few quarters to reposition the balance sheet and improve our run rate earnings. One key net result of our actions on our overall capitalization structure is the replacement of higher cost secure term loan corporate debt with lower costs, leverageable permanent preferred equity. Additionally, resolutions of all but one of our non-accrual loans and refinancing of our inefficient funding vehicles helped reduce the earnings drag from trapped capital and allowed for more reinvestment into earning assets. Our business continues to deliver strong operating performance led by our well-diversified and resilient senior loan-focused investment portfolio, generating solid run rate earnings supporting an attractive dividend. We believe that our recent accomplishments and fully reflected in our financial results in the coming quarters, as Marcin will discuss in more detail later, will significantly benefit our run rate profitability and position Granite Point well for the second half of the year. We are currently pursuing the additional embedded opportunities to potentially provide incremental benefits with the ultimate goal of delivering attractive total returns to our stockholders. I would now like to turn the call over to Steve Alpart to discuss our originations, forward pipeline and portfolio.