Granite Point Mortgage Trust Inc.

Good morning. My name is Jason. I'll be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust's third quarter 2022 financial results conference call. All participants will be on a listen-only mode. After the speaker's remarks, there will be a question and answer period. Please note this 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 third quarter 2022 financial results. With me on the call this morning are Jack Taylor, our President and Chief Executive Officer, Marcin Urbasic, our Chief Financial Officer, Steve Alport, our Chief Investment Officer and Co-Head of Originations, Peter Murrell, 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 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 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 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 subject to uncertainties that could cause actual results to differ materially from expectations. Please see our filings with the SEC for discussion of some of the risks that could affect results. We do not undertake any obligations 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 financial information presented in accordance with GAAP. The reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in our earnings release and slides, which are now 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 third quarter 2022 earnings call. Over the course of the third quarter, volatility in the capital markets continued to increase, with rapidly rising interest rates, tightening financial conditions, and reduced liquidity across asset classes, while the geopolitical environment remained unstable. While many market participants expect the Fed to pause in 2023, given the magnitude and speed of recent rate increases, there is less clarity about the full impact of the Fed's actions on the broader economy. With respect to commercial real estate, transaction volume has declined and there is downward pressure on property values. But as we have seen historically, U.S. commercial real estate remains a global safe haven in times like these. While the market uncertainty has kept many investors on the sidelines for now, waiting for more clarity, there are several hundred billion dollars of capital waiting to be invested. As compared to the global financial crisis, banks are far better capitalized. and the supply and demand fundamentals of commercial real estate are generally in better balance. Our strategy of originating first mortgage loans on high-quality U.S. real estate has proven to be resilient, with our loans supported from the volatility of real estate values by the healthy equity investments of our borrowers, and granted point benefits from our granular portfolio. As of September 30th, our $3.6 billion portfolio consists of 97 loans with an average balance of $37 million. Nevertheless, given these uncertain times, it is prudent in the near term to maintain a cautious stance emphasizing liquidity and actively managing both sides of our balance sheet. To that effect, we have scaled back our originations by closing only one new loan during the third quarter, which resulted in a lower portfolio balance as we continue to realize loan repayments and build up our liquidity position. Despite the market volatility, during the third quarter we realized over $340 million of loan repayments. Over 40% of these repayments included loans on office properties, and over 30% were hotel assets. Additionally, so far in the fourth quarter, we have realized about $150 million of repayments, of which about 80% were office loans. Year-to-date, repayments total over $740 million, with about 50% being office loans. These repayments have continued despite the ongoing market uncertainty and demonstrate the resilience of our portfolio, our asset management capabilities, and the benefits of our strategy. In this regard, our repayments have benefited from what seems to be somewhat more liquidity for middle market property sales and financings. Also, we proactively work with our borrowers to provide them with more flexibility and time to navigate market challenges. as they continue to invest additional equity to support their properties. We are seeing an ongoing commitment by our borrowers to their assets, with over $125 million of fresh equity invested into their properties over the last year or so. Our leverage remains moderate at 2.6 times at quarter end and is meaningfully below our targeted 3 to 3.5 times, while our financing sources are diverse and we continue to increase our funding flexibility. We maintain a well-balanced financing mix with the majority of our total fundings being non-mark-to-market. During the third quarter, we closed on a new $100 million non-mark-to-market loan financing facility, further expanding our funding capacity for a wider range of assets while enhancing our liquidity management. We are currently exploring additional funding sources to potentially add to our financing mix and provide us with further optionality. Our portfolio generally has performed well despite the current difficult market and select individual credit issues. Even so, considering the evolving environment, headwinds remain for the industry. Therefore, for the third quarter, we have adjusted down our risk ratings on select loans and increased our CECL reserves. With this period of elevated macroeconomic uncertainty and capital markets volatility, we intend to maintain our measured stance while drawing on the broad experience of our team to successfully navigate this environment, as we have done during prior cycles. I would now like to turn the call over to Steve Alpert to discuss our portfolio activities in more detail.