Granite Point Mortgage Trust Inc.

Good morning. My name is Christine, and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust's third quarter 2024 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, today's call is being recorded. I would now like to turn the call over to Chris Petta with Investor Relations for Granite Point.

Thank you. And good morning, everyone. Thank you for joining our call to discuss Granite Point's third quarter 2024 financial results. To me on the call this morning are Jack Taylor, our President and Chief Executive Officer, Marcin Arbasic, our Chief Financial Officer, Steve Alpart, our Chief Investment Officer and Co-Head of Originations, Peter Murau, Chief Development Officer and Co-Head of Originations, Steve Plust, our Chief Operating Officer, and Blake Johnson, our Deputy Chief Financial Officer. After my introductory comments, Jack will provide a brief recap of market conditions and review our current business activities. Steve Alport will discuss our portfolio, and Marcin will highlight key items from our financial results and capitalization. The press release, financial tables, and earnings supplemental 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 at the SEC for a 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 nor is to substitute for the financial information presented in accordance with GAAP. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in our earnings release and slides, which are available on our website. I will now turn the call over to Jack.

Thank you, Chris, and good morning, everyone. We would like to welcome you and thank you for joining us for Granite Point's third quarter 2024 earnings call. Before discussing our third quarter results, I'd like to take a moment to briefly discuss our upcoming CFO transition. As previously announced, on December 1st, Marcin Urbacek will depart Granite Point, and Blake Johnson, who rejoined us early last month, will take over as CFO. Blake and Marcin have been hard at work with our team for the past month, ensuring a smooth transition. Having had the privilege to work closely with him since the inception of our business, I have come to admire Marcin greatly for his honesty, character, intelligence, and dedication. Marcin has left an indelible mark on our company, and we are grateful for his leadership and friendship. Marcin, you'll be missed, and all of us at Granite Point wish you the very best in your next chapter. At the same time, we are also very excited to have Blake back at Granite Point. Blake played an integral role in establishing our finance, accounting, and tax functions, most recently serving as our controller. Both during that time and in the past month, I have seen firsthand Blake's financial expertise, industry acumen, and leadership capabilities. I am confident that his deep understanding of our business and his extensive history with our team make Blake the perfect fit to advance our initiatives and drive shareholder returns as our next CFO. Now turning to our business activities. The third quarter marked a period of substantial progress for Granite Point, driven by our proactive approach to resolving non-performing loans and generally improving real estate market conditions. The Federal Reserve began its long-awaited interest rate cutting cycle, which, along with improving liquidity and the overall market sentiment, should be supportive of real estate valuations and transaction activity going forward. We maintain our view that the commercial real estate market conditions in large part will be dependent on the forward path of interest rates, which remains somewhat uncertain, given the Fed's focus on the macroeconomic data that continues to point to the ongoing strength and resiliency of the broader economy. The CMBS market has grown significantly stronger during the year, especially for larger commercial mortgage loans. Liquidity in the floating rate transitional middle market sector, though improving, remains less robust, particularly as regional and community banks are largely on the sidelines. But this will present attractive longer-term opportunities for non-bank lenders to grow their market share over time. So far this year, through the third quarter end, we have resolved six loans totaling about $205 million, and realized about $283 million of principal balance loan repayments and paydowns, including office loans, with most of this activity occurring during the third quarter. More importantly, we have maintained strong forward momentum for the rest of the year and beyond, with a pipeline of over $280 million of loan resolutions across six assets, one of which closed in October at our carrying value, and we expect most of the remainder to be completed during the fourth quarter or shortly thereafter. We are adequately reserved for these loans and don't anticipate the material book value impact as they resolve. We are pursuing resolutions of our remaining five rated loans, most of which are in various stages of their respective processes, and anticipate those transactions will be finalized through the first half of next year, though some may take a bit longer given their challenging local market dynamics. As we have addressed the credit issues within our portfolio, we have successfully executed on multiple different resolution strategies. Our portfolio management approach emphasizes the balance between timing, potential profitability, book value impacts, liquidity needs, and other factors, with the goal of optimizing the economic outcomes for the company and our various stakeholders over the long term. We anticipate our CECL reserve balance will decline significantly in the coming quarters, given the improving confidence in the commercial real estate market, a pickup in the transaction activity, and our momentum on loan resolutions. We believe we have reached a point where the volume of non-performing loan resolutions will meaningfully exceed any potential future credit events, although we may experience some idiosyncratic credit migration in the future. We expect this ongoing turnover and repositioning of the portfolio to improve our run rate profitability over time, driven by multiple factors, including turning those loans into earning assets by providing seller financing, repaying expensive debt, reinvesting capital return from repayments, and remaining opportunistic with respect to our capital structure. To that point, and consistent with our capital allocation strategy of assessing all opportunities and executing on the ones that are most attractive, During the third quarter, we repurchased an additional 700,000 common shares, reflecting our strong belief that our stock continues to be significantly undervalued. Moreover, our board increased our repurchase authorization by an additional 3 million shares, bringing the total to about 5.9 million shares available for BIVACs, which further increases our capital return strategy flexibility by allowing us to remain opportunistic with respect to any potential BIVACs. We have made meaningful progress over the last few quarters, improving the overall credit profile of our portfolio through the resolutions of non-performing loans. We believe our industry is getting closer to the end of this prolonged credit cycle and the period of extreme market stress, and capital is gradually returning to the transitional lending space. In the near term, we will remain focused on maintaining higher liquidity and proactively managing our portfolio. As we look towards the next couple of quarters and beyond, driving further turnover of our portfolio through resolutions and loan repayments will position us to return to our core lending business and take advantage of what we believe will be attractive investment opportunities in the future, growing our portfolio while improving our run rate profitability and driving attractive total shareholder returns. I would now like to turn the call over to Steve Halpert to discuss our portfolio activities in more detail.