Good morning. My name is Paul, and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust First Quarter 2025 Financial Results Conference Call. All participants will be in a listen-only mode. After the speakers' 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 first quarter 2025 financial results. With me on the call this morning are Jack Taylor, our President and Chief Executive Officer; Steve Alpart, our Chief Investment Officer and Co-Head of Originations; Blake Johnson, our Chief Financial Officer; Peter Morral, our Chief Development Officer and Co-Head of Originations; and Ethan Lebowitz, our Chief Operating Officer. After my introductory comments, Jack will provide a brief recap of market conditions and review our current business activities. Steve Alpart will discuss our portfolio, and Blake will highlight key items from our financial results and capitalization. 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 and could cause actual results to differ materially from expectations. Please see our SEC filings for a discussion of some of the 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 as a 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'll 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 first quarter 2025 earnings call. Before discussing our first quarter results, I'd like to take a moment to briefly discuss our recent Chief Operating Officer transition from Steven Plust to Ethan Lebowitz, which was successfully completed on May 1. As was previously announced, this transition was initiated as Steve expressed a desire to narrow and concentrate the scope of his business responsibilities going forward. He has been in the industry for over 40 years, and I am proud to say that we have worked together for over 30 of those years. At the same time, we are also very excited to have Ethan as our newly appointed Chief Operating Officer. Ethan has been with the team since before Granite Point's inception, and I have worked with him for almost 20 years. Ethan brings broad industry expertise, real estate acumen, and exceptional leadership capabilities. I am confident that his deep understanding of our business and extensive history with our team makes Ethan the perfect fit to advance our initiatives and drive shareholder returns as our Chief Operating Officer. Now turning to the market. The beginning of 2025 showed continued improving sentiment for commercial real estate with credit spreads tightening, enhanced liquidity and greater transaction volume. However, in the past month following the tariff announcements, there has been renewed uncertainty about the path of interest rates and heightened concern about the possibility of a recession and the possible effects of both on commercial real estate. While this has introduced some caution amongst commercial real estate market participants, it is too soon to tell how long this uncertainty will last and what the long-term impact of the tariffs will be. Fortunately,…

Thank you, Jack, and thank you all for joining our first quarter earnings call. Before providing our business update, I'd like to congratulate Ethan Lebowitz on his recent promotion to Chief Operating Officer. Ethan is the ideal person to fill Steve's role and will be an excellent addition to the executive team and investment committee. Now turning to our business. We ended the first quarter with $2 billion in total loan portfolio commitments and $1.9 billion in outstanding principal balance, with about $93 million of future fundings, which accounts for only about 5% of total commitments. Our loan portfolio remains well diversified across regions and property types and includes 50 investments with an average UPB of about $39 million and a weighted average stabilized LTV of 64% at origination. As of March 31, our portfolio weighted average risk rating improved slightly to 3.0 with no new negative credit migration during the quarter. The realized loan portfolio yield for the first quarter was 6.8%, which excluding non-accrual loans would be 8.5% or 1.7% higher. The prior quarter realized loan portfolio yield was 6.6% and excluding non-accrual loans was 8.8% or 2.2% higher. The improvement in our overall loan portfolio yield of about 20 basis points is due to the lower amount of non-accrual loans relative to the total loan portfolio partially offset by lower SOFR. We had an active first quarter of loan repayments, pay downs and resolutions totaling about $172 million including the par payoff of an office loan and funded about $10 million on existing loan commitments resulting in a net loan portfolio reduction of $161 million. During the first quarter, we successfully resolved two non-accrual loans totaling about $97 million in UPB. As previously disclosed, we took title to the office property in Miami Beach, which had been…

Thank you, Steve. Good morning, everyone, and thank you for joining us today. Turning to our financial results. For the first quarter, we reported a GAAP net loss of $10.6 million or negative $0.22 per basic common share, which includes a provision for credit losses of $3.8 million or negative $0.08 per basic common share mainly related to collateral dependent loans. Distributable loss for the quarter was $27.7 million or negative $0.57 per share basic common share including write-offs of $24.6 million or negative $0.51 per basic common share, which were largely previously reserved for. The write-offs are related to the two non-accrual loan resolutions that Steve discussed earlier. Our book value at March 31 was $8.24 per common share, a decline of about $0.23 per share from Q4, which was primarily due to our GAAP net loss to common, partially offset by the accretive share buybacks, which we estimate benefited book value by about $0.10 per common share. Our aggregate CECL reserve at March 31 was about $180 million or $3.72 per common share as compared to $201 million last quarter or $4.12 per common share. The $21 million decline in our CECL reserve was driven by $24.6 million of write-offs related to the two resolutions, partially offset by an increase from provision for credit losses of $3.8 million. Approximately 75% of our total allowance or $134 million is allocated to individually assessed loans. With the two resolutions that occurred subsequent to quarter end, we expect to recognize a realized write-off of approximately $37 million, which we previously reserved for in our allowance. We believe we are appropriately reserved for and further resolutions should meaningfully reduce our total CECL reserve balance. As of today, we have about $223 million of principal balance on three loans on non-accrual status. All…

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions]. Our first question is from Doug Harter with UBS.

Thanks. You mentioned potentially starting originations back up in the second half of the year. You have been active in buying back stock, but given the current discount to book, how do you think about maybe accelerating the pace of buyback versus originating new loans.

Hey Doug, this is Jack. Thank you for joining us this morning. It is a balance that we have to strike. Right now we're in a mode of having a preservation of liquidity and directing what liquidity we do have has been put towards stock buybacks. And we don't directly comment on our potential buybacks, but I'll point out that this, we've been fairly active in it and we have authorization for another $3.9 million. As we reported, we bought back about $900,000 of our common in the last quarter. And so our flexibility is to continue with that and then later in the year to balance it further against new originations, which would be, as we have said, in the back end of the year.

Great. Appreciate that, Jack. And then you've made progress on working down the fives. I guess, as you look at, kind of the four rated assets and even the threes, how do you assess kind of the any event risk, whether that's maturity or other lease expirations or anything like that that could potentially lead to downgrades on threes or fours that would kind of do problem assets.

Steve Alpart, do you want to take that question?

Hey Doug, it's Steve Alpart. Good morning. Hope you're well. So just I guess high level, I mean, the majority of the portfolio has been performing well. And as we just talked about, we continue to work through these loan resolutions, which mainly relate to the office sector and the effect of elevated rates. We do have more work to do. But as we just talked about, we're pleased with all the resolutions we've had in 2024 and the one we've had so far year-to-date in 2025 with no negative credit migration in the first quarter and only one rating change overall, which was an upgrade. As far as the four rated loans, they're all behind on business plan. Some of them have been affected by the local market. Other factors, we're watching all of them carefully. We're working with all those sponsors. It's always possible that there could be negative credit migration, but we also hope to have positive credit migration as we've had in the past. And that, that relates to both the 4s and the 3s, but we're comfortable with where they're marked today.

Great. Thank you.

Our next question is from Steve DeLaney with Citizens JMP.

Good morning, everyone. Thanks for taking the question. I do want to applaud the buyback. I know you can't do but so much, but every little bit helps. So glad you stick with that as conditions allow. I heard two figures mentioned dollar amounts for write-offs or realized losses. I think someone mentioned a $22 million write-off in 2Q 2025 and then furthering comments, I heard a $37 million realized loss. Could you just clarify those two? Did I hear those items right? And can you clarify for us the expected timing of when the $22 million and the $37 million would actually be realized in your distributable EPS? Thanks.

I'll take the first part. The $37 million is related to the…

Hey Blake, we can't hear you.

If you could speak up, yes.

I apologize about that. Good morning, Steve. Thank you for the question.

Hello. Sure.

So the two write-offs that occurred subsequent to quarter end, that is actually what was equal to the $37 million. And included in that $37 million…

$37 million.

Correct. And included in that $37 million was $22 million related to one resolution and around $15.4 million related to the second.

Got it. So a $22 million and a $15 million. Excellent. And with these resolved how many five rated loans remain after these two have been resolved?

Yes. So as of $331 million we had five outstanding. And then as of these two resolutions occurred, we'll have three outstanding.

Only three. Okay, excellent. Okay, that's what I had. I appreciate the comment. That clarifies it.

Thank you.

Thank you for joining, Steve.

Our next question is from Jade Rahmani with KBW.

Thank you very much. The portfolio currently has 0.6 years of remaining term to maturity. So that implies nearly all loans in the portfolio should reach maturity this year, is that correct?

Hey Jade, it's Steve. That is not correct. There's loans that are maturing in 2025, there's loans maturing in 2026. That's probably the majority of it. And there's a few that go out a little further into 2027. There's a couple that are long date -- a little longer date of pieces of the paper, but it's a mix of 2025, 2026 and then some into 2027 and beyond.

Okay. Do you know generally what percentage, by the way, that statistic is from the 10-Q? So I don't know if anything needs to be updated there.

Hey Jade, this is Blake. If you go to that table, there's actually a helpful footnote at the bottom of it. That actual 0.6 is based on the contractual maturity date. So if you look at it, certain loans are subject to certain contractual extension options and that is included here.

Okay. So do you know what percentage of the portfolio matures in 2025?

Yes. So if you look at it, jade, it’s Steve, if you look at it in terms of fully extended maturity date, which is what my comment relates to. It's probably a little over 20% of the portfolio has a final maturity in 2025.

Okay.

And if you dig into that, some of those are the five rated loans that we've talked about. There's other loans in there that are expected to pay off. Some of them will extend as of right. And then others, if we don't have a payoff, we'll have to -- we are having conversations with those borrowers, but that it's a little early for that right now.

Okay. I've been looking at the commercial mortgage REITs and their approach toward CECL reserves, and it's clear that the companies heavily reserve on risk 5 rated loans. Then they take very low reserve on risk 4 rated loans and almost nothing on everything else, in contrast to banks. So could you say what the reserve is on the risk 4 rated loans? Right now, the total allowance is $177.3 million. What dollar amount relates to risk 4 rated loans?

Blake, do you want to answer that?

Yes, sure, I could take that. So if you actually look at our risk rated 4 loans, it's around $13.1 million as of quarter end.

Okay. On what balance of loans does that relate to?

Sure, $174 million.

Okay. So $13.1 million over $174 million. So that's 7.5% reserve better than the -- so $13.1 million on -- did you say 174 million?

Yes.

Of risk rated 4 loans. Okay. Better than the other mortgage rates. Do you expect any incremental credit provisions? You identified the realized losses that would be expected in the second quarter. But do you expect any incremental loan loss provisions?

As far as our CECL process goes, this actually happens at quarter end. So we go through a full assessment when we get to the end of the month of June, and we haven't yet done that. As far as whether we expect to have incremental losses, it's too early to tell. We could have incremental gains or losses. It really depends on the actual forecast we lose in our general reserve modeling and also additional information that we obtain on the collateral dependent loans.

Okay. The Miami office that you're taking, REO that's a 2016 vintage. So I mean, can you just give any color as to whether the asset produces any income? Miami is a pretty strong market, so what the issues are there, just some commentary around that.

Sure. So as of quarter end, we actually have three properties that are on our books as REO. And then when you look at the individual assets, I would say on a combined basis, we do expect positive NOI. So I would say roughly around $225 million a quarter. When you look at our earnings, it's a little bit different just NOI is a non-GAAP measure. And if you look at our earnings, it shows a loss, and that's largely because of the depreciation. But I think maybe, Steve, you could -- I think your question…

Yes, I can give color on that. Sorry, Jack, go ahead.

Oh, you go ahead. I was going to ask you to do so.

Oh, sure. So look, it's a high quality Class A property in a strong market. It's got a lot of potential. The issue here was really, Jade, around the prior owner who had distress in their larger portfolio. They just were not able to invest in this property or execute the business plan due to those issues. The market, as I think you alluded to, it's got compelling fundamentals. We thought this one made sense to take back. We're actively reviewing potential resolution alternatives. We're an active leasing discussions with a bunch of tenants, and we'll have more to share on that in the coming quarters.

Okay. Do you know what the basis is that you'll be taking it into REO?

Yes, we did do that. And Blake, if you would address that.

The basis like price per square foot.

I don't have that handy. So the total number that we actually put on our books is $72.5 million. I don't know if Steve, you have that handy.

Yes, I believe we do disclose the square footage, right?

So we can come back to you on that if it's not readily at hand, Steve.

I mean, do you think it's reasonable that there could be a gain in that property if it's Class A, the prior owner didn't invest in it. You're in discussions with a bunch of tenants, potential tenants.

The answer is depending on the resolution path and timing. Yes.

Okay, great. Well, thanks for taking the questions.

Great. Thank you, Jade. We appreciate your time.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Jack Taylor for any closing comments.

Well, we're very pleased with the progress we've made and we very much appreciate all the attention and time and focus that you all have shown to our company and support. And we look forward to reporting to you in the next quarter. Thank you very much.

This concludes today's call. You may disconnect your lines at this time. Thank you for your participation.