gpmt-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38124

GRANITE POINT MORTGAGE TRUST INC.

(Exact name of registrant as specified in its charter)


Maryland						61-1843143
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


3 Bryant Park, Suite 2400A
New York,	New York	10036
(Address of principal executive offices)		(Zip Code)

(212) 364-5500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

GPMT

NYSE

7.00% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share

GPMTPrA

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of November 4, 2022, there were 52,350,989 shares of outstanding common stock, par value $0.01 per share, issued and outstanding.

Table of Contents

GRANITE POINT MORTGAGE TRUST INC.

INDEX


		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets at September 30, 2022, and December 31, 2021	1
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2022, and 2021	2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and N ine Months Ended September 30, 2022, and 2021	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022, and 2021	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	53
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	54
Index of Exhibits		55
Signatures		56

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

GRANITE POINT MORTGAGE TRUST INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	September 30, 2022		December 31, 2021
ASSETS
Loans held-for-investment	$	3,603,016	$	3,782,205
Allowance for credit losses	(82,611)		(40,897)
Loans held-for-investment, net	3,520,405		3,741,308


Cash and cash equivalents	168,414		191,931
Restricted cash	45,242		12,362
Accrued interest receivable	11,056		10,716



Other assets	37,541		32,201
Total Assets (1)	$	3,782,658	$	3,988,518
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Repurchase facilities	$	1,195,965	$	677,285
Securitized debt obligations	1,224,035		1,677,619
Asset-specific financings	44,913		43,622
Term financing facility	—		127,145
Convertible senior notes	274,289		272,942


Senior secured term loan facilities	—		139,880
Dividends payable	17,023		14,406
Other liabilities	21,792		21,436
Total Liabilities (1)	2,778,017		2,974,335
Commitments and Contingencies (see Note 10)
10.00% cumulative redeemable preferred stock, par value $0.01 per share; 50,000,000 shares authorized, and 1,000 shares issued and outstanding ($1,000,000 liquidation preference)	1,000		1,000
Stockholders’ Equity
7.00% Series A cumulative redeemable preferred stock, par value $0.01 per share; 8,280,000 shares authorized, and 8,229,500 and 4,596,500 shares issued and outstanding, respectively; liquidation preference $25.00 per share	82		46
Common stock, par value $0.01 per share; 450,000,000 shares authorized, and 52,350,989 and 53,789,465 shares issued and outstanding, respectively	524		538
Additional paid-in capital	1,201,716		1,125,241
Cumulative earnings	136,919		171,518
Cumulative distributions to stockholders	(335,725)		(284,285)
Total Granite Point Mortgage Trust Inc. Stockholders’ Equity	1,003,516		1,013,058
Non-controlling interests	125		125
Total Equity	$	1,003,641	$	1,013,183
Total Liabilities and Stockholders’ Equity	$	3,782,658	$	3,988,518

____________________

(1)The condensed consolidated balance sheets include assets of consolidated variable interest entities, or VIEs, that can only be used to settle obligations of these VIEs, and liabilities of the consolidated VIEs for which creditors do not have recourse to Granite Point Mortgage Trust Inc. At September 30, 2022, and December 31, 2021, assets of the VIEs totaled $1,644,528 and $2,266,044, respectively, and liabilities of the VIEs totaled $1,225,758 and $1,679,435, respectively. See Note 4 - Variable Interest Entities and Securitized Debt Obligations for additional information.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

GRANITE POINT MORTGAGE TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands, except share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Interest income:
Loans held-for-investment	$	52,121	$	48,312	$	148,475	$	151,701



Cash and cash equivalents	714		95		960		298
Total interest income	52,835		48,407		149,435		151,999
Interest expense:
Repurchase facilities	15,098		5,451		30,486		20,449
Securitized debt obligations	14,416		8,777		34,992		20,523
Convertible senior notes	4,585		4,556		13,703		13,618
Term financing facility	—		1,453		1,713		6,208
Asset-specific financings	442		414		1,046		1,959

Senior secured term loan facilities	—		5,654		3,754		16,587
Total interest expense	34,541		26,305		85,694		79,344
Net interest income	18,294		22,102		63,741		72,655




Other (loss) income:
(Provision for) benefit from credit losses	(35,442)		5,760		(52,757)		15,072
Loss on extinguishment of debt	—		—		(18,823)		—

Fee income	—		—		954		—

Total other (loss) income	(35,442)		5,760		(70,626)		15,072
Expenses:


Compensation and benefits	4,953		5,634		16,539		16,111
Servicing expenses	1,336		1,323		4,297		3,763
Other operating expenses	2,068		2,276		6,867		6,967

Total expenses	8,357		9,233		27,703		26,841
(Loss) income before income taxes	(25,505)		18,629		(34,588)		60,886
(Benefit from) provision for income taxes	(1)		(1)		11		(4)
Net (loss) income	(25,504)		18,630		(34,599)		60,890
Dividends on preferred stock	3,626		25		10,876		75
Net (loss) income attributable to common stockholders	$	(29,130)	$	18,605	$	(45,475)	$	60,815
Basic (loss) earnings per weighted average common share	$	(0.56)	$	0.34	$	(0.85)	$	1.11
Diluted (loss) earnings per weighted average common share	$	(0.56)	$	0.33	$	(0.85)	$	1.05

Weighted average number of shares of common stock outstanding:
Basic	52,350,989		54,453,546		53,234,498		54,864,456
Diluted	52,350,989		56,735,278		53,234,498		70,902,745





Comprehensive (loss) income	$	(29,130)	$	18,605	$	(45,475)	$	60,815

The accompanying notes are an integral part of these condensed consolidated financial statements.

GRANITE POINT MORTGAGE TRUST INC

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)


	Common Stock		Preferred Stock
	Shares	Amount	Shares	Amount	Additional Paid-in Capital	Cumulative Earnings		Cumulative Distributions to Stockholders	Total Stockholders’ Equity	Non-controlling Interests	Total Equity

Balance, December 31, 2020	55,205,082	552	—	—	1,058,298	103,165		(228,169)	933,846	—	933,846
Net income	—	—	—	—	—	27,991		—	27,991	—	27,991


Restricted stock forfeiture	(97,425)	(1)	—	—	(918)	—		—	(919)	—	(919)

Preferred dividends declared, $25.00 per share	—	—	—	—	—	—		(25)	(25)	—	(25)

Common dividends declared, $0.25 per share	—	—	—	—	—	—		(14,008)	(14,008)	—	(14,008)

Contributions from non-controlling interests	—	—	—	—	—	—		—	—	125	125
Non-cash equity award compensation	—	—	—	—	1,887	—		—	1,887	—	1,887
Balance, March 31, 2021	55,107,657	551	—	—	1,059,267	131,156		(242,202)	948,772	125	948,897
Net income	—	—	—	—	—	14,269		—	14,269	—	14,269
Restricted stock forfeiture	(17,628)	—	—	—	(275)	—		—	(275)	—	(275)
Repurchase of common stock	(300,891)	(3)	—	—	(4,267)	—		—	(4,270)	—	(4,270)
Preferred dividends declared, $25.00 per share	—	—	—	—	—	—		(25)	(25)	—	(25)
Common dividends declared, $0.25 per share	—	—	—	—	—	—		(13,939)	(13,939)	—	(13,939)

Non-cash equity award compensation	1,048	—	—	—	1,639	—		—	1,639	—	1,639
Balance, June 30, 2021	54,790,186	548	—	—	1,056,364	145,425		(256,166)	946,171	125	946,296
Net income	—	—	—	—	—	18,630		—	18,630	—	18,630
Settlement of warrants to purchase common stock	—	—	—	—	(7,478)	—		—	(7,478)	—	(7,478)
Repurchase of common stock	(1,000,721)	(10)	—	—	(13,523)	—		—	(13,533)		(13,533)
Common dividends declared, $0.25 per share	—	—	—	—	—	—	0	(13,688)	(13,688)		(13,688)
Preferred dividends declared, $25.00 per share	—	—	—	—	—	—		(25)	(25)		(25)
Non-cash equity award compensation	—	—	—	—	2,032	—		—	2,032		2,032
Balance, September 30, 2021	53,789,465	538	—	—	1,037,395	164,055		(269,879)	932,109	125	932,234

Table of Contents

GRANITE POINT MORTGAGE TRUST INC

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data) (Continued)


	Common Stock		Preferred Stock
	Shares	Amount	Shares	Amount	Additional Paid-in Capital	Cumulative Earnings	Cumulative Distributions to Stockholders	Total Stockholders’ Equity	Non-controlling Interests	Total Equity

Balance, December 31, 2021	53,789,465	538	4,596,500	46	1,125,241	171,518	(284,285)	1,013,058	125	1,013,183
Net income	—	—	—	—	—	4,636	—	4,636	—	4,636

Issuance of preferred stock, net of offering costs	—		3,633,000	36	87,485	—	—	87,521	—	87,521
Restricted stock forfeiture	(69,039)	—	—	—	(824)	—	—	(824)	—	(824)
Restricted Stock Unit (RSU) forfeiture	—	—	—	—	(798)	—	—	(798)	—	(798)
Preferred dividends declared, $25.00 per share	—	—	—	—	—	—	(25)	(25)	—	(25)
Preferred dividends declared, $0.4375 per share	—	—	—	—	—	—	(3,600)	(3,600)	—	(3,600)
Common dividends declared, $0.25 per share	—	—	—	—	—	—	(13,770)	(13,770)	—	(13,770)


Non-cash equity award compensation	135,151	1	—	—	2,170	—	—	2,171	—	2,171
Balance, March 31, 2022	53,855,577	539	8,229,500	82	1,213,274	176,154	(301,680)	1,088,369	125	1,088,494
Net (loss) income	—	—	—	—	—	(13,731)	—	(13,731)	—	(13,731)


Repurchase of common stock	(1,539,134)	(15)	—	—	(15,699)	—	—	(15,714)	—	(15,714)
Restricted Stock Unit (RSU) forfeiture	—	—	—	—	(114)	—	—	(114)	—	(114)
Preferred dividends declared, $25.00 per share	—	—	—	—	—	—	(25)	(25)	—	(25)
Preferred dividends declared, $0.4375 per share	—	—	—	—	—	—	(3,600)	(3,600)	—	(3,600)
Common dividends declared, $0.25 per share	—	—	—	—	—	—	(13,382)	(13,382)	—	(13,382)
Non-cash equity award compensation	34,546	—	—	—	1,906	—	—	1,906	—	1,906
Balance, June 30, 2022	52,350,989	524	8,229,500	82	1,199,367	162,423	(318,687)	1,043,709	125	1,043,834
Net (loss) income	—	—	—	—	—	(25,504)	—	(25,504)	—	(25,504)


Preferred dividends declared, $25.00 per share	—	—	—	—	—	—	(25)	(25)	—	(25)
Preferred dividends declared, $0.4375 per share	—	—	—	—	—	—	(3,601)	(3,601)	—	(3,601)
Common dividends declared, $0.25 per share	—	—	—	—	—	—	(13,412)	(13,412)	—	(13,412)
Non-cash equity award compensation	—	—	—	—	2,349	—	—	2,349	—	2,349
Balance, September 30, 2022	52,350,989	524	8,229,500	82	1,201,716	136,919	(335,725)	1,003,516	125	1,003,641

The accompanying notes are an integral part of these condensed consolidated financial statements.

GRANITE POINT MORTGAGE TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)


	Nine Months Ended
	September 30,
	2022		2021
Cash Flows From Operating Activities:
Net (loss) income	$	(34,599)	$	60,890
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Accretion of discounts and net deferred fees on loans held-for-investment and deferred interest capitalized to loans held-for-investment	(10,014)		(20,310)
Amortization of deferred debt issuance costs	9,977		9,692
Provision for (benefit from) credit losses	52,757		(15,072)






Loss on extinguishment of debt	11,307		—
Amortization of equity-based compensation	6,426		5,558
Proceeds received from deferred interest capitalized on loans held-for-investment	4,069		—
Net change in assets and liabilities:
(Increase) decrease in accrued interest receivable	(340)		2,490



Decrease in other assets	2,276		(4,069)




Increase (decrease) in other liabilities	(1,092)		5,846

Net cash provided by operating activities	40,767		45,025
Cash Flows From Investing Activities:
Originations, acquisitions and additional fundings of loans held-for-investment, net of deferred fees	(449,844)		(549,705)
Proceeds from loan sales	43,714		—
Proceeds from repayment of loans held-for-investment	581,669		815,054




Increase in other assets, due from servicer on repayments of loans held-for-investment	(4,248)		(66,944)








Net cash provided by investing activities	171,291		198,405

Cash Flows From Financing Activities:
Proceeds from repurchase facilities	746,713		347,261
Principal payments on repurchase facilities	(228,034)		(1,139,378)
Proceeds from issuance of securitized debt obligations	—		685,766
Principal payments on securitized debt obligations	(457,416)		(254,647)

Repayment of senior secured term loan facilities	(150,000)		—
Proceeds from asset-specific financings	1,291		2,785
Repayment of asset-specific financings	—		(81,123)


Proceeds from term financing facility	—		349,291
Repayment of term financing facility	(129,099)		(219,311)


Payment of debt issuance costs	(7,398)		(8,353)
Settlement of warrants to purchase common stock	—		(7,478)
Contributions from non-controlling interests	—		125

Proceeds from issuance of preferred stock, net of offering costs	87,521		—



Tax withholding on restricted stock and RSUs	(1,736)		(1,194)
Repurchase of common stock	(15,714)		(17,804)
Dividends paid on preferred stock	(7,968)		(75)
Dividends paid on common stock	(40,855)		(52,970)
Net cash used in financing activities	(202,695)		(397,105)
Net increase (decrease) in cash, cash equivalents and restricted cash	9,363		(153,675)
Cash, cash equivalents, and restricted cash at beginning of period	204,293		329,193
Cash, cash equivalents, and restricted cash at end of period	$	213,656	$	175,518
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	83,391	$	75,818
Cash paid for taxes	$	440	$	607
Noncash Activities:

Dividends declared but not paid at end of period	$	17,023	$	13,713

The accompanying notes are an integral part of these condensed consolidated financial statements.

GRANITE POINT MORTGAGE TRUST INC.

Notes to the Condensed Consolidated Financial Statements

Note 1. Organization and Operations

Granite Point Mortgage Trust Inc., or the Company, is an internally managed real estate finance company that focuses primarily on directly originating, investing in and managing senior floating-rate commercial mortgage loans and other debt and debt-like commercial real estate investments. These investments are capitalized by accessing a variety of funding sources, including borrowing under the Company’s bank credit facilities or other asset-specific financings, issuing commercial real estate collateralized loan obligations, or CRE CLOs, and issuing other forms of secured and unsecured debt and equity securities, depending on market conditions and the Company’s view of the most appropriate funding option available for the Company’s investments. The Company is not in the business of buying or trading securities, and the only securities it owns are the retained interests from its CRE CLOs. The Company’s investment objective is to preserve the Company’s stockholders’ capital while generating attractive risk-adjusted returns over the long term, primarily through dividends derived from current income produced by the Company’s investment portfolio. The Company’s common stock is listed on the New York Stock Exchange, or NYSE, under the symbol “GPMT”. The Company operates its business in a manner that is intended to permit it to maintain its exclusion from registration under the Investment Company Act of 1940, as amended, or the Investment Company Act. The Company operates its business as one segment. The Company was incorporated in Maryland on April 7, 2017, and commenced operations as a publicly traded company on June 28, 2017.

The Company has elected to be treated as a real estate investment trust, or REIT, as defined under the Internal Revenue Code of 1986, as amended, or the Code, for U.S. federal income tax purposes. As long as the Company continues to comply with a number of requirements under federal tax law and maintains its qualification as a REIT, the Company generally will not be subject to U.S. federal income taxes to the extent that the Company distributes its taxable income to its stockholders on an annual basis and does not engage in prohibited transactions. However, certain activities that the Company may perform may cause it to earn income which will not be qualifying income for REIT purposes. The Company has designated one of its subsidiaries as a taxable REIT subsidiary, or TRS, as defined in the Code, to engage in such activities.

Note 2. Basis of Presentation and Significant Accounting Policies

Consolidation and Basis of Presentation

The interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles, or GAAP, have been condensed or omitted according to such SEC rules and regulations. However, management believes that the disclosures included in these interim condensed consolidated financial statements are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, all normal and recurring adjustments necessary to present fairly the financial condition of the Company at September 30, 2022, and results of operations for all periods presented, have been made. The results of operations for the three and nine months ended September 30, 2022, should not be construed as indicative of the results to be expected for future periods or the full year.

The unaudited condensed consolidated financial statements of the Company include the accounts of all subsidiaries; inter-company accounts and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation.

All entities in which the Company holds investments that are considered VIEs for financial reporting purposes were reviewed for consolidation under the applicable consolidation guidance. Whenever the Company has both the power to direct the activities of an entity that most significantly impact the entity’s performance, and the obligation to absorb losses or the right to receive benefits of the entity that could be significant, the Company consolidates the entity.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make a number of significant estimates. These include estimates of amount and timing of allowances for credit losses, fair value of certain assets and liabilities, and other estimates that affect the reported amounts of certain assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of certain revenues and expenses during the reported period. It is likely that changes in these estimates (e.g., valuation changes to the underlying collateral of loans due to changes in market interest and capitalization rates, leasing, credit worthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders, overall economic and capital markets conditions, the broader commercial real estate market, local geographic sub-markets or other factors) will occur in the near term.

GRANITE POINT MORTGAGE TRUST INC.

Notes to the Condensed Consolidated Financial Statements

The Company believes the estimates and assumptions underlying its condensed consolidated financial statements are reasonable and supportable based on the information available as of September 30, 2022. However, uncertainty over the ultimate impact COVID-19, Federal Reserve actions and geopolitical unrest will have on the global and U.S. economies generally, and the Company’s business in particular, makes any estimates and assumptions as of September 30, 2022, inherently less certain than they would be absent the current and potential impacts of these factors. The Company’s actual results could ultimately differ from its estimates and such differences may be material.

Significant Accounting Policies

Included in Note 2 to the Consolidated Financial Statements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, is a summary of the Company’s significant accounting policies. Provided below is a summary of additional accounting policies that are significant to the Company’s condensed consolidated financial condition and results of operations for the three and nine months ended September 30, 2022.

Recently Issued and/or Adopted Accounting Standards

Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures

In March 2022, the Financial Accounting Standards Board, or FASB, issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, or ASU 2022-02. The intention of ASU 2022-02 is to simplify the guidance surrounding loan modifications and restructurings and to eliminate the accounting guidance related to troubled debt restructurings, or TDR. The new guidance deviates from current TDR guidance as disclosures will now be based on whether a modification or restructuring with a borrower experiencing financial difficulty results in principal forgiveness, an interest rate reduction, a significant payment delay or term extension as opposed to simply a concession. The new guidance requires disclosure by class of financing receivables, of the types of modifications, the financial effects of those modifications and the performance of those modified receivables in the last twelve months. As it relates to ASC 326-20 the Company is now allowed to use any acceptable method to determine credit losses as a result of modification or restructuring with a borrower experiencing financial difficulty. ASU 2022-02 also requires disclosure of gross write-offs recorded in the current period, on a year-to-date basis, by year of origination in the vintage disclosures. ASU 2022-02 is effective for fiscal years beginning after December 15, 2022. Entities are able to early adopt these amendments and have the ability to early adopt the TDR enhancements separately from the vintage disclosures. The Company has not yet adopted this ASU and will continue to evaluate the effects of adoption.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting

In March 2020, FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, or ASU No. 2020-04, which provides optional expedients and exceptions for applying GAAP to debt instruments, derivatives, and other contracts that reference the London Interbank Offered Rate, or LIBOR, or other reference rates expected to be discontinued as a result of reference rate reform. This guidance is optional and may be elected through December 31, 2022, using a prospective application on all eligible contract modifications. The Company has loan agreements and debt agreements that incorporate LIBOR as a referenced interest rate. It is difficult to predict what effect, if any, the phase-out of LIBOR and the use of alternative benchmarks may have on the Company’s business or on the overall financial markets. The Company has not adopted any of the optional expedients or exceptions through September 30, 2022, but will continue to evaluate the possible adoption of any such expedients or exceptions.

Note 3. Loans Held-for-Investment, Net of Allowance for Credit Losses

The Company originates and acquires commercial real estate debt and related instruments generally to be held as long-term investments. These assets are classified as “loans held-for-investment” on the condensed consolidated balance sheets. Loans held-for-investment are reported at cost, net of any unamortized acquisition premiums or discounts, loan fees, origination costs and allowance for credit losses, as applicable.

GRANITE POINT MORTGAGE TRUST INC.

Notes to the Condensed Consolidated Financial Statements

The following tables summarize the Company’s loans held-for-investment by asset type, property type and geographic location as of September 30, 2022, and December 31, 2021:


	September 30, 2022
(dollars in thousands)	Senior Loans (1)		Mezzanine Loans		B-Notes		Total
Unpaid principal balance	$	3,601,341	$	10	$	13,826	$	3,615,177
Unamortized (discount) premium	(51)		—		—		(51)
Unamortized net deferred origination fees	(12,110)		—		—		(12,110)
Allowance for credit losses	(81,921)		(10)		(680)		(82,611)
Carrying value	$	3,507,259	$	—	$	13,146	$	3,520,405
Unfunded commitments	$	312,649	$	—	$