gpmt-20240630

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 June 30, 2024


☐			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 July 31, 2024, there were 50,684,117 shares of outstanding common stock, par value $0.01 per share, issued and outstanding.

GRANITE POINT MORTGAGE TRUST INC.

INDEX


		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets at June 30 , 2024, and December 31, 2023	1
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended June 30 , 2024, and 2023	2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30 , 2024, and 2023	3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30 , 2024, and 2023	4
	Notes to the Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	51
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	52
Index of Exhibits		53
Signatures		54

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains, or incorporates by reference, not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and that are subject to the safe harbors created by such sections. Forward-looking statements involve numerous risks and uncertainties. Our actual results may differ from our beliefs, expectations, estimates and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements are not historical in nature and can be identified by words such as “anticipate,” “estimate,” “will,” “should,” “expect,” “target,” “believe,” “outlook,” “potential,” “continue,” “intend,” “seek,” “plan,” “goals,” “future,” “likely,” “may” and similar expressions or their negative forms, or by references to strategy, plans or intentions. By their nature, forward-looking statements speak only as of the date they are made, are not statements of historical facts or guarantees of future performance and are subject to risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify. Our expectations, beliefs and estimates are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs and estimates will prove to be correct or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

These forward-looking statements are subject to risks and uncertainties, including, among other things, those described in our Annual Report on Form 10-K for the year ended December 31, 2023, under the caption “Risk Factors.” Other risks, uncertainties and factors that could cause actual results to differ materially from those projected are described below and may be described from time to time in reports we file with the Securities and Exchange Commission, or the SEC, including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

Important factors that may affect our actual results include, among others:

•the general political, economic and competitive conditions in the markets in which we invest and their impact on our investment portfolio, financial condition and business operations;

•inflationary trends which have led to higher interest rates and increased market volatility;

•reduced demand for office, multifamily or retail space, including as a result of increased hybrid work schedules which allow work from remote locations other than the employer's office premises;

•defaults by borrowers in paying debt service on outstanding indebtedness and borrowers' abilities to manage and stabilize properties;

•our ability to obtain or maintain financing arrangements on terms favorable to us or at all;

•the level and volatility of prevailing interest rates and credit spreads;

•reductions in the yield on our investments and increases in the cost of our financing;

•general volatility of the securities markets in which we participate and the potential need to post additional collateral on our financing arrangements;

•the return or impact of current or future investments;

•changes in our business, investment strategies or target investments;

•increased competition from entities investing in our target investments;

•effects of hedging instruments on our target investments;

•changes in governmental regulations, tax law and rates and similar matters;

•our ability to maintain our qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes and our exclusion from registration under the Investment Company Act of 1940, as amended, or the Investment Company Act;

•availability of desirable investment opportunities;

•threats to information security, including by way of cyber-attacks;

•availability of qualified personnel;

•operational failures by third-parties on whom we rely in the conduct of our business;

•estimates relating to our ability to make distributions to our stockholders in the future;

•natural disasters, such as hurricanes, earthquakes, wildfires and floods, including climate change-related risks; acts of war and/or terrorism; pandemics or outbreaks of infectious disease; and other events that may cause unanticipated and uninsured performance declines and/or losses to us or the owners and operators of the real estate securing our investments;

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•deterioration in the performance of the properties securing our investments that may cause deterioration in the performance of our investments, risks in collection of contractual interest payments and, potentially, principal losses to us, including the risk of credit loss charges and any impact on our ability to satisfy the covenants and conditions in our debt agreements; and

•difficulty or delays in redeploying the proceeds from repayments of our existing investments.

This Quarterly Report on Form 10-Q may contain statistics and other data that, in some cases, have been obtained or compiled from information made available by loan servicers and other third-party service providers.

iii

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

GRANITE POINT MORTGAGE TRUST INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	June 30, 2024		December 31, 2023
ASSETS
Loans held-for-investment	$	2,616,884	$	2,718,486
Allowance for credit losses	(264,140)		(134,661)
Loans held-for-investment, net	2,352,744		2,583,825



Cash and cash equivalents	85,916		188,370
Restricted cash	12,880		10,846
Real estate owned, net	42,820		16,939
Accrued interest receivable	10,725		12,380



Other assets	41,666		34,572
Total Assets (1)	$	2,546,751	$	2,846,932
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Repurchase facilities	$	791,556	$	875,442
Securitized debt obligations	938,075		991,698

Secured credit facility	85,192		84,000





Dividends payable	6,335		14,136
Other liabilities	20,892		22,633
Total Liabilities (1)	1,842,050		1,987,909
Commitments and Contingencies (see Note 10)

Stockholders’ Equity
7.00% Series A cumulative redeemable preferred stock, par value $0.01 per share; 11,500,000 shares authorized, and 8,229,500 and 8,229,500 shares issued and outstanding, respectively; liquidation preference $25.00 per share	82		82
Common stock, par value $0.01 per share; 450,000,000 shares authorized, and 50,684,117 shares and 50,577,841 issued and outstanding, respectively	507		506
Additional paid-in capital	1,198,894		1,198,048
Cumulative earnings	(69,696)		67,495
Cumulative distributions to stockholders	(425,211)		(407,233)
Total Granite Point Mortgage Trust Inc. Stockholders’ Equity	704,576		858,898
Non-controlling interests	125		125
Total Equity	704,701		859,023
Total Liabilities and Stockholders’ Equity	$	2,546,751	$	2,846,932

______________________

(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 June 30, 2024, and December 31, 2023, assets of the VIEs totaled $1,101,207 and $1,233,821, respectively, and liabilities of the VIEs totaled $939,878 and $994,081, respectively. See Note 5 - Variable Interest Entities and Securitized Debt Obligations, for further detail.

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

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GRANITE POINT MORTGAGE TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands, except share data)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Interest income:
Loans held-for-investment	$	46,882	$	66,217	$	98,847	$	131,508



Cash and cash equivalents	1,597		2,609		3,687		4,037
Total interest income	48,479		68,826		102,534		135,545
Interest expense:
Repurchase facilities	19,331		22,872		40,059		42,644
Secured credit facility	2,714		3,075		5,403		6,004
Securitized debt obligations	18,303		17,888		36,418		35,939
Convertible senior notes	—		2,332		—		4,643

Asset-specific financings	—		819		—		1,562


Total interest expense	40,348		46,986		81,880		90,792
Net interest income	8,131		21,840		20,654		44,753




Other income (loss):
Revenue from real estate owned operations	1,111		462		2,253		462

Provision for credit losses	(60,756)		(5,818)		(136,308)		(52,228)
Gain (loss) on extinguishment of debt	(786)		—		(786)		238



Total other loss	(60,431)		(5,356)		(134,841)		(51,528)
Expenses:


Compensation and benefits	4,721		6,209		10,708		12,121
Servicing expenses	1,398		1,320		2,774		2,698
Expenses from real estate owned operations	1,950		1,664		3,995		1,664
Other operating expenses	2,700		2,180		5,529		5,451

Total expenses	10,769		11,373		23,006		21,934
(Loss) income before income taxes	(63,069)		5,111		(137,193)		(28,709)
(Benefit from) provision for income taxes	(1)		70		(2)		79
Net (loss) income	(63,068)		5,041		(137,191)		(28,788)
Dividends on preferred stock	3,600		3,625		7,200		7,250

Net (loss) income attributable to common stockholders	$	(66,668)	$	1,416	$	(144,391)	$	(36,038)
Basic (loss) earnings per weighted average common share	$	(1.31)	$	0.03	$	(2.84)	$	(0.69)
Diluted (loss) earnings per weighted average common share	$	(1.31)	$	0.03	$	(2.84)	$	(0.69)

Weighted average number of shares of common stock outstanding:
Basic	50,939,476		51,538,309		50,842,004		51,921,217
Diluted	50,939,476		51,619,072		50,842,004		51,921,217

Net (loss) income attributable to common stockholders	$	(66,668)	$	1,416	$	(144,391)	$	(36,038)



Comprehensive (loss) income	$	(66,668)	$	1,416	$	(144,391)	$	(36,038)

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

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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, 2022	52,350,989	$	524	8,229,500	$	82	$	1,202,315	$	130,693	$	(350,069)	$	983,545	$	125	$	983,670
Net (loss) income	—	—		—	—		—		(33,829)		—		(33,829)		—		(33,829)

Repurchase of common stock	(1,001,338)	(10)		—	—		(5,108)		—		—		(5,118)		—		(5,118)
Restricted stock forfeiture	(36,916)	(1)		—	—		(236)		—		—		(237)		—		(237)
Restricted Stock Unit (RSU) forfeiture	—	—		—	—		(652)		—		—		(652)		—		(652)
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, $0.20 per share	—	—		—	—		—		—		(10,706)		(10,706)		—		(10,706)
Non-cash equity award compensation	213,304	2		—	—		1,953		—		—		1,955		—		1,955
Balance, March 31, 2023	51,526,039	$	515	8,229,500	$	82	$	1,198,272	$	96,864	$	(364,400)	$	931,333	$	125	$	931,458
Net income	—	—		—	—		—		5,041		—		5,041		—		5,041



Restricted Stock Unit (RSU) forfeiture	—	—		—	—		(77)		—		—		(77)		—		(77)
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, $0.20 per share	—	—		—	—		—		—		(10,736)		(10,736)		—		(10,736)
Non-cash equity award compensation	44,664	1		—	—		2,385		—		—		2,386		—		2,386
Balance, June 30, 2023	51,570,703	516		8,229,500	82		1,200,580		101,905		(378,761)		924,322		125		924,447




















Balance, December 31, 2023	50,577,841	$	506	8,229,500	$	82	$	1,198,048	$	67,495	$	(407,233)	$	858,898	$	125	$	859,023
Net (loss) income	—	—		—	—		—		(74,123)		—		(74,123)		—		(74,123)



Restricted Stock Unit (RSU) forfeiture	—	—		—	—		(1,185)		—		—		(1,185)		—		(1,185)

Preferred dividends declared, $0.4375 per share	—	—		—	—		—		—		(3,600)		(3,600)		—		(3,600)
Common dividends declared, $0.15 per share	—	—		—	—		—		—		(8,043)		(8,043)		—		(8,043)
Non-cash equity award compensation	456,959	4		—	—		2,167		—		—		2,171		—		2,171
Balance, March 31, 2024	51,034,800	$	510	8,229,500	$	82	$	1,199,030	$	(6,628)	$	(418,876)	$	774,118	$	125	$	774,243
Net (loss) income	—	—		—	—		—		(63,068)		—		(63,068)		—		(63,068)


Repurchase of common stock	(510,244)	(5)		—	—		(1,594)		—		—		(1,599)		—		(1,599)


Preferred dividends declared, $0.4375 per share	—	—		—	—		—		—		(3,600)		(3,600)		—		(3,600)
Common dividends declared, $0.05 per share	—	—		—	—		—		—		(2,735)		(2,735)		—		(2,735)
Non-cash equity award compensation	159,561	2		—	—		1,458		—		—		1,460		—		1,460
Balance, June 30, 2024	50,684,117	$	507	8,229,500	$	82	$	1,198,894	$	(69,696)	$	(425,211)	$	704,576	$	125	$	704,701

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

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GRANITE POINT MORTGAGE TRUST INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)



	Six Months Ended June 30,
	2024		2023
Cash Flows From Operating Activities:
Net loss	$	(137,191)	$	(28,788)
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	(3,453)		(5,854)
Amortization of deferred debt issuance costs	3,316		4,333
Provision for credit losses	136,308		52,228
(Gain) loss on extinguishment of debt	423		(274)






Amortization of equity-based compensation	3,631		4,341

Depreciation and amortization on real estate owned	2,558		—
Net change in assets and liabilities:
Decrease (increase) in accrued interest receivable	1,655		216



Decrease (increase) in other assets	(2,088)		999




Increase (decrease) in other liabilities	(2,521)		(810)

Net cash provided by operating activities	2,638		26,391
Cash Flows From Investing Activities:
Originations, acquisitions and additional fundings of loans held-for-investment, net of deferred fees	(34,053)		(34,318)


Proceeds from repayment of loans held-for-investment	96,883		265,623













Net cash provided by (used in) investing activities	62,830		231,305

Cash Flows From Financing Activities:
Proceeds from repurchase facilities	78,486		453,242
Principal payments on repurchase facilities	(161,949)		(396,676)

Principal payments on securitized debt obligations	(54,210)		(139,215)


Proceeds from asset-specific financings	—		911

Proceeds from secured credit facility	1,192		—








Payment of debt issuance costs	(843)		(3,514)







Tax withholding on restricted stock and RSUs	(1,185)		(966)
Repurchase of common stock	(1,599)		(5,118)
Redemption of cumulative redeemable preferred stock	—		(1,000)
Dividends paid on preferred stock	(7,201)		(7,251)
Dividends paid on common stock	(18,579)		(21,424)
Net cash (used in) provided by financing activities	(165,888)		(121,011)
Net (decrease) increase in cash, cash equivalents and restricted cash	(100,420)		136,685
Cash, cash equivalents, and restricted cash at beginning of period	199,216		140,165
Cash, cash equivalents, and restricted cash at end of period	$	98,796	$	276,850
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	83,764	$	90,379

Cash paid for taxes	$	—	$	697
Noncash Activities:

Dividends declared but not paid at end of period	$	6,335	$	14,336
Transfers from loans held-for-investment to real estate owned, other assets and other liabilities	$	35,659	$	24,000

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

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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 commercial 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 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 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. 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 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 SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles, or U.S. 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, 2023. In the opinion of management, all normal and recurring adjustments necessary to present fairly the financial condition of the Company at June 30, 2024, and results of operations for all periods presented have been made. The results of operations for the three and six months ended June 30, 2024, 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.

All entities in which the Company holds investments that are considered variable interest entities, or 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. See Note 5 - Variable Interest Entities and Securitized Debt Obligations to the Company’s Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional details regarding consolidation of VIEs.

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.

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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 June 30, 2024. However, 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, 2023, 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 six months ended June 30, 2024.

Real Estate Owned

As part of its portfolio management strategy to maximize an economic outcome from a defaulted loan, the Company may assume legal title or physical possession of the underlying collateral property through foreclosure or the execution of a deed-in-lieu of foreclosure. Real estate acquired through a foreclosure or by deed-in-lieu of foreclosure is classified as real estate owned, or REO. The Company’s basis in REO and related acquired assets is equal to the estimated fair value of the collateral on the acquisition date and allocated within Real estate owned, Other assets and Other liabilities on the Company’s condensed consolidated balance sheets. The estimated fair value of REO is determined using generally accepted valuation techniques, including a discounted cash flow model and inputs that include the highest and best use for each asset, estimated future values based on discussions with local brokers, investors and other market participants, the estimated holding period for the asset, and discount rates that reflect estimated investor return requirements for the risks associated with the expected use of each asset. If the estimated fair value of REO is lower than the carrying value of the related loan upon acquisition, the difference is recorded through the provision for credit losses in the Company’s condensed consolidated statements of comprehensive income. Upon acquisition, the Company allocates the fair value of REO to land and land improvements, building and building improvements, tenant improvements, intangible assets and intangible liabilities, as applicable.

As of June 30, 2024, REO and related acquired assets, except for land, are depreciated using the straight-line method over estimated useful lives as follows:


Description						Depreciable Life
Building						39 years
Land improvements						15 Years
Tenant improvements						Over lease terms
Lease intangibles						Over lease terms

Renovations and/or replacements that improve or extend the life of the REO are capitalized and depreciated over their estimated useful lives. The cost of ordinary repairs and maintenance are expensed as incurred in the Company’s condensed consolidated statements of comprehensive income.

REO is initially measured at fair value and is thereafter subject to an impairment assessment on a quarterly basis. Subsequent to a REO acquisition, events or circumstances may occur that may result in a material and sustained decrease in the cash flows generated from the property. REO is evaluated for recoverability when impairment indicators are identified. Any impairment losses and gains or losses on sale are included in the Company’s condensed consolidated statements of comprehensive income. Revenue and expenses from REO operations are included in the condensed consolidated statements of comprehensive income within Revenue from real estate owned operations and Expenses from real estate owned operations, as applicable.

Recently Issued and/or Adopted Accounting Standards

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, or ASU 2023-07. The new guidance requires a public entity with a single reportable segment to provide new disclosures surrounding segment expenses and other segment items on an annual and interim basis, with the intention of improving reportable segment disclosure requirements as well as enhancing interim disclosure requirements. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods with fiscal years beginning after December 15, 2024, with the guidance to be adopted retrospectively to all prior periods presented. The Company is currently evaluating the impact of this guidance but does not anticipate it will have a material impact on the Company’s condensed consolidated financial statements.

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GRANITE POINT MORTGAGE TRUST INC.

Notes to the Condensed Consolidated Financial Statements

Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, or ASU 2023-09. The new guidance requires entities to disclose the amount of income taxes paid, net of refunds received, disaggregated by federal, state and foreign jurisdiction, with the intention of improving the transparency of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and is to be adopted on a prospective basis with the option to apply retrospectively. The Company is currently evaluating the impact of this guidance but does not anticipate it will have a material impact on the Company’s condensed consolidated financial statements.

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

The following tables summarize the Company’s loans held-for-investment by asset type, property type and geographic location as of June 30, 2024, and December 31, 2023:


	June 30, 2024
(dollars in thousands)	Senior Loans(1)			B-Notes(2)			Total
Unpaid principal balance	$	2,610,510		$	13,374		$	2,623,884
Unamortized (discount) premium	(5)			—			(5)
Unamortized net deferred origination fees	(6,995)			—			(6,995)
Allowance for credit losses	(263,868)			(272)			(264,140)
Carrying value	$	2,339,642		$	13,102		$	2,352,744
Unfunded commitments	$	118,010		$	—		$	118,010
Number of loans	67			1			68
Weighted average coupon(3)	7.0		%	8.0		%	7.0		%
Weighted average years to maturity(4)	0.4			2.6			0.4


	December 31, 2023
(dollars in thousands)	Senior Loans(1)			B-Notes(2)			Total
Unpaid principal balance	$	2,713,672		$	13,507		$	2,727,179
Unamortized (discount) premium	(19)			—			(19)
Unamortized net deferred origination fees	(8,674)			—			(8,674)
Allowance for credit losses	(134,302)			(359)			(134,661)
Carrying value	$	2,570,677		$	13,148		$	2,583,825
Unfunded commitments	$	160,698		$	—		$	160,698
Number of loans	72			1			73
Weighted average coupon(3)	8.2		%	8.0		%	8.2		%
Weighted average years to maturity(4)	0.7			3.1			0.7

______________________

(1)Loans primarily secured by a first priority lien on commercial real property and related personal property and also includes, when applicable, any companion subordinate loans.

(2)A subordinate loan secured by the same mortgage as the senior loan.

(3)Weighted average coupon inclusive of the impact of nonaccrual loans.

(4)Based on contractual maturity date, including maturity defaulted loans with no remaining term. Certain loans are subject to contractual extension options with such conditions stipulated in the applicable loan documents. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment fee. The Company may also extend contractual maturities in connection with certain loan modifications.

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GRANITE POINT MORTGAGE TRUST INC.

Notes to the Condensed Consolidated Financial Statements


(dollars in thousands)	June 30, 2024				December 31, 2023
Property Type	Carrying Value		% of Loan Portfolio		Carrying Value		% of Loan Portfolio
Office	$	1,015,245	43.2	%	$	1,116,551	43.2	%
Multifamily	742,615		31.6	%	826,125		32.0	%
Hotel	181,437		7.7	%	180,891		7.0	%
Retail	235,271		10.0	%	257,945		10.0	%
Industrial	114,060		4.8	%	113,972		4.4	%
Other	64,116		2.7	%	88,341		3.4	%
Total	$	2,352,744	100.0	%	$	2,583,825	100.0	%


(dollars in thousands)	June 30, 2024				December 31, 2023
Geographic Location	Carrying Value		% of Loan Portfolio		Carrying Value		% of Loan Portfolio
Northeast	$	558,455	23.7	%	$	709,838	27.5	%
Southwest	493,592		21.0	%	495,133		19.2	%
West	310,306		13.2	%	328,547		12.7	%
Midwest	392,773		16.7	%	421,881		16.3	%
Southeast	597,618		25.4	%	628,426		24.3	%

Total	$	2,352,744	100.0	%	$	2,583,825	100.0	%

Loan Portfolio Activity

The following table summarizes activity related to loans held-for-investment, net of allowance for credit losses, for the three and six months ended June 30, 2024, and 2023:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Balance at beginning of period	$	2,492,539	$	3,182,379	$	2,583,825	$	3,267,815
Originations, additional fundings, upsizing of loans and capitalized deferred interest	17,867		18,975		35,868		37,180

Repayments	(61,405)		(206,173)		(96,883)		(265,623)


Transfers to real estate owned	(35,659)		(24,000)		(35,659)		(24,000)
Net discount accretion (premium amortization)	7		7		15		20
Increase (decrease) from net deferred origination fees	(911)		(413)		(852)		(1,032)
Amortization of net deferred origination fees	867		1,474		2,475		4,005


Provision for credit losses	(60,561)		(6,161)		(136,045)		(52,277)
Balance at end of period	$	2,352,744	$	2,966,088	$	2,352,744	$	2,966,088

During the six months ended June 30, 2024, the Company funded $34.9 million of prior commitments and upsizings. Additionally, the Company received $67.7 million of full loan repayments, paydowns and amortization of $29.2 million, for total loan repayments, paydowns and amortization of $96.9 million.

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GRANITE POINT MORTGAGE TRUST INC.

Notes to the Condensed Consolidated Financial Statements

Allowance for Credit Losses

The following table presents the changes for the three and six months ended June 30, 2024, and 2023 in the allowance for credit losses on loans held-for-investment:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Balance at beginning of period	$	210,145	$	128,451	$	134,661	$	82,335
Provision for (benefit from) credit losses	60,561		6,161		136,045		52,277
Write-off	(6,566)		(4,200)		(6,566)		(4,200)

Balance at end of period	$	264,140	$	130,412	$	264,140	$	130,412

During the three months ended June 30, 2024, the Company recorded a net increase of $54.0 million in its allowance for credit losses on loans held-for-investment. The increase was primarily due to: (i) $39.7 million related to loans that were individually assessed primarily driven by updated estimates of the fair value of the underlying collateral securing certain of these loans, and (ii) $14.3 million due to the ongoing challenges in the commercial real estate market and expectations for further pressure on property values and other loan specific assumptions employed in estimating the general Current Expected Credit Loss, or CECL, reserve.

During the six months ended June 30, 2024, the Company recorded a net increase of $129.5 million in its allowance for credit losses on loans held-for-investment. The increase was primarily due to: (i) $103.6 million related to eleven loans that were assessed individually and based on the estimates of the fair value of each loan’s underlying collateral, and (ii) $25.9 million due to the ongoing challenges in the commercial real estate market and expectations for further pressure on property values, and other loan specific assumptions employed in estimating the general CECL reserve.

As of June 30, 2024, the Company recognized $2.7 million in other liabilities related to the allowance for credit losses on unfunded commitments, resulting in a total allowance for credit losses of $266.9 million, and recorded a provision for credit losses of $(0.2) million and $(0.3) million for the three and six months ended June 30, 2024, respectively, partially offset by a decrease in unfunded commitments, resulting in a total provision for credit losses of $(60.8) million and $(136.3) million for the three and six months ended June 30, 2024, respectively.

As of June 30, 2024, the Company had ten collateral-dependent loans with an aggregate principal balance of $545.2 million, for which the Company recorded an allowance for credit losses of $195.0 million. These loans were individually assessed in accordance with the CECL framework and the allowance for credit losses was determined based on the estimates of the collateral properties’ fair value. The performance of the collateral properties securing these loans, which include four office buildings, four mixed-use properties with an office component, one hotel and one multifamily asset, has been impacted by an uncertain commercial real estate market and macroeconomic outlook, which includes weakening in credit fundamentals, capital markets volatility and significantly reduced real estate transaction activity, especially for certain property types, such as office assets located in underperforming markets, and a meaningfully higher cost of capital driven by high interest rates. These macroeconomic and market factors have resulted in the slowing of business plan execution and reduced market liquidity, thereby impacting the borrowers’ ability to either sell or refinance their properties to repay the Company’s loans. See Note 9 - Fair Value, for further detail on the fair value measurement of these loans.

Additionally, as of June 30, 2024, the Company had one collateral-dependent loan with an aggregate principal balance of $70.5 million secured by an office property, for which the Company recorded no allowance for credit losses as the collateral’s estimated fair value exceeded the loan balance. See Note 9 - Fair Value, for further detail on the fair value measurement of this loan.

Nonaccrual Loans

The following table presents the carrying value of loans held-for-investment on nonaccrual status for the three and six months ended June 30, 2024, and 2023:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Nonaccrual loan carrying value at beginning of period	$	517,507	$	207,234	$	343,683	$	207,958
Addition of nonaccrual loan carrying value	16,831		—		195,358		23,270
Reduction of nonaccrual loan carrying value	(81,541)		(23,971)		(86,244)		(47,965)
Nonaccrual loan carrying value at end of period	$	452,797	$	183,263	$	452,797	$	183,263

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GRANITE POINT MORTGAGE TRUST INC.

Notes to the Condensed Consolidated Financial Statements

As of June 30, 2024, the Company had twelve senior loans with a total unpaid principal balance of $665.3 million and carrying value of $452.8 million that were held on nonaccrual status, compared to four senior loans with a total unpaid principal balance of $245.6 million and carrying value of $183.3 million that were held on nonaccrual status as of June 30, 2023. All other loans were considered current with respect to principal and interest payments due as of June 30, 2024, and June 30, 2023.

Loan Modifications

As part of its asset and portfolio management strategy, the Company may amend or modify a loan depending on the loan’s specific facts and circumstances. These loan modifications typically include additional time for the borrower to refinance or sell the collateral property, adjustment or waiver of performance tests that are prerequisite to the extension of a loan’s maturity, and/or deferral of scheduled principal payments. In exchange for a modification, the Company may receive a partial repayment of principal, a short-term accrual of capitalized interest for a portion of interest due, a cash infusion to replenish interest or capital improvement reserves, termination of all or a portion of the remaining unfunded loan commitment, additional call protection, and/or an increase in the loan coupon or fees, among other items.

During the twelve months ended June 30, 2024, the Company entered into two loan modifications that met the disclosure requirements pursuant to ASC 326.

During the three months ended June 30, 2024, the Company completed the modification of a first mortgage loan secured by a design building property located in New York, NY, with an outstanding principal balance of $37.5 million as of March 31, 2024. The terms of the modification included, among others, a restructuring of the $37.5 million loan into (i) a $33.3 million senior loan, with $3.0 million in unfunded commitments, and (ii) a $4.2 million mezzanine note; a $2.6 million capital infusion from the sponsor to further support the collateral property; a change to the restructured senior loan’s coupon to S+3.00%, which was reduced from S+4.65%; an increase in the exit fee from 0.25% to 5.70% of the loan amount, and an extension of term to a maturity date of June 9, 2027. The mezzanine note is non-interest bearing and is subject to a distribution waterfall and is subordinate to certain amounts of sponsor’s equity, as defined in the loan agreement. As of June 30, 2024, the mezzanine note was deemed uncollectible, resulting in a write-off of $(4.2) million.

During the twelve months ended June 30, 2024, the Company completed the modification of a first mortgage loan secured by a multifamily student housing property in Louisville, KY. As of June 30, 2024, and December 31, 2023, the loan had a principal balance of $49.6 million and $48.5 million and an amortized cost of $49.4 million and $48.3 million, respectively. The terms of the modification included, among other things, a 12-month extension of the fully-extended maturity date to November 9, 2024, the full deferral of debt service payments with interest capitalized and compounding, the deferral of the extension fee and the Company’s agreement to pay for approved expenses, in its sole discretion. Due to the uncertainty with respect to the collection of future interest accruals, the loan was placed on nonaccrual status as of November 9, 2023.

Loan Risk Ratings

The Company’s primary credit quality indicators are its risk ratings. The Company evaluates the credit quality of each loan at least quarterly by assessing the risk factors of each loan and assigning a risk rating based on a variety of factors. Risk factors that are considered in the assessment include, but are not limited to, property type, geographic and local market dynamics, physical condition, leasing and tenant profile, projected cash flow, collateral performance, loan structure and exit plan, origination loan-to-value, or LTV, project sponsorship and other factors deemed necessary. The Company evaluates these factors with respect to each loan investment on a case-by-case basis taking into consideration such loan’s facts and circumstances at the time. The risk factors may be given different weightings and consideration depending on each loan’s situation. Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined as follows:

1 –Lower Risk

2 –Average Risk

3 –Acceptable Risk

4 –Higher Risk: A loan that has exhibited material deterioration in cash flows and/or other credit factors, which, if negative trends continue, could be indicative of probability of principal loss.

5 –Loss Likely: A loan that has a significantly increased probability of principal loss.

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GRANITE POINT MORTGAGE TRUST INC.

Notes to the Condensed Consolidated Financial Statements

The following table presents the number of loans, unpaid principal balance and carrying value by risk rating for loans held-for-investment as of June 30, 2024, and December 31, 2023:


(dollars in thousands)	June 30, 2024					December 31, 2023
Risk Rating	Number of Loans	Unpaid Principal Balance		Carrying Value		Number of Loans	Unpaid Principal Balance		Carrying Value
1	6	$	124,753	$	123,839	4	$	71,597	$	71,211
2	27	1,002,379		986,494		36	1,277,491		1,262,126
3	20	762,447		735,194		24	862,102		842,175
4	5	189,130		157,621		4	192,104		174,313
5	10	545,175		349,596		5	323,885		234,000
Total	68	$	2,623,884	$	2,352,744	73	$	2,727,179	$	2,583,825

As of June 30, 2024, the weighted average risk rating of the Company’s loan portfolio was 3.0, versus 2.8 as of December 31, 2023, and unchanged versus March 31, 2024, weighted by unpaid principal balance. The change in portfolio risk rating as of June 30, 2024, versus December 31, 2023, is mainly a result of select loan risk rating downgrades, partially offset by certain rating upgrades.

During the three months ended June 30, 2024, as part of its quarterly risk rating process, the Company downgraded one senior loan with an aggregate outstanding principal balance of $20.1 million and secured by an office property to a risk rating of “5”. This loan was downgraded due to a missed interest payment and the borrower’s unwillingness to make further capital commitments to support the collateral property resulting from the challenging office leasing environment including local market fundamentals, uncertain and volatile capital market conditions resulting in limited liquidity for real estate transactions, further pressure on property values and other factors related to property specific operating performance. The loan is considered collateral dependent and has been placed on nonaccrual status as of June 30, 2024.

During the three months ended June 30, 2024, the Company resolved an $11.6 million senior loan secured by a multifamily property located in Milwaukee, WI. The loan had been considered collateral-dependent, had a risk rating of “5” and had previously been placed on nonaccrual status. In connection with the resolution, which involved a discounted loan payoff, the Company incurred a write-off of $(2.4) million.

During the three months ended June 30, 2024, the Company transferred to real estate owned, or REO, a $35.7 million senior loan secured by an office property located in Maynard, MA. The loan had been considered collateral-dependent, had a risk rating of “4” and had previously been placed on nonaccrual status. The Company recorded the REO at the loan’s carrying value based on the estimated fair value of the collateral property at the time of acquisition. See Note 4 - Real Estate Owned, Net, for further detail.

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GRANITE POINT MORTGAGE TRUST INC.

Notes to the Condensed Consolidated Financial Statements

The following table presents the carrying value of loans held-for-investment as of June 30, 2024, and December 31, 2023, by risk rating and year of origination:


	June 30, 2024
(dollars in thousands)	Origination Year
Risk Rating	2024		2023		2022		2021		2020		Prior		Total
1	$	—	$	—	$	—	$	30,590	$	21,596	$	71,653	$	123,839
2	—		—		282,140		266,084		22,217		416,053		986,494
3	—		50,476		93,262		87,797		22,853		480,806		735,194
4	—		—