Granite Point (GPMT) Earnings Call Transcript

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DATE

Thursday, Feb. 12, 2026 at 11:00 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Jack Taylor
• Chief Financial Officer — Blake Johnson
• Chief Investment Officer and Co-Head of Originations — Steve Alpart
• Chief Development Officer and Co-Head of Originations — Peter Morale
• Chief Operating Officer — Ethan Leibowitz
• Investor Relations — Chris Petta

TAKEAWAYS

• Total Loan Portfolio Commitments -- $1.8 billion at year-end, including $1.7 billion outstanding principal balance and $77 million in future fundings, with future fundings representing about 4% of total commitments.
• Portfolio Composition -- 43 investments with an average unpaid principal balance (UPB) of approximately $39 million and a weighted average stabilized loan-to-value (LTV) ratio of 65% at origination.
• Portfolio Risk Rating -- Weighted average risk rating increased to 2.9 from 2.8 as of September 30.
• Realized Loan Portfolio Yield -- 6.7%, or 8% excluding nonaccrual loans, for the quarter.
• Loan Repayments -- $469 million received during 2025, including $45 million in the fourth quarter and two full loan repayments totaling $174 million post quarter-end.
• Risk-Rated 5 Loans -- Four loans totaling $249 million UPB classified as risk-rated 5; a $53 million Atlanta multifamily loan was downgraded to 5 during the quarter.
• GAAP Net Loss -- $27.4 million, or negative $0.58 per basic common share for the quarter.
• Provision for Credit Losses -- $14.4 million, or negative $0.30 per basic common share, included in quarterly results.
• Impairment Loss [Miami Beach OREO] -- $6.8 million, or negative $0.14 per basic common share.
• Distributable Loss -- $2.7 million, or negative $0.06 per basic common share for the quarter.
• Book Value -- $7.29 per common share at year-end, down $0.65 per share from the previous quarter.
• CECL Reserve -- $148 million aggregate reserve, up from $134 million at prior quarter-end; approximately 70% allocated to individually assessed loans.
• Specific CECL Reserves -- $105 million covering collateral-dependent loans of $249 million principal, or 42% of related UPB.
• Leverage -- Slight increase to 2.0 times from 1.9 times in the prior quarter.
• Unrestricted Cash -- $66 million at year-end and $55 million as of early February 2026.
• Cost of Repurchase Facilities -- Reduced by roughly 60 basis points post quarter-end, leading to estimated annual savings of $0.10 per share.
• Planned Originations -- Management expects to resume portfolio growth in 2026, timing contingent on repayments, resolutions, and market conditions.
• REO and Asset Resolution Activity -- Ongoing investments in two REO assets; post-quarter end strategy focused on maximizing value then seeking exit.

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RISKS

• Book value per share declined by $0.65 quarter over quarter, with management stating risk of further downgrades and losses due to ongoing workouts and credit migrations.
• The portfolio’s weighted average risk rating increased to 2.9 from 2.8, reflecting a slight deterioration in overall loan risk profile.
• A $53 million multifamily loan in Atlanta was downgraded to risk-rating 5, and management acknowledged softness and reduced pricing power in that market.
• CECL reserve increased by $15 million due to a decrease in the CRE price index and worsening macroeconomic assumptions, indicating heightened perceived credit risk.
• Impairment loss of $6.8 million was recognized on the Miami Beach OREO asset, and management indicated the Minneapolis office loan could have a longer and more challenging resolution timeline.

SUMMARY

Granite Point Mortgage Trust (NYSE:GPMT) reported significant portfolio reduction activity, including notable loan repayments and asset sales, as part of its strategic focus on asset resolutions and reducing risk exposure. Management detailed plans to re-enter the origination market in 2026, with timing tied to ongoing repayments and resolutions, and highlighted a recent decrease in the cost of debt. The company’s financial results included increased CECL reserves in response to updated economic forecasts and specific credit concerns, alongside recognized impairments in real estate owned (REO) assets.

• Management said, "We believe we are appropriately reserved" but acknowledged that both upgrades and downgrades may occur as credit migrations continue.
• The aggregate CECL reserve of $148 million at year-end represented heightened provisioning, with 70% allocated to individually assessed loans and $105 million tied to four collateral-dependent loans.
• Origination efforts are expected to accelerate later in 2026, as management prioritizes capital recycling following repayments and asset resolutions.
• The company stated that future portfolio stability will depend on the balance between repayment activity and new loan originations, with the current trajectory showing continued short-term portfolio contraction.

INDUSTRY GLOSSARY

• CECL Reserve: Current Expected Credit Loss reserve; a forward-looking allowance for potential losses on loans, based on expected performance and macroeconomic conditions.
• REO: Real Estate Owned; property acquired through foreclosure or loan resolution, held on the company’s balance sheet for eventual disposition.
• UPB: Unpaid Principal Balance; the remaining principal amount owed on a loan, excluding interest or fees.
• Risk-Rated 5 Loan: A loan classification indicating the highest level of credit risk within the company’s risk grading scale, often requiring active resolution strategies.
• LTV: Loan-to-Value ratio; a measure of a loan’s principal compared to the appraised value of the underlying property, expressed as a percentage.

Full Conference Call Transcript

Chris Petta: Thank you for joining our call to discuss Granite Point Mortgage Trust Inc.’s fourth quarter and full year 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 Morale, our Chief Development Officer and Co-Head of Originations; and Ethan Leibowitz, our Chief Operating Officer. After my introductory comments, Jack will provide a brief recap of conditions and review our current business activities. Steve will discuss our portfolio and Blake will highlight key items from our financial results.

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. We expect to file our Form 10-Ks in the coming weeks. I would like to remind you that remarks made by management during this call and the supporting slides may include forward-looking statements, which are uncertain and outside of the company’s control. Forward-looking statements reflect our views regarding future events and are subject to uncertainties that could cause actual results to differ materially from expectations. Please see our filings with the SEC for 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 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 will now turn the call over to Jack.

Jack Taylor: Thank you, Chris, and good morning, everyone.

Jack Taylor: We would like to welcome you and thank you for joining us for Granite Point Mortgage Trust Inc.’s fourth quarter and full year 2025 earnings call. 2025 was a constructive year for the commercial real estate industry.

Chris Petta: The year began with strong momentum

Jack Taylor: after pausing briefly in the spring due to macro uncertainty, quickly resumed with heightened deal activity and spread compression throughout the balance of the year. During the fourth quarter, we saw greater capital availability for a broader array of properties, including certain office properties, as well as improving fundamentals across many markets and most property types. Lending volume has expanded and also extended to a wider range of property types and markets. This greater liquidity in the market has benefited the CMBS market and strengthened CLO issuance. Larger commercial banks have become more active, notably for warehouse financing, and regional banks are beginning to return to the market as well.

Against this backdrop of available capital in the market, there continues to be a shortfall of actionable deals, which is one of the key factors contributing to the spread tightening we have been seeing over the last several quarters. For Granite Point, with the long-awaited market improvement, 2025 was an impactful year, as we achieved some of our key objectives. These included five loan resolutions, seven full loan repayments, and one REO property sale, as well as a reduction in our cost of debt.

The market momentum experienced in 2025 has continued into early 2026, and sets the stage for this year to be potentially a stronger year for the industry, with forecasted growth in transaction activity across property types, increased liquidity from traditional lenders, a robust securitization market, and an increasingly constructive backdrop for asset resolution activity. In 2026, continue to make progress reducing our higher-cost debt and moving along our asset resolutions, which will continue to help reduce the risk within our portfolio and improve our net interest spread.

This month, we repaid a substantial amount of additional higher-cost debt, resulting in a reduction in the cost of our repurchase facilities by roughly 60 basis points and an estimated annual savings of $0.10 per share. With respect to our two REO assets, we are investing capital where we believe it will maximize our outcome and then we will seek to exit and extract capital. Post quarter end, we also have received two full loan repayments of $174,000,000 combined. Turning to originations, as we said last quarter, we expect to begin to regrow our portfolio this year, and to start that process in 2026.

The exact timing and volume of originations will be driven by the pace of loan repayments and asset resolutions, as well as market conditions and idiosyncratic factors. While the timing and volume is uncertain, reallocating capital in our portfolio and recycling into new originations remains one of our highest priorities. I would now like to turn the call over to Steve to discuss our portfolio activities in more detail. Thank you, Jack.

Steve Alpart: And thank you all for joining our fourth quarter and full year earnings call. We ended the year with $1,800,000,000 in total loan portfolio commitments, inclusive of $1,700,000,000 in outstanding principal balance and about $77,000,000 of future fundings, which accounts for only about 4% of total commitments.

Operator: Our loan portfolio remains diversified across regions,

Steve Alpart: and property types, and includes 43 investments with an average UPB of about $39,000,000 and a weighted average stabilized LTV of 65% at origination. As of December 31, our portfolio weighted average risk rating increased slightly to 2.9 from 2.8 at September 30. The realized loan portfolio yield for the fourth quarter was 6.7%, which, excluding nonaccrual loans, would have been 8% or 1.3% higher. We had an active year of loan repayments totaling about $469,000,000 during 2025. During the year, funded about $51,000,000 on existing loan commitments and other investments.

During the fourth quarter, we had $45,000,000 of loan repayments and partial paydowns, including a full repayment of a $33,000,000 loan secured by a multifamily asset located in North Carolina. We had about $15,000,000 of future fundings and other investments, resulting in a net loan portfolio reduction of about $30,000,000 for the fourth quarter. Post quarter end, we have received two full loan repayments of $174,000,000. We will now provide some color on the risk-rated five loans. At December 31, we had four such loans with a total UPB of about $249,000,000.

At quarter end, we downgraded a $53,000,000 loan collateralized by a 284-unit multifamily property in the Atlanta MSA from a risk rating of four to a rating of five. While we have seen a pickup in occupancy at the property, the local market remains soft and we are not seeing the return of the pricing power we had expected. We are reviewing resolution alternatives, which may include a property sale. We are monitoring the situation closely and expect to have more to share over the coming quarters. We discussed last quarter that we had a partial resolution on the Chicago loan with the sale of the upper floor office space to a developer for a residential conversion.

After the sale, the remaining collateral securing the $76,000,000 loan is the retail space. The story is now cleaner and simpler, and we are continuing to work cooperatively with the borrower towards the ultimate resolution, which we expect will occur via a property sale in the nearer term. For the $27,000,000 Tempe hotel and retail loan, we are reviewing resolution alternatives there as well, which could involve a sale of the property. Regarding the $93,000,000 Minneapolis office loan, as previously disclosed, we anticipate a longer resolution timeline given the persistent local market challenges. Resolving these remaining five-rated loans remains a top priority.

Turning to the REO assets, we continue to have positive leasing successes at the suburban Boston property, and remain actively engaged with our partner and the local jurisdiction and other third parties on several value-enhancing repositioning opportunities. We continue to invest capital into this property to maximize the outcome. The Miami Beach office property is a Class A asset located in a strong market. We are having positive leasing discussions with a variety of existing and new tenants, will prudently invest in the property, and continue to review resolution alternatives, which include the potential sale. As we shared in prior quarters, our plan for 2026 is to remain focused on loan and REO resolutions.

We expect our portfolio balance will trend lower in the near term until we start our origination efforts in 2026 to take advantage of attractive investment opportunities and begin to regrow our portfolio. I will now turn the call over to Blake to discuss our financial results.

Blake Johnson: Thank you, Steve. Good morning, everyone, and thank you for joining us today. Turning to our financial results. For the fourth quarter, we reported a GAAP net loss attributable to common stockholders of $27,400,000, or negative $0.58 per basic common share, which includes a provision for credit losses

Jack Taylor: of $14,400,000, or negative $0.30 per basic common share

Steve Alpart: and an impairment loss

Blake Johnson: in the Miami Beach OREO asset of $6,800,000, or negative $0.14 per basic common share. Distributable loss for the quarter was $2,700,000, or negative $0.06 per basic common share. Our book value at December 31 was $7.29 per common share, a decline of $0.65 per share from Q3, largely from the provision for credit losses

Jack Taylor: and impairment loss on REO.

Blake Johnson: Our aggregate CECL reserve at December 31 was about $148,000,000, as compared to $134,000,000 last quarter. The roughly $15,000,000 increase in our CECL reserve was mainly due to an increase in our specific reserve on our collateral-dependent loans

Jack Taylor: and worsening macroeconomic forecast in our CECL model relative to the prior quarter.

Blake Johnson: Approximately 70% of our total allowance was allocated to individually assessed loans. As of quarter end, we had about $249,000,000 of principal balance on four loans with specific CECL reserves of around $105,000,000, representing 42% of the unpaid principal balance.

Steve Alpart: We believe we are appropriately reserved

Blake Johnson: and further resolutions should meaningfully reduce our total CECL reserve balance. Turning to liquidity and capitalization, we ended the quarter with about $66,000,000 of unrestricted cash. Our total leverage increased slightly relative to the prior quarter from 1.9 times to 2.0 times. As of a few days ago, carried about $55,000,000 in cash.

Steve Alpart: Our funding mix remains well diversified and stable, and we continue to have very constructive relationships with our financing counterparties. We expect to expand our financing capacity once we return to originating new loans.

Blake Johnson: I will now ask the operator to open the line for questions.

Operator: Thank you. We will now be conducting a question and answer session. Thank you. Our first question is from Douglas Harter with UBS.

Marissa Lobo: Good morning. It is actually Marissa Lobo on for Doug today. Thanks for taking my questions. On origination, how are you thinking about the economics of new origination versus returning capital to shareholders, given the large discount to book value that you trade at?

Blake Johnson: Good morning, Marissa. This is Blake. Thank you for the question today. When we look at our portfolio and the discount to book, one of our main objectives over the years to continue resolving our loans and actually working on decreasing our leverage until we start originating again. We do plan on returning to originations later in the year, and that is our focus for 2026.

Marissa Lobo: Okay. And on the CECL reserve build, how are you viewing the current reserve position and the likelihood for further reserve build? How are current macroeconomic assumptions factoring into that?

Blake Johnson: A very good question. Thank you. Yes. So as of year end, we go through our CECL process as in every quarter end. And when we went through the process, we update the generator for the latest and greatest economic forecast in our truck model. So that includes change in assumptions, and the biggest driver for this quarter was a decrease in the CRE price index.

Jack Taylor: These forecasts can change going forward, so the general reserve could change. But as of right now, that is the most recent assumption as far as what our general should be.

Blake Johnson: Moving to the actual specific reserve, that is based on our collateral-dependent loans. So as of quarter end, we had four collateral-dependent loans. In each quarter end, we assess the fair value of the underlying collateral is.

Jack Taylor: So absent any changes in collateral itself,

Steve Alpart: we do believe we are appropriately reserved for on those loans.

Marissa Lobo: Okay. Thank you. Appreciate the answers.

Operator: Our next question is from Jade Rahmani with KBW. Thank you very much.

Blake Johnson: Do you have any views as to where book value per share may trough

Steve Alpart: in this cycle?

Operator: It is down quite sharply year over year and quarter over quarter.

Jade Joseph Rahmani: Which clearly based on today’s stock performance, is a surprise. So can you just comment as to, you know, what your expectations are for the risk of future losses going forward?

Jack Taylor: Well, I will address that first and then turn it over to Steve to talk about credit migration.

Blake Johnson: We

Jack Taylor: We believe that there is a risk that there will be upgrades and downgrades and future losses may be part of that. Right? We do not—we have best that risk in our book today and that is embedded in the reserves. That we reserves. With respect to credit migration, maybe, Steve, you would speak to that. But I have been very clear over the quarters. I do not believe it is over in terms of workouts, delinquencies for the whole industry, and not for us. And there have been some prizes to us. We expect to have some upgrades and some downgrades. Steve?

Steve Alpart: Is that everything you were gonna—You know, it is—Hey, Jay. Good morning. It is Steve. I think Jack and Blake covered it pretty well. I mean, I would just say that we feel that the majority of the portfolio is performing well. We are working through these remaining loan resolutions, which are not entirely, but heavily in the office sector, and the impact of the rate hike that we went through. We are pleased with the progress we have had to date. We had a lot of resolutions in 2024. We had five more in 2025. We are in process on a couple more right now.

We just talked about the Chicago deal where we had the partial resolution of the office, and we are working on a full resolution, which involves the retail, which we think can get done in the near term. We did have two new fives during the quarter. So there is always a possibility that there could be more of that. But we also hope to have more resolutions, some upgrades, and we are happy to see that we are in a constructive environment, as far as capital, certainly debt, also, increasingly equity. And we think that will be helpful on further repayments and resolutions.

Jade Joseph Rahmani: And just overall, when you look at the portfolio, clearly, portfolio has a legacy vintage prior to the Fed rate hikes. So nearly every single loan in the portfolio is gonna have probably some cost of capital issue when it is up for maturity. But then looking beyond that, multifamily was an area of downgrade this quarter, which was so much surprising. So can you comment on the vintage and the multifamily property type and what your expectations are there?

Steve Alpart: Sure. I think there are two related questions in there. So we are working through these loans, including these kind of older vintage loans. We have pretty good visibility, I would say, on about a quarter of these loans, in terms of a near-term payoff where there is a process underway and we are expecting a loan repayment. I would say there is another, I call it 40% or so if I had to kind of take an estimate, where there is an upcoming maturity. We have communicated to the borrower that we expect an exit this year by the maturity date.

And there may be a refi or a recraft or a refi or a recap or sale process that is underway or expected. And we certainly cannot say that all those will get done, but we have, you know, some visibility on those that we think that there is a process that there is an exit out of. And then there is another, you know, call it about a third or so, where there are a couple of 2027 and 2028 maturities. And then I would throw in the Minneapolis office deal that are a little bit further out. So we are—I would say we are kind of chipping away at it.

And some have near-term visibility, some we are expecting and pushing on, and then a few will be, you know, kind of 2027 and 2028. Then as far as your question on multifamily, multifamily in our portfolio, we feel pretty good about. We did have the credit migration on the Atlanta deal, and we have talked about certain markets that we are looking at. We have kind of flagged in the past Atlanta. So, would say that one for us has been a bit of an exception. So—and that one has some unique factors that we can we can talk about.

But I think the overall trend line that we are seeing, including in the Sun Belt, is that I think the recovery that we were all expecting has been a little bit more sluggish, and you see that in the read-through on some of the public multifamily REITs. The spring leasing season last year was a little slower than expected. But the supply picture overall is improving. There has not been a lot of pricing power for landlords. But, you know, when we sit back and look at macro supply and demand, it feels like, you know, over the second half of this year and kind of going forward, we feel like the trend line in multifamily is fairly positive.

And there is obviously a lot of liquidity in the asset class. The sentiment coming out of the NMHC this year was very positive. So overall, on multifamily overall and in our book, we feel pretty good about it medium to longer term.

Jack Taylor: Thank you. Thank you, Jay.

Operator: Our next question is from Christopher Muller with Citizens Capital.

Blake Johnson: Hey guys, thanks for taking the questions. So I guess starting on the portfolio, it has been shrinking as you guys have been focused on asset management. But sounds like new originations starting up is still the expectation for later this year.

Operator: So I guess the question is, you guys have a ballpark of where the portfolio size could trough and maybe kind of playing into that a little bit is, what does scheduled maturities look like in the first half of this year in addition to what you guys already disclosed?

Steve Alpart: Hey, Chris, it is Steve. Just high level, on the first part of your question, look, just given

Blake Johnson: the

Steve Alpart: near-term focus on repayments and resolutions, we do expect the portfolio to tick down through mid-2026 and then begin to restabilize and regrow in the latter part of the year. Ultimately, that will depend on the timing of repayments and resolutions relative to new originations, but it will get a little lower over the next few quarters and then begin to regroup. Regrow.

Operator: Got it. And any visibility you guys have on

Christopher Muller: scheduled maturities that may play into that?

Steve Alpart: Yeah. I mean, a part of that is what I just mentioned to Jay that we have—we do have visibility on certain loans that are coming up on maturity. As we kind of look out—I am kind of looking out into 2026 overall. Some of these will just pay off in the normal course. A couple will extend out of bright. Has happened on some loans recently. Then to the extent—then we have other loans that I mentioned are not up for maturity yet, but they are up—know, kind of clawed—you know, third, fourth quarter.

And, you know, we are in a—of that, we are having conversations with a number of borrowers that we have done previous extensions on, where they have done everything right, where they put new money in. And we are looking to get the portfolio turned. So we are having clear communications with borrowers about our expectations and if they cannot do it via a refi, do it via an equity recap, it via a sale. So that has been kind of the playbook.

Look, case by case, we have extended out loans in win-win mod situations, but we feel like that was the playbook that allowed couple of years, and we are trying to move past that and get to just turning the portfolio.

Christopher Muller: Got it. And then just a quick clarifying one. Did I hear you guys correctly that there were two new five-rated loans in the quarter? I see the Georgia multifamily in the deck but, what was the other one if I heard that right?

Steve Alpart: There is one—there is one new five-rated loan.

Christopher Muller: Got it. So I just misunderstood. Thanks for taking the questions today.

Steve Alpart: It is the Georgia multifamily, correct. Thank you, Chris.

Operator: Our next question is from Gabe Hoggi with Raymond James. Hey, good morning, guys. Thanks for taking the question.

Christopher Muller: I may have missed this before, but can you tell us what the two sectors were and any details around the repayments you received year to date in one thus far this year in 2026?

Jack Taylor: Well, hey, Steve. Maybe I can just lead in on that for a moment and I would say it is a retail, a multifamily and importantly want out relating to an earlier

Blake Johnson: question,

Jack Taylor: These were vintage loans. COVID period and the higher interest rate period and paid off at par.

Christopher Muller: Thank you.

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

Jack Taylor: Yes. I just wanted to elaborate on something that was said earlier, which is the portfolio will shrink as we said, but I think we have many tools to regrow the portfolio. Through our loan repayments and resolutions, releasing capital—our REO, which will extract capital. We will be repaying our higher-cost debt and then rebuilding with an originations team that has been intact from when we were originating at $1,500,000,000 to $2,000,000,000. We have a lot of tools to re-leverage our balance sheet internally through the assets as they move from lower-level assets, the vintage loans that are being carried at lower leverage, to the new loans that we add

Jade Joseph Rahmani: And

Jack Taylor: that we also—excuse me—move into CLOs and the like and source capital as we have done in the past successfully to bring our lower leverage of 1.7 closer back to our target leverage. And to start repairing our earnings. Thank you for your time. And I just want to welcome—I would say thank you, everybody, for joining us for the call. And hope to speaking to you next

Steve Alpart: further

Jack Taylor: positive resolution.

Operator: This concludes today’s conference call. We thank you again for your participation. You may now disconnect your lines.

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