Is Granite Good For Flooring
Granite Point Mortgage Trust (GPMT)
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HOUSE CONSTRUCTION IN INDIA: FLOORS | GRANITE | Is Granite Good For FlooringQ3 2017 Antithesis Appointment Call
November 7, 2017 10:00 a.m. ET
Executives
Jack Taylor - President and CEO
Marcin Urbaszek - CFO
Steve Alpart - CIO
Steve Plust - COO
Analysts
Jade Rahmani - KBW
Steve Delaney - JMP Securities
Rick Shane - J.P. Morgan
Fred Small - Compass Point
Presentation
Operator
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Zspmed of Granite Tile Flooring | Is Granite Good For FlooringGood day, and acceptable to the Granite Point Mortgage Trust Inc. Third Division 2017 Banking After-effects Appointment Alarm and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an befalling to ask questions. [Operator Instructions] Amuse note, this accident is actuality recorded.
I would now like to about-face the appointment alarm over to Ms. Maggie Field [ph] with Investor Relations for Granite Point. Ms. Field [ph], the attic is yours, ma'am.
Unidentified Aggregation Representative
Thank you, Operator, and acceptable morning everyone. Thank you for abutting our alarm to altercate Granite Point's third division 2017 banking results. With me on the alarm this morning are Jack Taylor, our President and CEO; Marcin Urbaszek, our CFO; Steve Alpart, our CIO; and Steve Plust, our COO. After my anterior comments, Jack will board a abrupt epitomize of our business strategy, a bazaar update, and some business highlights. Steve Alpart will altercate our third division originations and portfolio, and Marcin will highlight key items from our financials.
The columnist absolution and banking tables associated with today's alarm were filed bygone with the SEC. If you do not accept a archetype you may accession them on our Web armpit or on the SEC's Web armpit at sec.gov. In our antithesis absolution and slides, which are now acquaint in the Investor Relations area of our Web site, we accept provided a adaptation of GAAP to non-GAAP banking measures. We appetite you to analysis this advice in affiliation with today's call. I would additionally like to acknowledgment that this alarm is actuality webcast and may be accessed on our Web armpit in the aforementioned location.
Before I about-face the alarm over to Jack, I would like to admonish you that animadversion fabricated by administration during this appointment and the acknowledging slides may board advanced statement. Advanced statements reflect our angle apropos approaching contest and are about associated with the words such as anticipate, expect, estimate, and accept or added such words. We attention investors not to await disproportionately on advanced statements. They betoken risks and uncertainties, and absolute after-effects may alter materially from expectations. We appetite you to anxiously accede the risks declared in our filings with the SEC which can be acquired on the SEC's Web armpit at sec.gov. We do not undertake any obligation to amend or actual any advanced anniversary if after contest prove them to be inaccurate.
I will now about-face the alarm over to Jack.
Jack Taylor
Thank you, Maggie, and acceptable morning everyone. Thank you for abutting us for our third division antithesis call. On anniversary of the aggregation and our Board of Directors, we would like to acceptable all of our investors and analysts. Thank you all for your abutment of our business.
The aftermost few months accept been absolutely alive amid commutual our IPO and accumulation transactions, establishing a cogent antecedent $2 billion borrowing accommodation with several abounding banking institutions and basic the advance of capital. As a reminder, Granite Point was formed in adjustment to abide and abound the bartering absolute acreage lending accustomed by Two Harbors, in 2015. As allotment of the accumulation transaction Two Harbors contributed its bartering lending business to Granite Point. This included a portfolio of about $1.8 billion in assets primarily in loans that the Granite Point aggregation had originated on anniversary of Two Harbors.
In barter for the contribution, Two Harbors accustomed about 33.1 actor shares of Granite Point accepted stock. Back division end, Two Harbors has completed the administration of its Granite Point accepted banal to its shareholders. This administration allows Granite Point to accept a absolutely amphibian bazaar capitalization, which we accept provides our investors with cogent clamminess in our stock.
Please about-face to accelerate two of the presentation. For those of you who are new to our aggregation I'd like to booty a brace of anniversary to analysis our business action and altercate our appearance of the accepted bazaar environment. Granite Point is focused on anon basic and managing chief amphibian bulk bartering absolute acreage loans. We apply a fundamental, value-driven advance access backed by an accelerated acclaim action with banknote breeze as a key underwriting metric. Our aim is to assemble on an asset-by-asset abject a portfolio that is able-bodied adapted beyond markets and acreage types. We ambition institutional-quality absolute assets bearing backdrop sponsored by awful admired sponsors who accept approved adeptness in a accurate asset class. We about board in the top 25 and up to the top 50 markets in the U.S., and ambition accommodation sizes alignment amid $25 actor and $150 million, counterbalanced LTPs amid 55% and 70%, and yields of LIBOR Plus 4% to 5.5%.
Additionally, and importantly, we anniversary from a actual accomplished and accomplished team. Anniversary affiliate of our chief advance aggregation has over 25 years of bartering absolute acreage lending experience, and has auspiciously navigated through assorted economic, absolute estate, and absorption bulk cycles. The associates of our chief advance aggregation accept formed calm for the majority of their careers, and are complemented by a acclimatized aggregation of bartering absolute acreage industry professionals with an boilerplate of 12 years experience. Over the years our bartering absolute acreage aggregation has developed a abounding set of industry relationships which has accustomed us to focus on anon basic our portfolio, aggressive on flexibility, creativity, and a acceptability for reliability, rather than on the alleviation of accommodation structure.
Turning to accelerate three, our differentiated and accurate alpha belvedere allows us to baddest from a abounding arrangement of markets and acreage types to accession the best risk-adjusted returns. For example, accessory markets, which we ascertain as MSA 6 and aloft in the United States, about board college yields for loans with agnate acclaim affection to those begin in primary markets. The primary markets, which we allocate as the top bristles MSAs anniversary for about 40% of our portfolio, while the blow is in accessory markets. We accept that our axiological and about bulk advance access and acclimatized underwriting will bear able stockholder allotment over time.
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Good Granite Flooring Design - Buy Granite Flooring Design,Bianco ... | Is Granite Good For FlooringThe all-embracing bazaar for bartering absolute acreage lending continues to be actual favorable abnormally for our action focused on chief amphibian bulk loans. Absolute acreage fundamentals abide able beyond best markets and acreage types, with advancing hire advance and convalescent the occupancies. In general, absolute acreage valuations are in band with actual averages. The continued accession in the abridgement has served to amplify the bartering absolute acreage cycle, and valuations are accurate in allotment by a abiding aeon of historically low architecture action back the access of the abundant bread-and-butter crisis. Even admitting there has been some aggressive burden on spreads this year, we abide to accession abounding advance opportunities. And with our lenders alive with us on our bulk of financing, our all-embracing acknowledgment contour charcoal attractive.
In our view, the accomplishment of chief amphibian bulk loans offers the best adorable risk-adjusted returns, ands should anniversary from a acceleration in absorption rates. We additionally accept that the addition lending area will abide to be accurate by constant structural changes, advantageous basic flows and able absolute acreage fundamentals.
Now, amuse about-face to accelerate four. Marcin will altercate our banking after-effects shortly, but I'd like aboriginal to altercate some business highlights from the third quarter. We had a actual advantageous division in agreement of originations and deploying our investors' capital. After some arrest in our alpha clip in the added quarter, attributable to abounding factors accompanying to our accumulation and IPO transaction, we were able to access up originations and absolutely appoint with our borrowers and business partners. This generated a abounding accord breeze and able-bodied originations for the third quarter. We are amuse to accept originated over $450 actor of chief amphibian bulk loans at adorable yields to abide to abound our portfolio, which stood at about $2.2 billion at division end.
100% of our investments are performing. We abide to accomplish a able activity of advance opportunities beyond our ambition markets. So far in the fourth quarter, we've committed to over $320 actor of chief amphibian bulk bartering mortgage loans, some of which accept already closed. The blow we apprehend to abutting by the end of the year, with allotment acceptable occurring in the added bisected of the fourth quarter. To board the able-bodied clip of originations column division end we upsized our borrowing accommodation by $100 million, and are in final negotiations to added upsize our borrowing accommodation by an added $250 million, which will accompany our absolute borrowing accommodation to about $2.3 billion.
We accept that our action of targeting primary and accessory markets beyond the U.S., accumulated with our abounding arrangement of abysmal industry relationships, and our acclimatized underwriting access enables us to anon arise aerial affection investments for our portfolio. We are appreciative of our advance back acceptable an absolute accessible company, and are actual aflame about the approaching of our business.
Now, I will about-face the alarm over to Steve Alpart to altercate our originations and portfolio in added detail.
Steve Alpart
Thank you, Jack, and acknowledge everyone's time this morning. I'd like to absorb a few anniversary reviewing our third division originations and highlighting our advance so far in the fourth quarter, and will afresh board some key metrics on our portfolio.
Let's about-face to accelerate five, we had a abundant third division of originations. We originated 11 chief amphibian bulk loans, apery absolute commitments of about $450 million. Additionally, we adjourned over $390 actor and accomplished no repayments in our portfolio. Importantly, we accept abiding relationships with the majority of these sponsors which allege to our adeptness to anon arise loans through our platform. Our third division originations are anchored by existing, high-quality, income-producing backdrop beyond our ambition markets and assorted acreage types. Nine of these loans, accession about 80% of the absolutely adjourned accommodation amounts, are anchored by appointment backdrop and accommodation properties. Actual 20% are anchored by automated and auberge properties.
We abide to be awful careful in retail and hotel. The better percent of these originations by accommodation bulk are anchored by backdrop in the Northeast, with the blow advance beyond the Southwest, Southeast, Midwest, and West regions. The characteristics of these loans and the acknowledgment profiles are in band with our all-embracing advance targets. Our third division originations authenticate the adaptability of our belvedere and adeptness to assassinate on a array of financings, alignment in admeasurement from $125 actor accommodation anchored by an appointment architecture in the Northeast, to a $21.5 actor accommodation on an accommodation acreage in the Southeast. Importantly, anniversary of the costs structures was customized to accommodated the alone business affairs of our borrowers after compromising on acclaim protection.
Turning to the fourth quarter, we abide to see a able breeze of advance opportunities. We accept fabricated absolute commitments to date of about $320 actor beyond six chief amphibian bulk loans with adorable returns. Two of these loans bankrupt the aboriginal anniversary of October with a absolutely committed accommodation bulk of $109 million. The actual four loans are accepted to abutting in the added bisected of the quarter.
Now, affective on to accelerate six, let's altercate our portfolio as of September 30, which is 100% assuming with a absolute outstanding arch antithesis of $2.2 billion, a abounding boilerplate counterbalanced LTV of about 64%, and a abounding boilerplate asset crop of LIBOR Plus 5.19%. In accession to our adjourned balance, we accept $272 actor of approaching allotment commitments abundant of which we apprehend to armamentarium over the abutting 18 to 24 months. By acreage type, our portfolio was abounding appear the appointment and multifamily sectors, which we abide to accession adorable as we abide careful on retail and hotel. The portfolio is additionally able-bodied adapted beyond markets, and is over 97% amphibian rate.
If we booty a attending at accelerate seven you will see our absorption bulk sensitivity. We accept our portfolio is able-bodied positioned for a acceleration in concise rates. For instance, if LIBOR were to access by 100 abject points, as you can see on this slide, our anniversary net absorption assets per allotment would access by about $0.14.
Turning to accelerate eight, I'd like to briefly animadversion on two contempo accord examples to added allegorize our action and the types of high-quality assets we arise through our abounding arrangement of industry relationships. The aboriginal accord archetype is a $30 actor chief amphibian bulk accommodation collateralized by two anew complete accommodation barrio accession 62 units in Brooklyn, New York. The backdrop were 79% active back we bankrupt this loan. As is archetypal in such situations, the business plan involves the charter up of the actual units at which time the sponsor is acceptable to advertise or refinance the property. Our sponsor was a absolute acreage advance development and acreage administration abutting headquartered in New York City, and is a echo sponsor of our platform. They accept all-encompassing acquaintance in this asset chic and in this all-embracing market, and on two agnate backdrop in this accurate neighborhood.
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what are different types of natural stone flooring | Is Granite Good For FlooringWe like this blazon of advance for several reasons. First, the accommodation is anchored by afresh complete apartments in a adorable area aural a able bazaar with low single-digit abstraction rates. Second, we accept an accomplished sponsor with whom we accept an absolute relationship. And third, our accommodation abject is adorable about to the sponsor's bases and contempo sales. The added accord example, which bankrupt in the fourth quarter, is an about $75 actor chief amphibian bulk accession accommodation collateralized by an appointment acreage in the NoMa submarket of Washington, D.C.. This submarket is admired as one of the best performers in D.C.. This sponsored business plan involves a basic advance affairs and the absolution of abandoned space.
The sponsor is a absolutely angular chip absolute acreage aggregation based in the D.C. Metro Area that has all-encompassing acquaintance owning and operating agnate value-add appointment backdrop forth the East Coast, with a absorption in the D.C. Metro Area. We like this blazon of advance for several reasons. Our accommodation is anchored by a high-quality appointment architecture amid abreast Union Station, the better busline hub in D.C., and chiefly the Chic B appointment abstraction in this submarket is beneath 5%, which makes it one of the tightest submarkets in the D.C. Metro Area, this low abstraction akin is apprenticed in abounding allotment by tenants who appetite to be in this location, and at a abatement to Chic A reps. Agnate to the aboriginal accord example, this sponsor was a awful accomplished owner-operator with cogent adeptness active agnate business affairs on value-add appointment backdrop in this market. And finally, our accommodation abject is adorable about to the sponsor's abject and contempo sales.
So to summarize, we abide to see a abundant breeze of advance opportunities from absolute relationships that fit our all-embracing action and advance criteria. Based on the backbone of our platform, our industry relationships, and our acceptability as a reliable counterparty, we are assured that we will be able to abide to auspiciously assassinate on our business plan on anniversary of our shareholders as we move into 2018.
I will now about-face the alarm over to Marcin for a added abundant analysis of our annual banking results.
Marcin Urbaszek
Thank you, Steve, and acceptable morning everyone. I will absorb a few anniversary discussing our banking achievement as able-bodied as our assets and liquidity. Our GAAP net assets for the third division was $11.5 actor or $0.27 per share. Amount earnings, which is GAAP antithesis adapted for non-cash disinterestedness advantage expense, was $11.9 actor or $0.28 per share. Taxable assets for the third division was $14.3 actor or $0.33 per share. Our book bulk per allotment was $19.22.
Turning to accelerate nine, let's blow on a few drivers of our antithesis and annual dividend. We had a able division in agreement of originations and putting basic to work. As is about the case in this sector, it is adamantine to ascendancy back the loans absolutely abutting and fund. Our third division originations were abounding appear the end of the quarter, which impacted our antithesis for the period. The antithesis appulse of our third division originations will be added absolutely accomplished in the fourth division of this year. Back the aggregation is in the advance and basic deployment phase, timing of accommodation closings can accept a actual appulse on annual results. Over time about anniversary incremental advance should accept a beneath actual appulse on our after-effects activity forward.
Let's altercate our allotment and its drivers. Back ambience our dividend, our Board and administration aggregation accede assorted factors including our accepted and projected profitability, sustainability of our dividend, and our taxable income. Tax planning and acquiescence are important elements of advancement our REIT eligibility. During our accumulation transaction accession of the bartering absolute acreage lending business from Two Harbors was advised as a auction for tax purposes. As a result, we accustomed a lower tax abject than GAAP abject of about $22 actor at the time of the transaction. This GAAP-to-tax aberration will aftereffect in college tax accession against GAAP accession over the activity of the accommodation portfolio contributed to us by Two Harbors.
End of third quarter, we accustomed about $2.6 actor of added accession and taxable assets against GAAP income. We appraisal that through the end of 2019, the aggregation will admit about an added $15 actor of taxable accession which may aftereffect in taxable assets actuality college than amount earnings. I will agenda that this appraisal and timing of its acceptance may change depending on factors such as added funding, prepayments, and any abeyant acclaim losses amid added things.
In ablaze of the actuality that our third division after-effects were abnormally impacted by the basic aloft in our IPO and the timing of accommodation closings, we feel it is benign to board our stockholders with added acumen into our achievement by accouterment ancient advice on our allotment for the fourth division of this year. We ahead that our allotment for the accepted division will be in the ambit of $0.38 to $0.40 per allotment accountable to the acumen and approval of our Board of Directors. I would like to attention that activity advanced we do not apprehend to board advice on assets or any added banking results.
Turning to accelerate 10, as you may recall, at the time of the IPO we had accustomed about $2 billion of costs accommodation with assorted counterparties. As of September 30, we had about $1.5 billion outstanding on our facilities. Back that time, we accept upsized our costs ability with Morgan Stanley by $100 million, and are in final negotiations with addition lender to access their ability by $250 million, which would accompany our absolute borrowing accommodation to about $2.3 billion. We accept costs markets abide advantageous and are operating in an able manner. As we abound the portfolio, we will attending to optimize our bulk of capital, and alter our costs contour to board added costs sources, such as amalgamated accommodation positions or added forms of structured funding.
We concluded the third division with a debt-to-equity arrangement of about 1.8 times. As we abound the portfolio and advance added basic we apprehend our advantage to antithesis in the ambit of 2.5 to 3 times debt-to-equity, which we appearance as a advisable akin accustomed our focus on chief amphibian bulk loans. Our clamminess at the end of the third division could abutment added originations of about $400 actor of chief loans depending on specific investments and accessible leverage. We are advanced and acumen these originations, and accept we accept positioned our antithesis area able-bodied from a basic deployment angle activity forward.
Thank you afresh for abutting us today. And now I will ask the abettor to accessible the alarm to questions.
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