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GP

Granite Point Mortgage Trust Inc. (GPMT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 showed continued portfolio de-risking but remained loss-making: GAAP net loss to common of $17.0M (-$0.35/share) and Distributable Loss of $45.3M (-$0.94/share), with book value at $7.99/share .
  • Bold miss vs Street: Primary EPS (non-GAAP) of -$0.94 missed S&P Global consensus of -$0.79; “Revenue” per S&P also missed materially due to realized/CECL dynamics in a mortgage REIT portfolio (see Estimates Context) [Values retrieved from S&P Global]*.
  • Execution progress: two nonaccrual loan resolutions in Q2 (write-offs $36.1M), sale of Phoenix REO (+$0.3M gain), CECL reserve reduced to $155.1M (8.1% of commitments), and 1.25M share buybacks ($3.1M) .
  • Liquidity/funding improved: secured credit facility extended to Dec 2026 with a 75 bps spread reduction; unrestricted cash ended at $85.1M; total leverage 2.1x .
  • Near-term stock narrative: continued resolution of remaining “5-rated” loans (post-Q2 Louisville student housing resolution with ~$19.3M write-off and ~$3.3M GAAP benefit to provision) and opportunistic buybacks are key catalysts before origination restart late-2025/early-2026 .

What Went Well and What Went Wrong

What Went Well

  • “We continued our progress in resolving nonperforming loans and reducing higher-cost debt… we repurchased 1.25 million of our common shares… look forward to returning to our core business of originating loans over the coming quarters.” — CEO Jack Taylor .
  • CECL reserve fell to $155.1M (8.1% of commitments), with 63% specific reserves (~$97.5M), reflecting advancing resolutions and lower nonaccrual exposure .
  • Funding/liquidity actions: secured credit facility maturity extended to Dec 2026, spread reduced by 75 bps, repo facilities extended earlier in Q2; unrestricted cash at $85.1M and total leverage at 2.1x .

What Went Wrong

  • Results pressured by realized losses and CECL provision: Q2 provision of ~$11.0M (general reserve increase on less favorable CRE price forecast) and ~$36.1M in loan write-offs tied to nonaccrual resolutions drove sizeable Distributable Loss (-$0.94/share) .
  • REO drag: revenue from REO of $3.8M was more than offset by REO operating expenses of $5.2M (REO portfolio carries $107.0M), weighing on quarterly profitability .
  • Run-rate distributable earnings below dividend expected until origination restarts, per CFO, given portfolio balance reduction and nonearning assets .

Financial Results

GAAP and Non-GAAP Summary (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Total Interest Income ($USD Millions)$38.7 $35.1 $33.8
Net Interest Income ($USD Millions)$7.6 $8.0 $8.0
Provision for Credit Losses ($USD Millions)$(37.2) $(3.8) $(11.0)
GAAP Net (Loss) to Common ($USD Millions)$(42.4) $(10.6) $(17.0)
GAAP Net (Loss) per Basic Share ($USD)$(0.86) $(0.22) $(0.35)
Distributable Earnings (Loss) per Basic Share ($USD)$(1.98) $(0.57) $(0.94)
Distributable Earnings (Loss) Before Realized Gains/Losses per Basic Share ($USD)$(0.06) $(0.06) $(0.04)
Book Value per Common Share ($USD)$8.47 $8.24 $7.99
CECL Reserve ($USD Millions)$201.0 $180.2 $155.1
CECL Reserve (% of Commitments)9.2% 8.8% 8.1%

Year-over-Year Snapshot (Q2 2024 vs Q2 2025)

MetricQ2 2024Q2 2025
Total Interest Income ($USD Millions)$48.5 $33.8
Net Interest Income ($USD Millions)$8.1 $8.0
GAAP Net (Loss) per Basic Share ($USD)$(1.31) $(0.35)
Distributable Earnings (Loss) per Basic Share ($USD)$(0.18) $(0.94)
CECL Reserve ($USD Millions)$266.9 $155.1
CECL Reserve (% of Commitments)9.7% 8.1%

KPIs and Balance Sheet/Capital (Q1 2025 → Q2 2025)

KPIQ1 2025Q2 2025
Total Loan Commitments ($USD Billions)$2.0 $1.9
Unpaid Principal Balance ($USD Billions)~$1.9 $1.83
Number of Investments50 47
Weighted Avg Stabilized LTV at Origination (%)64.5% 64.7%
Realized Loan Portfolio Yield (%)6.8% 7.1%
Weighted Avg Portfolio Risk Rating3.0 2.8
REO Carrying Value ($USD Millions)$123.8 $107.0
Unrestricted Cash ($USD Millions)$85.7 $85.1
Total Leverage (x)2.2x 2.1x
Common Dividend per Share ($USD)$0.05 $0.05
Preferred Dividend per Share ($USD)$0.4375 $0.4375

Portfolio Breakdown (as of Q2 2025)

  • Property Type mix: Office 43.9%; Multifamily 32.9%; Retail 6.4%; Hotel 6.4%; Industrial 6.8%; Other 3.6% .
  • Regional mix: Northeast 26.5%; Southwest 20.0%; Southeast 21.3%; Midwest 17.6%; West 14.6% .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Secured Credit Facility MaturityFacility termDec 2025 (prior maturity, per CFO) Dec 2026 Extended
Secured Credit Facility SpreadFacility pricing—Reduced by 75 bps Lowered
Repurchase FacilitiesFacility maturitiesExtended by ~1 year (Apr) Maintained extended maturities Maintained
Common DividendQ2 2025$0.05/share $0.05/share Maintained
Preferred Dividend (Series A)Q2 2025$0.4375/share $0.4375/share Maintained
Origination Activity (qualitative)Late-2025/2026Restart “later in 2025” Begin quoting in Q4 2025; likely closings late-2025/early-2026 Clarified timing

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Nonaccrual resolutions/CECL2024: resolved >$340M, CECL $201M (9.2%) ; Q1: two Q2 resolutions guided; CECL $180M (8.8%) Two Q2 resolutions (write-offs ~$36.1M); CECL down to $155.1M (8.1%) Improving
Origination restartQ1: restart later 2025; team intact Plan to quote in Q4 2025; probable closings late-2025/early-2026; 2026 origination $0.75–$1.0B ambition (mgmt context) Building
Macro/tariffs and CRE liquidityQ1: tariff-related uncertainty; liquidity still functioning Recovery resumed; spreads stabilized; transitional floating rate lending strengthening Stabilizing
Office sector outlookQ1: diversified; active resolutions; REO path options “Slow but steady” leasing progress; capital slowly returning; remaining challenges; continued focus Mixed but improving
Funding/liquidityQ1: repo extensions; cash ~$86M; leverage 2.2x Secured credit facility extended to Dec 2026; spread reduced; cash $85.1M; leverage 2.1x Strengthened
Dividend coverage (DE vs dividend)Q1: DE negative due to resolutions CFO expects DE below dividend until originations restart Headwind persists

Management Commentary

  • “We continued our progress in resolving nonperforming loans and reducing higher-cost debt… we repurchased 1.25 million of our common shares… look forward to returning to our core business of originating loans over the coming quarters.” — Jack Taylor, CEO .
  • “General reserve went up roughly around $11 million… primary driver was an update to the economic forecast we use in our CECL model… decrease in expected CRE price index.” — Blake Johnson, CFO .
  • “We expect to return to our core lending business and restarting origination efforts as we get into the end of the year… begin to regrow our portfolio in 2026.” — Stephen Alpart, CIO .
  • Post-Q2: Louisville student housing resolved; ~$19.3M write-off reserved by prior ~$22.6M allowance; expected ~$3.3M GAAP benefit in Q3 .

Q&A Highlights

  • Risk-rated “4” loans: behind on business plans; varied assets (office, multifamily, hotel); actively working with sponsors; timing uncertain .
  • CECL general reserve: increased ~$11M due to less favorable CRE price index in model (TREP) .
  • Originations cadence: expect quoting in Q4 2025 and closings late-2025/early-2026; potential ~$0.75–$1.0B origination in 2026 (contextual ambition) .
  • Dividend coverage: distributable EPS expected below dividend until origination restarts and nonearning assets resolve .
  • Office outlook: “slow but steady” leasing improvement; capital returning; continued focus on resolutions .

Estimates Context

  • Bold miss: Primary EPS (non-GAAP) Q2 2025 actual -$0.94 vs consensus -$0.786 (3 estimates) — miss; Q1 2025 -$0.57 vs -$0.707 — beat on less negative loss [Values retrieved from S&P Global]*.
  • Revenue per S&P: Q2 2025 actual -$2.94M vs consensus $8.92M (3 estimates); Q1 2025 actual $4.27M vs consensus $8.73M (note: S&P “Revenue” for mortgage REITs can differ from “Total interest income” reported in filings and may reflect GAAP revenue impacts from credit/REO items) [Values retrieved from S&P Global]*.
  • Implications: Street likely revises near-term DE/EPS lower until originations restart and remaining “5-rated” resolutions conclude; Q3 benefit from Louisville resolution (~$3.3M provision benefit) partially offsets .
MetricQ1 2025Q2 2025
Primary EPS Consensus Mean ($USD)-0.7066*-0.7861*
Primary EPS Actual ($USD)-0.57 -0.94
Revenue Consensus Mean ($USD)$8,726,990*$8,920,480*
Revenue Actual ($USD)$4,270,000*$(2,939,000)*
# of EPS Estimates3*3*
# of Revenue Estimates3*3*

Values retrieved from S&P Global*

Key Takeaways for Investors

  • The de-risking playbook remains intact: CECL reserve reduced (to 8.1% of commitments) with active resolutions and specific reserves concentrated on remaining nonearning assets .
  • Near-term P&L still shaped by write-offs and REO drag; CFO flagged distributable EPS below dividend until origination restarts, tempering income profile for yield-focused holders .
  • Funding optionality improved (secured facility extended, spread cut, repo extensions) and liquidity is robust ($85.1M cash; leverage 2.1x), supporting buybacks and future originations .
  • Watch Q3 print for Louisville resolution accounting: ~$19.3M write-off reserved, expected ~$3.3M GAAP benefit to provision; this should aid quarterly comparability and headline metrics .
  • Office remains the largest property exposure; management sees “slow but steady” leasing improvement and market liquidity returning—resolution momentum is a key stock driver .
  • Trading setup: incremental buybacks (authorization remaining) and visible progress on remaining “5-rated” loans could catalyze sentiment ahead of origination restart .
  • Medium-term thesis: portfolio re-grows in 2026 (mgmt indicating $0.75–$1.0B origination ambition) with improved run-rate profitability as nonearning assets resolve and cost of funds declines .