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GP

Granite Point Mortgage Trust Inc. (GPMT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was operationally stabilizing: GAAP net loss to common was $0.6M (-$0.01 per share), aided by a $1.6M benefit from credit losses; Distributable Earnings (Loss) were -$18.9M (-$0.40 per share) as write-offs from a resolved non‑accrual loan flowed through .
  • Estimates context: S&P Global consensus EPS was -$0.44 vs actual -$0.40*, and revenue consensus was $9.77M vs actual $11.94M*, indicating a modest beat on these bases. GAAP EPS reported by the company was -$0.01, which reflects non‑comparable definitions vs the consensus series . Values retrieved from S&P Global.*
  • Credit quality and liquidity improved: CECL reserve fell to $133.6M (7.4% of commitments) from $155.1M in Q2; unrestricted cash ended at $62.7M and rose to ~$80.1M post quarter-end; total leverage decreased to 1.9x .
  • Management highlighted catalysts: additional $7.5M reduction in the secured credit facility expected in Q4 2025 (total $15M for 2025) with a ~$0.03 annual EPS benefit; progress on 5‑rated loan resolutions (Chicago loan reclassified to retail; Tempe hotel downgraded; Minneapolis office remains longer‑dated) .

What Went Well and What Went Wrong

What Went Well

  • CECL reserve reduced by ~$21M QoQ to $133.6M (7.4% of commitments), with ~65% ($86.5M) allocated to specific reserves; allowed a $1.6M benefit from credit losses to flow through GAAP .
  • Resolution of Louisville student housing ($50.0M UPB) generated ~$19.4M write-off already reserved, producing an approximate $3.2M GAAP benefit and supporting Distributable Earnings alignment with cash economics .
  • Financing progress: maturity of secured credit facility extended to Dec 2026; spread reduced by 75 bps and borrowings reduced by $7.5M, with management guiding another $7.5M reduction in Q4 and ~$0.03 annual EPS benefit .

What Went Wrong

  • Distributable Earnings (Loss) remained materially negative (-$18.9M or -$0.40/share) due to realized write-offs ($19.8M) tied to non‑accrual resolutions; net run‑rate remains below the $0.05 quarterly common dividend .
  • Asset quality mixed: Tempe, AZ hotel was downgraded from 4 to 5, adding to 5‑rated exposure ($196.3M UPB; ~44% specific reserve coverage) and extending resolution timelines for Minneapolis office .
  • Sequential portfolio contraction (-$109.7M net loan activity) as management continues to prioritize resolutions/repayments over originations; originations unlikely until mid‑2026, delaying earnings normalization .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total Interest Income ($USD Millions)$44.30 $35.14 $33.80 $33.72
Total Interest Expense ($USD Millions)$36.64 $27.10 $25.76 $23.42
Net Interest Income ($USD Millions)$7.66 $8.04 $8.05 $10.30
(Provision)/Benefit for Credit Losses ($USD Millions)$(27.91) $(3.77) $(10.98) $1.64
Revenue from REO Operations ($USD Millions)$3.79 $3.09 $3.75 $3.62
Total Operating Expenses ($USD Millions)$14.57 $14.31 $14.48 $12.46
Net (Loss) Income ($USD Millions)$(31.02) $(7.02) $(13.36) $3.04
GAAP EPS (Basic) ($)$(0.69) $(0.22) $(0.35) $(0.01)
Distributable Earnings (Loss) per Share ($)—$(0.57) $(0.94) $(0.40)
DE Before Realized Gains/Losses per Share ($)—$(0.06) $(0.04) $0.02
Book Value per Common Share ($)$9.25 (9/30/24) $8.24 (3/31/25) $7.99 (6/30/25) $7.94 (9/30/25)

Estimates vs. Actuals (S&P Global):

MetricQ1 2025Q2 2025Q3 2025
Primary EPS Consensus Mean ($)$(0.71)*$(0.79)*$(0.44)*
Primary EPS Actual ($)$(0.57)*$(0.94)*$(0.40)*
Revenue Consensus Mean ($USD)$8.73M*$8.92M*$9.77M*
Revenue Actual ($USD)$4.27M*$(2.94)M*$11.94M*

Values retrieved from S&P Global.*

Segment/Portfolio Breakdown (Carrying value basis):

MetricQ2 2025Q3 2025
Total Loan Commitments$1.9B $1.8B
Investments (count)47 44
Property Type Mix: Office43.9% 41.9%
Property Type Mix: Multifamily32.9% 33.2%
Property Type Mix: Retail6.4% 8.7%
Property Type Mix: Industrial6.8% 7.2%
Property Type Mix: Hotel6.4% 6.5%
Region Mix: Northeast26.5% 24.1%
Region Mix: Southeast21.3% 23.4%
Region Mix: Southwest20.0% 20.9%
Region Mix: Midwest17.6% 16.3%
Region Mix: West14.6% 15.3%
Weighted Avg Stabilized LTV at Origination64.7% 65.0%
CECL Reserve (Total)$155.1M (8.1%) $133.6M (7.4%)
5‑Rated Loans (UPB)$222.8M $196.3M
Specific CECL Coverage on 5‑Rated Loans~44% ~44%
Total Leverage Ratio2.1x 1.9x
Unrestricted Cash$85.1M $62.7M (QoQ) / ~$80.1M post-QE

KPIs:

KPIQ3 2025
Realized Loan Portfolio Yield7.5% (8.4% excl. non‑accrual)
Non‑MTM Financing Mix~63%
Book Value per Share$7.94
Common Dividend per Share$0.05
Series A Preferred Dividend per Share$0.4375

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Secured Credit Facility ReductionQ4 2025$7.5M reduction executed in Q3Additional $7.5M reduction planned (total $15M for 2025); ~+$0.03 annual EPS effectRaised reduction / positive EPS impact
Origination Restart2026Restart toward end of 2025/early 2026 (Q2 commentary)Expect to begin mid‑2026Slower timing vs prior tone
DividendOngoing$0.05/common; $0.4375/preferredMaintained; no change announcedMaintained

Earnings Call Themes & Trends

TopicQ1 2025 (Prior)Q2 2025 (Prior)Q3 2025 (Current)Trend
Asset Resolutions (5‑rated loans)Resolved 3; 3 remaining; continuing resolutions Resolved Baton Rouge and Minneapolis hotel; student housing resolved post‑QE; 2 remaining Chicago reclassified to retail; Tempe hotel downgraded; Minneapolis office extended timeline Continued progress; still a key priority
CECL Reserve Direction$180.2M (8.8%) $155.1M (8.1%) $133.6M (7.4%) Improving reserve profile
Office ExposureOngoing reductions; diversified 51% reduction since 2021; active resolutions 57% reduction since 2021; Chicago office sold (upper floors); retail collateral remains Gradual de‑risking
Originations TimingEarly groundwork; team intact Restart late 2025/early 2026; $0.75–$1.0B in 2025–2026 potential (tone) Expect to start mid‑2026; slower due to pacing of resolutions/REO repositionings Pushed out
Financing & LiquidityRepo maturities extended; liquidity high Secured facility extended to Dec 2026; spread -75bps; leverage ~2.1x Additional $7.5M facility reduction planned; leverage 1.9x; cash ~$80M post‑QE Incremental improvement
Macro/Market LiquidityRecovering; more transactions Recovery resumed post “tariff” headlines; CMBS strong Market re‑liquifying; uneven by property/segment; SASB CMBS robust; banks more active Improving but bifurcated

Management Commentary

  • “Investor sentiment continued to improve… greater liquidity in the market… robust CMBS… increased lending activity by larger commercial banks… and a growing appetite from life insurance companies.”
  • “We expect to start [origination] in mid‑2026… timing and pace affected by slower‑than‑anticipated repayments, resolutions, and REO repositionings.”
  • “We reduced the balance of our higher‑cost secured credit facility by $7.5M… During the fourth quarter, we expect to further reduce… for a total of $15M for 2025, which would result in an improvement to earnings of $0.03 per common share on an annual basis.”
  • “At September 30th, we had three [risk‑rated 5] loans with total UPB about $196M… Chicago loan reclassified to retail following office sale… Tempe hotel downgraded… Minneapolis office will take longer.”
  • CFO: “Aggregate CECL reserve… about $134M… decline driven by $19.8M write‑offs and $1.6M benefit from credit losses… leverage decreased to 1.9x; cash ~$80M post quarter‑end.”

Q&A Highlights

  • Q3 call concluded without a public Q&A segment; commentary reiterated operational priorities and 2026 origination timing . For context, Q2 Q&A emphasized: pipeline rebuild timing (begin quoting in Q4 2025; closing likely early 2026), expectation that Distributable Earnings ex‑losses would remain below the dividend until originations resume, and watch‑list/office trends showing slow but steady improvement .

Estimates Context

  • EPS: S&P Global consensus Primary EPS was -$0.44 vs actual -$0.40* in Q3; company GAAP EPS was -$0.01, while Distributable EPS was -$0.40. The consensus series appears more aligned with the company’s Distributable EPS construct than GAAP EPS this quarter . Values retrieved from S&P Global.*
  • Revenue: S&P Global consensus revenue was $9.77M vs actual $11.94M*, implying a revenue beat on that basis. Company‑reported total interest income was $33.72M, reflecting reporting taxonomy differences in mREITs . Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Balance sheet and credit metrics improved: CECL reserve down to 7.4% of commitments; leverage reduced to 1.9x; liquidity robust (~$63M end‑quarter, ~$80M post‑QE) .
  • Loan resolutions continue to drive earnings volatility: DE remained negative due to realized write‑offs; expect DE to lag dividend until origination restarts (per prior Q&A) .
  • Portfolio de‑risking is tangible: 5‑rated UPB declined QoQ; Chicago office sold/down‑sized to retail collateral; Tempe hotel added to resolutions backlog; Minneapolis office remains a multiquarter process .
  • Financing actions are accretive: another $7.5M secured facility reduction in Q4 2025 should add ~$0.03 to annual EPS; spread cuts reduce funding costs and support NII .
  • Originations timing pushed to mid‑2026: near‑term earnings normalization depends on resolution pace and REO repositioning outcomes; traders should watch for additional resolution announcements and CECL trajectory .
  • Against S&P Global consensus, EPS and revenue were modest beats*, but GAAP EPS (-$0.01) diverges from the consensus series; use company DE and NII trends to assess run‑rate performance . Values retrieved from S&P Global.*
  • Tactical implication: Stock moves likely tied to asset resolution headlines, CECL reserve cadence, and financing spread reductions; medium‑term thesis hinges on the restart of originations and recycling capital into higher‑earning assets .