Granite Point Mortgage Trust Inc

Previous wording

Granite Point Mortgage Trust Inc. is an internally-managed 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. Our investment objective is to preserve our stockholders’ capital while generating attractive risk-adjusted returns over the long term, primarily through dividends derived from current income produced by our investment portfolio. We operate as a REIT, as defined under the Code. We also operate our business in a manner intended to maintain our exclusion from registration under the Investment Company Act. We operate our business as one segment.

Current wording

Granite Point Mortgage Trust Inc. is an internally-managed 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. Our common stock is listed on the New York Stock Exchange, or NYSE, under the symbol “GPMT”. Our investment objective is to preserve our stockholders’ capital while generating attractive risk-adjusted returns over the long term, primarily through dividends derived from current income produced by our investment portfolio. We operate as a REIT, as defined under the Code. We also operate our business in a manner intended to maintain our exclusion from registration under the Investment Company Act. We operate our business as one segment.

Previous wording

The year ended December 31, 2023, was characterized by continued volatility in global securities markets, driven by investor concerns over inflation, high interest rates, escalating trade tensions, slowing economic growth, political and regulatory uncertainty and geopolitical conditions, including the impacts of the Russia-Ukraine conflict and, more recently, the conflict and rising tensions in the Middle East. Events affecting financial institutions during the year also contributed to volatility in global markets and diminished liquidity and credit availability.

Current wording

The year ended December 31, 2024, was characterized by continued volatility in the global securities markets, driven by investor concerns over inflation, elevated interest rates, escalating trade tensions, slowing economic growth, political and regulatory uncertainty and geopolitical conditions. Events affecting financial institutions during the year also contributed to volatility in global markets and diminished liquidity and credit availability.

Previous wording

Although the Federal Reserve has indicated that no further interest rate increases are expected in 2024, how long interest rates will remain at their current elevated levels and the direction and extent of any future interest rate changes remain uncertain. Although our business model is such that higher interest rates will, all else being equal, generally correlate to higher net income, interest rates remaining elevated for an extended period of time has adversely affected, and may continue to adversely affect, our existing borrowers and the cost of financing their properties and lead to nonperformance. Additionally, higher interest rates and increasing costs may dampen consumer spending and slow corporate profit growth, which may negatively impact the collateral underlying certain of our loans. Higher interest rates have adversely impacted, and may continue to adversely impact, commercial real estate property values. It remains difficult to predict the full impact on macroeconomic conditions and our business of recent events and any future changes in interest rates or inflation.

Current wording

Interest rates remain at an elevated level and the timing, direction and extent of any future interest rate changes remain uncertain. Although our business model is such that higher interest rates should, all else being equal, generally correlate to higher net income, interest rates having remained elevated for an extended period of time have adversely affected, and may continue to adversely affect, our existing borrowers and the cost of financing their properties and lead to non-performance. Additionally, higher interest rates and increasing costs may dampen consumer spending and slow corporate profit growth, which may negatively impact the collateral underlying certain of our loans. Higher interest rates have adversely impacted, and may continue to adversely impact, commercial real estate property values. It remains difficult to predict the full impact on macroeconomic conditions and our business of recent events and any future changes in interest rates or inflation.

Previous wording

The office property market has been experiencing higher office vacancies, slower leasing activity and various tenants re-evaluating their need for physical office space due in large part to remote work trends. These factors coupled with inflation, elevated interest rates, and limited market liquidity have created a high level of uncertainty with respect to property values. These challenging dynamics have stressed certain borrowers’ ability and willingness to support their office properties and perform in accordance with the terms of their loans. Given this uncertainty, it remains difficult to predict the effect these challenging conditions may have on the office property market, our borrowers, their performance under the terms of our loans secured by office properties and our financial results.

Current wording

The office property market has been experiencing higher vacancies, slower leasing activity and various tenants re-evaluating their need for space due in large part to remote and hybrid work arrangements. These factors coupled with inflation, elevated interest rates and limited market liquidity have created a high level of uncertainty with respect to property values. These dynamics have stressed certain borrowers’ ability and willingness to support their properties and perform in accordance with the terms of their loans. Given this uncertainty, it remains difficult to predict the effect these challenging conditions may have on the office property market, our borrowers, their performance under the terms of our loans secured by office properties and our financial results.

Previous wording

•Generated Distributable Earnings before realized losses of $37.3 million, or $0.72 per basic share, and Distributable (Loss) to common stockholders of $(17.0) million, or $(0.33) per basic share, which includes a total of $(54.3) million of write-offs related to certain loan resolutions, and excludes the $(104.8) million in non-cash provision for credit losses, $(7.0) million of non-cash equity compensation expense and $(3.4) million of non-cash depreciation and amortization on REO.

Current wording

•Generated Distributable Earnings (Loss) to common stockholders of $(143.9) million, or $(2.85) per basic common share, which includes $(146.3) million in write-offs and $8.8 million in recoveries of amounts previously written off, and excludes the $(201.4) million in provision for credit losses, $(6.6) million of non-cash equity compensation expense and $(6.3) million of non-cash depreciation and amortization on REO.

Previous wording

•Recorded an increase to the allowance for credit losses of $50.5 million, for a total allowance of credit losses of $137.1 million, or approximately 4.7% of total loan commitments of $2.9 billion at December 31, 2023.

Current wording

•Recorded an increase to the allowance for credit losses of $63.9 million, for a total allowance of credit losses of $201.0 million, or approximately 9.2% of total loan commitments of $2.2 billion at December 31, 2024.

Previous wording

•Book value per share of common stock at December 31, 2023, was $12.91, inclusive of $(2.71) per share of total Current Expected Credit Loss, or CECL, reserve.

Current wording

•Book value per share of common stock at December 31, 2024, was $8.47, inclusive of $(4.12) per basic common share of total CECL reserve.

Previous wording

•Declared aggregate common stock dividends of $42.7 million, or $0.80 per share of common stock, and preferred dividends of $14.5 million, or $1.75 per share of Series A Preferred Stock.

Current wording

•Declared common stock dividends of $16.1 million, or $0.30 per basic common share, and preferred dividends of $14.4 million, or $1.75 per share of Series A Preferred Stock.

Previous wording

•Funded $71.3 million of prior loan commitments, loan upsizes and protective advances.

Current wording

•Funded $57.1 million of prior loan commitments and upsizes.

Previous wording

•Realized $698.3 million of total unpaid principal balance, or UPB, in loan repayments, principal paydowns and principal amortization, including a write-off of $(33.3) million.

Current wording

•Realized $(727.1) million of total UPB in loan repayments, principal paydowns, principal amortization, cost recovery, sales, resolutions and write-offs.

Previous wording

•Maintained a portfolio of 73 loan investments with an aggregate unpaid principal balance of $2.7 billion and total commitments of $2.9 billion, a weighted average stabilized LTV at origination of 63.6%, and a weighted average all-in yield at origination of S+4.03%.

Current wording

•Maintained a portfolio of 54 loan investments with an aggregate unpaid principal balance of $2.1 billion and total commitments of $2.2 billion, a weighted average stabilized LTV at origination of 64.4%, and a weighted average all-in yield at origination of Standard Overnight Financing Rate, or SOFR, of S+4.01%.

Previous wording

•Extended the maturity of the JPMorgan Chase financing facility to July 28, 2025, and upsized the facility’s maximum borrowing capacity up to $525 million.

Current wording

•Extended the Morgan Stanley financing facility to June 28, 2025, and adjusted the facility’s maximum borrowing capacity to $250 million.

Previous wording

•Repurchased 2,001,338 shares of common stock at a weighted average purchase price of $5.12 for an aggregate purchase price of $10.2 million.

Current wording

•Repurchased 2,392,671 shares of common stock at a weighted average purchase price of $3.16 for an aggregate purchase amount of $7.6 million.

Previous wording

•At December 31, 2023, carried unrestricted cash of $188.4 million, a portion of which is subject to certain liquidity covenants, and no restricted cash related to balances in CRE CLOs.

Current wording

•At December 31, 2024, carried unrestricted cash of $87.8 million, a portion of which is subject to certain liquidity covenants, and restricted cash of $26.7 million.

Previous wording

As a commercial real estate finance company, we believe the key financial measures and indicators for our business are earnings per share presented on a GAAP basis, dividends declared on common stock, Distributable Earnings and book value per share of common stock. For the year ended December 31, 2023, we recorded a GAAP net (Loss) per basic share of $(1.50), declared a cash dividend of $0.80 per share of common stock and reported Distributable (Loss) of $(0.33) per basic share. Our book value as of December 31, 2023, was $12.91 per share of common stock, inclusive of $(2.71) per share of total CECL reserves.

Current wording

As a commercial real estate finance company, we believe the key financial measures and indicators for our business are earnings per share presented on a GAAP basis, dividends declared on common stock, Distributable Earnings and book value per share of common stock. For the year ended December 31, 2024, we recorded a GAAP net (loss) per basic common share of $(4.39), declared a cash dividend of $0.30 per share of common stock and reported Distributable (loss) of $(2.85) per basic common share. Our book value as of December 31, 2024, was $8.47 per share of common stock, inclusive of $(4.12) per share of total CECL reserves.

Previous wording

As further described below, Distributable Earnings is a measure that is not prepared in accordance with GAAP. We use Distributable Earnings to evaluate our performance, excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations. In addition, Distributable Earnings is a performance metric we consider, along with other measures, when declaring our common stock dividends.

Current wording

As further described below, Distributable Earnings is a “non-GAAP financial measure.” We use Distributable Earnings to evaluate our performance, excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations. In addition, Distributable Earnings is a performance metric we consider, along with other measures, when declaring our common stock dividends.

Previous wording

In order to maintain our status as a REIT, we are required to distribute at least 90% of our taxable income as dividends. Distributable Earnings is intended to over time serve as a general, though imperfect, proxy for our taxable income. As such, Distributable Earnings is considered a key indicator of our ability to generate sufficient income to pay dividends on our common stock, which is the primary focus of income-oriented investors who comprise a meaningful segment of our stockholder base. We believe providing Distributable Earnings on a supplemental basis to our net income (loss) and cash flow from operating activities, as determined in accordance with GAAP, is helpful to stockholders in assessing the overall run-rate operating performance of our business.

Current wording

In order to maintain our status as a REIT, we are required to distribute at least 90% of our taxable income to stockholders, subject to certain distribution requirements. Distributable Earnings (Loss) is intended to over time serve as a general, though imperfect, proxy for our taxable income. As such, Distributable Earnings (Loss) is considered a key indicator of our ability to generate sufficient income to pay dividends on our common stock, which is the primary focus of income-oriented investors who comprise a meaningful segment of our stockholder base. We believe providing Distributable Earnings (Loss) on a supplemental basis to our net income (loss) and cash flow from operating activities, as determined in accordance with GAAP, is helpful to stockholders in assessing the overall operating performance of our business.

Previous wording

For reporting purposes, we define Distributable Earnings as net income (loss) attributable to our stockholders, computed in accordance with GAAP, excluding: (i) non-cash equity compensation expenses; (ii) depreciation and amortization; (iii) any unrealized gains (losses) or other similar non-cash items that are included in net income (loss) for the applicable reporting period (regardless of whether such items are included in other comprehensive income or in net income (loss) for such period); and (iv) certain non-cash items and one-time expenses. Distributable Earnings may also be adjusted from time to time for reporting purposes to exclude one-time events pursuant to changes in GAAP and certain other material non-cash income or expense items approved by a majority of our independent directors. The exclusion of depreciation and amortization from the calculation of Distributable Earnings only applies to debt investments related to real estate to the extent we foreclose upon the property or properties underlying such debt investments.

Current wording

For reporting purposes, we define Distributable Earnings (Loss) as net income (loss) attributable to our stockholders, computed in accordance with GAAP, excluding: (i) non-cash equity compensation expenses; (ii) depreciation and amortization; (iii) any unrealized gains (losses) or other similar non-cash items that are included in net income (loss) for the applicable reporting period (regardless of whether such items are included in other comprehensive income or in net income (loss) for such period); and (iv) certain non-cash items and one-time expenses. Distributable Earnings (Loss) may also be adjusted from time to time for reporting purposes to exclude one-time events pursuant to changes in GAAP and certain other material non-cash income or expense items approved by a majority of our independent directors. The exclusion of depreciation and amortization from the calculation of Distributable Earnings (Loss) only applies to debt investments related to real estate to the extent we foreclose upon the property or properties underlying such debt investments.

Previous wording

While Distributable Earnings excludes the impact of the unrealized non-cash current provision for credit losses, we expect to only recognize such potential credit losses in Distributable Earnings if and when such amounts are deemed non-recoverable. This is generally at the time a loan is repaid, or in the case of foreclosure, when the underlying asset is sold, but non-recoverability may also be concluded if, in our determination, it is nearly certain that all amounts due will not be collected. The realized loss amount reflected in Distributable Earnings will equal the difference between the cash received, or expected to be received, and the carrying value of the asset, and is reflective of our economic experience as it relates to the ultimate realization of the loan. During the year ended December 31, 2023, we recorded provision for credit losses of $(104.8) million, which has been excluded from Distributable Earnings, consistent with other unrealized gains (losses) and other non-cash items pursuant to our existing policy for reporting Distributable Earnings referenced above. During the year ended December 31, 2023, we recorded $(3.4) million in depreciation and amortization on REO and related intangibles, which has been excluded from Distributable Earnings consistent with other unrealized gains (losses) and other non-cash items pursuant to our existing policy for reporting Distributable Earnings referenced above. During the year ended December 31, 2023, we recorded a $0.2 million gain on early extinguishment of debt, which has been excluded from Distributable Earnings consistent with certain one-time events pursuant to our existing policy for reporting Distributable Earnings as a helpful indicator in assessing the overall run-rate operating performance of our business.

Current wording

While Distributable Earnings (Loss) excludes the impact of the unrealized non-cash current provision for credit losses, we expect to only recognize such potential credit losses in Distributable Earnings (Loss) if and when such amounts are deemed non-recoverable. This is generally at the time a loan is repaid, or in the case of foreclosure, when the underlying asset is sold, but non-recoverability may also be concluded if, in our determination, it is nearly certain that all amounts due will not be collected. The realized loss amount reflected in Distributable Earnings (Loss) will equal the difference between the cash received, or expected to be received, and the carrying value of the asset, and is reflective of our economic experience as it relates to the ultimate realization of the loan. During the years ended December 31, 2024, and 2023, we recorded a provision for credit losses of $(201.4) million and $(104.8) million, respectively, which has been excluded from Distributable Earnings (Loss), consistent with other unrealized gains (losses) and other non-cash items pursuant to our existing policy for reporting Distributable Earnings (Loss) referenced above. During the years ended December 31, 2024, and 2023, we recorded $(6.3) million and $(3.4) million, respectively, in depreciation and amortization on REO and related intangibles, which has been excluded from Distributable Earnings (Loss) consistent with other unrealized gains (losses) and other non-cash items pursuant to our existing policy for reporting Distributable Earnings (Loss) referenced above.

Previous wording

Distributable Earnings does not represent net income (loss) or cash flow from operating activities and should not be considered as an alternative to GAAP net income (loss), or an indication of our GAAP cash flows from operations, a measure of our liquidity, or an indication of funds available for our cash needs. In addition, our methodology for calculating Distributable Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and, accordingly, our reported Distributable Earnings may not be comparable to the Distributable Earnings reported by other companies.

Current wording

Distributable Earnings (Loss) does not represent GAAP net income (loss) attributable to common stockholders or cash flow from operating activities and should not be considered as an alternative to GAAP net income (loss) attributable to common stockholders, or an indication of our GAAP cash flows from operations, a measure of our liquidity, or an indication of funds available for our cash needs. In addition, our methodology for calculating Distributable Earnings (Loss) may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and, accordingly, our reported Distributable Earnings (Loss) may not be comparable to the Distributable Earnings (Loss) reported by other companies.

Previous wording

We believe it is useful to our stockholders to present Distributable Earnings before realized losses to reflect our run-rate operating results as (i) our operating results are mainly comprised of net interest income earned on our loan investments net of our operating expenses, which comprise our ongoing operations, (ii) it helps our stockholders in assessing the overall run-rate operating performance of our business, and (iii) it has been a useful reference related to our common dividend as it is one of the factors we and our Board of Directors consider when declaring the dividend. We believe that our stockholders use Distributable Earnings and Distributable Earnings before realized losses, or a comparable supplemental performance measure, to evaluate and compare the performance of our company and our peers.

Current wording

We believe it is useful to our stockholders to present Distributable Earnings (Loss) Before Realized Gains and Losses, a non-GAAP measure, to reflect our run-rate operating results as (i) our operating results are mainly comprised of net interest income earned on our loan investments net of our operating expenses, which comprise our ongoing operations, (ii) it helps our stockholders in assessing the overall run-rate operating performance of our business, and (iii) it has been a useful reference related to our common dividend as it is one of the factors we and our Board of Directors consider when declaring the dividend. We believe that our stockholders use Distributable Earnings (Loss) and Distributable Earnings (Loss) Before Realized Gains and Losses, or a comparable supplemental performance measure, to evaluate and compare the performance of our company and our peers.

Previous wording

The following table provides a reconciliation of GAAP net (loss) attributable to common stockholders to Distributable Earnings before realized losses and Distributable (Loss) Earnings for the years ended December 31, 2023, and 2022:

Current wording

The following table provides a reconciliation of GAAP net (loss) attributable to common stockholders to Distributable Earnings (Loss) Before Realized Gains and Losses and Distributable Earnings (Loss) for the years ended December 31, 2024, and 2023:

Previous wording

Book value per share as of December 31, 2023, includes the impact of an estimated allowance for credit losses of $(137.1) million, or $(2.71) per common share. See Note 3 –Loans Held-for-Investment, Net of Allowance for Credit Losses to our Consolidated Financial Statements included in this Annual Report on Form 10-K for a detailed discussion of allowance for credit losses.

Current wording

Book value per share as of December 31, 2024, includes the impact of an estimated allowance for credit losses of $201.0 million, or $(4.12) per common share. See Note 3 –Loans Held-for-Investment, Net of Allowance for Credit Losses to our Consolidated Financial Statements included in this Annual Report on Form 10-K for a detailed discussion of allowance for credit losses.

Previous wording

Interest-earning assets include our 100% loan investment portfolio. At December 31, 2023, our loan portfolio was comprised of 73 investments, of which 72 were senior first mortgage loans totaling $2.9 billion of commitments with an unpaid principal balance of $2.7 billion, and one subordinated loan totaling $13.5 million in commitments and unpaid principal balance. At December 31, 2023, the weighted average risk rating of our loan portfolio was 2.8 as compared to 2.5 at December 31, 2022, weighted by total unpaid principal balance.

Current wording

Interest-earning assets include our 100% loan investment portfolio. At December 31, 2024, our loan portfolio was comprised of 54 investments, of which 53 were senior first mortgage loans totaling $2.2 billion of commitments with an unpaid principal balance of $2.1 billion, and one subordinated loan totaling $13.2 million in commitments and unpaid principal balance. At December 31, 2024, the weighted average risk rating of our loan portfolio was 3.1 as compared to 2.8 at December 31, 2023, weighted by total unpaid principal balance.

Previous wording

We may hold REO as a result of taking title to a loan’s collateral. As of December 31, 2023, we owned one office property with a carrying value of $20.5 million.

Current wording

We may hold REO as a result of taking title to a loan’s collateral. As of December 31, 2024, we owned two office properties with an aggregate carrying value of $52.4 million, inclusive of $9.8 million of intangible assets included in other assets and $(0.2) million of other liabilities in our Consolidated Balance Sheets.

Previous wording

During the year ended December 31, 2023, we funded $69.3 million under existing loan commitments, $48.8 million on one origination and $2.0 million on loan upsizings and protective advances. We realized $758.4 million in aggregate reductions in portfolio unpaid principal balance from loan repayments, paydowns, amortization and loan resolutions. During the year ended December 31, 2023, we generated interest income of $263.7 million and incurred interest expense of $(181.7) million, which resulted in net interest income of $82.0 million. See Note 3 -Loans Held-for-Investment, Net of Allowance for Credit Losses to our Consolidated Financial Statements included in this Annual Report on Form 10-K for further detail.

Current wording

During the year ended December 31, 2024, we funded $57.1 million under existing loan commitments and loan upsizes. We realized $727.1 million in aggregate reductions in portfolio unpaid principal balance from loan repayments, paydowns, amortization and resolutions. See Note 3 -Loans Held-for-Investment, Net of Allowance for Credit Losses to our Consolidated Financial Statements included in this Annual Report on Form 10-K for further detail.

Previous wording

(1)Additional fundings made under existing loan commitments and upsizing of loans.

Current wording

(2)Additional fundings made under existing loan commitments and upsizing of loans.

Previous wording

(1)Cash coupon does not include origination or exit fees. Weighted average cash coupon excludes fixed rate loans.

Current wording

(1)Cash coupon does not include origination or exit fees. Weighted average cash coupon excludes fixed rate loans and impact of loans placed on nonaccrual status.

Previous wording

(2)Yield includes net origination fees and exit fees, but does not include future fundings, and is expressed as a monthly equivalent. Weighted average yield excludes fixed rate loans.

Current wording

(2)Yield includes net origination fees and exit fees, but does not include future fundings, and is expressed as a monthly equivalent. Weighted average yield excludes fixed rate loans and impact of loans on nonaccrual status.

Previous wording

(3)Stabilized loan-to-value ratio, or stabilized LTV, is calculated as the fully funded loan amount (plus any financing that ispari passu with or senior to such loan), including all contractually provided for future fundings, divided by the as stabilized value (as determined in conformance with USPAP) set forth in the original appraisal. As stabilized value may be based on certain assumptions, such as future construction completion, projected re-tenanting, payment of tenant improvement or leasing commissions allowances or free or abated rent periods, or increased tenant occupancies.

Current wording

(3)Stabilized loan-to-value ratio at origination, or stabilized LTV, is calculated as the fully funded loan amount (plus any financing that ispari passu with or senior to such loan), including all contractually provided for future fundings, divided by the as stabilized value (as determined in conformance with USPAP) set forth in the original appraisal. As stabilized value may be based on certain assumptions, such as future construction completion, projected re-tenanting, payment of tenant improvement or leasing commissions allowances or free or abated rent periods, or increased tenant occupancies.

Previous wording

(2)Cash coupon does not include origination or exit fees. Weighted average cash coupon excludes fixed rate loans.

Current wording

(2)Cash coupon does not include origination or exit fees. Weighted average cash coupon excludes fixed rate loans and impact of loans placed on nonaccrual status.

Previous wording

(3)Yield includes net origination fees and exit fees, but does not include future fundings, and is expressed as a monthly equivalent. Weighted average yield excludes fixed rate loans.

Current wording

(3)Yield includes net origination fees and exit fees, but does not include future fundings, and is expressed as a monthly equivalent. Weighted average yield excludes fixed rate loans and impact of loans placed on nonaccrual status.

Previous wording

(5)Initial loan-to-value ratio, or initial LTV, is calculated as the initial loan amount (plus any financing that ispari passu with or senior to such loan) divided by the as is appraised value (as determined in conformance with the Uniform Standards of Professional Appraisal Practice, or USPAP) as of the date of the loan was originated set forth in the original appraisal.

Current wording

(5)Initial loan-to-value ratio, or initial LTV at origination, is calculated as the initial loan amount (plus any financing that ispari passu with or senior to such loan) divided by the as is appraised value (as determined in conformance with the Uniform Standards of Professional Appraisal Practice, or USPAP) as of the date of the loan was originated set forth in the original appraisal.

Previous wording

We maintain strong relationships and an active asset management dialogue with our borrowers. We have leveraged those strong relationships along with our team’s experience to maximize the performance of our portfolio, including during periods of economic uncertainty and market volatility. While we generally believe that the principal amount of our loans is sufficiently protected by the underlying collateral value, there is a risk that we will not realize the entire principal amount of certain of our loan investments.

Current wording

We maintain strong relationships and an active asset management dialogue with our borrowers. We have leveraged those relationships along with our team’s experience to maximize the performance of our portfolio, including during periods of real estate market and economic uncertainty and volatility. While we generally believe that the principal amount of our loans is sufficiently protected by the underlying collateral value, there is a risk that we will not realize the entire principal amount of certain of our loan investments.

Previous wording

As of December 31, 2023, we had five loans that had a risk rating of “5” with an aggregate principal balance of $323.9 million, for which we recorded an allowance for credit losses of $89.6 million. These five loans were on nonaccrual status as of December 31, 2023. The performance of these assets has been adversely affected to varying degrees by many different factors, such as slower leasing velocity, including leasing challenges of office properties in certain markets related to work from home trends and other submarket dynamics combined with a significant rise in interest rates resulting in a meaningful reduction in real estate transaction activity, capital markets volatility and limited market liquidity affecting these borrowers’ ability to either sell or refinance their loans, and other property specific factors.

Current wording

As of December 31, 2024, we had seven loans that had a risk rating of “5” with an aggregate principal balance of $453.3 million, for which we recorded an allowance for credit losses of $154.7 million. These seven loans were on nonaccrual status as of December 31, 2024. The performance of these assets, which include four office buildings, one mixed-use property with an office component, one hotel asset and one multifamily property, has been adversely affected to varying degrees by many factors, such as slower pace in leasing activity for office properties, related to work from home trends and other submarket dynamics, combined with a significant rise in interest rates contributing to a meaningful reduction in real estate transaction activity, capital markets volatility and limited market liquidity affecting property values and these borrowers’ ability to either sell or refinance their loans, and other property specific factors. During the year ended December 31, 2024, four of these loans were downgraded to a risk rating of “5”, including two office loans, one hotel loan, and one multifamily loan. These loans were downgraded due to the borrowers’ unwillingness to make further capital commitments to support the collateral properties resulting from a variety of factors including the challenging office leasing environment, 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. These loans are considered collateral dependent and have been placed on nonaccrual status as of December 31, 2024.

Previous wording

During the year ended December 31, 2023, we completed the modification of a first mortgage loan with a principal balance of $48.5 million secured by a multifamily student housing property in Louisville, KY. 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 our agreement to pay for approved expenses, in our sole discretion. Due to the uncertainty with respect to the collection of future interest accruals, the loan was placed on nonaccrual status.

Current wording

In November 2024, we completed the modification of a first mortgage loan secured by a multifamily student housing property in Louisville, KY. As of December 31, 2024, and December 31, 2023, the loan had a principal balance of $50.0 million and $48.5 million, respectively, and an amortized cost of $49.8 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, 2025, the full deferral of debt service payments with interest capitalized and compounding, the deferral of the extension fee and the 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 in conjunction with a previous modification. The loan was performing pursuant to its modified contractual terms as of December 31, 2024.

Previous wording

As of December 31, 2023, our portfolio financing consisted of repurchase and secured credit facilities collateralized by loans held-for-investment and our one REO asset, and securitized debt obligations collateralized by pools of loans held-for-investment issued in CRE CLOs. Our non-mark-to-market financing sources accounted for approximately 55.5% of portfolio loan-level financing as of December 31, 2023.

Current wording

As of December 31, 2024, our portfolio financing consisted of repurchase and secured credit facilities collateralized by loans held-for-investment and securitized debt obligations collateralized by pools of loans held-for-investment issued in CRE CLOs. Our non-mark-to-market financing sources accounted for approximately 59.4% of portfolio loan-level financing as of December 31, 2024.

Previous wording

As of December 31, 2023, we had repurchase facilities in place with five counterparties with aggregate outstanding borrowings of $0.9 billion, which financed a portion of our loans held-for-investment and real estate owned. As of December 31, 2023, the weighted average borrowing rate on our repurchase facilities was 8.8%, the weighted average advance rate was 69.3%, and the term to maturity ranged from 180 days to approximately 1.6 years, with a weighted average remaining maturity of 1.2 years.

Current wording

As of December 31, 2024, we had repurchase facilities in place with three counterparties with aggregate outstanding borrowings of $0.6 billion, which financed a portion of our loans held-for-investment and real estate owned. As of December 31, 2024, the weighted average borrowing rate on our repurchase facilities was 7.8%, the weighted average advance rate was 61.7%, and the term to maturity ranged from approximately 0.4 years to approximately 0.6 years, with a weighted average remaining maturity of 0.5 years.

Previous wording

Under our repurchase facilities, other than with respect to our Centennial Bank repurchase facility, which provides financing on a non-mark-to-market basis, our counterparties may make margin calls as a result of a perceived decline in the value of our assets collateralizing the given secured financing arrangement due to a credit event or, under a limited number of our repurchase facilities, due to market events. To cover a margin call, we may transfer cash or other loan collateral to such a counterparty. Should the value of our assets suddenly decrease, significant margin calls on our mark-to-market repurchase facilities could result, causing an adverse change in our liquidity position.

Current wording

Under our existing repurchase facilities, our counterparties may make margin calls as a result of a perceived decline in the value of our assets collateralizing the given facility due to a credit event or, under a limited number of our repurchase facilities, due to market events. To cover a margin call, we may transfer cash or other collateral to such a counterparty. Should the value of our assets suddenly decrease, significant margin calls on our mark-to-market repurchase facilities could result, causing an adverse change in our liquidity position.

Previous wording

We have financed certain pools of our loans through the issuance of CRE CLOs. At December 31, 2023, we had two CRE CLOs outstanding: GPMT 2021-FL4 and GPMT 2021-FL3, totaling $1.0 billion of outstanding borrowings, financing 39 of our existing first mortgage loan investments with an aggregate principal balance, inclusive of restricted cash, of $1.3 billion. As of December 31, 2023, our CRE CLOs financed 45.9% of our total loan portfolio principal balance on a term-matched, non-recourse and non-mark-to-market basis with attractive cost of funds. On March 16, 2023, we redeemed the GPMT 2019-FL2 CRE CLO, which at its redemption had $98.1 million of outstanding borrowings. As a result of the redemption, we realized a gain on early extinguishment of debt of approximately $0.3 million.

Current wording

We have financed certain pools of our loans through the issuance of CRE CLOs. At December 31, 2024, we had two CRE CLOs outstanding: GPMT 2021-FL4 and GPMT 2021-FL3, totaling $0.8 billion of outstanding borrowings, financing 30 of our existing first mortgage loan investments with an aggregate principal balance, inclusive of restricted cash, totaling $1.0 billion. As of December 31, 2024, our CRE CLOs financed 46.5% of our total loan portfolio principal balance on a term-matched, non-recourse and non-mark-to-market basis with attractive cost of funds.