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Granite Point Mortgage Trust (NYSE: GPMT) reported a first-quarter GAAP net loss of $6 million, or $0.13 per share, as the company said it remains in a transition phase while it works through legacy loans and higher-cost debt. Management said resolving troubled assets is the top priority, pointing to the Chicago retail loan resolution and several other repayments and sales. At the end of the quarter, four risk-rated 5 loans totaling $189 million remained under review or in active sale processes.
The company ended the quarter with $44 million in unrestricted cash and leverage of 1.7x. Granite Point expects earnings to improve later in 2026 as it redeploys capital into new originations and potentially capital-light, fee-based strategies.
On the company’s first-quarter 2026 earnings call, President and Chief Executive Officer Jack Taylor said U.S. commercial real estate markets continued to improve during the quarter. He noted, however, that geopolitical developments tied to the Iran conflict have added uncertainty to capital markets. Taylor also said rising energy prices have increased investor attention on inflation and complicated expectations for future interest rate cuts.
“Notwithstanding some of these headwinds, capital continued to flow into commercial real estate assets,” Taylor said. He added that commercial real estate lending activity is expected to continue improving through 2026, though securitization volumes may moderate and transactions are taking longer to complete.
Taylor said Granite Point’s primary objective is to use the improving environment to resolve legacy loans and position the company to begin regrowing its portfolio in the second half of 2026. Since the beginning of the year, the company completed two full loan repayments, sold a B-note secured by a hotel at a price somewhat above par, reached a final resolution on a Chicago retail loan above its carrying value, and sold a subordinate interest in debt secured by an office property in Dallas.
Chief Investment Officer and Co-Head of Originations Steve Alpart said Granite Point ended the quarter with $1.6 billion in total loan portfolio commitments, including $1.5 billion of outstanding principal balance and about $68 million of future fundings. He said the portfolio included 40 investments with an average unpaid principal balance of about $38 million and a weighted average stabilized loan-to-value ratio of 66% at origination.
During the first quarter, Granite Point recorded loan repayments, paydowns, sales and amortization totaling approximately $189 million. This included two loan repayments totaling $174 million and the sale of a $13 million B-note secured by a performing hotel in Hawaii at a price somewhat above par. After future fundings and other investments, the company’s net loan portfolio declined by about $175 million during the quarter.
Alpart said the weighted average risk rating of the loan portfolio increased to 3.2 as of March 31 from 2.9 at the end of 2025. The realized loan portfolio yield for the quarter was 6.5%, or 7.9% excluding non-accrual loans.
At quarter-end, Granite Point had five loans rated 5 with total unpaid principal balance of about $265 million. After the quarter ended, the resolution of the Chicago retail loan reduced that figure to four loans totaling $189 million. Alpart said three of the four remaining 5-rated loans are in active sales processes that could be completed over coming quarters.
The Chicago retail loan, which had been risk-rated 5 and was on non-accrual status, was resolved through a property sale by the borrower. Alpart said the company expects to realize a write-off of approximately $30.2 million, which had been reserved for through a previously recorded $31.3 million allowance for credit losses as of Dec. 31.
Alpart also discussed other challenged loans, including a $15 million loan collateralized by a 72-key hotel that was downgraded from a risk rating of 3 to 5. He said Granite Point is in discussions with the borrower and expects resolution could involve a sale of the hotel. The company is also reviewing resolution alternatives for a $27 million Tempe hotel and retail loan, a $53 million Atlanta multifamily loan, and a $93 million Minneapolis office loan, which Alpart said may have a longer resolution timeline due to local market challenges.
Chief Financial Officer Blake Johnson said Granite Point reported a GAAP net loss attributable to common stockholders of $6 million, or $0.13 per basic common share, for the first quarter. The result included a $0.2 million benefit from credit losses. Distributable loss was $3 million, or $0.06 per basic common share.
Book value was $7.05 per share at March 31, down $0.24 from the prior quarter. Granite Point’s aggregate CECL reserve was about $149 million, roughly $100,000 higher than the previous quarter. Johnson said the increase in specific reserves on collateral-dependent loans was largely offset by a decline in the general reserve, reflecting improving macroeconomic forecasts in the company’s CECL model and a lower general reserve portfolio balance.
Johnson said approximately 81% of the total allowance was allocated to individually assessed loans. At quarter-end, the company had about $334 million of principal balance on loans with specific CECL reserves of about $120 million, representing 36% of unpaid principal balance.
Following the Chicago retail loan resolution, Johnson said Granite Point’s specific CECL reserves declined by about $30 million to $90 million, and the principal balance of collateral-dependent loans declined by $76 million to $258 million. He said the transaction resulted in a first-quarter benefit from credit losses of approximately $1.1 million because the resolution was above the company’s year-end carrying value.
Granite Point ended the quarter with about $44 million of unrestricted cash, while total leverage declined to 1.7 times from 2.0 times. Johnson said proceeds from loan repayments and a loan sale were used to reduce higher-cost borrowings and pay down CLO bonds. He said the company had about $56 million of cash as of a few days before the call.
Johnson said Granite Point expects earnings to improve as it redeploys capital from collateral-dependent loans and REO assets into new originations at target leverage. He estimated that redeployment could increase quarterly EPS by approximately $0.17 to $0.19. He also said the company is evaluating capital-light income opportunities, including fees from joint venture structures with third-party investors.
In response to an analyst question, Taylor said potential structures could include originating directly for third-party capital providers, using a combination of Granite Point capital and outside capital, or creating a formal joint venture.
Asked about the dividend, Taylor said the company and its board continue to evaluate the dividend in light of market conditions, the loan book and earnings. He acknowledged that Granite Point is currently “under-earning” but said management is considering the company’s longer-term prospects as non-accrual loans are reduced.
On borrower discussions, Alpart said Granite Point is taking a more proactive approach with older vintage loans, particularly office loans. He said the company is setting clear expectations with borrowers and pushing for repayment through property sales, refinancings or recapitalizations. Granite Point is also selectively considering loan sales and, in certain cases, may consider loan modifications or taking back properties if it sees upside potential.
“We’re pushing hard to turn over the portfolio,” Alpart said. “We’re looking to unlock capital so we can redeploy to higher earning assets.”
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