Investor Presentation Second Quarter 2019
Safe Harbor Statement This presentation contains, in addition to historical information, certain forward-looking statements that are based on our current assumptions, expectations and projections about future performance and events. In particular, statements regarding future economic performance, finances, and expectations and objectives of management constitute forward-looking statements. Forward-looking statements are not historical in nature and can be identified by words such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates," "anticipates," “targets,” “goals,” “future,” “likely” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters. Although the forward-looking statements contained in this presentation are based upon information available at the time the statements are made and reflect the best judgment of our senior management, forward-looking statements inherently involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to differ materially from anticipated future results. Important factors that could cause actual results to differ materially from expected results, including, among other things, those described in our filings with the Securities and Exchange Commission (“SEC”), including our annual report on form 10-K for the year ended December 31, 2018, and any subsequent Quarterly Reports on Form 10-Q under the caption “Risk Factors. ” Factors that could cause actual results to differ include, but are not limited to: the state of the U.S. economy generally or in specific geographic regions; the general political, economic, and competitive conditions in the markets in which we invest; defaults by borrowers in paying debt service on outstanding indebtedness and borrowers' abilities to manage and stabilize properties; our ability to obtain financing arrangements on terms favorable to us or at all; the level and volatility of prevailing interest rates and credit spreads; reductions in the yield on our investments and an increase in the cost of our financing; general volatility of the securities markets in which we participate; the return or impact of current or future investments; allocation of investment opportunities to us by our Manager; increased competition from entities investing in our target assets; effects of hedging instruments on our target investments; changes in governmental regulations, tax law and rates, and similar matters; our ability to maintain our qualification as a REIT for U.S. federal income tax purposes and our exclusion from registration under the Investment Company Act; availability of desirable investment opportunities; availability of qualified personnel and our relationship with our Manager; estimates relating to our ability to make distributions to our stockholders in the future; hurricanes, earthquakes, and other natural disasters, acts of war and/or terrorism and other events that may cause unanticipated and uninsured performance declines and/or losses to us or the owners and operators of the real estate securing our investments; deterioration in the performance of the properties securing our investments that may cause deterioration in the performance of our investments and, potentially, principal losses to us; and difficulty or delays in redeploying the proceeds from repayments of our existing investments. These forward-looking statements apply only as of the date of this press release. We are under no duty to update any of these forward-looking statements after the date of this presentation to conform these statements to actual results or revised expectations. You should, therefore, not rely on these forward-looking statements as predictions of future events. This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. 2
Company Overview (1) • Business established in early 2015 as a CRE lending platform, initially part of Two Harbors Investment Corp. (NYSE: TWO), and was spun out in June 2017 with a concurrent IPO. • Senior CRE leadership team with decades of lending experience across economic, credit and interest rate cycles • Investment strategy focused on direct origination of floating- rate, senior commercial real estate loans secured by institutional-quality, transitional properties • Nationwide loan portfolio with maximum commitments of $4.2 billion that is well-diversified across markets and property types • Conservatively managed balance sheet with moderate leverage, a well-balanced financing profile and over $1.0 billion of equity capital • GPMT is a member of the S&P 600 Small Cap index • GPMT is externally managed by Pine River Capital Management L.P., a diversified alternative asset manager 3 (1) Except as otherwise indicated in this presentation, reported data is as of or for the period ended June 30, 2019.
Granite Point Investment Highlights Each senior CRE team member has over 20 years of experience in the commercial real estate debt EXPERIENCED AND markets. Includes extensive background in investment management and structured finance CYCLE-TESTED SENIOR CRE TEAM Broad and long-standing direct relationships within the commercial real estate lending industry ATTRACTIVE AND The U.S. CRE lending markets continue to offer an enduring opportunity for specialty finance companies SUSTAINABLE as the borrower demand for debt capital remains strong and property fundamentals remain attractive MARKET Senior floating rate loans represent a particularly attractive value proposition OPPORUNITY Nationwide lending program targeting income-producing, institutional-quality properties and high DIFFERENTIATED quality, experienced sponsors across the top 25 and, generally, up to the top 50 MSAs DIRECT 47% of the investment portfolio is located in the top 5 MSAs ORIGINATION Fundamental value-driven investing combined with credit intensive underwriting and focus on cash flow PLATFORM as a key underwriting criteria Portfolio with total loan commitments of $4.2 billion, a weighted average stabilized LTV (1) of 63.1% and HIGH CREDIT weighted average all-in yield at origination (2) of LIBOR + 4.58% QUALITY INVESTMENT Well-diversified across property types, geographies, and sponsors with 98% invested in senior loans and PORTOFOLIO 98% floating rate Moderate level of balance sheet leverage and a well-diversified financing mix including CLO securitizations, secured credit facilities, and senior unsecured convertible notes ATTRACTIVE FINANCIAL Emphasis on term-matched, non-recourse and non-mark-to-market types of financing such as CLO PROFILE securitizations and certain types of credit facilities Strong cash flow profile supporting an attractive common stock dividend yield (1) See footnote (5) on p .27. 4 (2) See footnotes (2) and (3) on p. 27.
Commercial Real Estate Market Overview
Market Environment DEMAND FOR COMMERCIAL REAL ESTATE LOANS REMAINS HIGH… Over $1.5 trillion of loans maturing over the next 5 Sale transaction volume has recovered and remains strong years (1) post-global economic crisis (2) $500 $600 $400 $ in billions $300 U.S. Investors $500 $200 $100 $400 $- 2019 2020 2021 2022 2023 $300 Banks CMBS Life Cos Other HOLDERS OF CRE DEBT (3) $200 Other $100 10.0% GSE 7.8% $- Banks CMBS 51.9% 17.0% Life Cos 13.4% Tot otal al CRE Debt: t: ~$3 $3 trilli lion 6 (1) Source: MS, Trepp LLC and Federal Reserve Bank, dated as of 12/31/2018. (2) Source: Real Capital Analytics. Data from 12/31/2001 to 12/31/2018. (3) Source: Federal Reserve Bank, Fourth Quarter 2018 Flow of Funds.
Market Environment (Cont’d) …AND MARKET FUNDAMENTALS REMAIN STRONG Capitalization rates remain favorable versus historical Historically low level of new construction over past several averages (1) years has constrained supply of properties (3) 2.30% 11% 800 700 9% 2.15% 600 7% 500 2.00% 400 5% 300 1.85% 3% 200 1.70% 1% 100 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 1.55% 10yr UST Cap Rate Spread (bps) Spread Avg (bp, right) 1.40% Occupancies and rents continue to improve across most markets and property types (2) 1.25% 15% 15% 10% 13% 1.10% Indicates periods when U.S. construction spending NOI Growth (%) vacancy (%) as a percent of GDP is below 1993-2009 average 5% 11% 0.95% 0% 9% 0.80% -5% 7% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 -10% 5% Pct. GDP Average (1993-2009) 1Q92 2Q93 3Q94 4Q95 1Q97 2Q98 3Q99 4Q00 1Q02 2Q03 3Q04 4Q05 1Q07 2Q08 3Q09 4Q10 1Q12 2Q13 3Q14 4Q15 1Q17 2Q18 NOI Growth Vacancy 7 (1) Source: Real Capital Analytics. Data from 1/1/2001 through 12/31/2018. (2) Source: MS. Data from 1992 through 12/31/2018. (3) Source: Census Bureau, BEA and MS. Data from 1/1/1993 to 12/31/2018.
Investment Strategy and Origination Platform
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