Granite Point Mortgage Trust Inc. Stock

Good morning. My name is Alicia, and I'll be your conference facilitator. At this time, I'd like to welcome everyone to Granite Point Mortgage Trust Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note today's call is being recorded. I would now like to turn the call over to Chris Petta, Head of Investor Relations for Granite Point.

Thank you, and good morning, everyone. Thank you for joining our call to discuss Granite Point's second quarter 2026 financial results. With me on the call this morning are Jack Taylor, our President and Chief Executive Officer; Steve Alpart, our Chief Investment Officer and Co-Head of Originations; Blake Johnson, our Chief Financial Officer; Peter Morral, our Chief Development Officer and Co-Head of Originations; and Ethan Lebowitz, our Chief Operating Officer.

After my introductory comments, Jack will provide a brief recap of market conditions and review our current business activities. Steve will discuss our portfolio, and Blake will highlight key items from our financial results.

The press release, financial tables, and earnings supplemental associated with today's call were filed yesterday with the SEC, along with our Form 10-Q, and are available in the Investor Relations section of our website.

I would like to remind you that remarks made by management during this call and the supporting slides may include forward-looking statements, which are uncertain and out of the company's control. Forward-looking statements reflect our views regarding future events and are subject to uncertainties that could cause actual results to differ materially from expectations.

Please see our filings with the SEC for a discussion of some of the risks that could affect results. We do not undertake any obligation to update any forward-looking statements.

We will also refer to certain non-GAAP measures on this call. This information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. The reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in our earnings release and slides, which are available on our website.

Now I'll turn the call over to Jack.

Thank you, Chris, and good morning, everyone. We would like to welcome you, and thank you for joining Granite Point's Second Quarter 2026 Earnings Call. U.S. commercial real estate credit continued to benefit from improving fundamentals and extended its positive trajectory during the second quarter.

Geopolitical developments tied to the Iran conflict are influencing the U.S. capital markets, as energy prices, along with tariffs, have sharpened investors' focus on inflation and contributed to greater uncertainty about the direction of interest rates. As a result, property values are facing potential headwinds as expectations are shifting from pricing near-term interest rate cuts to rate hikes. Nevertheless, capital continues to flow into commercial real estate assets.

Debt markets have remained competitive, and lending spreads have continued a trend of tightening, helping to mitigate a potential rise in short-term rates that could impact refinancings. During the quarter, loan demand generally broadened due to a pickup in acquisitions. Banks have been reporting net increases in commercial real estate loan demand for the first time since 2022.

The CMBS market continues to be strong, with issuance on pace to surpass last year's post-GFC record volumes. The increase in acquisition volumes was driven by portfolio and entity-level mega-deals, while the Iran war and other contributors to volatility in some instances paused and delayed individual asset sales, reducing volumes.

Nevertheless, fundamentals and liquidity continue to improve in many office markets, which is a constructive sign for resolving legacy office loans. Our reserves increased during the quarter, due to an increase in our general reserve caused in part by a more negative macroeconomic forecast utilized in our general reserve model, increases in the specific reserves in some situations involving a change of circumstances at the collateral or borrower level, and in others where it was a result of more particular price discovery as processes proceeded.

While we'll go into greater detail on these items, we do expect our nearer-term resolutions to offset much of these increases. Granite Point remains focused on our primary objective of resolving our legacy loans.

Following on the activities of the first quarter, which included two large loan repayments and the sale of a B-note secured by a hotel at a price somewhat above par, during the second quarter, we completed the resolution of the Chicago retail loan above our carrying value, realized an office loan repayment, and successfully sold two participation interests in debt secured by an office property in Dallas, Texas, for a price in the low 90s. These participation interests included a larger subordinated interest and an accompanying much smaller senior interest.

These actions also furthered our goals of reducing higher-cost debt. With respect to our two REO assets, we continue to make progress on maximizing value with the goal of exiting these properties opportunistically.

As we continue to focus on our objectives, one of which is to lower our cost of funds, more recently, as announced in a recent press release, we refinanced the assets that were in our two legacy CLOs by extending and upsizing the JPMorgan financing facility, which reduced the cost of funds on these assets from SOFR plus 238 to SOFR plus 200.

We are pleased to achieve this refinancing with one of our key lending partners at a favorable cost of funds, which also substantiates underlying value in these loan assets which constitute a large subset of our portfolio.

Taken together, we believe our initiatives are strengthening Granite Point's financial position and enhancing our ability to create long-term shareholder value. The Board and management believe that the company's current market valuation does not fully reflect the underlying value of Granite Point and its assets, and we remain actively focused on narrowing that gap.

We intend to do so in a variety of ways, including disciplined execution, resolving our legacy assets in a value-maximizing manner, reducing our cost of capital, maintaining balance sheet flexibility, and positioning the company to redeploy capital into attractive new investments. I would now like to turn the call over to Steve to discuss our portfolio activities in more detail.

Thank you, Jack, and thank you all for joining our second quarter earnings call. We ended the quarter with $1.5 billion in total loan portfolio commitments, inclusive of $1.4 billion in outstanding principal balance and about $57 million of future fundings, which accounts for only about 4% of total commitments.

Our loan portfolio remains diversified across regions and property types and includes 38 investments with an average UPB of about $37 million and a weighted average stabilized LTV of 66% (sic) [ 66.1% ] at origination. As of June 30th, our portfolio weighted average risk rating remained stable at 3.2, quarter-over-quarter.

The realized loan portfolio yield for the second quarter was 6%, which excluding non-accrual loans would be 7.4%, or 1.4% higher.

We had an active quarter of loan repayments, resolutions, paydowns, amortization, and loan participation sales totaling about $160 million. During the second quarter, we had a repayment of a $37 million loan secured by an office property in Richmond, Virginia.

This property has been a strong performing property in a solid office market. However, until recently we had not seen much liquidity in this market for either debt or equity. As Jack mentioned earlier, we are now seeing expanded capital available for office assets.

In addition, we sold two interests in debt secured by a strong performing, well-occupied office property in Dallas, Texas, totaling $31 million. We achieved the final resolution on the $76 million Chicago retail loan via a property sale. We had about $8 million of future fundings and other investments, resulting in a net loan portfolio reduction of about $122 million for the second quarter.

We'll now provide some color on the remaining risk-rated 5 loans. At June 30th, we had five such loans with a total UPB of about $253 million. Three of the five are in active sales processes that we anticipate may be completed over the coming quarters. At quarter end, we downgraded a $65 million loan collateralized by a 384,000-square-foot office property in the San Diego CBD from a risk rating of 4 to a rating of 5. The office property was purchased by a West Coast institutional owner for a major hotel redevelopment strategy. This owner made a major equity investment in the property, as did the major hotel brand separately.

However, more recently, as a result of rising construction costs and elevated financing costs, the sponsor believes that the original business plan may be difficult to achieve at this time, and as a result, we downgraded this loan from a 4 rating to a 5 rating. We are in discussions with the borrower and pursuing several potential resolution alternatives.

Regarding the $27 million Tempe hotel and retail loan, which we've discussed in prior quarters, we've been in active dialogue with the borrower and are reviewing resolution alternatives, which we expect will involve a sale of the property. The property securing the Atlanta multifamily loan, which we've also discussed in prior quarters, is now under contract with a hard deposit with a targeted close in the near term.

We are in discussions with the borrower on the $15 million New Haven hotel loan, and as we mentioned last quarter, we expect to resolve this loan via a property sale by the borrower over the next couple of quarters. The last 5-rated loan is the $93 million Minneapolis office loan, where we are working collaboratively with current ownership to take the property back as REO in the nearer term.

Solving these remaining 5-rated loans remains a top priority. At quarter end, we had two loans with a combined UPB of $68 million, which have risk ratings of 4 that are on non-accrual status. We are reviewing resolution alternatives for each of these loans and will provide additional information as the situations progress.

Regarding the REO assets, we continue to have positive leasing momentum at the suburban Boston property and remain actively engaged with our partner and other third parties on several value-enhancing repositioning opportunities. The Miami Beach office property is a Class A asset located in a strong market.

We are having positive leasing discussions with a variety of existing and new tenants, will prudently invest in the property, and continue to review alternatives targeting a sale of the property during the second half of 2026.

As we shared in prior quarters, our plan is to remain focused on repayments and resolutions. Along with resolving the 5-rated and other non-accrual loans, the REO assets provide additional capital that can be unlocked and redeployed into higher-earning investments.

In the interim, we expect our portfolio balance will trend lower until the end of the year, when we restart our origination efforts to take advantage of attractive investment opportunities and begin to regrow our portfolio. I will now turn the call over to Blake to discuss our financial results.

Thank you, Steve. Good morning, everyone, and thank you for joining us today. Turning to our financial results. For the second quarter, we reported a GAAP net loss attributable to common stockholders of $62 million, or negative $1.29 per basic common share, which includes a provision for credit losses of $47 million and an impairment loss on REO of $6.1 million, and a distributable loss of $37.7 million, or negative $0.79 per basic common share.

Our book value as of June 30th was $5.70, a decline of $1.35 from Q1.

Our aggregate CECL reserve at June 30th was about $166 million, which is approximately $17 million higher than last quarter. The $10 million increase in our specific reserve is largely due to one new risk-rated 5 loan, partially offset by the write-off associated with one loan resolution during the quarter.

The $7 million increase in general reserve was driven by downgraded macroeconomic forecasts in our CECL model and changes in loan attributes in our investment portfolio. Approximately 78% of our total allowance was allocated to individually assessed loans. As of quarter end, we had about $253 million of principal balance on risk-rated 5 loans with specific CECL reserves of about $120 million, representing 47.4% of the unpaid principal balance. We believe we are appropriately reserved and further resolutions should meaningfully reduce our total CECL reserve balance.

Regarding liquidity and capitalization, we ended the quarter with about $58 million of unrestricted cash and total leverage of 1.9x. During the quarter, we extended the Citibank and Morgan Stanley repurchase facilities by approximately one year and extended the secured credit facility to December 2027, including reducing its cost of funds by 25 basis points.

After quarter end, we refinanced our legacy CLOs by upsizing and extending the JPMorgan repurchase facility. As of a few days ago, we carried about $35.7 million in cash. Our funding mix remains well diversified and stable, and we continue to have very constructive relationships with our financing counterparties, who know our assets very well, as evidenced by their recent extensions.

We expect to expand our financing capacity once we return to originating new loans.

Lastly, as Jack mentioned earlier, the refinance of our legacy CLO assets and upsize of the JPMorgan repurchase facility will reduce our cost of funds and interest expense. We expect the weighted average cost of funds for those refinanced assets to decrease to SOFR plus 200 from SOFR plus 238 as of 6/30.

The 38-basis-point improvement in the cost of funds will decrease our interest expense by approximately $2 million on an annualized basis using the 6/30 CLO outstanding balance of $521 million. As we look forward, we continue to believe the best use of our capital is to continue paying down our higher-cost debt, resolving our remaining non-accrual loans and REO, and regrowing our investment portfolio. I will now ask the operator to open the line for questions.

[Operator Instructions] Our first question comes from the line of Chris Muller with Citizens Capital Markets.

Sorry if I missed some of this, but I was jumping around calls this morning. But I guess on the San Diego loan that was downgraded, can you guys just give a little more detail on that? What's occupancy? And it sounds like it might be a redevelopment, so maybe it's not occupied as we sit today, and just any timelines on redevelopment resolution there you could share would be helpful.

Hey, Chris. Good morning. It's Steve Alpart. Thanks for joining the call. So you mentioned that you may have joined a little bit late. So what we just mentioned on the earlier call is that, look, we downgraded this loan. It's a $65 million loan. It's a 384,000-square-foot office property in the San Diego CBD. The property was purchased by a West Coast institutional owner. Original business plan was a major hotel redevelopment strategy. They partnered with a prominent hotel brand, and the development also was, you know, potentially including residential and retail components.

We mentioned earlier also that the borrower and the brand each made pretty significant equity investments in the property. But more recently, they said that because of the impact of rising construction costs, also elevated financing costs, they feel that the original business plan is more difficult.

So it was really kind of the cumulative effect of those factors that led them to say that at least even though they were putting in equity until very recently, that they're not going to put more equity into the property behind our loan. So that was really the catalyst for the movement of the loan from a 4 to a 5 rating during the quarter.

You asked about the occupancy. This was originally designed as an office building. The occupancy is, I'll just say, very low intentionally because the current strategy is to reposition as hotel or hotel with mixed-use. It was originally a low-occupied office building for redevelopment. So that's, I guess that's the answer to your question on occupancy.

As far as timing and next steps, look, we're in discussions with the borrower. They are engaged, they are cooperative, and we're looking at a number of resolution alternatives, but I would say it's early days to get into timelines.

Got it. And then maybe changing gears a little bit to the Miami REO, I see that was moved to held for sale. Are you guys getting any interest from buyers on that asset? And could a sale on that one be done by the end of the year?

Yes, we have been looking at alternatives. The focus has been on leasing. We have gotten good leasing traction. This happens to be in a very strong and robust market. We are now under contract on that property sale, and we are targeting a sale during the second half of this year.

Got it. And maybe just changing gears a little bit. So maybe just touching on the dividend, you guys made some comments about the portfolio is probably going to continue to trend a little bit lower until you can restart the origination engine. So how are you guys thinking about the dividend versus just preserving as much capital as you can through that period?

I'll address that. This is Jack. Nice to speak with you, Chris. We do evaluate quarter-to-quarter all our uses of capital, including the dividend, and it is a Board decision with recommendation from management. And as we move forward, we will, as we always do, look at the competing uses of capital, including the dividend. We've not made that determination as of this moment.

Got it. I appreciate that and I figured that was the answer I was going to get, but figured I'd ask anyway. I appreciate you guys taking the questions today.

Thank you, Chris.

Thank you. Our next question comes from the line of Marissa Lobo with UBS. Please proceed.

Just was hoping you could review the liquidity position post the CLO refi, just looking at cash of $35 million on August 3rd. Can you just talk through that with funding commitments and active sale processes and your minimum liquidity buffer?

Marissa, this is Blake. Thank you for the question. I'll take a first pass at answering this, and then I can pass it to Jack to provide some more color. But yes, so as of quarter end, we held around $58.5 million of cash. And then as of the other day, we held around $35.7 million, so roughly around a $23 million change.

As far as the CLO refi goes, we did actually reduce our borrowings there. So part of this change from that $23 million is largely from $12 million of reduced borrowings.

We also had some fees associated with the refinance as well, in addition to the upsize. And then we also had fees associated with other facilities, which resulted in a total of around $4 million. So the combination of those two is around $16 million for the month. The rest of the change is largely attributed to things that we see on a recurring basis. So spending money in our REO, for example, future fundings, that sum to around $2.8 million. And depending on the quarter, we see around $3 million to $4 million a month.

The other one that was unique in the month of July was we had the dividend payment go out the door to common and preferred. That was around $6 million.

Got it. Thank you.

Are you done, Blake?

I am, Jack.

I'll just add, we added disclosure in our 10-Q in a footnote relating to the secured financing agreements, which basically does two things. Just right below our statement of how we are in compliance with four financial covenants, the disclosure sets out two things.

First, a favorable change to our most restrictive minimum tangible net worth covenant from $600 million to $500 million. And a favorable change to the minimum unrestricted cash covenant from $30 million to $20 million.

It also outlines a plan to mitigate the possibility of temporarily falling below $20 million of unrestricted cash that could occur later this year between the third and fourth quarters. It's a footnote per prescriptive GAAP rules. And so it does not include all the other items that could release capital, which we're working on, because it doesn't fit in with the prescriptive rules, such as repayments of certain assets that we believe are likely to occur in the coming months or other mitigants or levers available to us, such as, say, like a loan sale. We do not believe that we will have a temporary fall below our minimum cash of $20 million, and we will remain in compliance with the covenant.

Okay, great. I appreciate that detail. And just thinking about peer commentary on resolutions and some non-performing loans facing volatile bids with rising return expectations from buyers, can you give us color on what you're seeing and how your marks reflect that? If it's appraisal, or should we expect more mark-to-market deterioration?

Steve, do you want to address that and then I can follow up?

Sure, I think I heard a couple of questions in there. Part of it I think was on the marks and was part of it what we're seeing in the market? I just want to make sure I understand the question.

Yes, correct. Yes, just to understand whether the marks are more appraisal-based or just reflecting some of the realities of buyers' return expectations.

Okay, understood. Thank you for the clarification. Yes, so I would say earlier in the year, so, earlier in the process, it's typically going to be appraisal-based. And then, to the extent there's an active resolution process, which particularly for the 5s, some of the 4-rated loans, as we get more information, it's a very prescriptive process.

So I would say earlier with appraisal-based, if you're in the market on a sale or other process and you're taking in more information, for example, if you're taking in bids, at some point that'll become more relevant. And I think you heard a lot of commentary this quarter. There's a lot of capital in the market, particularly debt capital. Equity capital is very selective in many cases, I would say, particularly for office and some of these more complicated situations.

So we've seen processes where you get 20 or more real bidders showing up, and there'll be some outliers, but there's a really well-defined market. And then there's other cases where you start a process and at the end there's only a handful of bidders. So depending what happens with those bidders, it can really move around a lot.

And with the movement in rates and some of the interest rate volatility, that is impacting pricing in some cases. You've seen return requirements drift off. That has an impact on values. So basically, as we go through a process, then that will become more impactful to our reserves than the appraisal.

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Jack Taylor for any closing remarks.

Thank you, Operator, for assisting us today. I want to thank everybody on the team for all the hard work that you've been doing to get the refinancing done and other activities that we've been engaged in. We are all working very hard to pursue the repayments.

We have good visibility on repayments coming through, and we are actively working on the resolutions that we've discussed and are optimistic that many of those are going to come through as we set out in our prepared remarks and commentary. Thank you, everybody, for joining us, and we wish you a good day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Good morning. My name is Paul, and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust First Quarter 2026 Financial Results Conference Call. [Operator Instructions]. Please note, today's call is being recorded.

I would now like to turn the call over to Chris Petta, Head of Investor Relations for Granite Point. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining our call to discuss Granite Point's first quarter of 2026 financial results. With me on the call this morning are Jack Taylor, our President and Chief Executive Officer; Steve Alpart, the Chief Investment Officer; Blake Johnson, our Chief Financial Officer; Peter Morral, our Chief Development Officer and Co-Head of Originations; and Ethan Lebowitz, our Chief Operating Officer.

After my introductory comments, Jack will provide a brief recap of market conditions and review our current business activities. That's our portfolio, and Blake will highlight key items from our financial results. The press release, financial tables and earnings supplemental associated with today's call were filed yesterday with the SEC along with our Form 10-Q and are available in the Investor Relations section of our website.

I would like to remind you that remarks made by management during this call and the supporting slides may include forward-looking statements that are uncertain and outside of the company's control. Forward-looking statements reflect our views regarding future events and are subject to uncertainties that could cause actual results to differ materially from expectations. Please see our filings with the SEC for a discussion of some of the risks that could affect results. We do not undertake any obligation to update any forward-looking statements. We also will refer to non-GAAP measures on this call. This information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measures can be found in our earnings release and slides and they are available on our website. I'll now turn the call over to Jack.

Thank you, Chris, and good morning, everyone. We would like to welcome you and thank you for joining us for Granite Point's First Quarter 2026 Earnings Call.

U.S. commercial real estate markets continued their positive trajectory during the first quarter. However, recent geopolitical developments tied to the Iran conflict are influencing the U.S. capital markets as rising energy prices have sharpened investors' focus on inflation trends and contributed to greater uncertainty about the timing of further interest rate cuts. Notwithstanding some of these headwinds, capital continued to flow into commercial real estate assets. Commercial real estate lending activity is expected to continue to improve through 2026, supported by steady demand and continued investor interest.

While securitization volumes may moderate due to broader economic uncertainty surrounding the conflict in Iran and a mixed U.S. outlook and deals are taking longer to complete, the market has shown strong resilience, we believe that recent fluctuations in the commercial mortgage-backed securities and CRE CLO spreads along with a temporary slowdown in unsecured bond issuance, primarily reflects a recalibrating of while investors continue to be engaged and constructive in the commercial real estate sector.

For Granite Point, our primary objective continues to be capitalizing on the improving environment to resolve legacy loans to set the stage to begin regrowing our portfolio in the latter half of 2026. To that end, our accomplishments since the beginning of the year included two sizable full loan repayments. The sale of a B note secured by a hotel that are priced somewhat above par. The final resolution on the Chicago retail loan above our carrying value and the successful sale of a subordinate interest in debt secured by an office property located in Dallas, Texas. These actions furthered our goals for reducing higher cost debt and setting the path for future growth.

Given the improved capital markets and to continue to address our legacy loan portfolio and pending maturity dates, we have been less inclined to provide borrowers with additional time and are pushing further for repayments through property sales, refinancings and recapitalizations and we are also selectively looking at some loan sales. In some cases, this approach was a contributing factor in recent outgrades for certain loans in our portfolio. With respect to our two REO assets, we are investing capital where we believe it will improve our outcome, and we'll then seek to exit and extract capital. All of these initiatives will free up capital for us to optimize our balance sheet and set the stage for us to regrow our portfolio in future quarters. Restart of new origination activity is expected to our net interest spread and earnings, which has remained a key goal, which Blake will go into further shortly.

I would now like to turn the call over to Steve Alpart to discuss our portfolio activities in more detail.

Thank you, Jack, and thank you all for joining our first quarter earnings call. We ended the quarter with $1.6 billion in total loan portfolio commitments, inclusive of $1.5 billion an outstanding principal balance and about $68 million of future fundings, which accounts for only about 4% of total commitments. Our loan portfolio remains diversified across regions and property types and includes 40 investments with an average UPB of about $38 million and a weighted average stabilized LTV of 66% at origination. As of March 31, our portfolio weighted average risk rating increased from 3.2 from 2.9 at December 31.

Realized loan portfolio yield for the first quarter was 6.5%, which, excluding nonaccrual loans, would be 7.9% or 1.4% higher. We had an active quarter of loan repayments, paydowns, sales and amortization totaling about $189 million. During the first quarter, we had two loan repayments totaling $174 million and sold a $13 million note secured by a strong performing hotel in Hawaii at a price somewhat above par. We had about $14 million of future fundings and other investments, resulting in a net loan portfolio reduction of about $175 million for the first quarter.

Post quarter end, we achieved a final resolution on the $76 million Chicago retail loans via a property sale by the borrower after previously resolving the office component also through a property sale. The loan had been risk rated 5 and was on nonaccrual status. As a result of this transaction and the prior resolution on the office component, the company expects to realize a write-off approximately $30.2 million, which have been reserved for through a previously recorded $31.3 million allowance for credit losses as of December 31. During the second quarter, we sold a subordinate interest in debt secured by an office property located in Dallas, Texas.

We'll now provide some color on the remaining risk rated 5 loans. At March 31, we had 5 such loans with a total UPB of about $265 million, which post quarter end was reduced to 4 loans totaling $189 million following the resolution of the Chicago retail loan. 3 of the 4 are in active sales processes that we anticipate may be completed over the coming quarters. Quarter end, we downgraded a $15 million loan collateralized by a 72-key hotel property from a risk rating of 3 to a risk rating of 5.

The hotel is well located and institutionally owned by a sponsor with a large amount of cash equity in the asset who has also made substantial loan paydowns over time. The business plan has been well underway prior to the hotel becoming unionized. We are in discussions with the borrower and pursuing resolution alternatives, which we expect will involve the sale of the hotel over the coming quarters. Regarding the $27 million Tempe hotel and retail loans and the $53 million Atlanta multifamily loan, which have been discussed in prior quarters.

In each of these cases, we are in active dialogue with the borrower and are reviewing resolution alternatives, which we expect will involve a sale of each property over the next few quarters. Regarding the $93 million Minneapolis office loan, as previously disclosed, we anticipate a longer resolution time line given the persistent local market challenges. Resolving these remaining 5 rated loans remains a top priority. As of quarter end, we had 2 loans with a combined UPB of $69 million, which have risk ratings of 4 and are on nonaccrual status. We are reviewing resolution alternatives for each of those loans and we'll provide additional information as the situations progress.

Turning to the REO assets. We continue to have positive leasing successes at the suburban Boston property and remain actively engaged with our partner in the local jurisdiction and other third parties on several value-enhancing repositioning opportunities. We are continuing to invest capital into this property to maximize the outcome and are reviewing various alternatives. The Miami Beach office property is a Class A asset located in a strong submarket. We are having positive leasing discussions with a variety of existing and new tenants. We prudently invest in the property and continue to review alternatives, including a sale of the property during the second half of 2026.

As we've shared in prior quarters, our plan is to remain focused on repayments and resolutions. We expect our portfolio balance will trend lower until we start our origination efforts in the latter half of 2026 to take advantage of attractive investment opportunities and begin to regrow our portfolio.

I will now turn the call over to Blake to discuss our financial results.

Thank you, Steve. Good morning, everyone, and thank you for joining us today. Turning to our financial results. For the first quarter, we reported a GAAP net loss attributable to common stockholders of $6 million or negative $0.13 per basic common share, which includes a benefit from credit losses of $0.2 million and a distributable loss of $3 million or negative $0.06 in per basic common share. Our book value at March 31 was $7.05, a decline of $0.24 from Q4. Our aggregate CECL reserve at March 31 was about $149 million which is approximately $100,000 higher from last quarter.

The net increase in our specific reserve on our 7-collateral dependent loans was largely offset by a decrease in our general reserve, resulting from improving macroeconomic forecast model and a decrease in the general reserve portfolio balance. Approximately 81% of our total allowance was allocated to individually assessed loans. As of quarter end, we had about $334 million of principal balance on loans specific CECL reserves of about $120 million, representing 36% of the unpaid principal balance.

Subsequent to quarter end, the resolution of the Chicago retail loan decreased our specific reserves by approximately $30 million to $90 million, and the principal balance of our collateral dependent loans by $76 million to $258 million. Chicago retail loan at a previously recorded specific reserves as of December 31, and the resolution was above our year-end carrying value, which resulted in a benefit from credit losses of approximately $1.1 million during the first quarter. As a result of this resolution, our CECL reserve as a percentage of our total commitments decreased from 9.4% at March 31 to 7.9%, assuming all else being equal. We believe we are appropriately reserved and further resolution should meaningful reduce our total CECL reserve balance.

Turning to liquidity and capitalization. We ended the quarter with about $44 million of unrestricted cash, and our total leverage decreased relative to the prior quarter from 2.0x to 1.0x as proceeds from the two full loan repayments and on loan sale were used to reduce our higher cost borrowings and pay down our CLO bonds. As of a few days ago, we carried about $56 million in cash. Our funding mix remains well diversified and stable, and we continue to have very constructive relationships with our financing counterparties. We expect to expand our financing capacity once we return to originating new loans. As we look forward we expect our earnings to meaningfully improve.

For example, our capital and our collateral dependent loans and REO produced a GAAP net loss, excluding credit losses of roughly $0.11 per common share first quarter. And once we redeploy our capital from these assets into new originations and target leverage, we expect to increase our quarterly EPS by approximately $0.17 to $0.19. In addition, improving our returns not constrained by our existing capital as we intend to further improve earnings through continued expense reduction initiatives and expand into new sources of capital-light income, such as earning fees from joint venture structures with third-party investors.

The attractive market opportunity ahead and our earnings potential, we believe the best use of our capital is to continue paying down our higher cost debt, resolve our remaining nonaccrual loans in REO and regrow our investment portfolio originations beginning later this year. I will now ask the operator to open the line for questions.

[Operator Instructions]. Our first question is from Jade Rahmani with KBW.

This is Jason Sabshon for Jade. So I guess to start, it would be helpful to hear more about the loans that were downgraded to risk 4. Just some more color on what drove the negative migration in your view?

Jason, it's Steve Alpart. Thanks for joining the call this morning. So you're asking about the 4 rated loans, I believe, in -- in aggregate, if I heard the question correctly.

There were -- it looked like there were a couple of loans that were downgraded to risk for. Is that correct?

That is correct. So I guess, high level, we had 7 nonaccrual loans at the end of the quarter. after we resolve the Chicago retail loan that left 6. So that one was resolved that left 5 and there's 2 additional nonaccrual loans. With respect to the 4s that are part of that cohort, I guess, high level, what I would say is that we're generally seeing improving markets. but it's uneven. And some of the markets are seeing a delayed recovery. These loans that you're referring to, these properties are behind other business plans, and that's why they've been downgraded to a 4. Each of these loans, we are in discussions with each of the borrowers, and we expect to have more color on these over the coming quarters.

Great. And just on your multifamily book, do you have an expectation of getting higher repayments near term. Rent growth has been pretty muted overall for the sector. So it would be great to hear some color on overall performance for that part of your book?

Sure. It's Steve again. I'll take that. So yes, we are seeing a pretty steady rate of multifamily loan repayments. We had 1 large multifamily loan payoff this quarter. So it's been a pretty steady pace. We like the multifamily sector. We are seeing generally stable fundamentals in most of the markets that we're in. I think it's been well reported that the new supply picture looks much better as we get out into the future.

The trend line in certain markets, particularly in the Sun Belt, it's been a little more sluggish than some that I think a lot of people were expecting. We are seeing the supply picture get better. But there is some ongoing headwinds. The supply is different in every market, declining immigration has been a factor. So I would say, generally, we're seeing improving fundamentals, but it's really asset by asset, where we're seeing some borrowers in some markets have more pricing power on rents.

But even in cases where borrowers aren't getting rent bumps all the way to what they were expecting, I would say the general trend is that we are seeing progress. We have seen a few assets fall behind our business plan, but that's not been the general trend. And where that does happen, we're expecting that over time, the borrowers will be available to push rents. So going back to your question, there is good liquidity in the sector. Sentiment is positive. We are seeing payoffs and we are pushing hard for some of these older loans to pay off as well.

Got it. did you see any of the rate and geopolitical volatility have any impact on like overall activity that may have impacted your book in the first quarter and so far in the second quarter, have you seen that of any impact just overall?

Yes. I think -- this is Jack. Thank you for the question. I think the overall impact is just a higher degree of uncertainty in the market generally, and that has led to delay in payments and resolutions. Not a cessation, right? But just deals are all taking longer because of a higher degree of macro uncertainty and especially with respect to rates.

Got it. That makes sense. And then just as my last question. It would just be great to hear your current thoughts about the dividend. Given that the DE has been below it. I understand that working through risk 5 and some of the REO assets will be the main driver of earnings of earnings growth, but just wanted to hear your thoughts on the dividend.

Sure. It's a good question. And we are always examining the overall market and what's happening in our loan book and our earnings and the like. But basically, we take considered approach working with our Board. That is a board decision and thinking about the long-term potential for the company. And I would say with the burn-off of the nonaccrual loans, which has had a meaningful drag on our earnings, we expect that to be reduced as we work through them and we'll continue to evaluate the company's dividend in respect to future quarters. And where they were under earning, but we're looking at the longer-term prospects.

[Operator Instructions]. Our next question is from Chris Muller with Citizens Capital Markets.

I guess on the subsequent resolution, and sorry if I missed this in your prepared remarks, but did that property move to REO? Or was it repaid? And then will the entire $30 million write-off come out of the specific reserve balance. So that balance is around $90 million, which I heard -- I think I heard Blake say?

This is Blake. Thanks for your question. Yes. So this property was not moved to REO. This was held as a loan as of quarter end. And as of March 31, the balance of loan was $76 million. So on this result in the early -- during early April, excuse me, we did have that resulting in around $30 million.

Got it. And then just looking at the specific reserve balances quarter-over-quarter, it looks like it increased about $15 million. Was that due to just the New Haven Hotel? Or was that also the new 4-rated loans that came up?

Yes. So it's kind of interesting. I think it's best if you look at the entire reserve. So it increased in total around $100,000. And then if you look at the primary drivers, we did have incremental losses on certain number of collateral-dependent loans, and that was around $15 million in total, but it also included the shift of three of the loans from our general reserve in the previous which already had a substantial reserve as of 12/31. So part of that shift included the balance that was previously in the general reserve.

Got it. Got it. Got it. And then just the last one, if I could squeeze it in. I hear your comments on looking at JVs and some other kind of different ways to look at the business. Is there anything that you guys are looking at today that you could share? And just what type of JVs would you be interested in?

So I'll answer first, and then I can pass it to Jack, and he can expand on my response. So the point in the script is in our prepared remarks, we can introduce capital-light income and JVs and this would actually help offset our operating expenses from an economic standpoint. If we start this today, for example, we would expect to see something between $2 million to $4 million in annual earnings really in the first year. So if you look at that on an EPS basis, it's around $0.01 to $0.02 per share quarterly. And really, it would increase from there because once you have the JV start, you'd see some momentum. As far as the actual structure itself, I can pass it to Jack, and he can provide some color.

Yes. And I would just add a couple of things. We have folks that we've known for a long time and some that are some new acquaintances, if you will, who have approached us, and they have a lot of capital, they would like to come into the market and they know and trust us. So they're thinking and discussing with us what we're calling the capital-light strategies, which can take a number of forms, just originating for them directly, where it's all their capital, they can be where it's part our capital and theirs. It could be a formal JV structure.

But the main point is that we have the infrastructure and the team to originate loans of the sorts. Various forms actually that these counterparties are interested in accessing without having to build their own team. So we've been very pleased about the reverse inquiry. Some of them are on pause, if you will, in part because it would require us as it's foreign capital to carry quite sizable loans in cash for a period of time. So we are not yet able to transact on that type of structure, but others were still under consideration.

Got it. Very helpful, Jack. And great to hear you guys kind of thinking outside the box and some different avenues you could take. So I appreciate you guys taking the questions today.

Our next question is from Gabe Poggi with Raymond James.

It's David on for Gabe. I wanted to ask a question around the vintage of some of your larger loans outstanding. How are conversations going with borrowers and their plans for repayment? Just wanted to get a feel for the playbook on some of these legacy office loans.

It's Steve. I'll take that question, and thank you for joining the call this morning. So a great question. It's a big point of focus for us. We've made a lot of progress reducing the balance of some of these older vintage loans, including the office loans. We have a very proactive asset management approach. We're in constant dialogue with these borrowers. We're setting clear expectations. We're now in an improved commercial real estate market environment. So as we continue to think about addressing these pending maturity dates, as you heard us say earlier, we've been less inclined to provide borrowers with additional time, and we're pushing very hard for borrower repayments, whether that's through property sales, refinancings, recaps.

We're also selectively looking at some loan sales. We are in discussions with borrowers. We're delivering clear expectations about getting a process underway, whether that's a refinancing or equity recap, if it's an asset they want to hold. If not a property sale, there are a few cases where for credits that we like, we may consider modifying and extending a loan to keep it in the portfolio. And again, case by case, if we see some upside potential, we'll selectively take back properties through a deed in lieu or possibly through a foreclosure. So this applies not just to the office, but it's probably particularly true for the office loans that you mentioned. And again, we're pushing hard to turn over the portfolio. We'll continue to do that over the next couple of quarters, and we're looking to unlock capital so we can redeploy to higher earning assets.

There are no further questions at this time. I would like to hand the floor back over to Jack Taylor for closing comments.

Thank you, Paul. We thank you again to all that joined us for this call. and for your time and attention and support, and we look forward to reporting further progress and moving towards the regrowth of our company.

This concludes today's conference. You may disconnect your lines at the time. Thank you again for your participation.

Good morning. My name is Paul, and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust's Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please note, today's call is being recorded. I would now like to turn the call over to Chris Petta with Investor Relations for Granite Point. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining our call to discuss Granite Point's Fourth Quarter and Full Year 2025 financial results. With me on the call this morning are Jack Taylor, our President and Chief Executive Officer; Steve Alpart, our Chief Investment Officer and Co-Head of Originations; Blake Johnson, our Chief Financial Officer; Peter Morral, our Chief Development Officer and Co-Head of Originations; and Ethan Lebowitz, our Chief Operating Officer.

After my introductory comments, Jack will provide a brief recap of market conditions and review our current business activities. Steve will discuss our portfolio, and Blake will highlight key items from our financial results. Press release, financial tables and earnings supplemental associated with today's call were filed yesterday with the SEC and are available in the Investor Relations section of our website. We expect to file our Form 10-K in the coming weeks. I would like to remind you that remarks made by management during this call and the supporting slides may include forward-looking statements, which are uncertain and outside of the company's control.

Forward-looking statements reflect our views regarding future events and are subject to uncertainties that could cause actual results to differ materially from expectations. Please see our filings with the SEC for a discussion of some of the risks that could affect results. We do not undertake any obligation to update any forward-looking statements. We also refer to certain non-GAAP measures on this call. This information is not intended to be considered in isolation or a substitute for the financial information presented in accordance with GAAP. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in our earnings release and slides, which are available on our website. I will now turn the call over to Jack.

Thank you, Chris, and good morning, everyone. We would like to welcome you, and thank you for joining us for Granite Point's Fourth Quarter and Full Year 2025 Earnings Call. 2025 was a constructive year for the commercial real estate industry. The year began with strong momentum, which after pausing briefly in the spring due to macro uncertainty, quickly resumed with heightened deal activity and spread compression throughout the balance of the year. During the fourth quarter, we saw greater capital availability for a broader array of properties, including certain office properties as well as improving fundamentals across many markets and most property types.

Lending volume has expanded and also extended to a wider range of property types and markets. This greater liquidity in the market has benefited the CMBS market and strengthened CLO issuance. Larger commercial banks have become more active, notably for warehouse financing, and regional banks are beginning to return to the market as well. Against this backdrop of available capital in the market, there continues to be a shortfall of actionable deals, which is one of the key factors contributing to the spread tightening we have been seeing over the last several quarters. At Granite Point with the long-awaited market improvement, 2025 was an impactful year as we achieved some of our key objectives. These included 5 loan resolutions, 7 full loan repayments and 1 REO property sale as well as a reduction in our cost of debt.

The market momentum experienced in 2025 has continued into early 2026 and sets the stage for this year to be potentially a stronger year for the industry with forecasted growth in transaction activity across property types, increased liquidity from traditional lenders, a robust securitization market and an increasingly constructive backdrop for asset resolution activity. In 2026, we continue to make progress reducing our higher cost debt and moving along our asset resolutions, which will continue to help reduce the risk within our portfolio and improve our net interest spread. This month, we repaid a substantial amount of additional higher cost debt, resulting in a reduction in the cost of our repurchase facilities by roughly 60 basis points and an estimated annual savings of $0.10 per share.

With respect to our 2 REO assets, we are investing capital where we believe it will maximize our outcome and then we'll seek to exit and extract capital. Post quarter end, we also have received 2 full loan repayments of $174 million combined. Turning to originations. As we said last quarter, we expect to begin to regrow our portfolio this year and to start that process in the latter half of 2026. The exact timing and volume of originations will be driven by the pace of loan repayments and asset resolutions as well as market conditions and idiosyncratic factors. While the timing and volume is uncertain, reallocating capital in our portfolio and recycling into new originations remains one of our highest priorities. I would now like to turn the call over to Steve to discuss our portfolio activities in more detail.

Thank you, Jack, and thank you all for joining our fourth quarter and full year earnings call. We ended the year with $1.8 billion in total loan portfolio commitments, inclusive of $1.7 billion in outstanding principal balance and about $77 million of future fundings, which accounts for only about 4% of total commitments. Our loan portfolio remains diversified across regions and property types and includes 43 investments with an average UPB of about $39 million and a weighted average stabilized LTV of 65% at origination. As of December 31, our portfolio weighted average risk rating increased slightly to 2.9% from 2.8% at September 30. The realized loan portfolio yield for the fourth quarter was 6.7%, which excluding nonaccrual loans would have been 8% or 1.3% higher. We had an active year of loan repayments and resolutions totaling about $469 million during 2025.

During the year, we funded about $51 million on existing loan commitments and other investments. During the fourth quarter, we had $45 million of loan repayments and partial paydowns, including a full repayment of a $33 million loan secured by a multifamily asset located in North Carolina. We had about $15 million of future fundings and other investments, resulting in a net loan portfolio reduction of about $30 million for the fourth quarter. Post quarter end, we have received 2 full loan repayments of $174 million.

We'll now provide some color on the risk rated 5 loans. At December 31, we had 4 such loans with a total UPB of about $249 million. At quarter end, we downgraded a $53 million loan collateralized by a 284-unit multifamily property in the Atlanta MSA from a risk rating of 4 to a rating of 5. While we've seen a pickup in occupancy at the property, the local market remains soft, and we are not seeing the return of the pricing power we had expected. We are reviewing resolution alternatives, which may include a property sale. We're monitoring the situation closely and expect to have more to share over the coming quarters.

We discussed last quarter that we had a partial resolution on the Chicago loan with the sale of the upper floor office space to a developer for a residential conversion. After the sale, the remaining collateral securing the $76 million loan is the retail space. The story is now cleaner and simpler, and we are continuing to work cooperatively with the borrower towards the ultimate resolution, which we expect will occur via a property sale in the nearer term. For the $27 million Tempe hotel and retail loan, we are reviewing resolution alternatives there as well, which could involve a sale of the property. Regarding the $93 million Minneapolis office loan, as previously disclosed, we anticipate a longer resolution time line given the persistent local market challenges. Resolving these remaining 5 rated loans remain a top priority.

Turning to the REO assets. We continue to have positive leasing successes at the suburban Boston property and remain actively engaged with our partner and the local jurisdiction and other third parties on several value-enhancing repositioning opportunities. We continue to invest capital into this property to maximize the outcome. The Miami Beach office property is a Class A asset located in a strong market. We are having positive leasing discussions with a variety of existing and new tenants. We will prudently invest in the property and continue to review resolution alternatives, which includes a potential sale. As we shared in prior quarters, our plan for the first half of 2026 is to remain focused on loan and REO resolutions. We expect our portfolio balance will trend lower in the near term until we start our origination efforts in the latter half of 2026 to take advantage of attractive investment opportunities and begin to regrow our portfolio. I will now turn the call over to Blake to discuss our financial results.

Thank you, Steve. Good morning, everyone, and thank you for joining us today. Turning to our financial results. For the fourth quarter, we reported a GAAP net loss attributable to common stockholders of $27.4 million or negative $0.58 per basic common share, which includes a provision for credit losses of $14.4 million or negative $0.30 per basic common share and an impairment loss in the Miami Beach REO asset of $6.8 million or negative $0.14 per basic common share. Distributable loss for the quarter was $2.7 million or negative $0.06 per basic common share. Our book value at December 31 was $7.29 per common share, a decline of $0.65 per share from Q3, largely from the provision for credit losses and impairment loss on REO.

Our aggregate CECL reserve at December 31 was about $148 million as compared to $134 million last quarter. The roughly $15 million increase in our CECL reserve was mainly due to an increase in our specific reserve on our collateral-dependent loans and worsening macroeconomic forecast in our CECL model relative to the prior quarter. Approximately 70% of our total allowance was allocated to individually assessed loans. As of quarter end, we had about $249 million of principal balance on 4 loans with specific CECL reserves of around $105 million, representing 42% of the unpaid principal balance.

We believe we are appropriately reserved and further resolutions should meaningfully reduce our total CECL reserve balance. Turning to liquidity and capitalization. We ended the quarter with about $66 million of unrestricted cash, and our total leverage increased slightly relative to the prior quarter from 1.9x to 2.0x. As of a few days ago, we carried about $55 million in cash. Our funding mix remains well diversified and stable, and we continue to have very constructive relationships with our financing counterparties. We expect to expand our financing capacity once we return to originating new loans. I will now ask the operator to open the line for questions.

[Operator Instructions] Our first question is from Doug Harter with UBS.

It's actually Marissa Lobo on for Doug today. On origination, how are you thinking about the economics of new origination versus returning capital to shareholders given the large discount to book value that you trade at?

This is Blake. Thank you for the question today. Yes, when we look at our portfolio and the discount to book, one of our main objectives over the years to continue resolving our loans and actually working on decreasing our leverage until we start originating again, we do plan on returning to originations later in the year, and that is our focus for 2026.

Okay. And on the CECL reserve build, how are you viewing the current reserve position and the likelihood for further reserve build? How are current macroeconomic assumptions factoring into that?

That's a very good question. Thank you. Yes. So as of year-end, we go through our CECL process as in every quarter end. And when we went through the process, we update the general reserve for the latest and greatest economic forecast in our Trepp model. So that includes a change in assumptions and the biggest driver for this quarter was a decrease in the CRE price index. These forecasts can change going forward, so the general reserve could change. But as of right now, that is the most recent assumption as far as what our general reserve should be. Moving to the actual specific reserve, that is based on our collateral-dependent loans. So as of quarter end, we had 4 collateral-dependent loans. In each quarter end, we assess the fair value of the underlying collateral is. So absent any changes in the collateral itself, we do believe we are appropriately reserved for on those loans.

Our next question is from Jade Rahmani with KBW.

Do you have any views as to where book value per share may trough in this cycle? It's down quite sharply year-over-year and quarter-over-quarter, which clearly, based on today's stock performance is a surprise. So can you just comment as to what your expectations are for the risk of future losses going forward?

Well, I'll address that first and then turn it over to Steve to talk about credit migration. We believe that there's a risk that there will be upgrades and downgrades and future losses may be part of that, right? We don't -- we've assessed that risk in our book today, and that's embedded in the reserves that -- we have specific reserves. With respect to credit migration, maybe, Steve, you would speak to that. But I've been very clear over the quarters. I don't believe it's over in terms of workouts and delinquencies for the whole industry and not for us. And there have been surprises to us, and we expect to have some upgrades and some downgrades. Steve?

It's Steve. I think Jack and Blake covered it pretty well. I mean I would just say that we feel that the majority of the portfolio is performing well. We are working through these remaining loan resolutions, which are not entirely but heavily in the office sector and the impact of the rate hike that we went through. We're pleased with the progress we've had to date. We had a lot of resolutions in '24. We have 5 more in 2025. We're in process on a couple more right now. We just talked about the Chicago deal where we had the partial resolution of the office, and we're working on a full resolution, which involves the retail, which we think can get done in the near term.

We did have 2 new 5s during the quarter. So there's always a possibility that there could be more of that. but we also hope to have more resolutions, some upgrades, and we are happy to see that we are in a constructive environment as far as capital, certainly debt, also increasingly equity. And we think that will be helpful on further repayments and resolutions.

And just overall, when you look at the portfolio, clearly, the portfolio has a legacy vintage prior to the Fed rate hikes. So nearly every single loan in the portfolio is going to have probably some cost of capital issue when it's up for maturity. But then looking beyond that, multifamily was an area of downgrade this quarter, which was somewhat surprising. So can you comment on the vintage and the multifamily property type and what your expectations are there?

Sure. I think there's 2 related questions in there. So we are working through these loans, including these kind of older vintage loans. We have pretty good visibility, I would say, on about 1/4 of these loans in terms of a near-term payoff where there's a process underway, and we're expecting a loan repayment. I would say there's another, I don't know, call it, 40% or so, if I had to kind of take an estimate where there's an upcoming maturity. We have communicated to the borrower that we expect an exit this year by the maturity date. And there may be a refi or a recap or a sale process that's underway or expected. We certainly can't say that all those will get done, but we have some visibility on those that we think that there's a process that there's an exit out of.

And then there's another, call it, about 1/3 or so where there are a couple of 2027 and 2028 maturities. And then I would throw in the Minneapolis office deal that are a little bit further out. So I would say we're kind of chipping away at it and some have near-term visibility, some we're expecting and pushing on and then a few will be kind of '27 and '28. Then as far as your question on multifamily, the multifamily in our portfolio, we feel pretty good about. We did have the credit migration on the Atlanta deal, and we have talked about certain markets that we're looking at, and we have kind of flagged in the past Atlanta. So I would say that one for us has been a bit of an exception. And that one has some unique factors that we can talk about. But I think the overall trend line that we're seeing, including in the Sunbelt is that I think the recovery that we were all expecting has been a little bit more sluggish, and you see that in the read-through on some of the public multifamily REITs.

The spring leasing season last year was a little slower than expected. But the supply picture overall is improving. There hasn't been a lot of pricing power for landlords. But when we sit back and look at macro supply and demand, it feels like over the second half of this year and kind of going forward, we feel like the trend line in multifamily is fairly positive. And there's obviously a lot of liquidity in the asset class and the sentiment coming out of the NMHC this year was very positive. So overall, on multifamily, overall and in our book, we feel pretty good about it medium to longer term.

Our next question is from Chris Muller with Citizens Capital.

So I guess starting on the portfolio, it's been shrinking as you guys have been focused on asset management, but it sounds like new originations starting up is still the expectation for later this year. So I guess the question is, do you guys have a ballpark of where the portfolio size could trough? And maybe kind of playing into that a little bit is what do scheduled maturities look like in the first half of this year in addition to what you guys already disclosed?

Chris, it's Steve. So just high level on the first part of your question, look, just given the near-term focus on repayments and resolutions, we do expect the portfolio to tick down through mid-2026, and then begin to restabilize and regrow in the latter part of the year. Ultimately, that will depend on the timing of repayments and resolutions relative to new originations, but it will get a little lower over the next few quarters and then begin to regrow.

Got it. And any visibility you guys have on scheduled maturities that may play into that?

Yes. I mean part of that is what I just mentioned to Jay, that we have -- we do have visibility on certain loans that are coming up on maturity. As we kind of look out -- I'm kind of looking out into 2026 overall. Some of these will just pay off in the normal course. A couple will extend as of right, which has happened on some loans recently. Then to the extent -- and then we have other loans that I mentioned are not up for maturity yet, but they're up kind of, call it, third, fourth quarter. And we're -- in anticipation of that, we are having conversations with a number of borrowers that we've done previous extensions on, where they've done everything right, where they put new money in.

And we are looking to get the portfolio turned. So we're having clear communications with borrowers about our expectations. And if they can't do it by a refi, do it by an equity recap, do it by a sale. So that's been kind of the playbook. And look, case by case, we have extended out loans in win-win situations, but we feel like that was the playbook the last couple of years, and we're trying to move past that and get to just turning the portfolio.

Got it. And then just a quick clarifying one. Did I hear you guys correctly that there were 2 new 5-rated loans in the quarter? I see the Georgia multifamily in the deck, but what was the other one, if I heard that right?

There is one new 5-rated loan.

Got it. I just misunderstood.

Yes. It is the Georgia multifamily, correct.

Our next question is from Gabe Poggi with Raymond James.

I may have missed this before, but can you tell us what the 2 sectors were, and any details around the repayments you received year-to-date in thus far this year in '26?

Well, Steve, maybe I can just lead in on that for a moment. And I would say that it's a retail, multifamily. And importantly, I want [indiscernible] relating to an earlier question, these were vintage loans, COVID period and the higher interest rate period and paid off at par.

There are no further questions at this time. I would like to hand the call back over to Jack Taylor for any closing comments.

Yes. I just wanted to elaborate on something that was said earlier, which is the portfolio will shrink as we said, but we have many tools to regrow the portfolio through our loan repayments and resolutions, releasing capital, our REO, which will extract capital. We'll be repaying our higher cost debt and then rebuilding with an originations team that has been intact from when we were originating at $1.5 billion to $2. We have a lot of tools to releverage our balance sheet internally through the assets as they move from lower level of assets, the vintage loans that are being carried at lower leverage to the new loans that we add and that we also can move into CLOs and the like and source capital as we've done in the past successfully to bring our lower leverage of 1.7 closer back to our target leverage and to start repairing our earnings.

Thank you for your time. And I just want to welcome -- I say thank you, everybody, for joining us for the call and look forward to speaking to you -- further positive resolution.

This concludes today's conference call. We thank you again for your participation. You may now disconnect.

Good morning. My name is Alicia, and I'll be your conference facilitator. At this time, I'd like to welcome everyone to Granite Point Mortgage Trust's Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note today's call is being recorded.

I would now like to turn the call over to Chris Petta with Investor Relations for Granite Point. Please proceed.

Thank you, and good morning, everyone. Thank you for joining our call to discuss Granite Point's third quarter 2020 financial results. With me on the call this morning are Jack Taylor, our President and Chief Executive Officer; Steve Alpart, our Chief Investment Officer and Co-Head of Originations; Blake Johnson, our Chief Financial Officer; Peter Morral, our Chief Development Officer and Co-head of Originations; and in Ethan Lebowitz, our Chief Operating Officer. After my introductory comments, Jack will provide a brief recap of market conditions and review our current business activities. Steve will discuss our portfolio and Blake will highlight key items from our financial results. .

The press release, financial tables and earnings supplemental associated with today's call were filed yesterday with the SEC and are available in the Investor Relations section of our website, along with our Form 10-Q. I would like to remind you that remarks made by management during this call and the supporting slides may include forward-looking statements, which are uncertain and outside of the company's control. Forward-looking statements reflect our views regarding future events and are subject to uncertainties that could cause actual results to differ materially from expectations.

Please see our filings with the SEC for a discussion of some of the risks that could affect results, we do not undertake any obligation to update any forward-looking statements. We also refer to certain non-GAAP measures on this call. This information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in our earnings release and slides, which are available on our website.

I'll now turn the call over to Jack.

Thank you, Chris, and good morning, everyone. We would like to welcome you and thank you for joining us for Granite Point's Third Quarter 2025 Earnings Call. Investor sentiment continued to improve through the third quarter with more participants gaining confidence to deploy debt and equity capital into the recovering commercial real estate market against the backdrop of improving fundamentals and a general decline in new supply. Lender activity has been mostly for refinancings and there has also been a pickup in acquisition financings in line with the gradually increasing number of sales transactions.

The greater liquidity in the market is reflected across multiple segments, including a robust CMBS market, in particular, the single-asset single borrower segment, increased lending activity by larger commercial banks, both for their direct lending and notably for warehouse financing and a growing appetite from life insurance companies.

While the reliquefication of the commercial real estate market is underway, it remains uneven and bifurcated. The middle market loan segment is compelling for certain and favorable property types such as multifamily and industrial properties and more challenging for some other property sectors with regional and smaller banks still not providing significant liquidity. Even though there is a large wall of maturities creating an attractive opportunity set going forward, there is not enough supply of actionable deals yet, which is a key factor contributing to the spread tightening we've seen this year.

We have continued to make progress in 2025 with ongoing asset resolutions and reducing our higher cost debt, which has helped reduce the risk of our portfolio and improve our net interest spread. As previously reported, during the quarter, the Louisville student housing loan was resolved at over $3 million above our carrying value. The office portion of the risk rated 5 office and retail property located in Chicago was sold, which resulted in a net $3.4 million partial paydown of our loan. As a result, that loan is now classified as 100% retail.

With respect to our REO assets, we continue to reposition these 2 properties and are investing capital where we believe it will maximize our outcome, and we'll then seek to exit and extract capital. During the quarter, our risk ratings were stable with the one 5 loan resolution being partially offset by a hotel loan being downgraded from 4 to 5. And over the past year, we have improved our weighted average risk rating from 3.1 to 2.8 and meaningfully reduced the number of 5-rated loans and the balance by some 2/3.

Turning to originations. As we said last quarter, we expect to begin to regrow our portfolio in 2026. As we sit here today, we expect to start that process in mid-2026. The estimated timing and pace of originations is being affected by a slower-than-anticipated set of repayments, resolutions and REO repositionings. We continue to be focused on loan repayments and asset resolutions and our origination activity will be partially fueled by the release of capital from our existing loan portfolio and REO.

Also, we continuously evaluate the various paths for all assets in our portfolio in order to maximize outcomes. In certain situations, the best path may be investing additional capital or adjusting the timing of when we ultimately realize a resolution. Investing additional capital, for example, may be related to good news leasing and/or capital improvements on the REO properties. We're making subordinate capital investments such as preferred equity in the loan portfolio.

While the timing and volume is uncertain and may change because of market conditions and idiosyncratic factors, repatriating this embedded capital in our portfolio and recycling it into high earning assets remains one of our highest priorities. We will update as we have new information.

Also during the quarter, we reduced the balance of our higher-cost secured credit facility by $7.5 million and extended the maturity to December 2026, and reduced the financing spread by 75 basis points. During the fourth quarter, we expect to further reduce the secured credit facility by an additional $7.5 million for a total of $15 million for 2025, which would result in an improvement to earnings of $0.03 per common share on an annual basis.

I would -- now I'd like to turn the call over to Steve Alpart to discuss our portfolio activities in more detail.

Thank you, Jack, and thank you all for joining our third quarter earnings call. We ended the third quarter with $1.8 billion in total loan portfolio commitments and $1.7 billion in outstanding principal balance with about $76 million of future fundings which accounts for only about 4% of total commitments. Our loan portfolio remains well diversified across regions and property types and includes 44 investments with an average UPB of about $39 million a weighted average stabilized LTV of 65% at origination.

As of September 30, our portfolio weighted average risk rating held steady at 2.8. The realized loan portfolio yield for the third quarter was 7.5%, which excluding nonaccrual loans, would be 8.4% or 0.9% higher. The prior quarter realized loan portfolio yield was 7.1% and excluding nonaccrual loans was 8.2% or 1.1% higher for that quarter. The improvement in our overall loan yield of about 40 basis points is due to the reduced proportion of nonaccrual loans in the portfolio. We had an active third quarter of loan repayments, partial paydowns and resolutions totaling about $121 million, including the repayment in full of an office loan where we previously provided staple financing and a loan secured by a quality event and entertainment venue in New York City.

Also during the quarter, we funded about $12 million on existing loan commitments, resulting in a net loan portfolio reduction of about $110 million. As previously disclosed, during the third quarter, we resolved the $50 million loan secured by the student housing property in Louisville, Kentucky via a property sale, resulting in a realized write-off of about $19 million which was previously reserved for through the recorded allowance for credit losses and recognize a GAAP benefit from provision for credit losses of $3 million.

We'd now like to provide some color on the risk rated 5 loans. At September 30, we had 3 such loans with a total UPB of about $196 million. At quarter end, we downgraded a $27 million loan collateralized by a hotel and fully leased retail pad in Tempe, Arizona from a risk rating of 4 to a rating of 5. The property had been under contract with a hard deposit at a price well in excess of our loan amount. However, that sale is now on hold. And in combination with the property's performance, we felt it was prudent to change this rating.

During the third quarter, we had a partial resolution related to the $79 million Chicago office loan with the sale of the upper floor office space while retaining the ground floor retail. Working with our borrower and the new buyer, the zoning change of the upper floors to residential use was approved by the city of Chicago after a lengthy process. The sale resulted in net proceeds of $3.4 million, which we used to pay down the loan to about $76 million.

Since the pandemic, the bulk of the value has been in the retail component. And now with the sale of the upper floor office space, our remaining collateral is the ground floor retail on the Magnificent Mile. As a result of the office sale, the story is less complicated for potential buyers as we proceed towards the ultimate resolution, which should occur over the next few quarters. Following this sale, the loan was reclassified from office to retail.

Regarding the $93 million Minneapolis office loan, as previously disclosed, we anticipate a longer resolution time line given the persistent local market challenges. We are seeing the beginnings of the long-awaited return to office mandates in Minneapolis. While it seems premature to call this a recovery, the trends are slowly moving in the right direction. Resolving these remaining 5 rated loans remains the top priority.

Turning to the REO assets. We continue to have positive leasing successes at the suburban Boston property and remain actively engaged with our partner in the local jurisdiction and other third parties on several value-enhancing repositioning opportunities. We continue to invest capital into this property to maximize the outcome. The Miami Beach office property is a Class A asset located in a strong submarket. We are having positive leasing discussions with a variety of existing and new tenants will prudently invest in the property and continue to review resolution alternatives.

As we said in prior quarters, our plan for 2025 has been to remain focused on loan and REO resolutions and maintaining higher levels of liquidity. As a result, we expect that our portfolio balance will trend lower in the near term, most likely through the first half of 2026. At that point, we expect to return to our core lending business and restart our origination efforts and take advantage of attractive investment opportunities and begin to regrow our portfolio.

I will now turn the call over to Blake to discuss our financial results.

Thank you, Steve. Good morning, everyone, and thank you for joining us today. Turning to our financial results. For the third quarter, we reported a GAAP net loss attributable to common stockholders of $0.6 million or negative $0.01 per basic common share, which includes a benefit from credit losses of $1.6 million or positive $0.03 per basic common share mainly from a decrease in our general reserve due to more favorable macroeconomic forecast in our CECL model relative to the prior quarter, partially offset by a net increase in our specific reserve on our collateral dependent loans.

Distributable loss for the quarter was $18.9 million or negative $0.40 per basic common share, including write-offs of $19.8 million or $0.42 per basic common share, which were previously reserved for. The write-offs were primarily related to the 1 nonaccrual loan resolution that Steve discussed earlier. Our book value as of September 30 was $7.94 per common share, a decline of $0.05 per share from Q2. Our aggregate CECL reserve at September 30 was about $134 million as compared to $155 million last quarter. The $21 million decline in our CECL reserve was driven by $19.8 million of write-offs largely related to the 1 resolution and the benefit from credit losses of $1.6 million.

Approximately 65% of our total allowance or about $86 million was allocated to individually assessed loans. As of quarter end, we had about $196 million of principal balance on 3 loans on nonaccrual status with specific CECL reserves of $86 million, representing 44% of the unpaid principal balance. We believe we are appropriately reserved for and further resolutions should meaningfully reduce our total CECL reserve balance.

Turning to liquidity and capitalization. We ended the quarter with about $63 million of unrestricted cash, and our total leverage decreased slightly relative to the prior quarter from 2.1x to 1.9x. As of a few days ago, we carried about $80 million in cash. Our funding mix remains well diversified and stable, and we continue to have very constructive relationships with our financing counterparties as evidenced by the extension of our secured credit facility during the third quarter. We expect to expand our financing capacity once we return to originating new loans.

I will now ask the operator to open the line for questions.

[Operator Instructions] At this time, I'd like to pass the call to Jack.

Well, thank you for joining us today, and we're diligently proceeding on our plans to resolve the assets and positioning for a regrowth in 2026. We appreciate the efforts of our whole team and for your time and attention today. Thank you very much.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.