Granite Point Mortgage Trust (NYSE:GPMT) reported a $60.3 million third-quarter loss attributable to common stockholders as credit reserves rose and more loans moved to non-accrual status. Management said it remains focused on resolving loans and selling real estate assets while its board reviews alternatives to enhance stockholder value.
The loss amounted to $12.50 per basic common share and included a $45.4 million provision for credit losses and a $2.6 million impairment loss on real estate owned, or REO. The company also reported a distributable loss of $33.7 million, or $6.99 per basic common share.
Reserves Rise as Refinancing Headwinds Persist
President and CEO Jack Taylor said higher interest rates and uncertainty over their direction have slowed commercial property sales and refinancing activity and weighed on asset values. He said the company’s credit reserves rose partly because of the impact of challenging capital markets on active sales and refinancing processes.
Granite Point’s aggregate current expected credit loss, or CECL, reserve stood at approximately $186 million at quarter-end, about $20 million higher than in the prior quarter. Johnson said approximately 95% of the total allowance was allocated to loans with specific reserves.
The company had five loans with its highest risk rating, five, with a combined unpaid principal balance of about $260 million. Those loans carried approximately $119 million in specific CECL reserves, or 45.6% of their principal balance. Johnson said the company believes it is appropriately reserved and that further resolutions should meaningfully reduce the total reserve balance.
Specific reserves covered 13 loans in total, including loans rated four and one rated three, Johnson said in response to an analyst’s question.
Loan Resolutions and Non-Accrual Status
Granite Point resolved two previously identified five-rated loans during the quarter through property sales: a $52 million Georgia multifamily loan and a $15 million Connecticut hotel loan. The transactions resulted in approximately $25 million of write-offs, which had been covered by previously recorded allowances.
The company also downgraded two Atlanta office loans totaling about $74 million from risk rating four to five. Chief Investment Officer Steve Alpart said leasing had been slower than expected at both properties and that Granite Point was discussing resolution alternatives with the sponsors.
Among the other five-rated loans, Alpart said the company expects to resolve a Tempe hotel and retail loan in the near term, possibly by year-end, and a San Diego office loan in the first half of 2027. Granite Point also anticipates taking back the property securing a $93 million Minneapolis office loan as REO before year-end.
In addition to the five-rated loans, eight other loans with a combined principal balance of $343 million were on non-accrual status at quarter-end. Seven were placed on non-accrual during the quarter. Alpart said some processes could be delayed, while other loans could return to accrual status in the fourth quarter or early 2027 as sales or refinancing processes resume or loans are paid down.
Granite Point ended the quarter with $1.3 billion in outstanding loan principal across 34 investments. Repayments, paydowns, resolutions and amortization totaled about $90 million during the quarter, including two office loan repayments totaling about $20 million.
Financing and Strategic Review
The company ended the quarter with about $45 million in unrestricted cash and total leverage of 1.9 times. It refinanced legacy collateralized loan obligation assets and assets on other financing lines through an extended and upsized JPMorgan repurchase facility.
Johnson said the refinancing lowered Granite Point’s weighted-average repo cost of funds by 29 basis points, to the secured overnight financing rate, or SOFR, plus 2.13%. At the quarter-end repo balance of $727 million, that represents about $500,000 in quarterly interest expense savings, he said. The refinancing also resulted in approximately $1.7 million of interest expense during the third quarter.
On its two REO properties, Alpart said a Miami Beach office asset is under contract with a hard deposit and a targeted closing by year-end 2026. At a suburban Boston property, the company is pursuing leasing and repositioning opportunities.
Taylor said the board’s review of alternatives, announced Sept. 23, remains ongoing. The company does not intend to disclose developments until the evaluation is completed or the board determines earlier disclosure is appropriate. Alpart said Granite Point does not intend to restart originations or provide longer-term guidance while the review continues.
Asked about preferred dividends, Johnson said the current quarterly payment of approximately $3.6 million is expected to rise to about $5.1 million next year when the fixed rate switches to a floating rate on Jan. 15. He said the company was not sharing any plans regarding the preferred shares.
About Granite Point Mortgage Trust (NYSE:GPMT)
Granite Point Mortgage Trust Inc is a real estate investment trust that focuses on commercial real estate finance. The company originates, acquires and manages commercial real estate debt investments, with an emphasis on floating-rate, senior mortgage loans secured by properties in major U.S. markets.
Its investments generally support transitional commercial properties, including office, multifamily, industrial, hotel, retail and mixed-use assets. Granite Point typically provides financing to property owners and investors seeking capital for acquisitions, renovations, repositioning or other business plans intended to enhance a property’s value.
Granite Point was established in 2015 and became a publicly traded company in 2017.
