Hello and good morning. My name is Chad and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point's Fourth Quarter 2017 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] I would now like to turn the conference call over to Maggie Field with Investor Relations for Granite Point. Please begin.

Thank you and good morning, everyone. Thank you for joining our call to discuss Granite Point's fourth quarter 2017 financial results. With me on the call this morning are Jack Taylor, our President and CEO; Marcin Urbaszek, our CFO; Steve Alpart, our CIO and Steve Plust, our COO. After my introductory comments, Jack will provide a brief recap of market conditions and some business highlights. Steve Alpart will discuss our fourth quarter originations and portfolio, and Marcin will highlight key items from our financials. The press release and financial tables associated with today's call were filed yesterday with the SEC. If you do not have a copy, you may find them on our website or on the SEC's website at sec.gov. In our earnings release and slides, which are now posted in the Investor Relations section on our website, we have provided a reconciliation of GAAP to non-GAAP financial measures. We urge you to review this information in conjunction with today's call. I would also like to mention that this call is being webcast and may be accessed on our website in the same location. Before I turn the call over to Jack, I would like to remind you that remarks made by management during this conference call and the supporting slides may include forward-looking statements. Forward-looking statements reflect our views regarding future events and are typically associated with the use of words such as anticipate, expect, estimate, and believe or other such words. We caution investors not to rely unduly on forward-looking statements. They imply risks and uncertainties, and actual results may differ materially from expectations. We urge you to carefully consider the risks described in our filings with the SEC, which may be obtained on the SEC's website at sec.gov. We do not undertake any obligation to update or correct any forward-looking statement if later events prove them to be inaccurate. I will now turn the call over to Jack.

Thank you, Maggie and good morning, everyone. On behalf of our team, we would like to welcome you all and thank you for joining us for our fourth quarter earnings call. 2017 was a transformative year for our business. After establishing our platform over the last few years as part of Two Harbors, we executed our IPO in June, allowing us direct access to the capital markets to take advantage of attractive investment opportunities in the senior floating rate commercial real estate lending sector. Over the course of 2017, we originated over 1.2 billion of loans and further expanded our footprint within the commercial real estate lending markets. We also grew our borrowing capacity to over 2.3 billion and began diversifying our capital structure. We remain optimistic about our ability to continue to implement our business strategy and profitably grow the company in 2018 and beyond. Please turn to slide 5. Marcin will discuss our detailed financial results shortly, but I'd like to touch on some of the highlights and business activities from the fourth quarter. We grew our fourth quarter core earnings to $0.34 per share from $0.28 per share in the third quarter. Our common dividend for the fourth quarter was $0.38 per share, consistent with our prior guidance and up from $0.32 per share in the third quarter. Our earnings and dividend benefited from the continued deployment of capital and growth of our investment portfolio. It was an active period for us in terms of originations and balance sheet activity. Our 344 million of total loan commitments and 277 seven million in total loan fundings in the fourth quarter deployed most of the capital remainings from the IPO and grew our loan portfolio to approximately 2.4 billion of funded loans at the end of Q4. While very…

Thank you, Jack and we appreciate everyone's time this morning. I'll spend a few minutes reviewing our fourth quarter originations and highlighting our progress so far in the first quarter and then I'll provide some key metrics on our portfolio. Let's turn to slide 6. We had an active fourth quarter in terms of originations. We originated six new senior floating rate loans, and upsized two existing loans, representing total commitments of approximately 344 million. We funded approximately 277 million of loans, inclusive of approximately 25 million of fundings on loan commitments from prior quarters. As Jack mentioned earlier, our lower originations pace quarter-over-quarter was driven by our ability to deploy capital raised in our IPO at a strong pace in the third quarter and first half of the fourth quarter rather than a lack of attractive investment opportunities. Our fourth quarter origination was secured by existing high quality income producing properties across our target markets and various property types. Approximately 71% of the fully fund loan amounts are secured by office properties. The remaining balance consists of a hotel property and a mixed use property, which is primarily office with a small retail component. While we continue to be selective in retail and hotel, we do believe that we can originate attractive investments that fit our risk and return parameters in these sectors, like the hotel loan we originated in Q4. Our fourth quarter originations were geographically diverse and distributed between the West, Southwest and Northeast regions and the characteristics of these loans and the return profiles are in line with our overall investment targets. Our fourth quarter originations demonstrate our focus on a broader range of MSAs and on loan sizes below the general targets of some of our public peers. In the fourth quarter, these loans range…

Thank you, Steve and good morning, everyone. I'll spend a few minutes discussing our financial performance as well as our capitalization and liquidity. Turning to slide 10, our GAAP net income for the fourth quarter was $14.1 million or $0.33 per share. Our core earnings, which is GAAP earnings adjusted for the non-cash equity compensation expense was 14.5 million or $0.34 per share. Taxable income for the fourth quarter was 17.9 million or $0.41 per share. As you may recall, our taxable income includes an accretion of a GAAP to tax difference, resulting from our formation transaction and for the next several quarters will cause our taxable income to be higher than our GAAP income. Consistent with the one-time guidance on our last earnings call, we declared and paid a fourth quarter dividend of $0.38 per common share, which translates into an attractive dividend yield. Our book value at December 31 was $19.17 per common share. Let's touch base on a few drivers of our earnings and quarterly dividend. We had a good quarter in terms of originations and were able to commit nearly all of the remaining capital from our IPO. Similar to last quarter, the majority of our fourth quarter originations closed in the second half of the period, which slightly impacted our earnings. Since the company is in a growth phase, the timing of loan closings can have a relatively significant impact on our quarterly results. Over time however, as our portfolio grows, the timing of loans closings should have a smaller impact on our results. As a reminder, I'll quickly review our GAAP to tax difference and its impact on our dividend. As we discussed last quarter, as a result of our formation transaction, we recognized a lower tax basis than a GAAP basis of approximately…

[Operator Instructions] The first question comes today from Jade Rahmani with KBW.

Should we take your comments to imply a dip in 1Q earnings sequentially from the fourth quarter level?

Hi, Jade. It's Marcin. Yeah. I think look, as we mentioned in the prepared remarks, when we recognize the full quarter of interest expense and the convertible, and some light from capital deployment as we build up the pipeline, there will be an impact. It's hard to say exactly what that's going to be, but I think that's probably a good assumption.

In terms of where repayments are coming in, does the fourth quarter level represent an outsized quarter based on the seizing of the portfolio, so prepayments should moderates or is that level something we should expect to be sustained.

This is Steve Plust. As the portfolio matures, we will be seeing more and more prepayments such that when we get to a steady state in the future, we should be expecting something like 25% of the portfolio to prepay over the course of the year. We're looking right now, we think it's hard to put a spot estimate out, but we think that in the first quarter, we should be receiving something like 50 million to 100 million of prepayments.

Just a bigger question, for Granite Point to trade above book value and therefore have access to equity capital to meaningfully grow, it seems investors need to be convinced of two things. One that you would not issue equity dilutively, and two that you have the ability and the business model to achieve levered returns in the 9% range or hopefully higher. So just wanted to ask you if you could comment on those two specific things.

Well, with respect to the first, we have said that it is not our intention to issue equity dilutively and we'll repeat that here today. Is there an echo? I heard. Okay. Secondly, I will ask Marcin to chime in if he wants, but we fully believe that we'll be able to hit those returns that you mentioned.

Look I think Jade, as we levered our portfolio and we deployed the capital, obviously, we're underlevered today. We're at two times debt to equity at the end of the quarter. We stated our target is 2.5 to 3. We think we'll get there over the next several quarters. So barring some unforeseen market events and craziness in spread markets and financing markets, we feel pretty comfortable looking at what our portfolio yields today and what our cost base is. We feel pretty comparable we'll get to the market returns as we're fully stabilized.

And can you comment on your discussions with lenders about accessing additional financing capacity? Do you have the ability to increase financing capacity without the need for additional equity capital?

Yeah. So I'll let Marcin elaborate.

Look I think so we upsized two facilities. We have more than enough financing capacity today to deploy the capital that we have. But we also said in our prepared remarks that we've seen improvement in our funding costs recently and I would say that's both on the cost but also on the leverage. So, there's only so far you can go with a repo line in terms of how much leverage you can get on it, but we've seen an improvement in both as the markets evolve.

Next question will be from Rick Shane of J.P. Morgan.

Really two questions here. Obviously, I realized at this point in your life as you're growing in the capital base, is sub $1 billion, the timing is incredibly sensitive, but I am curious about the decision to sort of reduce the origination pipeline, given what should have been some available leverage in to the fourth quarter and the implications of that going into 2018. And to just sort of continue that, so we understand the timing going forward, with the incremental $140 million of capital probably leveraged about 2.5 times, put it in the midpoint of your target range, how long do you think it will take you to fully deploy the proceeds from the current offering.

Hi, Rick. This is Marcin. So I'll attack the last part of your question. I would say, as we said in the prepared remarks, we had liquidity to originate about $600 million of loans plus or minus. That does not include additional prepayments. I think that should take us a couple of quarters to deploy. Obviously, committing to the loans and we're actually closing them. There's a lag there. So please keep that in mind. As we get additional prepayment in a portfolio, that's going to be an additional source of liquidity. So, we'll be deploying capital throughout the year. In terms of rationale for the deal, I would say that we - as we said, we deployed our capital midway through the quarter. We did not have, when we said deploy, it's committed, we don't have additional ability at that time to borrow more as, if you look at our Q3 10-Q, when we had $2 billion of assets pledged at about against 1.5 billion of repo lines, those assets were pretty fully levered. We had some assets that were unlevered there. We had some mezzanine assets that are not levered. So we were at the point where because of our strong originations in Q3, going into Q4, we were essentially - we had to slow down the originations to accommodate some capital constraints. We had some prepayments coming in later in the quarter, so we started originations later in the quarter going into the first quarter, but that's just the constraint that we had to accommodate and we thought it was a good opportunity to issue some unsecured five-year debt that provide us some liquidity and provides us flexibility on a capital structure, so we executed the deal and we're very happy with the outcome.

And again when I look at the originations, seem to be pretty much on track. I guess where increased noise is, how quickly you can turn on and turn off that origination pipeline and frankly the implication is not for the third and fourth quarter, but potentially for the first quarter originations versus expectations.

Hey, Rick, it's Steve Alpart. I'll take that question. So just a couple of comments on the first quarter. So you heard us say earlier that we have total funding commitments of about 130 million of senior floating rate loans. It's about 120 million on an initial funding basis. We mentioned that two loans, about 50 million of commitments, about 45 million of initial funding have closed and the rest should close later this quarter, possibly into first quarter, second quarter, I'm sorry. In total, for Q1, we're anticipating that we'll fund about 200 million plus or minus. We think about a little over half of these loans will fund towards the end of March. Although as we've noted and as Marcin has noted, the timing of the closings is hard to predict with certainty. Some of that could slip past the quarter. So just to kind of take-off where margin left off, these loans as you know typically take 6 to 8 weeks. They can take longer from term sheet to closing. So the Q4 slowdown that we talked about has impacted the pace in the beginning part of Q1 and therefore will probably impact Q1 overall. But we have very good visibility on the forward pipeline and we are expecting to get back to our pace of originations that you've seen us do in prior quarters.

Last question, when we look at the difference between commitments and fundings in any given quarter or on any individual loans, over the life of a loan, what percentage of the commitment do you actually expect to fund? Is it 75%, is it 95%? That will help us really sort of think about the differential between commitments and fundings?

Rick, it's Steve again. So it's going to vary deal by deal. Generally, we would expect to fund the majority of the commitment on every loan. That doesn't mean 100%. So the way we would think about it is, sponsored business plans, these loans, customized around that. Oftentimes the sponsors are expecting to lease up the property to 95% or more. We'll typically underwrite a little bit lower, but we'll slide the loan towards their business plan, so there could be a small gap between what we're underwriting and what they are expecting and there's always the possibility that they just sell or refi the property early. So, I would say 90%, 95% somewhere in that zip code as far as what we would typically expect to fund on the commitment.

Our next question comes from Fred Small of Compass Point.

Just on the repayments, on the 25% sort of annualized repayment rate. When do you expect that you'll be closer to that level? It just seems - it seems a lot higher than sort of where you're run rating now?

This is Jack. I would say that the repayments, if you look at our portfolio, roughly half of it was originated within the last 12 months. So I don't think that we'll hit, what I'll call, in this context, a stabilized run rate on prepayments until much later this year. Because we're looking at loans that for half the portfolio were fairly recently originated. So we expect it would ramp up to that 25% per year estimate.

And then on the - just so I understand the math right on the originations or the fundings for the first quarter, you've got 120 odd million that you've done that's already expected this quarter. You've done 45, so there's 75 left of that component and then there are - if you're getting to 200, there's still 5 that's not sort of 75 or 80 that's not in the pipeline yet that you expect this quarter.

It's Steve. Yeah. That's about right. So that's just basically near term visible pipeline, doing estimates about what we think will get signed up and closed this quarter, some of what we're expecting to sign up in the next week or two will close in the second quarter, but that's a good estimate for what we expect to fund this quarter.

And I mean have you seen any - just with sort of ramping that back up, have you seen any impact in the discussions from just sort of recent market volatility or rate volatility that you think could push more of that into the second quarter?

It's hard to predict with certainty obviously, but when we come up with an estimate like that, is based on a bigger pipeline than that number and then making some estimates about what gets signed up and timing. These loans typically close in four to six weeks. Sometimes, they can go a little bit longer. So it's just us making best estimate based on what we're seeing right now in front of us.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Jack Taylor for any closing remarks.

Well, thank you, Chad. We would like to thank everyone for joining us today. We appreciate it and we appreciate everyone's support for our business. We look forward to speaking with you all again soon. Thank you, again.

And thank you, sir. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.