Good morning. My name is Anita and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust's Second Quarter 2019 Financial Results Conference Call. All participants will be in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. Please note, this event is being recorded.I would now like to turn the conference call over to Chris Petta with Investor Relations for Granite Point. Mr. Petta, please go ahead.

Thank you and good morning everyone. Thank you for joining our call to discuss Granite Point's second quarter 2019 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 summary of our business activities and brief recap of market conditions; Steve Alpart will discuss our first quarter originations, our portfolio, and pipeline; 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 of 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 statements if later events proved them to be inaccurate.I will now turn the call over to Jack.

Thank you, Chris and good morning everyone. We would like to welcome you all and thank you for joining our second quarter 2019 earnings call. We are very pleased with the progress of our business and the first half of 2019 and are excited about maintaining our strong momentum for the rest of the year. Commercial real estate market fundamentals and the credit environment both remain solid. After a lower origination volume in the first quarter owing to market volatility and seasonality, we return to our historical deployment pace and had a very productive second quarter, funding over $415 million of loans. Our second quarter loan funding's combined with manageable prepayments, resulted in portfolio growth of about 8% versus last quarter to over $3.6 billion and over $4.2 billion, inclusive of our future funding commitments.The credit quality of our assets remains strong. Real Estate Market transaction volume though slightly lower than last year remains at a healthy level, generating a strong flow of attractive lending opportunities for Granite Point. As evidence of this, while maintaining our high standards of credit underwriting and loan structuring, we have generated a robust forward investment pipeline of over $770 million of new senior floating rate loan commitments, some of which we have already closed in the current quarter. The credit quality of the new loans we are originating remains attractive. The weighted average LTV on our second quarter origination was 59%. And their resulting investment yields continued to meet our targets of low double digit ROI.Assuming all the loans in our pipeline closed, and market conditions remain stable for the rest of the year, we anticipate to well exceed our origination from last year despite active competition for assets and market volatility earlier in the year. We are currently on pace to originate about…

Thank you, Jack. And thank you all for joining. We appreciate your time this morning. I'll spend a few minutes reviewing our second quarter originations, our portfolio and our forward pipeline. Following the overall slowdown in transaction and lending activities in the first quarter caused by year-end market volatility, we saw a strong rebound in the second quarter, which allowed us to return to our historical pace of originations. In the second quarter, we close 10 new loans, with total commitments of over $420 million.Our total funding's were $415 million, comprised of about $360 million of initial funding for the new loans, over $54 million from our preexisting loan commitments, and $1.5 million for one upsized loan. The loans we closed in the second quarter have strong credit characteristics and are secured by high-quality income producing properties with highly experienced sponsors. These properties are well-diversified by geography and property type, with multi-family and office assets, accounting for over 60% of the total which is generally consistent with our overall portfolio mix.Our second quarter originations have a weighted average LTV of 59%, and a weighted average yield of LIBOR plus 3.74%. The credit quality and yields on our new originations in the first half of the year have been relatively stable, as we remain highly selective within a large universe of lending opportunities. During the second quarter, we realized about $162 million of pre-payments and principal amortization, which were largely driven by the payoff of our second largest asset, a $108 million loan on an office property located in the Northeast.Driven by strong net funding's, the outstanding principal balance of our portfolio grew to over $3.6 billion and the fully committed balance to over $4.2 billion at quarter-end. Our overall portfolio is well-diversified across markets and property types and continues to…

Thank you, Steve and good morning everyone. Thank you for joining our call. Our business produces strong operating results in the second quarter. Our total quarter earnings grow over 7% quarter-over-quarter driven by 6% growth in net interest income which benefited from strong portfolio growth and a decline in financing costs. We also realized lower operating expenses as certain one-time items from the prior quarter were eliminated. However, as we discussed in our last call, the EPS numbers reflect the temporary impact from the additional shares outstanding as a result of our capital raising activities. We would anticipate that this impact would become much less significant over time as we continue to deploy our capital.Turning to specific results, our GAAP net income for the second quarter was $18.2 million or $0.34 per share. And our core earnings were $19.4 million or $0.36 per share. We declared second quarter dividend of $0.42 per common share, which at our current stock price offers an attractive yield of 8.9%. Our book value at June 30, was $18.74 per common share, largely reflecting the dividends being paid on the new shares before our capital is fully deployed. Our Q2 earnings were also impacted by our origination is closing late in the quarter has over $320 million dollars of loans funded in June. And the majority of those occurred in the last two weeks of the month. Regarding financing and leverage, the outstanding balance on our credit facilities increased to over $1.3 billion from the first quarter driven by the growth of our portfolio. At June 30, we had total borrowing capacity of over $2.3 billion inclusive of our options to upside two of our facilities by combined $300 million.As Jack mentioned earlier, during the second quarter, we extended the maturity of three of our…

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

Thank you very much. Inclusive of the back-end waiting of the originations this quarter and the very robust pipeline, you said it, are you anticipating quarter earnings to meet or exceed the dividend in the third quarter or for the back half of the year? Can you give any indication?

Hi, Jade. Good morning. It's Marcin, thank you for joining us. Thanks for the question. I would say we anticipate it will be closer to the dividend level towards the end of the year. I think the late closings in the quarter probably cost us $0.02 to $0.03 of earnings. So obviously, that will be reflected in in Q3 numbers. So, we do anticipate that quarter will be higher in Q3, but the exact number, it's hard to predict depending on when the new launch close, what happens to LIBOR. We will also have additional recognition of some of the shares that we sold in the second quarter, but we do anticipate it will be a little bit higher.

You said you have minimal exposure to New York City rent control. Does that suggest that there's at least one loan that has some kind of exposure or are you saying there's no exposure?

Jade, it's Steve, thank you for joining us. So, the market is still absorbing the overall impact of the regulations. And the impact of these new regs will be very specific to any particular asset. A lot of people think that it could -- I guess the general view is that it will negatively impact the market. We actually think that for a subset of the market with non-regulated units, it could actually be a positive for the market. As far as our New York City's exposure, we mentioned earlier, it's very limited to de minims [ph] in terms of both dollar exposure and the specific risks of those assets. Given the types of apartments we finance as well as how we underwrote the business plans, we only have a few loans on New York City multi-family apartments. And with respect to these assets, there's a limited number of rent stabilized or rent controlled apartments. So that represents a very small part of the cash flow on those assets.And further, I want to point out that we are underwriting does not assume that those rents will be transitioned to market in any material way. We do have $130 million loan on a recent vintage property in Brooklyn, where the units are all rent stabilized. However, to point on that asset that our underwriting assumes rent growth, only at a level consistent with the annual rent stabilization permitted increases, and we did not assume that any of those units would become rented at market levels. So the way we think about this, this is actually a great example of our overall investment philosophy of avoiding credit exposure to government regulatory or legal changes that could have a significant negative impact on capital values. And then I guess I will conclude by saying that we do not believe that our portfolio has any significant credit risk associated with these new rent loss.

Okay. And just to clarify, does that business plan in Brooklyn include putting in capital improvements in order to raise rents above what is now the 2% cap on growth from the prior 6%?

It did not. That property is a relatively new vintage property and there's no CapEx associated with that business plan in the near medium-term.

And what do you expect for repayments? You mentioned there was -- your largest loan on an office property repaid. Does that suggest you expect repayments to moderate in the second half?

Jade, this is Steve Plust. Good to hear from you. As we said repeatedly in the past we expect on a stabilized portfolio to run it about a 25% prepay rate per year. Right now, based upon the ongoing dialogues we've had with many of our borrowers, we're expecting a level of pre-repayments over the next two quarters of something like $160 million to $100 million per quarter.

And then finally, could you give an update on to risk for rated loans?

Sure Jade, I'll address that question. There's really no material update on these. We're continuing to monitor them. You probably saw that we maintain the risk rating of four on both of these loans for Q2. Both loans are current on payments. We currently don't expect to create any reserves for these loans. We've mentioned in the past that we have independent third-party appraisals done earlier in the year and we feel that we're well secured. I also want to point out that we don't have any other loans or records ranked four or five. Obviously, the nature of this business is that some loans will perform, some loans will do better than planned, someone loans will write plan, but we're closely monitoring all the assets and don't have any major concerns on credit performance.

[Operator Instructions] The next question today comes from Steve DeLaney with JMP Securities. Please go ahead.

I apologize. I was tied up on another call for a minute. If you've already addressed that, my apologies. But I'm curious, obviously the Fed is in play. I think for now we are assuming that they're not just one and done. And I'm curious, with respect to floors, while there'll be short-term pain, how far if you could estimate, how far does the Fed need to go in terms of cuts before you're actually in the money on your floors and you actually are receiving a positive impact from the floors? Thank you.

Steve, thanks for joining us. It's Stephen Alpart. Let me just give you some general sense of where we are on floors; so about 98% of our loans have LIBOR floors. Q2 originations have a weighted average floor of about 210, originations in the first half of 2019 have a weighted average floor of about 206. The forward pipelines has a weighted average floor of about 195, the portfolio weighted average is about 1.3. That is driven by a relatively significant part of our portfolio being loans that we originated between 2015 and 2017 when LIBOR was lower, and we we've done a great job amending loans and preventing them from being refinance early, which contributes to the lower average LIBOR floor, but also, it's helped us to preserve attractiveness in the portfolio.

That's helpful, Steve. And if we think -- looking at a year or so, and I think there's -- with the Fed's started is not likely to revert, probably for the next at least not 12 months to 18 months probably. Would it be reasonable to think those 2015/2016 loans are going to be just from a seasoning standpoint and business plans? Aren't they the loans with the low floors that are going to be going away to the greatest degree over the next 6 months to 12 months? And then I assume the overall weighted average floor, you would expect to move higher as those payoffs.

I couldn't have said it better myself. That's exactly right. These loans, many of which, and that basket has been extended for say 12 months, the nature of these business plans is that we would expect that that cohort would be the most likely to be paying off the fastest and that the weighted average floor level should rise.

So probably not so much at 2019 but if we look and as we're modeling for 2020, it would seem like there's a positive -- the Fed goes down three or four more, it seems like your floors could really help you in 2020. So, that was all I wanted to cover this morning, and thank you for the comments.

The next questions come from Rick Shane with JP Morgan. Please go ahead.

My questions were on floor. So I appreciate all the details there. Just to sort of combine both Jade and Steve's topics and conversation related to the second quarter, we've seen LIBOR decline about 20 basis points since June 30, looking at the interest rate sensitivity, looking at sort of the deployment that you guys described on the back end of the second quarter, fair to say that about there's probably about a $0.01 pressure from the declining rates offset by the $0.02 to $0.03 that you guys have described in terms of timing?

Hi Rick, it's Marcin. Yes, I think that's a fair statement.

The next question is a follow-up from Jade Rahmani with KBW. Please go ahead.

Thanks. Could you remind us what your target debt to equity ratio is in terms of leverage for the consolidated portfolio, and if you anticipate any need to access the common equity market in the remaining part of the year based on your current visibility, with respect to the pipeline?

Sure, Jade. It's Marcin again. So, our target is around three times debt to equity on the total basis with our pipeline available liquidity assuming no major prepaid is weird that we don't anticipate today, we should get to that level by the end of the year, again, depending on when the loans close. In terms of accessing the market, we have liquidity today at the set for about $300 million. As Steve once mentioned, if we do another $300 million to $400 million other prepays that we anticipate for the rest of the year, we should have a decent runway till the end of the year, depending on what we see in the market. In terms of loan opportunities, we have a variety of tools that we can use to potentially access the markets, one of which is our ATM program, which is a very efficient way for us to raise kind of in-time capital, which obviously we've done in the second quarter. So we'll monitor everything that I just discussed and make the appropriate decisions as long as accessing the market makes sense for our shareholders.

This concludes our question-and-answer session. I would now like to turn the conference back over to Jack Taylor for any closing remarks.

Thank you, Anita. And we'd like to thank everyone for joining us today and for everyone supporting our business, we really appreciate it and we look forward to speaking with you all again soon. Thank you.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.