Good morning. My name is Grant, and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust’s Third Quarter 2021 Financial Results Conference Call. All participants will be in listen-only mode. After the speakers’ remarks, there will be a question-and-answer period. I would now like to turn the conference 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 third quarter 2021 financial results. With me on the call this morning are Jack Taylor, our President and Chief Executive Officer; Marcin Urbaszek, our Chief Financial Officer; Steve Alpart, our Chief Investment Officer and Co-Head of Originations; Peter Morral, our Chief Development Officer and Co-Head of Originations; and Steve Plust, our Chief Operating Officer. After my introductory comments, Jack will review our current business activities and provide a brief recap of market conditions. Steve Alpart will discuss our portfolio, and Marcin will highlight key items from our financial results. The press release and financial tables associated with today’s call as well as our Form 10-Q were filed yesterday with the SEC 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 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 our risks that could affect results. We do not undertake any obligations 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 will now turn the call over to Jack.

Thank you, Chris, and good morning, everyone. We would like to welcome you all to our third quarter 2021 earnings call. We have made tremendous progress since the beginning of the year to further position Granite Point to successfully execute on our strategy of investing in a diversified portfolio of floating rate first mortgage loans. Since restarting originations in the second quarter, we are on pace to deploy over $800 million of capital into new loans for the year. I am also pleased to report that we continue to further improve our funding profile with the recently announced pricing of our second commercial real estate CLO of the year and our fourth overall. Granite Point’s status as an established and respected repeat issuer afforded us the opportunity to issue the $621 million transaction with attractive financing on a term matched, non-recourse and non-mark-to-market basis, including a two-year reinvestment period, providing us with more balance sheet and origination flexibility. Upon the closing of this securitization, we estimate our percentage of credit non-mark-to-market funding to be over 75% of our total borrowings. Since 2018, we have sponsored four CLOs totaling $3.1 billion, and we continue to view this market as an attractive way to financing a meaningful portion of our business. It matches very well with our senior loan investment strategy, focused on high credit quality and well-diversified assets with light to moderate transitional business plans. During the third quarter, we advanced our business on a number of fronts. We had an active quarter with respect to originations, closing eight new loans totaling over $310 million in commitments, and we currently have an additional $270 million of loans in our pipeline that have either closed or are in the process of closing. We have been prioritizing loans collateralized by high-quality properties with…

Thank you, Jack, and thank you all for joining our call this morning. In the third quarter, we continued to deploy capital into high quality loans that meet our credit and return criteria. We closed eight new loans with total commitments of over $310 million and initial fundings of over $285 million. We also funded an additional $35 million on existing loan commitments for total portfolio fundings of over $320 million. Four of the new loans, representing over 50% of our Q3 originations are secured by multifamily properties and three loans totaling about a third of our new loan volume are collateralized by well-leased office buildings. One new hotel loan is related to the sale of the Minneapolis Hotel to a new ownership group, where Granite Point provided a $45 million first mortgage loan at a reset basis supported by fresh equity capital invested into the transaction. The newly originated loans carry attractive return and credit profiles with a weighted average yield of LIBOR plus 391 and a weighted average stabilized LTV of under 66%, generally consistent with our overall portfolio LTV. During the third quarter, we realized $290 million of repayments, which were diversified across various property types, including office, multifamily and one warehouse loan. Through the first nine months of the year, we realized over $800 million of repayments and principal amortization, which has been largely consistent with our initial full year estimate of between $500 million and $1 billion. We currently anticipate approximately $150 million of loan repayments in the fourth quarter, though the exact timing and volume are highly dependent on the typical loan closing process, which if realized would bring full year repayments to almost $1 billion or about 25% of our portfolio balance at the beginning of the year. We believe that healthy loan…

Thank you, Steve. Good morning, everyone, and thank you for joining us today. Yesterday afternoon, we reported our third quarter GAAP net income of $18.6 million or $0.34 per basic share as compared to $14.2 million or $0.26 per basic share in Q2. Our Q3 GAAP earnings include a benefit from provision for credit losses of $5.8 million or $0.11 per basic share related to certain reserve releases. Distributable earnings for the third quarter were $5.1 million or $0.09 per basic share versus $15.7 million or $0.29 per share in Q2. As we disclosed in our business update a few weeks ago, we incurred a $9.7 million or $0.18 per basic share write-off related to a resolution of our loan collateralized by hotel property located in Minneapolis. This write-off was the main driver of our distributable earnings variance as compared to the prior period. Our write-off adjusted distributable earnings of $0.27 per basic share, supported by the attractive returns generated by our portfolio and the ongoing benefits from LIBOR floors continue to cover our $0.25 per share common dividend. The weighted average floor rate was 130 basis points in Q3, which declined from 155 basis points in the prior period as our portfolio mix has continued to shift to newly originated assets with lower index floors while legacy loans with higher floors have been paying off. Our Q3 book value increased to $17.33 per share from $17.27 per share in Q2. The increase was driven by our share repurchases, which contributed around $0.07 per share and the release of CECL reserves of about $0.11 per share. These benefits were partially offset by the net cash settlement of warrants to purchase about 1.1 million shares, which impacted our third quarter book value by about $0.14 per share. As we disclosed in…

We will now begin the question-and-answer session. First question today comes from Doug Harter with Credit Suisse. Please go ahead.

Good morning, everyone. This is Josh Bolton on for Doug. Thanks for taking the question. As you’re thinking about your current excess liquidity position, how are you thinking about your ability to repay or pay down or replace some of the senior secured debt? And what could the timing look like on reducing some of the cost of funds associated? Thanks.

Hey, good morning. This is Marcin. Thank you for your question. Look, as we said before, refinancing our 8% term loan remains our strategic priority. It is something we’re spending quite a bit of time. It is market dependent. We’re evaluating a lot of different potential alternatives to refinance it. So timing, again, as TBD, I would say from an earnings perspective, it’s probably a 2022 event than 2021 event kind of given where we are in the year. But it is something we’re focused on. But again, it’s highly dependent on kind of market conditions and which type of product we eventually decide to go with.

Great. Thanks, Marcin. And then just thinking about leverage, the target leverage that you mentioned versus currently where you guys are today, which is at the lower end of that. Just curious, should we expect leverage to slowly increase to maybe the middle of that range? Or any thoughts around leverage over the next several quarters would be helpful. Thank you.

Sure. Happy to address that. Good question. Look, I think given the structure of our liabilities with a meaningful allocation to non-recourse term at no mark-to-market financing. I think we’ll be comfortable bringing leverage up towards the higher end of that range over the next, I would say, two to four quarters. So I would expect us over the course of 2022 to increase leverage. So we have some room to grow the portfolio and earnings. But again, it’s going to take us some time.

Great. Appreciate the comments, Marcin.

Thank you.

The next question comes from Chris Muller with JMP Securities. Please go ahead.

Hey, guys. Thanks for taking the question. I’m on for Steve today. Just one quick one from me. So it’s nice to see the resolution of some of the non-accruals and five rate loans. Do you guys have an estimate of what the drag on EPS is from the remaining non-accruals and I guess what that would look like flowing into earnings once you resolve this? Thanks.

Hey, Chris. Good morning. It’s Marcin. Happy to take this. Look, I think it’s – I would say it’s a few cents a share. There’s a lot that goes into it in terms of financing and capital. We are evaluating a lot of different options for the two remaining loans, which may require some capital if we decide to foreclose on one of them or both of them, right? So we need some liquidity for that. So I would say, it’s several cents a quarter. But again, as to the timing and when that may materialize, it’s still TBD. I’ll turn it over to maybe just Steve Alpart to give some more clarity on that.

Sure. I can give a quick update on the watch list assets. So I guess starting with the Pasadena retail deal. I got no major update on that one. We mentioned in the past that this is a well-secured, well-located, open-air infill retail center. It’s in a great area of Pasadena. It was low levered. When we made the loan performing very well prior to the pandemic, property was disproportionately impacted by the COVID lockdown protocols, some of the operating restrictions in LA County. We made a determination that it was not likely to be repaid at the July maturity date. And as a result, we moved it to five in Q2. We’ve maintained that five ranking for Q3. We’re continuing to be in active conversations with the borrower looking at a variety of potential options, which could include negotiated deal in lieu foreclosure, sale of the property or sale of a loan. Just to reiterate, property has multiple demand drivers and we’re confident of the intrinsic value of the property. We’ll keep you updated as these conversations progress. Turning to the D.C. office loan, secured by a very well-located office building in the District of Columbia. Prior to the pandemic, the submarket was about a 5% vacancy. We have a great sponsor here, lots of equity, a business plan as a lease-up play. As people probably know, the D.C. market has been impacted by the pandemic. A lot of the big space users like law firms, government users are lagging the return to the office. So leasing has been very slow. We moved this one to a five in Q2, also maintaining the risk ranking for this one in Q3. Conversations remain productive with the borrower and similar capacity to retail, we’re looking at a variety of potential options, foreclosure deal in lieu, sale of the property or sale of loan. So those are the two non-accrual loans. And then the third watch list asset is a newer vintage student housing property in Louisville, Kentucky. The asset has remained as a four, because it’s been behind on business plan due to property-related issues, which the borrower has been addressing. As a result of that, the borrower has requested and we are going to grant an extension to November 2022. Meanwhile, the property’s occupancy has been in the high 80s. We’re monitoring the asset, and we’re going to continue our conversations with the borrower. So that’s the update on those three. Overall, in the portfolio, we’re seeing very positive credit migration. We feel good about the overall credit quality. And as Jack said earlier, we think we’ll deliver good results over time.

Very helpful. Thanks for taking the question.

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

Well, thank you for joining us on our call today. We very much appreciate your support and your attention. And we look forward to reporting back to you next quarter as we continue our progress for Granite Point and positioning for future growth. Thank you, again.