GPMT - Granite Point Mortgage Trust Is Facing Headwinds But I'm Holding The Discounted Preferreds

2024-05-12 06:43:57 ET

Summary

• Granite Point Mortgage Trust reduced its quarterly cash dividend by 25% to $0.15 per share.
• The mREIT saw its book value decline by 13.7% sequentially following an increase in provision for credit losses of $75.6 million.
• I still own a significant position in the 10.5% yielding preferreds against $155 million in unrestricted cash as of the end of the first quarter.

Granite Point Mortgage Trust ( GPMT ) shed nearly 18% of its value following the publication of fiscal 2024 first-quarter earnings which saw CECL reserve as a percent of commitments move up to 7.5% sequentially from 4.7% in the fourth quarter. GPMT's loan portfolio had an outstanding principal balance of $2.7 billion spread across 71 loan investments that were 99% constituted from senior loans with roughly 43.1% of loans backed by office properties. This outsized exposure to office against the headwinds of the property type has opened up a significant discount to book value as provision for credit losses continues to embed high GAAP net losses. I last covered the ticker in February....

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