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What changed in Granite Point Mortgage Trust Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Granite Point Mortgage Trust Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+335 added−387 removedSource: 10-K (2025-02-27) vs 10-K (2024-03-01)

Top changes in Granite Point Mortgage Trust Inc.'s 2024 10-K

335 paragraphs added · 387 removed · 281 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFor additional information concerning these competitive risks, see “ Risk Factors — Risks Related to our Lending and Investment Activities — We operate in a competitive market for investment opportunities and competition may limit our ability 4 Table of Contents to originate or acquire our target investments and could also affect the pricing of these investments ” in Item 1A of this Annual Report on Form 10-K.
Biggest changeFor additional information concerning these competitive risks, see “ Risk Factors — Risks Related to our Lending and Investment Activities — We operate in a competitive market for investment opportunities and competition may limit our ability to originate or acquire our target investments and could also affect the pricing of these investments ” in Item 1A of this Annual Report on Form 10-K. 4 Table of Contents Human Capital Our team of talented employees is fundamental to our success.
The Investment Company Act defines voting securities as any security presently entitling the owner, or holder 6 Table of Contents thereof, to vote for the election of directors of a company. We treat entities in which we own at least a majority of the outstanding voting securities as majority-owned subsidiaries for purposes of the 40% test.
The Investment Company Act defines voting securities as any security presently entitling the owner, or holder thereof, to vote for the election of directors of a company. We treat entities in which we own at least a majority of the 6 Table of Contents outstanding voting securities as majority-owned subsidiaries for purposes of the 40% test.
As stabilized value may be based on certain assumptions, such as future construction completion, projected re-tenanting, payment of tenant improvement or leasing commissions allowances or free or abated rent periods, or increased tenant occupancies. 2 Table of Contents The map and charts below, weighted by carrying value, illustrate the geographic distribution and types of properties securing our loan portfolio as of December 31, 2023: Our Financing Strategy and Leverage We currently finance our business through public and private offerings of our equity and debt securities, asset-backed financings and our outstanding commercial real estate collateralized loan obligations, or CRE CLOs.
As stabilized value may be based on certain assumptions, such as future construction completion, projected re-tenanting, payment of tenant improvement or leasing commissions allowances or free or abated rent periods, or increased tenant occupancies. 2 Table of Contents The map and charts below, weighted by carrying value, illustrate the geographic distribution and types of properties securing our loan portfolio as of December 31, 2024: Our Financing Strategy and Leverage We currently finance our business through public and private offerings of our equity and debt securities, asset-backed financings and our outstanding commercial real estate collateralized loan obligations, or CRE CLOs.
Compensation and Benefits We provide a comprehensive suite of compensation and benefits that includes the following elements, among others, to promote our employees’ well-being: 5 Table of Contents • competitive compensation packages that consist of salaries, cash bonuses, merit increases and stock-based compensation for eligible employees; • company-paid medical and dental insurance benefits for our full-time employees and their families; • savings and investment opportunities, including a 401(k) plan with company contributions and health savings accounts with company contributions; • mental health and wellness offerings, including a gym reimbursement program, gym discount program, fitness rewards program, free subscriptions to a mental health and mediation app, and an employee assistance program; • generous paid time off, ten company holidays and leave policies, including gender neutral parenting leave; and • flexible/hybrid work model, where employees may work up to two days a week remotely.
Compensation and Benefits We provide a comprehensive suite of compensation and benefits that includes the following elements, among others, to promote our employees’ well-being: • competitive compensation packages that consist of salaries, cash bonuses, merit increases and stock-based compensation for eligible employees; 5 Table of Contents • company-paid medical and dental insurance benefits for our full-time employees and their families; • savings and investment opportunities, including a 401(k) plan with company contributions and health savings accounts with company contributions; • physical and mental health and wellness offerings, including a gym reimbursement program, gym discount program, fitness rewards program, free subscriptions to a mental health and meditation app, and an employee assistance program; • generous paid time off, ten company holidays and leave policies, including gender neutral parenting leave; and • flexible/hybrid work model, where employees may work up to two days a week remotely.
We believe that our well-diversified portfolio and flexible investment strategy will allow us to actively adapt to changing market conditions and generate attractive, long-term returns for our stockholders in a variety of environments. 1 Table of Contents Our Loan Portfolio As of December 31, 2023, our loan portfolio consisted of 73 commercial real estate loan investments with an aggregate principal balance of $2.7 billion and an additional $0.2 billion of future funding obligations.
We believe that our well-diversified portfolio and flexible investment strategy will allow us to actively adapt to changing market conditions and generate attractive, long-term returns for our stockholders in a variety of environments. 1 Table of Contents Our Loan Portfolio As of December 31, 2024, our loan portfolio consisted of 54 commercial real estate loan investments with an aggregate principal balance of $2.1 billion and an additional $0.1 billion of future funding obligations.
Given our focus on senior floating-rate mortgage loans, we currently expect that such leverage will be, on a total debt-to-equity ratio basis, within a range of 3.0:1.0 and 3.5:1.0; however, our leverage may vary and differ from our expectations depending on market conditions and any steps we may take to strengthen our balance sheet and enhance our liquidity position.
Given our focus on senior floating-rate mortgage loans, we currently expect that such leverage will be, on a total debt-to-equity ratio basis, within a range of 3.0:1.0 and 3.5:1.0; however, our leverage may vary and differ from our expectations depending on market conditions and any steps we may take to adjust our liquidity position.
We classify our assets for purposes of certain of our subsidiaries’ Section 3(c)(5)(C) exclusion from the Investment Company Act based upon no-action positions taken by the SEC staff and interpretive guidance provided by the SEC and its staff.
We classify our assets for purposes of certain of our subsidiaries’ Section 3(c)(5)(C) exclusion from the Investment Company Act based upon no-action positions taken by the Securities and Exchange Commission, or the SEC, staff and interpretive guidance provided by the SEC and its staff.
As of December 31, 2023, the outstanding amount due on securitized debt obligations was $1.0 billion. We are not required to maintain any particular debt-to-equity leverage ratio.
As of December 31, 2024, the outstanding amount due on securitized debt obligations was $0.8 billion. We are not required to maintain any particular debt-to-equity leverage ratio.
As of December 31, 2023, we had repurchase and secured credit financing facilities in place to finance loans held for investment and our one real estate owned, or REO, asset with an aggregate maximum borrowing capacity of $1.9 billion. We also finance pools of commercial real estate loans through CRE CLOs, which are consolidated on our financial statements.
As of December 31, 2024, we had repurchase and secured credit financing facilities in place to finance loans held for investment asset with an aggregate maximum borrowing capacity of $1.3 billion. We also finance pools of commercial real estate loans through CRE CLOs, which are consolidated on our financial statements.
Employee Engagement In the fall of 2022, we developed and implemented an annual survey to measure employee engagement and satisfaction and to identify any areas where we may improve our work environment or culture. More than 90% of our team members have completed this engagement survey each year.
Employee Engagement We conduct an annual employee survey to measure engagement and satisfaction and to identify any areas where we may improve our work environment, culture or benefit offerings. More than 85% of our team members have completed this engagement survey each year.
As of December 31, 2023, 98.3% of our loan portfolio by principal balance earned a floating rate of interest.
As of December 31, 2024, 97.9% of our loan portfolio by principal balance earned a floating rate of interest.
Human Capital Our team of talented employees is fundamental to our success. As of December 31, 2023, we employed 35 individuals, all of whom are full time and based out of our two primary office locations in New York, New York, and Saint Louis Park, Minnesota.
As of December 31, 2024, we employed 33 individuals, all of whom are full time and based out of our two primary office locations in New York, New York, and Saint Louis Park, Minnesota.
Avg. $ 2,887,877 $ 2,727,179 $ 2,583,825 S+3.75% S+4.03% 3.2 66.7 % 63.6 % ____________________ (1) “Senior” means a loan primarily secured by a first priority lien on commercial real property and related personal property and also includes, when applicable, any companion subordinate loans. (2) Cash coupon does not include origination or exit fees.
Avg. $ 2,196,975 $ 2,106,334 $ 1,897,648 S+3.77% S+4.01% 3.1 69.6 % 64.4 % ____________________ (1) “Senior” means a loan primarily secured by a first priority lien on commercial real property and related personal property and also includes, when applicable, any companion subordinate loans. (2) Cash coupon does not include origination or exit fees.
The table below details overall statistics of our portfolio as of December 31, 2023: (dollars in thousands) Type Maximum Loan Commitment Principal Balance Carrying Value Cash Coupon (2) Yield (3) Original Term (Years) Initial LTV (4) Stabilized LTV (5) Senior loans (1) $ 2,874,370 $ 2,713,672 $ 2,570,677 S+3.75% S+4.03% 3.1 66.8 % 63.7 % Subordinated loans 13,507 13,507 13,148 8.00 % 8.11 % 10.0 41.4 % 36.2 % Total/Wtd.
The table below details overall statistics of our portfolio as of December 31, 2024: (dollars in thousands) Type Maximum Loan Commitment Principal Balance Carrying Value Cash Coupon (2) Yield (3) Original Term (Years) Initial LTV (4) Stabilized LTV (5) Senior loans (1) $ 2,183,737 $ 2,093,096 $ 1,884,581 S+3.77% S+4.01% 3.0 69.8 % 64.6 % Subordinated loans 13,238 13,238 13,067 8.00 % 8.11 % 10.0 41.4 % 36.2 % Total/Wtd.
More than 90% of respondents to the 2023 survey indicated that they Strongly Agree or Agree that they feel like they are part of a team, they have confidence in the leadership of the Company, and there is good interdepartmental cooperation.
More than 86% of respondents to the 2024 survey indicated that they Strongly Agree or Agree that the Company operates by strong values, they have confidence in the leadership of the Company, and there is good interdepartmental cooperation.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are required to materially increase our CECL reserves for any reason, such increase could adversely affect our business, financial condition and results of operations. CECL reserves are difficult to estimate, and may not be correct, which could severely impact our results of operations. Our CECL reserves are evaluated on a quarterly basis.
Biggest changeIn addition, there can be no assurance that any loan modification or restructuring will not result in a substantial write-off of the principal of such loan, debt securities or other interests. If we are required to materially increase our CECL reserves for any reason, such increase could adversely affect our business, financial condition and results of operations.
In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of loans and investments, offer more attractive pricing or other terms and establish more relationships than we.
In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of loans and investments, offer more attractive pricing or other terms and establish more relationships than we have.
Loan investments that are outstanding beyond the end of the call protection or yield maintenance period can be repaid with no prepayment fees or penalties. The absence of call protection provisions may expose us to the risk of early repayment of loans, and the inability to redeploy capital accretively.
Loan investments that are outstanding beyond the end of the call protection or yield maintenance period can be repaid with no prepayment fees or penalties. The absence of call protection or yield maintenance provisions may expose us to the risk of early repayment of loans, and the inability to redeploy capital accretively.
Moreover, even if a restructuring were successfully accomplished, a risk exists that, upon maturity of such real estate loan, debt securities or other interests, replacement “takeout” financing will not be available. Additionally, such loan modifications may result in our becoming the owner of underlying the real estate.
Moreover, even if a restructuring were successfully accomplished, a risk exists that, upon maturity of such real estate loan, debt securities or other interests, replacement “takeout” financing will not be available. Additionally, such loan modifications may result in our becoming the owner of the underlying real estate.
Operational risks, including the risk of cyberattacks, may disrupt our business, resulting in loss or limited growth. Our operations are highly dependent on our information systems and technology, which are provided and maintained by an outsourced technology vendor, and we rely heavily on our financial, accounting, treasury, communications and other data processing systems.
Operational risks, including the risk of cyberattacks, may disrupt our business, resulting in loss or limited growth. Our operations are highly dependent on our information systems and technology, which are provided and maintained by an outsourced information technology vendor, and we rely heavily on our financial, accounting, treasury, communications and other data processing systems.
Our substantial amount of debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that: • our cash flow from operations may be insufficient to make required payments of principal of and interest on our debt, or we may fail to comply with covenants or breach a representation contained in our debt agreements, which in each case, if we are unable to obtain amendments or waivers of such convenants or representations from financing counterparties, may result in (a) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision), which we then may be unable to repay from internal funds or to refinance on favorable terms, or at all, (b) our inability to borrow undrawn amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements, which would result in a decrease in our liquidity, and/or (c) the loss of some or all of our collateral assets to foreclosure or sale; • our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase in an amount sufficient to offset the higher financing costs; • we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder dividends or other purposes; and • we may not be able to refinance any debt that matures prior to the maturity (or realization) of an underlying investment it was used to finance on favorable terms or at all.
Our substantial amount of debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that: • our cash flow from operations may be insufficient to make required payments of principal of and interest on our debt, or we may fail to comply with covenants or breach a representation contained in our debt agreements, which in each case, if we are unable to obtain amendments or waivers of such covenants or representations from financing counterparties, may result in (a) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision), which we then may be unable to repay from internal funds or to refinance on favorable terms, or at all, (b) our inability to borrow undrawn amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements, which would result in a decrease in our liquidity, and/or (c) the loss of some or all of our collateral assets to foreclosure or sale; • our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase in an amount sufficient to offset the higher financing costs; • we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder dividends or other purposes; and • we may not be able to refinance any debt that matures prior to the maturity (or realization) of an underlying investment it was used to finance on favorable terms or at all.
Such changes have included, and may in the future include, economic and/or market fluctuations, reduced demand for office properties as a result of increases in remote working arrangements, changes in environmental, zoning and other laws, casualty or condemnation losses, regulatory limitations on rents, evictions and/or foreclosures, decreases in property values, changes in the appeal of properties to tenants, changes in supply and demand of real estate products, fluctuations in real estate fundamentals, the financial resources of borrower entities, energy and supply shortages, various uninsured or uninsurable risks, natural disasters, terrorism, acts of war, outbreaks of pandemic or contagious diseases, changes in government regulations, political and legislative uncertainty, changes in monetary policy, changes in real 8 Table of Contents property tax rates and operating expenses, changes in interest rates, changes in the availability of debt financing and/or mortgage funds which may render the sale or refinancing of properties difficult or impracticable, increased mortgage defaults, increases in borrowing rates, changes in consumer spending, negative developments in the economy that depress travel activity, escalating global trade tensions, the conflict between Russia and Ukraine, deteriorating conditions in the Middle East, adverse changes in demand and/or real estate values generally and other factors that are beyond our control.
Such changes have included, and may in the future include, economic and/or market fluctuations, reduced demand for office properties as a result of increases in remote working arrangements, changes in environmental, zoning and other laws, casualty or condemnation losses, regulatory limitations on rents, evictions and/or foreclosures, decreases in property values, changes in the appeal of properties to tenants, changes in supply and demand of real estate products, fluctuations in real estate fundamentals, the financial resources of borrower entities, energy and supply shortages, various uninsured or uninsurable risks, natural disasters, terrorism, acts of war, outbreaks of pandemic or contagious diseases, changes in government regulations, political and legislative uncertainty, changes in monetary policy, changes in real 8 Table of Contents property tax rates and operating expenses, changes in interest rates, changes in the availability of debt financing and/or mortgage funds which may render the sale or refinancing of properties difficult or impracticable, increased mortgage defaults, increases in borrowing rates, changes in consumer spending, negative developments in the economy that depress travel activity, escalating global trade tensions, the conflict between Russia and Ukraine, conditions in the Middle East, adverse changes in demand and/or real estate values generally and other factors that are beyond our control.
If the borrower’s assessment of the asset as undervalued is inaccurate, or if the market in which the asset is located fails to improve according to the borrower’s projections, or if the borrower fails to improve the quality of the asset’s management and/or the value of the asset or stabilize the property, the borrower may not be able to satisfy the transitional loan through a sale of the property or conventional financing, and we bear the risk of loss of principal and non-payment of interest and fees.
If the borrower’s assessment of the asset as undervalued is inaccurate, or if the market in which the asset is located fails to improve according to the borrower’s projections, or if the borrower fails to sufficiently improve the quality of the asset’s management and/or the value of the asset or stabilize the property, the borrower may not be able to satisfy the transitional loan through a sale of the property or conventional financing, and we bear the risk of loss of principal and non-payment of interest and fees.
The net operating income of an income-producing property can be affected by numerous factors, including, but not limited to: • tenant mix; • success of tenant businesses and tenant bankruptcies; • property management decisions, including decisions on capital improvements, particularly in older building structures; • renovations or repositionings during which operations may be limited or halted completely; • property location and condition; • competition from similar properties; • changes in national, regional or local economic conditions, real estate values or rental or occupancy rates; • increases in remote working arrangements and the subsequent effect on demand for commercial real estate, particularly office properties; • labor shortages and increasing wages; • changes in interest rates and in the state of the credit and securitization markets and the debt and equity capital markets, including diminished availability or lack of debt financing for commercial real estate; • changes in governmental rules, regulations and fiscal policies, including income tax regulation, real estate taxes, environmental legislation and zoning laws; • responses of businesses, governments and individuals to pandemics or outbreaks of contagious disease; • environmental contamination and any liabilities relating to environmental matters at the property; • fraudulent acts or theft on the part of the property owner, sponsor and/or property manager; and • natural disasters, such as hurricanes, earthquakes, wildfires and floods, including climate change-related risks; terrorism; social unrest; civil disturbances and other events which may result in property damage, decrease the availability of or increase the cost of insurance or otherwise result in uninsured losses.
The net operating income of an income-producing property can be affected by numerous factors, including, but not limited to: • tenant mix; • success of tenant businesses and tenant bankruptcies; • property management decisions, including decisions on capital improvements, particularly in older building structures; • renovations or repositionings during which operations may be limited or halted completely; • property location and condition; • competition from similar properties; • changes in national, regional or local economic conditions, real estate values or rental or occupancy rates; • increases in remote working arrangements and the subsequent effect on demand for commercial real estate, particularly office properties; • labor shortages and increasing wages; • changes in interest rates and in the state of the credit and securitization markets and the debt and equity capital markets, including diminished availability or lack of debt financing for commercial real estate; • changes in governmental rules, regulations and fiscal policies, including income tax regulation, real estate taxes, environmental legislation and zoning laws; • responses of businesses, governments and individuals to pandemics or outbreaks of contagious disease; • environmental contamination and any liabilities relating to environmental matters at the property; • fraudulent acts or theft on the part of the property owner, sponsor and/or property manager; and • natural disasters, such as hurricanes, earthquakes, wildfires and floods, including climate change-related risks; acts of war and terrorism; social unrest; civil disturbances and other events which may result in property damage, a decrease in the availability of and/or an increase in the cost of insurance and/or uninsured losses.
Obtaining and maintaining licenses cause us to incur expenses and failure to be properly licensed under state law or otherwise may have a material adverse effect on us and our operations. 25 Table of Contents Changes in laws or regulations governing our operations, changes in the interpretation thereof or newly enacted laws or regulations (including laws and regulations having the effect of exempting REITs from the Investment Company Act) and any failure by us to comply with these laws or regulations, could require changes to certain of our business practices, negatively impact our operations, cash flow or financial condition, impose additional costs on us, subject us to increased competition or otherwise adversely affect our business.
Obtaining and maintaining licenses cause us to incur expenses and failure to be properly licensed under state law or otherwise may have a material adverse effect on us and our operations. 24 Table of Contents Changes in laws or regulations governing our operations, changes in the interpretation thereof or newly-enacted laws or regulations (including laws and regulations having the effect of exempting REITs from the Investment Company Act) and any failure by us to comply with these laws or regulations, could require changes to certain of our business practices, negatively impact our operations, cash flow or financial condition, impose additional costs on us, subject us to increased competition or otherwise adversely affect our business.
Certain categories of stockholders such as foreign stockholders eligible for treaty or other benefits, stockholders with net operating losses, and certain tax-exempt stockholders that are subject to unrelated business income tax, could be subject to increased taxes on a portion of their dividend income from us that is 32 Table of Contents attributable to “excess inclusion income.” In addition, to the extent that our stock is owned by tax-exempt “disqualified organizations,” such as certain government-related entities and charitable remainder trusts that are not subject to tax on unrelated business income, we may incur a corporate level tax on a portion of our income from the taxable mortgage pool.
Certain categories of stockholders such as foreign stockholders eligible for treaty or other benefits, stockholders with net operating losses, and certain tax-exempt stockholders that are subject to unrelated business income tax, could be subject to increased taxes on a portion of their dividend income from us that is attributable to “excess inclusion income.” In addition, to the extent that our stock is owned by tax-exempt “disqualified organizations,” such as certain government-related entities and charitable remainder trusts that are not subject to tax on 31 Table of Contents unrelated business income, we may incur a corporate level tax on a portion of our income from the taxable mortgage pool.
In the event that our financing is for a shorter term than the financed investment, we may not be able to extend or find appropriate replacement financing, and that would have an adverse impact on our liquidity and our returns.
In the event that our financing is for a shorter term than the financed investment, we may not be able to extend or find appropriate replacement financing, which would have an adverse impact on our liquidity and our returns.
Additionally, global trade disruption, significant introductions of trade barriers and bilateral trade frictions, including due to war or other hostilities, together with any future downturns in the global economy resulting therefrom, could adversely affect our performance.
Additionally, global trade disruption, significant introductions of tariffs and other trade barriers and bilateral trade frictions, including due to war or other hostilities, together with any future downturns in the global economy resulting therefrom, could adversely affect our performance.
Further, ownership of real estate may increase our risk of direct and/or indirect liability under environmental laws that impose, regardless of fault, joint and several liability for the cost of remediating contamination and compensation for damages.
Further, ownership of real estate assets may increase our risk of direct and/or indirect liability under environmental laws that impose, regardless of fault, joint and several liability for the cost of remediating contamination and compensation for damages.
RISK FACTORS Risks Related to Our Lending and Investment Activities Our loans and investments expose us to risks associated with debt-oriented real estate investments generally. We seek to invest primarily in debt investments in or relating to commercial real estate assets.
RISK FACTORS Risks Related to Our Lending and Investment Activities Our loans and investments expose us to risks associated with debt-oriented real estate investments generally. We invest primarily in debt investments in or relating to commercial real estate assets.
Breaches in security, whether malicious in nature or through inadvertent transmittal or other loss of data, could potentially jeopardize our 23 Table of Contents employees’, investors’ or counterparties’ confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our employees’, investors’, counterparties’ or third-parties’ operations, which could result in significant losses, increased costs, disruption of our business, liability to our investors and other counterparties, regulatory intervention or reputational damage.
Breaches in security, whether malicious in nature or through inadvertent transmittal or other loss of data, could potentially jeopardize our employees’, investors’ or counterparties’ confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our employees’, investors’, counterparties’ or third-parties’ operations, which could result in significant losses, increased costs, 22 Table of Contents disruption of our business, liability to our investors and other counterparties, regulatory intervention or reputational damage.
For further discussion of the risks related to capital deployment, see “ — Risks Related to Our Lending and Investment Activities — Difficulty or delays in redeploying the proceeds from repayments of our existing loans and investments may cause our financial performance and returns to stockholders to suffer .” Our existing loan investments often contain call protection provisions that require a certain minimum amount of interest due to us regardless of when the loan is repaid.
For further discussion of the risks related to capital deployment, see “ — Risks Related to Our Lending and Investment Activities — Difficulty or delays in redeploying the proceeds from repayments of our existing loans and investments may cause our financial performance and returns to stockholders to suffer .” Our existing loan investments often contain call protection or yield maintenance provisions that require a certain minimum amount of interest due to us regardless of when the loan is repaid.
For the purpose of preserving our qualification as a REIT for federal income tax purposes, among other purposes, our charter provides that beneficial or constructive ownership by any individual (including certain entities treated as individuals for this purpose) of more than a certain percentage (currently 9.8%) in value or number of shares, whichever is more restrictive, of the outstanding shares of our common stock, or 9.8% in value of our outstanding capital stock is prohibited, which we refer to as the “ownership limits.” The constructive ownership rules under the Code and our charter are 30 Table of Contents complex and may cause shares of our outstanding common stock owned by a group of related individuals or entities to be deemed to be constructively owned by one individual.
For the purpose of preserving our qualification as a REIT for federal income tax purposes, among other purposes, our charter provides that beneficial or constructive ownership by any individual (including certain entities treated as individuals for this purpose) of more than a certain percentage (currently 9.8%) in value or number of shares, whichever is more restrictive, of the outstanding shares of our common stock, or 9.8% in value of our outstanding capital stock is prohibited, which we refer to as the “ownership limits.” The constructive ownership rules under the Code and our charter are complex and may cause shares of our outstanding common stock owned by a group of related individuals or entities to be deemed to be constructively owned by one individual.
In addition, if we acquire direct or indirect interests in undeveloped land or underdeveloped real property, which may often be non-income producing, we will be subject to the risks normally associated with such assets and development activities, including risks relating to the availability and timely receipt of zoning and other regulatory or environmental approvals, the cost and timely completion of construction (including risks beyond our control, such as weather or labor conditions or material shortages) and the availability of both construction and permanent financing on favorable terms.
In addition, if we 15 Table of Contents acquire direct or indirect interests in undeveloped land or underdeveloped real property, which may often be non-income producing, we will be subject to the risks normally associated with such assets and development activities, including risks relating to the availability and timely receipt of zoning and other regulatory or environmental approvals, the cost and timely completion of construction (including risks beyond our control, such as weather or labor conditions or material shortages) and the availability of both construction and permanent financing on favorable terms.
Our access to sources of financing will depend upon a number of factors, over which we have little or no control, 19 Table of Contents including the market's view of the quality of our investments, the market’s perception of our growth potential, our current and potential future earnings and cash dividends, any credit ratings we or our corporate debt may receive from major rating agencies, the prevailing interest rates being paid by other companies that investors consider to be comparable to us and the market price of our securities.
Our access to sources of financing will depend upon a number of factors, over which we have little or no control, including the market's view of the quality of our investments, the market’s perception of our growth potential, our current and potential future earnings and cash dividends, any credit ratings we or our corporate debt may receive from major rating agencies, the prevailing interest rates being paid by other companies that investors consider to be comparable to us and the market price of our securities.
As a result of the risk retention requirements, we have, and may in the future, be required to purchase and retain certain interests in a securitization into which we sell loans and/or, when we act as issuer, may be required to sell certain interests in a securitization at prices below levels that such interests have historically yielded and/or may be required to enter into certain arrangements related to risk retention that we have not historically been required to enter into.
As a result of the risk retention requirements, we have, and may in the future, be required to purchase and retain certain interests in a securitization into which we sell investments and/or, when we act as issuer, may be required to sell certain interests in a securitization at prices below levels that such interests have historically yielded and/or may be required to enter into certain arrangements related to risk retention that we have not historically been required to enter into.
In addition, as regulatory capital requirements imposed on our lenders are increased, they may be required to limit, or increase the cost of, financing they provide to us. In general, this could potentially increase our financing costs and reduce our liquidity or require us to sell assets at an inopportune time or price.
In addition, ifs regulatory capital requirements imposed on our lenders are increased, they may be required to limit, or increase the cost of, financing they provide to us. In general, this could potentially increase our financing costs and reduce our liquidity or require us to sell assets at an inopportune time or price.
In addition, unless we enter into hedging or similar transactions with respect to the portion of our assets that we fund using our balance sheet, returns we achieve on such assets will generally increase as interest rates for those assets rise and decrease as interest rates for those assets decline. 9 Table of Contents A prolonged economic slowdown, a lengthy or severe recession or declining real estate values could impair our investments and harm our operations.
In addition, unless we enter into hedging or similar transactions with respect to the portion of our assets that we fund using our balance sheet, returns we achieve on such assets will generally increase as interest rates for those assets rise and decrease as interest rates for those assets decline. 9 Table of Contents A prolonged economic slowdown, a lengthy or severe recession, severe public health events or declining real estate values could impair our investments and harm our operations.
As a result, the valuations of the real estate assets against which we will make or acquire loans are subject to a large 10 Table of Contents degree of uncertainty and are made on the basis of assumptions and methodologies that may not prove to be accurate, particularly in periods of volatility, macroeconomic and local economic uncertainty, disrupted supply chains effecting the timing of delivery and cost of materials, inflationary pressures, low transaction flow or restricted debt availability.
As a result, the valuations of the real estate assets against which we will make or acquire loans are subject to a large degree of uncertainty and are made on the basis of assumptions and methodologies that may not prove to be accurate, particularly in periods of volatility, macroeconomic and local economic uncertainty, disrupted supply chains effecting the timing of delivery and cost of materials, inflationary pressures, low transaction flow or restricted debt availability.
These financing arrangements also grant certain consent rights to the lenders thereunder which give them the right to consent to certain modifications to the pledged collateral and could limit our ability to manage a pledged investment in a way that we think would provide the best outcome for our stockholders.
These financing arrangements also grant certain consent rights to the lenders thereunder which give them the right to consent to certain modifications to the financed collateral and could limit our ability to manage a financed investment in a way that we think would provide the best outcome for our stockholders.
Although we intend to make regular quarterly distributions to holders of our common stock and we currently expect to distribute at least 90% of our net taxable income to our stockholders on an annual basis, we have not established a minimum distribution payment level and our ability to pay distributions may be adversely affected by a number of factors, including the risk factors described in this Annual Report on Form 10-K.
Although we intend to make regular quarterly distributions to holders of our common stock and we currently expect to distribute at least 90% of our net taxable income to our stockholders on an annual basis, we have not established a minimum distribution payment level and our ability to pay distributions may be adversely affected by a 27 Table of Contents number of factors, including the risk factors described in this Annual Report on Form 10-K.
In addition, selecting and evaluating material due diligence matters, including ESG factors, is subjective by nature, and there is no guarantee that the criteria utilized or judgment exercised by us or a third-party specialist (if any) will reflect the beliefs, values, internal policies or preferred practices of any particular investor or align with the beliefs or values or preferred practices of other commercial real estate debt investors or with market trends.
In addition, selecting and evaluating material due diligence matters, including ESG factors, is subjective by nature, and there is no guarantee that the criteria utilized or judgment exercised by us or a third-party specialist (if any) will reflect the 11 Table of Contents beliefs, values, internal policies or preferred practices of any particular investor or align with the beliefs or values or preferred practices of other commercial real estate debt investors or with market trends.
In addition, investments in real estate and real estate-related businesses and assets may be subject to the risk of environmental liabilities, contingent liabilities upon disposition of assets, casualty or condemnations losses, energy supply shortages, natural disasters, climate-related risks (including transition risks and acute and chronic physical risks), acts of God, terrorist attacks, war and other events that are beyond our control, and various uninsured or uninsurable risks.
In addition, investments in real estate and real estate-related businesses and assets may be subject to the risk of environmental liabilities, contingent liabilities upon disposition of assets, casualty or condemnations losses, energy supply shortages, natural disasters, climate-related risks (including transition risks and acute and chronic physical risks), acts of God, terrorist attacks, war, pandemic or other public health events and other events that are beyond our control, and various uninsured or uninsurable risks.
With certain exceptions, the Maryland General Corporation Law provides that a holder of “control shares” of a Maryland corporation acquired in a “control share acquisition” has no voting rights with respect to those shares except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquiring person or by our officers or by our directors who are our employees.
With certain exceptions, the Maryland General Corporation Law provides that a holder of “control shares” of a Maryland corporation acquired in a “control share acquisition” has no voting rights with respect to those shares except to the extent approved by a vote of two-thirds of the votes entitled to be 26 Table of Contents cast on the matter, excluding shares owned by the acquiring person or by our officers or by our directors who are our employees.
We are generally required to distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gain, each year for us to qualify as a REIT under the Code, 28 Table of Contents which requirement we currently intend to satisfy through quarterly distributions of at least 90% of our net taxable income in such year, subject to certain adjustments.
We are generally required to distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gain, each year for us to qualify as a REIT under the Code, which requirement we currently intend to satisfy through quarterly distributions of at least 90% of our net taxable income in such year, subject to certain adjustments.
Although we monitor our investments in and transactions with TRSs, there can be no assurance that we will be able to comply with the limitation on the value of our TRSs discussed above or to avoid application of the 100% excise tax discussed above.
Although we monitor our investments in and transactions with our TRS, there can be no assurance that we will be able to comply with the limitation on the value of our TRS discussed above or to avoid application of the 100% excise tax discussed above.
Certain of our investments may include loans on properties and to borrowers that are typically highly leveraged, with significant burdens on cash flow and, therefore, involve a high degree of risk of substantial or total losses on our investments in 14 Table of Contents certain circumstances and may become subject to certain additional potential liabilities that may exceed the value of our original investment therein.
Certain of our investments may include loans on properties and to borrowers that are typically highly leveraged, with significant burdens on cash flow and, therefore, involve a high degree of risk of substantial or total losses on our investments in certain circumstances and may become subject to certain additional potential liabilities that may exceed the value of our original investment therein.
The percentage of leverage we employ varies depending on our available capital, our ability to obtain and access financing arrangements with lenders, the type of asset we are funding, whether the financing is recourse or nonrecourse, debt restrictions contained in those financing arrangements and the lenders’ and rating agencies’ estimate of the stability of our investment portfolio’s cash flow.
The percentage of leverage we employ varies depending on 17 Table of Contents our available capital, our ability to obtain and access financing arrangements with lenders, the type of asset we are funding, whether the financing is recourse or nonrecourse, debt restrictions contained in those financing arrangements and the lenders’ and rating agencies’ estimate of the stability of our investment portfolio’s cash flow.
If the SEC or its staff were to disagree with our treatment of one or more subsidiary entities as majority-owned subsidiaries, we may need to adjust our strategy and our assets in order to continue to pass the 40% test. Any adjustment in our strategy or assets could have a material adverse effect on us.
If the SEC or its staff were to disagree with our treatment of one or more 23 Table of Contents subsidiary entities as majority-owned subsidiaries, we may need to adjust our strategy and our assets in order to continue to pass the 40% test. Any adjustment in our strategy or assets could have a material adverse effect on us.
We also may be subject to state and local taxes on our income or property, including franchise, payroll, mortgage recording and transfer taxes, either directly or at the level of the other companies through which we indirectly own our assets. In addition, our TRS is subject to full U.S. federal, state, local and foreign corporate-level income taxes.
We also may be subject to state and local taxes on our income or property, including franchise, payroll, mortgage recording and transfer taxes, either directly or at the level of the other companies through which we indirectly own our assets. 28 Table of Contents In addition, our TRS is subject to full U.S. federal, state, local and foreign corporate-level income taxes.
Furthermore, the renovation, refurbishment or expansion of a property in transition by a borrower involves various risks, including rehabilitation costs exceeding original estimates (including as the result of inflation in the cost of labor and materials), 13 Table of Contents environmental risks, delays in legal and other approvals and rehabilitation and subsequent leasing of the property not being completed on schedule or at all.
Furthermore, the renovation, refurbishment or expansion of a property in transition by a borrower involves various risks, including rehabilitation costs exceeding original estimates (including as the result of inflation in the cost of labor and materials), environmental risks, delays in legal and other approvals and rehabilitation and subsequent leasing of the property not being completed on schedule or at all.
If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any resultant gain if we sell assets that are treated as dealer property or inventory. 33 Table of Contents Our ownership of, and relationship with, our TRSs will be restricted and a failure to comply with the restrictions would jeopardize our REIT status and may result in the application of a 100% excise tax.
If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any resultant gain if we sell assets that are treated as dealer property or inventory. 32 Table of Contents Our ownership of, and relationship with, our TRS will be restricted and a failure to comply with the restrictions would jeopardize our REIT status and may result in the application of a 100% excise tax.
Our board of directors, in its sole discretion, may exempt (prospectively or retroactively) a person from this limitation if it obtains such representations, covenants and undertakings as it deems appropriate to conclude that granting the exemption will not cause us to lose our status as a REIT.
Our 29 Table of Contents board of directors, in its sole discretion, may exempt (prospectively or retroactively) a person from this limitation if it obtains such representations, covenants and undertakings as it deems appropriate to conclude that granting the exemption will not cause us to lose our status as a REIT.
This may include systems failures, security breaches and errors that could significantly disrupt our business, including resulting in nonperformance of, or loss of, investments or defaults under our financing facilities. Increases in our CECL reserves have had and could continue to have an adverse effect on our business, financial condition and results of operations.
This may include systems failures, security breaches and errors that could significantly disrupt our business, including resulting in non-performance of, or loss of, investments or defaults under our financing facilities. Increases in our CECL reserves have had and could continue to have an adverse effect on our business, financial condition and results of operations.
The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition and our ability to make distributions to our stockholders. 12 Table of Contents The properties underlying our investments may be subject to other unknown liabilities that could adversely affect the value of these properties and, as a result, our investments.
The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition and our ability to make distributions to our stockholders. The properties underlying our investments may be subject to other unknown liabilities that could adversely affect the value of these properties and, as a result, our investments.
In the event any of the properties or entities underlying or collateralizing our commercial real estate loans or investments experiences or continues to experience any of the foregoing events or occurrences, the value of, and return on, such investments could be reduced, which, in turn, would adversely affect our results of operations and financial condition.
In 13 Table of Contents the event any of the properties or entities underlying or collateralizing our commercial real estate loans or investments experiences or continues to experience any of the foregoing events or occurrences, the value of, and return on, such investments could be reduced, which, in turn, would adversely affect our results of operations and financial condition.
In addition, the securitization of our portfolio might magnify our exposure to losses because any equity interest we retain in the issuing entity would be subordinate to the notes issued to investors and we would, therefore, absorb all of the losses sustained with respect to a securitized pool of assets before the owners of the notes experience any losses.
In addition, the securitization of our investments might magnify our exposure to losses because any equity interest we retain in the issuing entity would be subordinate to the notes issued to investors and we would, therefore, absorb all of the losses sustained with respect to a securitized pool of investments before the owners of the notes experience any losses.
The inability to securitize our portfolio may hurt our performance and our ability to grow our business. At the same time, the securitization of our loans or investments might expose us to losses, as the residual loans or investments in which we do not sell interests will tend to be riskier and more likely to experience losses.
The inability to securitize our investments may hurt our performance and our ability to grow our business. At the same time, the securitization of our loans or investments might expose us to losses, as the residual investments in which we do not sell interests may be riskier and more likely to experience losses.
The Investment Company Act defines voting securities as any security presently entitling the owner or holder thereof to vote for the election of directors of a 24 Table of Contents company. We treat entities in which we own at least a majority of the outstanding voting securities as majority-owned subsidiaries for purposes of the 40% test.
The Investment Company Act defines voting securities as any security presently entitling the owner or holder thereof to vote for the election of directors of a company. We treat entities in which we own at least a majority of the outstanding voting securities as majority-owned subsidiaries for purposes of the 40% test.
We are subject to regulation by laws and regulations at the local, state and federal levels. These laws and regulations, as well as their interpretation, may change from time to time and new laws and regulations may be enacted.
We are subject to laws and regulations at the local, state and federal levels. These laws and regulations, as well as their interpretation, may change from time to time and new laws and regulations may be enacted.
Under these circumstances, the insurance proceeds received with respect to a property relating to one of our investments might not be adequate to restore our economic position with respect to our investment. Any uninsured loss could result in the corresponding nonperformance of, or loss on, our investment related to such property.
Under these circumstances, the insurance proceeds received with respect to a property relating to one of our investments might not be adequate to restore our economic position with respect to our investment. Any uninsured loss could result in the corresponding non-performance of, or loss on, our investment related to such property.
We and our service providers and other market participants increasingly depend on complex information technology and communications systems to conduct business functions, and their operations rely on the secure access to, and processing, storage and transmission of confidential and other information in their systems and those of their respective third-party service providers.
We and our service providers and other market participants increasingly depend on complex information technology and communications systems to conduct business functions, and their operations rely on the secure access to, and processing, storage and transmission of confidential and other 21 Table of Contents information in their systems and those of their respective third-party service providers.
Generally, our borrowers may repay their loans prior to their stated maturities. In periods of declining interest rates and/or credit spreads, or as the business plans for the underlying collateralizing properties reach completion, prepayment rates on loans 11 Table of Contents generally increase.
Generally, our borrowers may repay their loans prior to their stated maturities. In periods of declining interest rates and/or credit spreads, or as the business plans for the underlying collateralizing properties reach completion, prepayment rates on loans generally increase.
The statute permits various exemptions 27 Table of Contents from its provisions, including business combinations that are exempted by the board of directors prior to the time that an interested stockholder becomes an interested stockholder. We are also subject to the Maryland Control Share Acquisition Act.
The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors prior to the time that an interested stockholder becomes an interested stockholder. We are also subject to the Maryland Control Share Acquisition Act.
Additionally, the size of our employee base (35 employees as of December 31, 2023, inclusive of the senior management group) means that we have limited overlap in roles such that any degree of attrition could challenge operations. Many of these roles are highly specialized and specific to our industry, making them difficult to source.
Additionally, the size of our employee base (33 employees as of December 31, 2024, inclusive of the senior management group) means that we have limited overlap in roles such that any degree of attrition could challenge operations. Many of these roles are highly specialized and specific to our industry, making them difficult to source.
Significant losses related to such loans or investments could adversely affect our results of operations and financial condition. 17 Table of Contents Investments in subordinated debt involve greater credit risk of default than the senior classes of the issue or series.
Significant losses related to such loans or investments could adversely affect our results of operations and financial condition. Investments in subordinated debt involve greater credit risk of default than the senior classes of the issue or series.
We have in the past retained, and would expect in the future to retain, all or a portion of the equity and potentially other tranches in the securitized pool of loans or investments. In addition, we have in the past, and may in the future, retain pari passu participations in securitized loans.
We have in the past retained, and would expect in the future to retain, all or a portion of the equity and potentially other tranches in the securitized pool of loans or investments. In addition, we have in the 20 Table of Contents past, and may in the future, retain pari passu participations in securitized loans.
In particular, these financing arrangements require us to maintain a certain amount of cash or set aside assets sufficient to maintain a specified liquidity position. As a result, we may not be able to leverage our assets as fully as we would otherwise choose, which could reduce our return on assets.
For instance, these financing arrangements require us to maintain a certain amount of cash or set aside assets sufficient to maintain a specified liquidity position. As a result, we may not be able to leverage our assets as fully as we would otherwise choose, which could reduce our return on assets.
Risks associated with climate change may adversely affect our business and financial results and damage our reputation. There has been increasing awareness of severe weather and other climate events outside of the historical norm as well as increasing concern from government agencies about the effects of climate change on the environment.
Risks associated with climate change may adversely affect our business and financial results and damage our reputation. There has been increasing awareness of severe weather and other climate events outside of the historical norm as well as increasing concern from various stakeholders about the effects of climate change on the environment.
We have a substantial amount of debt and, subject to market conditions and availability, we may incur a significant amount of additional debt through bank credit facilities (including term loans and revolving facilities), repurchase agreements, warehouse facilities and structured financing arrangements, public and private debt issuances (including through securitizations) and derivative instruments, in addition to transaction or asset-specific funding arrangements.
We have a substantial amount of debt and, subject to market conditions and availability, we may incur a significant amount of additional debt through bank credit facilities (including term loans and revolving facilities), repurchase agreements, warehouse facilities and structured financing arrangements, public and private debt issuances (including through securitizations, such as our CRE CLOs) and derivative instruments, in addition to transaction or asset-specific funding arrangements.
The issuance of additional shares of our common stock, including in connection with our outstanding 7% Series A cumulative redeemable preferred stock, or our Series A Preferred Stock, or in connection with other future issuances of our common stock or shares of preferred stock or securities convertible or exchangeable into equity securities, may dilute the ownership interest of our existing holders of our common stock.
The issuance of additional shares of our common stock, including in connection with our outstanding 7.00% Series A Fixed-to-Floating Cumulative Redeemable Preferred Stock, or our Series A Preferred Stock, or in connection with other future issuances of our common stock or shares of preferred stock or securities convertible or exchangeable into equity securities, may dilute the ownership interest of our existing holders of our common stock.
Statements about our ESG related initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future.
Statements about any ESG-related initiatives and goals we undertake, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future.
Our ability to fund our loans and investments may be impacted by our ability to secure bank credit facilities, warehouse facilities and structured financing arrangements, public and private debt issuances (including through securitizations) and derivative instruments, in addition to transaction or asset-specific funding arrangements and additional repurchase agreements on acceptable terms or at all.
Our ability to fund our loans and investments may be impacted by our ability to secure bank credit facilities, warehouse facilities and structured financing arrangements, public and private debt issuances (including securitizations, like our CRE CLOs) and derivative instruments, in addition to transaction or asset-specific funding arrangements and additional repurchase facilities on acceptable terms or at all.
The properties securing our investments may at times be concentrated in certain property types or geographies that may be subject to higher risk of loss.
The properties securing our investments may at times be concentrated in certain property types or geographies that may be 10 Table of Contents subject to higher risk of loss.
For example, we rely on a third-party servicer to service the 16 Table of Contents commercial real estate loans that we invest in and commercial real estate loans underlying CRE CLOs and other commercial real estate debt investments to, among other things, collect principal and interest payments on such commercial real estate loans and perform certain asset management services in accordance with applicable laws and regulations.
For example, we rely on a third-party servicer to service the commercial real estate loans that we invest in, including the commercial real estate loans underlying our CRE CLOs and other commercial real estate debt investments to, among other things, collect principal and interest payments on such commercial real estate loans and perform certain asset management services in accordance with applicable laws and regulations.
We depend on third-party service providers, including our loan servicers and our managed service provider, for a variety of services related to our business. We are, therefore, subject to the risks associated with third-party service providers.
We depend on third-party service providers, including our loan servicer and our information technology managed service provider, for a variety of services related to our business. We are, therefore, subject to the risks associated with third-party service providers.
Any such increases would also increase our borrowers’ interest payments and, 18 Table of Contents for certain borrowers, may lead to defaults and losses to us. Such increases could also adversely affect commercial real estate property values.
Any such increases would also increase our borrowers’ interest payments and, for certain borrowers, may lead to defaults and losses to us. Such increases could also adversely affect commercial real estate property values.
Advocacy groups, government agencies, the general public, regulators, customers, investors, employees and other stakeholders are increasingly focusing on ESG matters and related disclosures.
Advocacy groups, government agencies, the general public, regulators, customers, investors, employees and other stakeholders have been increasingly focusing on ESG matters and related disclosures.
Our master repurchase agreements with various counterparties, any bank credit facilities and additional repurchase agreements or other financing we may enter into in the future involve the risk that the market value of the assets pledged or sold by us to the provider of the financing may decline in value, in which case the lender or counterparty may require us to provide additional collateral or lead to margin calls that may require us to repay all or a portion of the funds advanced.
Our repurchase facilities with various counterparties, any bank credit facilities and additional repurchase facilities or other financing we may enter into in the future involve the risk that the market value of the assets financed may decline in value, in which case the lender or counterparty may require us to provide additional collateral or lead to margin calls that may require us to repay all or a portion of the funds advanced.
For example, our concentration of investments secured by office properties are subject to a higher risk of loss as a result of increased hybrid work schedules, which allow employees to work from remote locations other than their employer’s office premises.
For example, our concentration of investments secured by office properties are subject to a higher risk of loss as a result of hybrid work arrangements that allow employees to work from remote locations other than their employer’s office premises.
Such investments are subject to the potential for deterioration of real estate fundamentals and the risk of adverse changes in local market and economic conditions, which may include changes in supply of and demand for competing properties in an area, changes in interest rates and related increases in borrowing costs, fluctuations in the average occupancy and room rates for hotel properties, changes in demand for commercial office properties (including as a result of an increased prevalence of remote work), changes in the financial resources of tenants, defaults by borrowers or tenants and the lack of availability of mortgage funds, which may render the sale or refinancing of properties difficult or impracticable.
Such investments are potentially subject to the costs associated with operating and redeveloping a property, including any operating shortfalls and significant capital expenditures, and to the potential for deterioration of real estate fundamentals and the risk of adverse changes in local market and economic conditions, which may include changes in supply of and demand for competing properties in an area, changes in interest rates and related increases in borrowing costs, fluctuations in the average occupancy and room rates for hotel properties, changes in demand for commercial office properties (including as a result of an increased prevalence of remote work), changes in the financial resources of tenants, defaults by borrowers or tenants and the lack of availability of mortgage funds, which may render the sale or refinancing of properties difficult or impracticable.
As a result, these investments should be expected to have a higher risk of default and loss than investment grade rated assets. Losses related to our non-investment grade loans or securities would adversely affect our financial condition and results of operations. Insurance on commercial real estate loans may not cover all losses.
As a result, these investments should be expected to have a higher risk of default and loss than investment grade rated assets. Losses related to our non-investment grade loans or securities would adversely affect our financial condition and results of operations. Insurance on the properties underlying or securing our investments may not cover all losses.
Changes to our CECL reserves have been, and will continue to be, recognized through net income on our consolidated statements of operations. See Note 2 – Basis of Presentation and Significant Accounting Policies to our Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion of our CECL reserves.
Changes to our CECL reserves are recognized through net income on our consolidated statements of operations. See Note 2 – Basis of Presentation and Significant Accounting Policies to our Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion of our CECL reserves.
Issuance of stock without stockholder approval. Our charter authorizes our board of directors, without stockholder approval, to authorize the issuance of up to 450,000,000 shares of common stock and up to 50,000,000 shares of preferred stock. As of December 31, 2023, 11,500,000 shares of preferred stock are classified as 7.00% Series A Preferred Stock.
Issuance of stock without stockholder approval. Our charter authorizes our board of directors, without stockholder approval, to authorize the issuance of up to 450,000,000 shares of common stock and up to 50,000,000 shares of preferred stock. As of December 31, 2024, under our charter, 11,500,000 of the authorized shares of preferred stock are classified as our Series A Preferred Stock.
We may be required to make further increases to our CECL reserves in the future, depending on the performance of our portfolio and broader market conditions, and there may be volatility in the level of our CECL reserves.
We may be required to record further increases to our CECL reserves in the future, depending on the performance of our portfolio and broader market conditions, and there may 16 Table of Contents be volatility in the level of our CECL reserves.
There have been a number of recent highly publicized cases involving the dissemination, theft and destruction of corporate information or other assets, as a result of a failure to follow procedures by employees or contractors or as a result of actions by a variety of third parties, including nation state actors and terrorist or criminal organizations.
There have been a number of recent highly publicized cases involving the dissemination, theft and destruction of corporate information or other assets, as a result of a failure to follow procedures by employees or contractors or as a result of actions by a variety of third parties.
We depend on a variety of services provided by third-party service providers related to our investments in commercial real estate debt investments, as well as for general operating purposes.
We depend on a variety of services provided by third-party service providers related to our investments, as well as for general operating purposes.
In the case of repurchase transactions, if the value of the underlying security has declined as of the end of that term, or if we default on our obligations under the repurchase agreement, we will likely incur a loss on our repurchase transactions.
In the case of repurchase transactions, if the value of the financed investment has declined as of the end of that term, or if we default on our obligations under the repurchase facility, we will likely incur a loss on our repurchase transactions.
In addition, the capital and credit markets have recently experienced extreme volatility and economic disruption, inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates, which may result in additional liquidity concerns for us and/or in the broader financial services industry.
In addition, inflation, rapid increases in interest rates, and other similar macroeconomic trends or factors can result in extreme volatility in the capital and credit markets, economic disruptions have led and may in the future lead to a decline in the trading value of previously issued government securities with interest rates below current market interest rates, which may result in additional liquidity concerns for us and/or in the broader financial services industry.
However, qualification as a REIT involves the application of highly technical and complex Code provisions for which only a limited number of judicial or administrative interpretations exist.
We intend to continue to operate as a qualified REIT under the Code. However, qualification as a REIT involves the application of highly technical and complex Code provisions for which only a limited number of judicial or administrative interpretations exist.
These increases have increased borrowers' interest payments, adversely affected commercial real estate property values, and for certain of our borrowers have contributed, and may continue to contribute, to loan non-performance, modifications, defaults, foreclosures and/or property sales, which could result in us realizing losses on our investments.
These increased rates have increased borrowers' interest payments, adversely affected commercial real estate property values and for certain of our borrowers have contributed, and may continue to contribute, to loan non-performance, modifications, defaults, foreclosures and/or property sales, as well as losses on our investments.
The documents that govern these financing arrangements and the related guarantees contain, and additional lending facilities may contain, customary affirmative and negative covenants, including financial covenants that may restrict our flexibility to determine our operating policies and investment strategy.
We borrow funds under repurchase facilities and other financing arrangements with various counterparties. The documents that govern these financing arrangements and the related guarantees contain, and additional lending facilities may contain, customary affirmative and negative covenants, including financial covenants that may restrict our flexibility to determine our operating policies and investment strategy.
If we are unable to adequately address such ESG matters or if we fail to achieve progress with respect to our goals within the scope of ESG on a timely basis, or at all, or if we or our borrowers fail or are perceived to fail to comply with all laws, regulations, policies and related interpretations, it could negatively impact our reputation and our business results. 26 Table of Contents The market price of our common stock has been, and may continue to be, volatile and may decline.
If we are unable to adequately address such ESG matters or if we fail to achieve progress with respect to our goals within the scope of ESG on a timely basis, or at all, or if we or our borrowers fail or are perceived to fail to comply with all laws, regulations, policies and related interpretations, it could negatively impact our reputation and our business results.
At any time prior to or during the foreclosure proceedings, the borrower may 15 Table of Contents file for bankruptcy, which would have the effect of staying the foreclosure actions and further delaying the foreclosure process and potentially results in a reduction or discharge of a borrower’s debt.
In some states, foreclosure actions can take several years or more to litigate. At any time prior to or during the foreclosure proceedings, the borrower may file for bankruptcy, which would have the effect of staying the foreclosure actions and further delaying the foreclosure process and potentially results in a reduction or discharge of a borrower’s debt.
There can be no assurances that the credit ratings of our corporate debt or the notes issued in our securitization transactions will not be downgraded in the future, whether as a result of deteriorating general economic conditions, failure to successfully implement our operating strategy or the adverse impact on our results of operations or liquidity position of any of the above, or otherwise.
There can be no assurances that the credit ratings of our corporate debt or the notes issued in our securitization transactions will not be downgraded in the future, whether as a result of deteriorating general economic conditions, failure to successfully implement our operating strategy or the adverse impact on our results of operations or liquidity position of any of the above, or otherwise. 19 Table of Contents The condition of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Incident Response Team includes our Cybersecurity Team and our Chief Executive Officer, along with other Company personnel as appropriate based on the nature of the incident. The members of our Cybersecurity Team have various levels of experience in information technology and cybersecurity matters.
Biggest changeIt includes our Cybersecurity Team, our Chief Executive Officer and other Company personnel as appropriate based on the nature of the incident.
In partnership with our designed outsourced technology provider, we have implemented extensive processes and controls to assess, manage and protect against material risks from cybersecurity threats, including the following: • a managed detection and response platform that is monitored at all times by members of our third-party technology provider’s Security Operations Center team; • periodic penetration testing and vulnerability scans; • quarterly cybersecurity training and phishing email exercises for all employees and officers; • vendor cybersecurity diligence; • cybersecurity insurance; and • a cybersecurity Incident Response Plan that includes procedures for responding to cybersecurity incidents.
In partnership with our outsourced technology provider, we have implemented extensive processes and controls to assess, manage and protect against material risks from cybersecurity threats, including the following: • a managed detection and response platform that is monitored at all times by members of our third-party technology provider’s Security Operations Center team; • periodic penetration testing and vulnerability scans; • quarterly cybersecurity training and phishing email exercises for all employees and officers; • vendor cybersecurity diligence; • cybersecurity insurance; and • an Incident Response Plan that includes procedures for responding to cybersecurity incidents.
In addition, all members of our board of directors, including members of the Audit Committee, participate in quarterly training on cybersecurity threats, including those facing the Company. 34 Table of Contents Our CCO and our Chief Financial Officer, or our CFO, work collaboratively with senior members of our outsourced technology firm to comprise our Cybersecurity Team.
In addition, all members of our board of directors, including members of the Audit Committee, participate in quarterly training on cybersecurity threats, including those facing the Company. 33 Table of Contents Our CCO and our Chief Financial Officer, or our CFO, work collaboratively with senior members of our outsourced technology firm to comprise our Cybersecurity Team.
Our CCO also holds a CERT Certificate in Cybersecurity Oversight issued from the CERT Division of the Software Engineering Institute at Carnegie Mellon University and the National Association of Corporate Directors.
Our CCO also holds a CERT Certificate in Cybersecurity Oversight issued from the CERT Division of the Software Engineering Institute at Carnegie Mellon University and the National Association of Corporate Directors. Our Incident Response Team, in coordination with external advisors, is responsible for responding to and managing cybersecurity incidents pursuant to our Incident Response Plan.
Our Cybersecurity Team has primary responsibility for overseeing, implementing and managing our processes and controls to assess, identify and manage material risks from cybersecurity threats, including those described above in Risk Management and Strategy . Our Incident Response Team, in coordination with external advisors, is responsible for responding to and managing cybersecurity incidents pursuant to our Incident Response Plan.
Our Cybersecurity Team has primary responsibility for overseeing, implementing and managing our processes and controls to assess, identify and manage material risks from cybersecurity threats, including those described above in Risk Management and Strategy . The members of our Cybersecurity Team have various levels of experience in information technology and cybersecurity matters.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeMine Safety Disclosures Not applicable. 35 Table of Contents PART II
Biggest changeMine Safety Disclosures Not applicable. 34 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+2 added−2 removed6 unchanged
Biggest changeCOMPARISON OF CUMULATIVE TOTAL RETURN Among Granite Point Mortgage Trust Inc., S&P 500 and Bloomberg REIT Mortgage Index Index 6/28/17 6/30/17 12/31/17 6/30/18 12/31/18 6/30/19 12/31/19 6/30/20 12/31/20 6/30/21 12/31/21 6/30/22 12/31/22 6/30/23 12/31/23 Granite Point Mortgage Trust Inc. $ 100.00 $ 99.84 $ 97.25 $ 105.12 $ 108.05 $ 117.60 $ 120.47 $ 47.06 $ 70.39 $ 107.90 $ 89.15 $ 76.44 $ 46.14 $ 49.25 $ 59.34 S&P 500 $ 100.00 $ 99.30 $ 110.64 $ 113.56 $ 105.78 $ 125.39 $ 139.07 $ 134.78 $ 164.63 $ 189.74 $ 211.86 $ 169.55 $ 173.44 $ 202.73 $ 218.99 Bloomberg REIT Mortgage Index $ 100.00 $ 99.21 $ 102.58 $ 103.07 $ 99.59 $ 108.57 $ 123.12 $ 73.73 $ 95.79 $ 116.79 $ 112.65 $ 91.84 $ 85.20 $ 92.22 $ 97.53 37 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers On May 9, 2023, we announced that our board of directors had amended our share repurchase program to authorize the repurchase of an additional 5,000,000 shares of our common stock, for a total share repurchase authorization of 9,000,000 shares of our common stock, inclusive of amounts previously authorized.
Biggest changeCOMPARISON OF CUMULATIVE TOTAL RETURN Among Granite Point Mortgage Trust Inc., S&P 500, Bloomberg REIT Mortgage Index and FTSE NAREIT Mortgage REITs Index Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Granite Point Mortgage Trust Inc. $ 100.00 $ 58.43 $ 74.00 $ 38.30 $ 49.26 $ 25.13 S&P 500 $ 100.00 $ 118.39 $ 152.34 $ 124.73 $ 157.48 $ 196.85 Bloomberg REIT Mortgage Index $ 100.00 $ 77.80 $ 91.50 $ 69.20 $ 79.21 N/A FTSE NAREIT Mortgage REITs Index $ 100.00 $ 81.38 $ 94.05 $ 69.27 $ 79.79 $ 79.96 36 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers On May 9, 2023, we announced that our board of directors had amended our share repurchase program to authorize the repurchase of an additional 5,000,000 shares of our common stock, for a total share repurchase authorization of 9,000,000 shares of our common stock, inclusive of amounts previously authorized and on September 20, 2024, we announced that our board of directors had further amended our share repurchase program to authorize the repurchase of an additional 3,000,000 shares of our common stock, for a total cumulative share repurchase authorization of 12,000,000 shares of our common stock, inclusive of amounts previously authorized.
Our share repurchase program has no expiration date. Item 6. [Reserved] Not applicable. 38 Table of Contents
Our share repurchase program has no expiration date. Item 6. [Reserved] Not applicable. 37 Table of Contents
The following table presents cash dividends declared on our common stock since 2022: Declaration Date Record Date Payment Date Cash Dividend Per Share 2023 December 19, 2023 December 29, 2023 January 16, 2024 $ 0.20 September 20, 2023 October 2, 2023 October 16, 2023 $ 0.20 June 22, 2023 July 3, 2023 July 17, 2023 $ 0.20 March 16, 2023 April 3, 2023 April 17, 2023 $ 0.20 $ 0.80 2022 December 20, 2022 December 30, 2022 January 17, 2023 $ 0.20 September 20, 2022 October 3, 2022 October 17, 2022 $ 0.25 June 16, 2022 July 1, 2022 July 15, 2022 $ 0.25 March 17, 2022 April 1, 2022 April 15, 2022 $ 0.25 $ 0.95 36 Table of Contents Performance Graph The following graph compares the stockholder’s cumulative total return on our common stock, assuming $100 invested at June 28, 2017, with all quarterly reinvestment of dividends before consideration of income taxes and without the payment of any commissions, as if such amounts had been invested in: (i) our common stock; (ii) the stocks included in the Standard and Poor’s 500 Stock Index, or S&P 500; and (iii) the stocks included in the Bloomberg REIT Mortgage Index.
The following table presents cash dividends declared on our common stock since 2023: Declaration Date Record Date Payment Date Cash Dividend Per Share 2024 December 19, 2024 December 31, 2024 January 15, 2025 $ 0.05 September 20, 2024 October 1, 2024 October 15, 2024 $ 0.05 June 18, 2024 July 1, 2024 July 15, 2024 $ 0.05 March 14, 2024 April 1, 2024 April 15, 2024 $ 0.15 $ 0.30 2023 December 19, 2023 December 29, 2023 January 16, 2024 $ 0.20 September 20, 2023 October 2, 2023 October 16, 2023 $ 0.20 June 22, 2023 July 3, 2023 July 17, 2023 $ 0.20 March 16, 2023 April 3, 2023 April 17, 2023 $ 0.20 $ 0.80 35 Table of Contents Performance Graph The following graph compares the stockholder’s cumulative total return on our common stock, assuming $100 invested at December 31, 2019, with all quarterly reinvestment of dividends before consideration of income taxes and without the payment of any commissions, as if such amounts had been invested in: (i) our common stock; (ii) the stocks included in the Standard and Poor’s 500 Stock Index, or S&P 500; (iii) the stocks included in the Bloomberg REIT Mortgage Index and (iv) the stocks included in the FTSE NAREIT Mortgage REITs Index.
Holders As of February 26, 2024, there were 178 registered holders of our common stock. This does not include the number of stockholders that hold shares in “street name” through banks or broker-dealers.
Holders As of February 20, 2025, there were 167 registered holders of our common stock. This does not include the number of stockholders that hold shares in “street name” through banks or broker-dealers.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the NYSE under the symbol “GPMT.” On February 26, 2024, the closing price of our common stock, as reported on the NYSE, was $4.63 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the NYSE under the symbol “GPMT.” On February 20, 2025, the closing price of our common stock, as reported on the NYSE, was $2.96 per share.
During the year ended December 31, 2023, and 2022, under our share repurchase program, we repurchased 2,001,338 shares of our common stock at a weighted average purchase price of $5.12 per share for an aggregate purchase price of $10.2 million and 1,539,134 shares of our common stock at a weighted average purchase price of $10.18 per share for an aggregate purchase price of $15.7 million, respectively.
During the years ended December 31, 2024, and 2023, under our share repurchase program, we repurchased 2,392,671 shares of our common stock at a weighted average purchase price of $3.16 per share for an aggregate purchase price of $7.6 million, and 2,001,338 shares of our common stock at a weighted average purchase price of $5.12 per share for an aggregate purchase price of $10.3 million, respectively.
During the year ended December 31, 2023, and 2022, pursuant to such authorization, we repurchased from employees 36,916 shares of our common stock at a weighted average purchase price of $6.40 for an aggregate purchase price of $0.2 million and 69,039 shares of our common stock at a weighted average purchase price of $11.94 for an aggregate purchase price of $0.8 million, respectively.
During the year ended December 31, 2023, pursuant to such authorization, we repurchased from employees 36,916 shares of our common stock at a weighted average purchase price of $6.40 for an aggregate purchase price of $0.2 million. No shares were repurchased for tax withholding purposes during the year ended December 31, 2024.
Issuer Purchases of Equity Securities The following table summarizes the repurchase of common stock for the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs (1) October 1-31, 2023 — $ — — 5,157,916 November 1-30, 2023 798,737 $ 5.06 798,737 4,359,179 December 1-31, 2023 201,263 $ 5.50 201,263 4,157,916 Total 1,000,000 $ 5.15 1,000,000 4,157,916 ____________________ (1) On May 9, 2023, we announced that our board of directors had amended our share repurchase program to authorize the repurchase an additional 5,000,000 shares of our common stock, for a total share repurchase authorization of 9,000,000 shares of our common stock, inclusive of amounts previously authorized.
Issuer Purchases of Equity Securities The following table summarizes the repurchase of common stock for the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs (1) October 1-31, 2024 — $ — — 5,921,112 November 1-30, 2024 881,645 $ 3.45 881,645 5,039,467 December 1-31, 2024 274,222 $ 3.46 274,222 4,765,245 Total 1,155,867 $ 3.45 1,155,867 4,765,245 ____________________ (1) On May 9, 2023, we announced that our board of directors had amended our share repurchase program to authorize the repurchase of an additional 5,000,000 shares of our common stock, for a total share repurchase authorization of 9,000,000 shares of our common stock, inclusive of amounts previously authorized and on September 20, 2024, we announced that our board of directors had further amended our share repurchase program to authorize the repurchase of an additional 3,000,000 shares of our common stock, for a total cumulative share repurchase authorization of 12,000,000 shares of our common stock, inclusive of amounts previously authorized.
Our board of directors also authorized the repurchase of shares of restricted common stock granted to employees and directors for tax withholding purposes.
As of December 31, 2024, there remained 4,765,245 shares authorized for repurchase under our share repurchase program. Our board of directors also authorized the repurchase of shares of restricted common stock granted to employees and directors for tax withholding purposes.
Removed
During the three months ended December 31, 2023, under our share repurchase program, we repurchased 1,000,000 shares of our common stock at a weighted average price of $5.15 per share for an aggregate purchase price of $5.2 million. As of December 31, 2023, there remained 4,157,916 shares authorized for repurchase under our share repurchase program.
Added
We have replaced the Bloomberg REIT Mortgage Index with the FTSE NAREIT Mortgage REITs Index in this Annual Report on Form 10-K because the Bloomberg REIT Mortgage Index was discontinued in 2024.
Removed
No shares were repurchased for tax withholding purposes during the three months ended December 31, 2023.
Added
We retained the Bloomberg REIT Mortgage Index in this Annual Report on Form 10-K for comparison purposes until the index was no longer available, but will not include that index in our stock performance graph going forward.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

127 edited+34 added−57 removed67 unchanged
Biggest changeThe following table provides detail of our loan portfolio as of December 31, 2023: (dollars in millions) Type (1) Origination/ Acquisition Date Maximum Loan Commitment Principal Balance Carrying Value Cash Coupon (2) All-in Yield at Origination (3) Original Term (Years) (4) State Property Type Initial LTV (5) Stabilized LTV (6) Loans Held-For-Investment Senior 12/19 $111.1 $109.2 $108.9 S+2.80% S+3.23% 3.0 IL Multifamily 76.5% 73.0% Senior 12/18 96.5 92.2 92.0 S+3.75% S+5.21% 3.0 NY Mixed-Use 26.2% 47.6% Senior (7) 08/19 93.1 93.1 93.2 S+2.85% S+3.26% 3.0 MN Office 73.1% 71.2% Senior (7) 07/19 89.8 80.0 79.9 S+3.74% S+4.32% 3.0 IL Office 70.0% 64.4% Senior 10/19 87.4 87.2 86.8 S+2.60% S+3.05% 3.0 TN Office 70.2% 74.2% Senior (7) 12/15 86.0 85.6 85.4 S+4.15% S+4.43% 4.0 LA Mixed-Use 65.5% 60.0% Senior 06/19 81.2 81.0 80.5 S+3.29% S+3.05% 3.0 TX Mixed-Use 71.7% 72.2% Senior 12/18 78.1 60.1 60.0 S+3.40% S+3.44% 3.0 TX Office 68.5% 66.7% Senior 10/19 77.3 77.3 77.0 S+3.41% S+3.73% 3.0 FL Mixed-Use 67.7% 62.9% Senior 10/22 77.3 77.3 77.3 S+4.50% S+4.61% 2.0 CA Retail 47.7% 36.6% Senior 12/19 69.2 62.9 62.8 S+3.50% S+3.28% 3.0 NY Office 68.8% 59.3% Senior (7) 12/16 66.0 66.0 66.0 S+5.15% S+4.87% 4.0 FL Office 73.3% 63.2% Senior 12/23 61.8 48.8 48.8 S+5.50% S+5.65% 2.0 CA Office 80.0% 79.2% Senior 05/22 55.5 46.7 46.5 S+3.29% S+3.70% 3.0 TX Multifamily 59.3% 62.9% Senior 06/19 54.1 54.1 53.9 S+3.35% S+3.70% 3.0 VA Office 49.3% 49.9% Senior 11/21 52.8 50.1 49.9 S+3.40% S+3.82% 3.0 PA Mixed-Use 62.0% 63.5% Senior 06/21 52.7 47.5 47.4 S+4.38% S+4.75% 3.0 GA Office 68.0% 69.4% Senior 09/21 51.7 51.0 50.9 S+5.05% S+5.12% 3.0 MN Hotel 68.4% 57.8% Senior (7) 08/17 48.5 48.5 48.3 S+4.35% S+4.40% 3.0 KY Multifamily 79.8% 73.1% Senior 07/22 47.6 45.0 44.5 S+3.62% S+4.25% 3.0 GA Multifamily 74.5% 68.2% Senior 03/22 46.9 46.9 46.6 S+3.25% S+3.64% 3.0 MA Industrial 67.3% 60.8% Senior 07/21 46.4 45.4 45.2 S+3.72% S+4.19% 3.0 CT Office 68.3% 63.5% Senior 04/22 46.2 44.2 44.0 S+3.41% S+3.78% 3.0 TX Multifamily 74.4% 64.0% Senior 08/21 45.8 45.4 45.3 S+3.21% S+3.53% 3.0 TX Multifamily 77.8% 75.2% Senior 09/21 44.3 41.1 40.8 S+3.36% S+3.72% 3.0 CA Office 62.4% 66.1% Senior 02/22 42.4 42.4 42.2 S+3.05% S+3.40% 3.0 NJ Industrial 75.0% 59.5% Senior 04/22 40.2 37.5 37.3 S+4.65% S+4.87% 3.0 NY Other 66.7% 61.8% Senior 12/17 39.4 38.8 38.7 S+5.25% S+5.26% 3.0 MA Mixed-Use 72.9% 62.0% Senior 05/21 38.9 37.6 37.4 S+3.33% S+3.83% 3.0 AL Multifamily 72.2% 64.8% Senior 05/18 38.8 35.4 35.5 S+3.18% S+3.95% 3.0 MA Office 47.0% 41.1% Senior 07/16 38.5 38.5 38.3 S+5.55% S+4.99% 4.0 VA Office 62.8% 61.5% Senior (7) 11/18 37.1 37.1 37.1 S+3.60% S+5.50% 3.0 CA Mixed-Use 69.9% 67.9% Senior 03/20 34.9 24.1 24.1 S+5.04% S+4.66% 3.0 GA Office 63.2% 64.6% Senior 12/18 34.2 33.7 33.5 S+4.11% S+3.27% 4.0 IL Multifamily 70.8% 62.1% Senior 08/19 33.5 31.1 31.1 S+2.96% S+3.38% 3.0 TX Multifamily 79.3% 72.5% Senior 11/21 33.4 32.0 31.9 S+3.13% S+3.52% 3.0 AL Multifamily 77.9% 68.1% 44 Table of Contents Senior 11/19 32.9 32.7 32.5 S+3.73% S+3.14% 3.0 NC Multifamily 80.0% 72.8% Senior 03/16 32.5 32.5 32.5 5.11% 5.26% 10.0 NJ Office 74.9% 74.9% Senior 04/22 31.8 30.2 30.0 S+3.35% S+3.73% 3.0 GA Multifamily 75.1% 67.1% Senior 03/19 30.6 29.0 28.9 S+3.75% S+3.42% 3.0 NY Office 53.8% 48.5% Senior 04/22 28.6 26.4 26.2 S+3.22% S+3.55% 3.0 TX Multifamily 73.3% 63.9% Senior (7) 12/18 28.0 28.0 28.0 S+3.90% S+4.42% 3.0 MN Hotel 64.7% 57.7% Senior 01/19 27.6 26.9 26.9 S+3.00% S+3.38% 3.0 TX Multifamily 64.9% 64.9% Senior 03/22 27.2 24.3 24.0 S+4.14% S+4.89% 3.0 NC Office 47.4% 53.5% Senior 01/19 27.0 26.1 26.0 S+3.40% S+3.44% 3.0 MA Office 71.2% 70.1% Senior 08/19 26.8 26.6 26.5 S+3.20% S+3.67% 3.0 SC Multifamily 67.0% 58.7% Senior 10/21 25.7 25.7 25.5 S+3.20% S+3.43% 4.0 GA Industrial 67.5% 64.5% Senior 01/18 25.2 25.2 25.1 S+5.18% S+5.58% 3.0 AZ Hotel 65.8% 61.3% Senior 03/20 25.1 22.2 22.1 S+4.25% S+3.27% 3.0 CA Office 63.6% 66.7% Senior 08/19 25.0 23.9 23.8 S+2.71% S+3.07% 2.0 OK Multifamily 79.9% 74.2% Senior 12/21 24.7 16.7 16.6 S+3.36% S+3.59% 3.0 CA Office 72.9% 68.3% Senior 09/21 24.4 23.6 23.5 S+3.23% S+3.61% 3.0 CA Multifamily 71.9% 57.8% Senior 07/17 23.8 23.8 23.7 S+4.50% S+4.58% 3.0 NY Multifamily 76.5% 76.5% Senior 05/21 23.3 18.6 18.5 S+3.55% S+4.09% 3.0 LA Multifamily 68.0% 69.6% Senior 02/22 22.9 20.1 20.0 S+3.90% S+4.29% 3.0 CO Office 64.4% 60.2% Senior 02/20 21.9 21.9 21.8 S+4.00% S+3.75% 3.0 TN Hotel 69.1% 54.2% Senior 06/18 21.8 19.9 19.8 S+5.31% S+4.73% 3.0 FL Retail 74.0% 69.4% Senior 06/19 21.5 21.5 21.5 S+4.55% S+5.05% 3.0 NY Other 39.6% 39.6% Senior 05/21 20.6 20.4 20.4 S+4.05% S+4.41% 3.0 FL Multifamily 69.8% 62.8% Senior 12/21 20.4 20.4 20.3 S+3.91% S+4.16% 3.0 Various Other 55.1% 64.3% Senior 06/19 20.4 20.4 20.3 S+3.25% S+4.24% 3.0 GA Mixed-Use 60.6% 67.4% Senior 11/18 18.5 16.9 16.9 S+5.00% S+3.83% 3.0 CA Office 73.1% 64.5% Senior 10/18 16.9 16.9 16.9 S+4.71% S+5.16% 3.0 CT Hotel 75.4% 66.9% Senior 06/21 16.7 14.3 14.1 S+3.41% S+3.82% 4.0 IN Multifamily 67.0% 66.4% Senior 07/19 16.6 14.5 14.5 S+3.07% S+3.60% 3.0 OH Office 63.1% 66.1% Senior 08/17 15.4 12.4 12.3 S+5.25% S+5.49% 3.0 PA Office 66.7% 67.3% Senior 08/21 14.5 13.9 13.9 S+3.70% S+3.88% 3.0 CO Office 72.0% 63.7% Senior 07/18 14.3 10.0 10.0 S+4.86% S+4.35% 3.0 CA Office 77.1% 63.5% Mezzanine 01/17 13.5 13.5 13.5 8.00% 8.11% 10.0 HI Hotel 41.4% 36.2% Senior 10/19 11.8 4.3 4.3 S+2.81% S+3.28% 3.0 CA Office 70.6% 67.8% Senior (7) 09/19 11.7 11.7 11.7 S+3.05% S+3.50% 3.0 WI Multifamily 51.4% 75.0% Senior 06/19 11.4 10.4 10.4 S+4.01% S+4.69% 3.0 NY Office 40.7% 60.0% Senior 01/18 8.3 6.6 6.6 S+5.25% S+5.50% 3.0 PA Office 66.8% 67.3% Allowance for credit losses (134.7) Total/Weighted Average Loans $2,887.9 $2,727.2 $2,583.8 S+3.75% S+4.03% 3.2 66.7% 63.6% ____________________ (1) “Senior” means a loan primarily secured by a first priority lien on commercial real property and related personal property and also includes, when applicable, any companion subordinate loans.
Biggest changeAs stabilized value may be based on certain assumptions, such as future construction completion, projected re-tenanting, payment of tenant improvement or leasing commissions allowances or free or abated rent periods, or increased tenant occupancies. 42 Table of Contents The following table provides detail of our loan portfolio as of December 31, 2024: (dollars in millions) Type (1) Origination/ Acquisition Date Maximum Loan Commitment Principal Balance Carrying Value Cash Coupon (2) All-in Yield at Origination (3) Original Term (Years) (4) State Property Type Initial LTV (5) Stabilized LTV (6) Loans Held-For-Investment Senior 12/19 $111.1 $109.2 $108.8 S+2.80% S+3.23% 3.0 IL Multifamily 76.5% 73.0% Senior (7) 08/19 93.1 93.1 93.2 S+2.80% S+3.26% 3.0 MN Office 73.1% 71.2% Senior 10/19 87.5 87.4 87.2 S+2.60% S+3.05% 3.0 TN Office 70.2% 74.2% Senior (7) 12/15 82.3 80.5 80.5 S+4.15% S+4.43% 4.0 LA Mixed-Use 65.5% 60.0% Senior (7) 07/19 79.7 79.7 79.5 S+3.74% S+4.32% 3.0 IL Office 70.0% 64.4% Senior 06/19 78.7 78.5 78.0 S+3.29% S+3.05% 3.0 TX Mixed-Use 71.7% 72.2% Senior 12/18 78.1 63.8 63.9 S+3.90% S+3.44% 3.0 TX Office 68.5% 66.7% Senior 10/22 77.3 77.3 77.1 S+4.50% S+4.61% 2.0 CA Retail 47.7% 36.6% Senior (7) 12/16 71.3 71.3 71.3 S+5.15% S+4.87% 4.0 FL Office 73.3% 63.2% Senior (9) 12/19 69.2 67.3 67.2 S+3.50% S+3.28% 3.0 NY Office 68.8% 59.3% Senior 12/23 61.8 55.5 55.5 S+5.50% S+5.65% 2.0 CA Office 80.0% 79.2% Senior (7) 09/21 52.9 52.6 52.7 S+5.00% S+5.12% 3.0 MN Hotel 68.4% 57.8% Senior 06/21 52.8 47.6 47.5 S+4.38% S+4.75% 3.0 GA Office 68.0% 69.4% Senior (7) 08/17 50.0 50.0 49.8 S+4.35% S+4.40% 3.0 KY Multifamily 79.8% 73.1% Senior 07/22 48.6 48.2 47.6 S+2.78% S+4.25% 3.0 GA Multifamily 74.5% 68.2% Senior (10) 11/24 48.0 48.0 47.6 S+3.75% S+3.87% 3.0 NY Mixed-Use 100.0% 55.8% Senior 03/22 46.9 46.9 46.8 S+3.25% S+3.64% 3.0 MA Industrial 67.3% 60.8% Senior 07/21 46.4 45.4 45.2 S+3.72% S+4.19% 3.0 CT Office 68.3% 63.5% Senior 04/22 46.2 44.4 44.2 S+3.41% S+3.78% 3.0 TX Multifamily 74.4% 64.0% Senior 08/21 45.8 45.4 45.3 S+3.21% S+3.53% 3.0 TX Multifamily 77.8% 75.2% Senior 09/21 44.3 42.4 42.2 S+3.36% S+3.72% 3.0 CA Office 62.4% 66.1% Senior 02/22 42.4 42.4 42.3 S+3.05% S+3.40% 3.0 NJ Industrial 75.0% 59.5% Senior 07/16 39.3 38.5 38.5 S+5.05% S+4.99% 4.0 VA Office 62.8% 61.5% Senior (8) 11/21 39.0 32.0 30.3 5.75% 3.82% 3.0 PA Mixed-Use 62.0% 63.5% Senior 12/17 38.9 38.7 38.4 S+5.25% S+5.26% 3.0 MA Mixed-Use 72.9% 62.0% Senior 04/22 36.3 34.3 32.8 S+3.00% S+4.87% 3.0 NY Other 66.7% 61.8% Senior 03/20 34.9 24.4 24.3 S+5.04% S+4.66% 3.0 GA Office 63.2% 64.6% Senior 11/21 33.4 32.9 32.9 S+3.13% S+3.52% 3.0 AL Multifamily 77.9% 68.1% Senior 08/19 33.2 31.6 31.5 S+2.96% S+3.38% 3.0 TX Multifamily 79.3% 72.5% Senior 11/19 32.9 32.7 32.6 S+3.73% S+3.14% 3.0 NC Multifamily 80.0% 72.8% Senior 03/19 30.2 29.1 29.0 S+2.97% S+3.42% 3.0 NY Office 53.8% 48.5% Senior 04/22 28.6 27.0 26.9 S+3.22% S+3.55% 3.0 TX Multifamily 73.3% 63.9% Senior 03/22 27.2 24.5 24.3 S+4.14% S+4.89% 3.0 NC Office 47.4% 53.5% Senior 01/19 26.9 26.9 26.9 S+4.45% S+3.38% 3.0 TX Multifamily 64.9% 64.9% Senior (7) 01/19 26.1 26.1 26.1 S+3.40% S+3.44% 3.0 MA Office 71.2% 70.1% Senior 10/21 25.7 25.7 25.6 S+3.20% S+3.43% 4.0 GA Industrial 67.5% 64.5% Senior 01/18 25.2 25.2 25.1 S+5.18% S+5.58% 3.0 AZ Hotel 65.8% 61.3% Senior 12/21 24.7 17.0 16.9 S+3.36% S+3.59% 3.0 CA Office 72.9% 68.3% Senior 03/20 24.7 22.6 22.5 S+4.25% S+3.27% 3.0 CA Office 63.6% 66.7% Senior 09/21 24.4 23.6 23.5 S+3.23% S+3.61% 3.0 CA Multifamily 71.9% 57.8% Senior 05/21 23.3 20.4 20.3 S+3.55% S+4.09% 3.0 LA Multifamily 68.0% 69.6% Senior 02/20 21.9 21.9 21.7 S+4.00% S+3.75% 3.0 TN Hotel 69.1% 54.2% Senior 06/19 21.5 21.5 21.4 S+4.55% S+5.05% 3.0 NY Other 39.6% 39.6% Senior 06/19 21.0 20.4 20.4 S+3.25% S+4.24% 3.0 GA Mixed-Use 60.6% 67.4% Senior 05/21 20.0 20.0 19.7 S+4.05% S+4.41% 3.0 FL Multifamily 69.8% 62.8% Senior 06/21 16.7 14.2 14.2 S+3.41% S+3.82% 4.0 IN Multifamily 67.0% 66.4% Senior 10/18 15.8 15.8 16.0 S+5.21% S+5.16% 3.0 CT Hotel 75.4% 66.9% Senior 07/19 15.6 13.5 13.5 S+3.07% S+3.60% 3.0 OH Office 63.1% 66.1% Senior 08/17 15.4 14.4 14.3 S+5.25% S+5.49% 3.0 PA Office 66.7% 67.3% Senior 08/21 14.5 13.9 13.9 S+3.70% S+3.88% 3.0 CO Office 72.0% 63.7% Mezzanine 01/17 13.2 13.2 13.2 8.00% 8.11% 10.0 HI Hotel 41.4% 36.2% Senior 07/18 12.4 10.0 9.9 S+4.86% S+4.35% 3.0 CA Office 77.1% 63.5% Senior 06/19 11.4 10.7 10.7 S+2.75% S+4.69% 3.0 NY Office 40.7% 60.0% Senior 01/18 8.3 6.7 6.6 S+5.25% S+5.50% 3.0 PA Office 66.8% 67.3% Allowance for credit losses (199.7) Total/Weighted Average Loans $2,197.0 $2,106.3 $1,897.6 S+3.77% S+4.01 % 3.1 69.6% 64.4% ______________________ 43 Table of Contents (1) “Senior” means a loan primarily secured by a first priority lien on commercial real property and related personal property and also includes, when applicable, any companion subordinate loans.
For reporting purposes, we define Distributable Earnings as net income (loss) attributable to our stockholders, computed in accordance with GAAP, excluding: (i) non-cash equity compensation expenses; (ii) depreciation and amortization; (iii) any unrealized gains (losses) or other similar non-cash items that are included in net income (loss) for the applicable reporting period (regardless of whether such items are included in other comprehensive income or in net income (loss) for such period); and (iv) certain non-cash items and one-time expenses.
For reporting purposes, we define Distributable Earnings (Loss) as net income (loss) attributable to our stockholders, computed in accordance with GAAP, excluding: (i) non-cash equity compensation expenses; (ii) depreciation and amortization; (iii) any unrealized gains (losses) or other similar non-cash items that are included in net income (loss) for the applicable reporting period (regardless of whether such items are included in other comprehensive income or in net income (loss) for such period); and (iv) certain non-cash items and one-time expenses.
The realized loss amount reflected in Distributable Earnings will equal the difference between the cash received, or expected to be received, and the carrying value of the asset, and is reflective of our economic experience as it relates to the ultimate realization of the loan.
The realized loss amount reflected in Distributable Earnings (Loss) will equal the difference between the cash received, or expected to be received, and the carrying value of the asset, and is reflective of our economic experience as it relates to the ultimate realization of the loan.
Our interest income, which reflects the amortization of origination fees and direct costs, is recognized based on the contractual rate and the outstanding principal balance of the loans we originate. The objective of the interest method is to arrive at periodic interest income that yields a level rate of return over the loan term.
Our interest income, which reflects the amortization of origination fees and direct costs, is recognized based on the contractual rate and the outstanding principal balance of the loans we originate. The objective of the interest method is to arrive at a periodic interest income that yields a level rate of return over the loan term.
We mitigate this counterparty risk by seeking to diversify our lending partners, focusing on establishing borrowing relationships with strong counterparties and continuously monitoring them through a thoughtful approach to counterparty risk oversight.
We mitigate this counterparty risk by seeking to diversify our lending partners, focusing on establishing borrowing relationships with strong counterparties and continuously monitoring them through a thoughtful approach to counterparty risk oversight.
We remain focused on actively managing our balance sheet and enhancing our liquidity position to best position us for the market environment, satisfy our loan future funding and financing obligations and to make new investments, which we expect will cause us to take, and in some instances has already caused us to take, some or all of the following actions: raise capital from offerings of equity and/or debt securities, on a public or private basis; borrow additional capital; post additional collateral; sell assets; and/or change our dividend policy, which we will continue to evaluate in respect of future quarters based upon customary considerations, including market conditions and distribution requirements to maintain our REIT status.
We remain focused on actively managing our balance sheet and liquidity to best position us for the market environment, to satisfy our loan future funding and financing obligations and to make new investments, which we expect will cause us to take, and in some instances has already caused us to take, some or all of the following actions: raise capital from offerings of equity and/or debt securities, on a public or private basis; borrow additional capital; post additional collateral; sell assets; and/or change our dividend policy, which we will continue to evaluate in respect of future quarters based upon customary considerations, including market conditions and distribution requirements to maintain our REIT status.
Distributable Earnings is intended to over time serve as a general, though imperfect, proxy for our taxable income. As such, Distributable Earnings is considered a key indicator of our ability to generate sufficient income to pay dividends on our common stock, which is the primary focus of income-oriented investors who comprise a meaningful segment of our stockholder base.
Distributable Earnings (Loss) is intended to over time serve as a general, though imperfect, proxy for our taxable income. As such, Distributable Earnings (Loss) is considered a key indicator of our ability to generate sufficient income to pay dividends on our common stock, which is the primary focus of income-oriented investors who comprise a meaningful segment of our stockholder base.
Distributable Earnings may also be adjusted from time to time for reporting purposes to exclude one-time events pursuant to changes in GAAP and certain other material non-cash income or expense items approved by a majority of our independent directors.
Distributable Earnings (Loss) may also be adjusted from time to time for reporting purposes to exclude one-time events pursuant to changes in GAAP and certain other material non-cash income or expense items approved by a majority of our independent directors.
The amount of leverage we deploy for our target investments depends upon our assessment of a variety of factors, which may include the anticipated liquidity and any changes 57 Table of Contents in value of the investments in our portfolio, the potential for losses in our portfolio, the gap between the maturities of our assets and liabilities, the availability and cost of financing our investments, our opinion of the creditworthiness of our financing counterparties, the health of the U.S. economy and commercial real estate financing markets, our outlook for the level and volatility of interest rates, the slope of the yield curve, the credit quality of our investments, the collateral underlying our investments and our outlook for investment credit spreads relative to SOFR.
The amount of leverage we deploy for our target investments depends upon our assessment of a variety of factors, which may include the anticipated liquidity and any changes in value of the investments in our portfolio, the potential for losses in our portfolio, the gap between the maturities of our assets 54 Table of Contents and liabilities, the availability and cost of financing our investments, our opinion of the creditworthiness of our financing counterparties, the health of the U.S. economy and commercial real estate financing markets, our outlook for the level and volatility of interest rates, the slope of the yield curve, the credit quality of our investments, the collateral underlying our investments and our outlook for investment credit spreads relative to SOFR.
In addition, our methodology for calculating Distributable Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and, accordingly, our reported Distributable Earnings may not be comparable to the Distributable Earnings reported by other companies.
In addition, our methodology for calculating Distributable Earnings (Loss) may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and, accordingly, our reported Distributable Earnings (Loss) may not be comparable to the Distributable Earnings (Loss) reported by other companies.
While Distributable Earnings excludes the impact of the unrealized non-cash current provision for credit losses, we expect to only recognize such potential credit losses in Distributable Earnings if and when such amounts are deemed non-recoverable.
While Distributable Earnings (Loss) excludes the impact of the unrealized non-cash current provision for credit losses, we expect to only recognize such potential credit losses in Distributable Earnings (Loss) if and when such amounts are deemed non-recoverable.
The exclusion of depreciation and amortization from the calculation of Distributable Earnings only applies to debt investments related to real estate to the extent we foreclose upon the property or properties underlying such debt investments.
The exclusion of depreciation and amortization from the calculation of Distributable Earnings (Loss) only applies to debt investments related to real estate to the extent we foreclose upon the property or properties underlying such debt investments.
As a result, there may exist the risk of non-performance on our floating-rate loans, and in the case of a significant increase in interest rates, the cash flows of the 52 Table of Contents collateral properties may not sufficiently cover debt service due under our loans, which may contribute to loan non-performance or, in certain cases, loan default.
As a result, there may exist the risk of non-performance on our floating-rate loans, and in the case of a significant increase in interest rates, the cash flows of the collateral properties 50 Table of Contents may not sufficiently cover debt service due under our loans, which may contribute to loan non-performance or, in certain cases, loan default.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report on Form 10-K can be found in “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report on Form 10-K can be found in “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Interest rate fluctuations resulting in our interest and related expense exceeding interest and related income would result in operating losses for us. For further discussion of the potential impacts of changes in interest rates, see “ Quantitative and Qualitative Disclosures about Market Risk — Interest Rate Risk ” in Item 7A of this Annual Report on Form 10-K.
Interest rate fluctuations resulting in our interest and related expense exceeding interest and related income would result in operating losses for us. For further discussion of the potential impacts of changes in interest rates, see “ Quantitative and Qualitative Disclosures about Market Risk — Interest Rate Risk ” in Part I, Item 7A of this Annual Report on Form 10-K.
(3) Stabilized loan-to-value ratio, or stabilized LTV, is calculated as the fully funded loan amount (plus any financing that is pari passu with or senior to such loan), including all contractually provided for future fundings, divided by the as stabilized value (as determined in conformance with USPAP) set forth in the original appraisal.
(3) Stabilized loan-to-value ratio at origination, or stabilized LTV, is calculated as the fully funded loan amount (plus any financing that is pari passu with or senior to such loan), including all contractually provided for future fundings, divided by the as stabilized value (as determined in conformance with USPAP) set forth in the original appraisal.
(5) Initial loan-to-value ratio, or initial LTV, is calculated as the initial loan amount (plus any financing that is pari passu with or senior to such loan) divided by the as is appraised value (as determined in conformance with the Uniform Standards of Professional Appraisal Practice, or USPAP) as of the date of the loan was originated set forth in the original appraisal.
(5) Initial loan-to-value ratio, or initial LTV at origination, is calculated as the initial loan amount (plus any financing that is pari passu with or senior to such loan) divided by the as is appraised value (as determined in conformance with the Uniform Standards of Professional Appraisal Practice, or USPAP) as of the date of the loan was originated set forth in the original appraisal.
These factors coupled with inflation, elevated interest rates, and limited market liquidity have created a high level of uncertainty with respect to property values. These challenging dynamics have stressed certain borrowers’ ability and willingness to support their office properties and perform in accordance with the terms of their loans.
These factors coupled with inflation, elevated interest rates and limited market liquidity have created a high level of uncertainty with respect to property values. These dynamics have stressed certain borrowers’ ability and willingness to support their properties and perform in accordance with the terms of their loans.
As stabilized value may be based on certain assumptions, such as future construction completion, projected re-tenanting, payment of tenant improvement or leasing commissions allowances or free or abated rent periods, or increased tenant occupancies. (7) Loan was held on nonaccrual status as of December 31, 2023.
As stabilized value may be based on certain assumptions, such as future construction completion, projected re-tenanting, payment of tenant improvement or leasing commissions allowances or free or abated rent periods, or increased tenant occupancies. (7) Loan was held on nonaccrual status as of December 31, 2024.
Additionally, as part of our broader risk management strategy, and to the extent available in the market, we finance our business through other means, which may include, but not be limited to, securitizations, note sales and issuance of unsecured debt and equity instruments.
Additionally, as part of our broader risk management strategy, and to the extent available in the market, we finance our business through other means, which may include, but are not to be limited to, securitizations, note sales and issuance of secured and unsecured debt and equity instruments.
Our consolidated financial statements are prepared in accordance with GAAP and our distributions will be determined by our board of directors consistent with our obligation to distribute to our stockholders at least 90% of our REIT taxable income on an annual basis in order to maintain our REIT qualification; in each case, our activities and balance sheet are measured with reference to historical cost and/or fair market value without considering inflation.
Our consolidated financial statements are prepared in accordance with GAAP and our distributions will be determined by our board of directors consistent with our obligation to distribute to our stockholders at least 90% of our REIT taxable income on an annual basis in order to maintain our REIT qualification; in each case, our activities and balance sheet are measured with reference to historical cost and/or fair market value without considering inflation. 57 Table of Contents
We believe providing Distributable Earnings on a supplemental basis to our net income (loss) and cash flow from operating activities, as determined in accordance with GAAP, is helpful to stockholders in assessing the overall run-rate operating performance of our business.
We believe providing Distributable Earnings (Loss) on a supplemental basis to our net income (loss) and cash flow from operating activities, as determined in accordance with GAAP, is helpful to stockholders in assessing the overall operating performance of our business.
Declines in economic conditions have negatively impacted, and may continue to negatively impact, real estate and real estate capital markets, which could make it more difficult for us to obtain or maintain financing. We finance pools of our commercial real estate loans through CRE CLOs, retaining subordinate securities in our investment portfolio.
These conditions have negatively impacted, and may continue to negatively impact, real estate and real estate capital markets, which could make it more difficult for us to obtain or maintain financing. We finance pools of our commercial real estate loans through CRE CLOs, retaining subordinate securities in our investment portfolio.
It remains difficult to predict the full impact on macroeconomic conditions and our business of recent events and any future changes in interest rates or inflation. Office Property Market The office property market has been experiencing higher office vacancies, slower leasing activity and various tenants re-evaluating their need for physical office space due in large part to remote work trends.
It remains difficult to predict the full impact on macroeconomic conditions and our business of recent events and any future changes in interest rates or inflation. Office Property Market The office property market has been experiencing higher vacancies, slower leasing activity and various tenants re-evaluating their need for space due in large part to remote and hybrid work arrangements.
We believe it is useful to our stockholders to present Distributable Earnings before realized losses to reflect our run-rate operating results as (i) our operating results are mainly comprised of net interest income earned on our loan investments net of our operating expenses, which comprise our ongoing operations, (ii) it helps our stockholders in assessing the overall run-rate operating performance of our business, and (iii) it has been a useful reference related to our common dividend as it is one of the factors we and our Board of Directors consider when declaring the dividend.
We believe it is useful to our stockholders to present Distributable Earnings (Loss) Before Realized Gains and Losses, a non-GAAP measure, to reflect our run-rate operating results as (i) our operating results are mainly comprised of net interest income earned on our loan investments net of our operating expenses, which comprise our ongoing operations, (ii) it helps our stockholders in assessing the overall run-rate operating performance of our business, and (iii) it has been a useful reference related to our common dividend as it is one of the factors we and our Board of Directors consider when declaring the dividend.
Allowance for Credit Losses Our operating results are also impacted by the allowance for credit losses we record for loans held-for-investment using the CECL model pursuant to ASU 2016-13.
Allowance for Credit Losses Our operating results are also impacted by the allowance for credit losses we record for loans held-for-investment using the CECL methodology pursuant to ASU 2016-13.
Distributable Earnings does not represent net income (loss) or cash flow from operating activities and should not be considered as an alternative to GAAP net income (loss), or an indication of our GAAP cash flows from operations, a measure of our liquidity, or an indication of funds available for our cash needs.
Distributable Earnings (Loss) does not represent GAAP net income (loss) attributable to common stockholders or cash flow from operating activities and should not be considered as an alternative to GAAP net income (loss) attributable to common stockholders, or an indication of our GAAP cash flows from operations, a measure of our liquidity, or an indication of funds available for our cash needs.
We try to mitigate these risks by seeking to originate or acquire assets of higher quality at appropriate rates of return given anticipated and unanticipated losses, by employing a comprehensive review and selection process and by proactively monitoring our investments.
We try to mitigate these risks by seeking to originate or acquire assets of higher quality at appropriate rates of return given anticipated and unanticipated losses, by employing a comprehensive review and selection process and by proactively monitoring our investment portfolio.
The increase in the provision for credit losses was primarily driven by recording an increase in the allowance for certain collateral-dependent loans during the year ended December 31, 2023, that were individually assessed in accordance with ASU 2016-13.
The increase in the provision for credit losses was primarily driven by an increase in the allowance for certain collateral-dependent loans during the year ended December 31, 2024, that were individually assessed in accordance with ASU 2016-13.
Financial Condition As of December 31, 2023, our borrowings consisted of repurchase agreement facilities collateralized by a portion of our loans held-for-investment and REO, securitized debt obligations issued by CRE CLOs collateralized by pools of our loans held-for-investment and a secured credit facility collateralized by loans held-for-investment.
Financial Condition As of December 31, 2024, our borrowings consisted of repurchase agreement facilities collateralized by a portion of our loans held-for-investment, securitized debt obligations issued by CRE CLOs collateralized by pools of our loans held-for-investment and a secured credit facility collateralized by loans held-for-investment.
We place emphasis on diversifying our investment portfolio across geographical regions and local markets, property types, borrowers and loan structures. We do not limit our loan originations by geographical area or property type so that we may develop a well-diversified investment portfolio. Interest-earning assets include our 100% loan investment portfolio.
We place emphasis on diversifying our investment portfolio across geographical regions 41 Table of Contents and local markets, property types, borrowers and loan structures. We do not limit our loan originations by geographical area or property type so that we may develop a well-diversified investment portfolio. Interest-earning assets include our 100% loan investment portfolio.
The terms of the modification included, among other things, a 12-month extension of the fully-extended maturity date to November 9, 2024, the full deferral of debt service payments with interest capitalized and compounding, the deferral of the extension fee and our agreement to pay for approved expenses, in our sole discretion.
The terms of the modification included, among other things, a 12-month extension of the fully-extended maturity date to November 9, 2025, the full deferral of debt service payments with interest capitalized and compounding, the deferral of the extension fee and the agreement to pay for approved expenses, in its sole discretion.
The dividend declared in the fourth quarter of 2023 and paid in the first quarter of 2024 was treated as a 2024 dividend for federal tax purposes.
The dividend declared in the fourth quarter of 2024 and paid in the first quarter of 2025 was treated as a 2025 dividend for federal tax purposes.
This CECL reserve is estimated using the same process outlined above for our outstanding loan balances, and changes in this component of the CECL reserve will similarly flow through our consolidated statements of operations.
This 56 Table of Contents CECL reserve is estimated using the same process outlined above for our outstanding loan balances, and changes in this component of the CECL reserve will similarly flow through our consolidated statements of operations.
This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Investor concerns over inflation, rising interest rates, slowing economic growth, and geopolitical uncertainty have resulted in significant disruptions and volatility in financial markets, uncertainty about the overall macroeconomic outlook and a dislocation in the commercial real estate sector, including reduced borrower demand, wider credit spreads, higher lending rates, increased capitalization rates on properties and significantly lower transaction volume.
Investor concerns over inflation, elevated interest rates and geopolitical uncertainty have resulted in significant disruptions and volatility in financial markets, uncertainty about the overall macroeconomic outlook and a dislocation in the commercial real estate sector, including reduced borrower demand, wider credit spreads, higher lending rates, increased capitalization rates on properties and significantly lower transaction volume.
See Note 5 – Variable Interest Entities and Securitized Debt Obligations , Note 6 – Secured Financing Agreements and Note 7 – Convertible Senior Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional details regarding our securitized debt obligations, our secured financing facilities, and our convertible senior notes, respectively.
See Note 5 – Variable Interest Entities and Securitized Debt Obligations and Note 6 – Secured Financing Agreements to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional details regarding our securitized debt obligations and our secured financing facilities, respectively.
We have leveraged those strong relationships along with our team’s experience to maximize the performance of our portfolio, including during periods of economic uncertainty and market volatility.
We have leveraged those relationships along with our team’s experience to maximize the performance of our portfolio, including during periods of real estate market and economic uncertainty and volatility.
During the year ended December 31, 2023, we recorded $(3.4) million in depreciation and amortization on REO and related intangibles, which has been excluded from Distributable Earnings consistent with other unrealized gains (losses) and other non-cash items pursuant to our existing policy for reporting Distributable Earnings referenced above.
During the years ended December 31, 2024, and 2023, we recorded $(6.3) million and $(3.4) million, respectively, in depreciation and amortization on REO and related intangibles, which has been excluded from Distributable Earnings (Loss) consistent with other unrealized gains (losses) and other non-cash items pursuant to our existing policy for reporting Distributable Earnings (Loss) referenced above.
Nevertheless, unanticipated credit losses, including as a result of inflation, rising interest rates, capital markets volatility, slowing economic growth and geopolitical uncertainty, could occur that could adversely impact our operating results. Volatility in market interest rates may result in fluctuations in cash flows and values of properties securing our loans.
Nevertheless, unanticipated credit losses, including as a result of inflation, high interest rates, capital markets volatility and geopolitical uncertainty, could occur that could adversely impact our operating results. Volatility in market interest rates may result in fluctuations in cash flows and values of properties securing our loans.
We have paid full cumulative dividends on all classes of our preferred stock from the respective dates of issuance through December 31, 2023. 56 Table of Contents The following table presents cash dividends declared on our common stock since 2022: Declaration Date Record Date Payment Date Cash Dividend Per Share 2023 December 19, 2023 December 29, 2023 January 16, 2024 $ 0.20 September 20, 2023 October 2, 2023 October 16, 2023 $ 0.20 June 22, 2023 July 3, 2023 July 17, 2023 $ 0.20 March 16, 2023 April 3, 2023 April 17, 2023 $ 0.20 $ 0.80 2022 December 20, 2022 December 30, 2022 January 17, 2023 $ 0.20 September 20, 2022 October 3, 2022 October 17, 2022 $ 0.25 June 16, 2022 July 1, 2022 July 15, 2022 $ 0.25 March 17, 2022 April 1, 2022 April 15, 2022 $ 0.25 $ 0.95 The following table summarizes dividends declared since 2022 and their related tax characterization (per share amounts): Tax Characterization of Dividends Year Ended December 31, Dividends Declared Adjustments (1) Ordinary Dividends (Non-Qualified) (2) Qualified Ordinary Dividends Capital Gain Distribution Nondividend Distributions (3) 2023 $ 0.80 $ — $ — $ — $ — $ 0.80 2022 $ 0.95 $ (0.20) $ 0.08 $ 0.01 $ — $ 0.66 ____________________ (1) The dividend declared in the fourth quarter of 2022 and paid in the first quarter of 2023 was treated as a 2023 distribution for federal income tax purposes.
We have paid full cumulative dividends on all classes of our preferred stock from the respective dates of issuance through December 31, 2024. 53 Table of Contents The following table presents cash dividends declared on our common stock since 2023: Declaration Date Record Date Payment Date Cash Dividend Per Share 2024 December 19, 2024 December 31, 2024 January 15, 2025 $ 0.05 September 20, 2024 October 1, 2024 October 15, 2024 $ 0.05 June 18, 2024 July 1, 2024 July 15, 2024 $ 0.05 March 14, 2024 April 1, 2024 April 15, 2024 $ 0.15 $ 0.30 2023 December 19, 2023 December 29, 2023 January 16, 2024 $ 0.20 September 20, 2023 October 2, 2023 October 16, 2023 $ 0.20 June 22, 2023 July 3, 2023 July 17, 2023 $ 0.20 March 16, 2023 April 3, 2023 April 17, 2023 $ 0.20 $ 0.80 The following table summarizes dividends declared since 2023 and their related tax characterization (per share amounts): Tax Characterization of Dividends Year Ended December 31, Dividends Declared Adjustments (1) Ordinary Dividends (Non-Qualified) (2) Qualified Ordinary Dividends Capital Gain Distribution Nondividend Distributions (3) 2024 $ 0.30 $ 0.15 $ — $ — $ — $ 0.45 2023 $ 0.80 $ — $ — $ — $ — $ 0.80 ____________________ (1) The dividend declared in the fourth quarter of 2023 and paid in the first quarter of 2024 was treated as a 2024 distribution for federal income tax purposes.
Typically, our loan documents allow us, among other things, to receive regular property, borrower and guarantor financial statements; approve 45 Table of Contents annual budgets and major tenant leases; and enforce loan covenants and remedies.
Typically, our loan documents allow us, among other things, to receive regular property, borrower and guarantor financial statements; approve annual budgets and major tenant leases; and enforce loan covenants and remedies.
The following table sets forth our immediately available sources of liquidity as of December 31, 2023: (in thousands) December 31, 2023 Cash and cash equivalents $ 188,370 Approved but unused borrowing capacity on financing facilities — Total $ 188,370 We have access to liquidity through public offerings of debt and equity securities, subject to market conditions.
The following table sets forth our immediately available sources of liquidity as of December 31, 2024: (in thousands) December 31, 2024 Cash and cash equivalents $ 87,788 Approved but unused borrowing capacity on financing facilities — Total $ 87,788 We have access to liquidity through public offerings of debt and equity securities, subject to market and other conditions.
At December 31, 2023, we had two CRE CLOs outstanding: GPMT 2021-FL4 and GPMT 2021-FL3, totaling $1.0 billion of outstanding borrowings, financing 39 of our existing first mortgage loan investments with an aggregate principal balance, inclusive of restricted cash, of $1.3 billion.
At December 31, 2024, we had two CRE CLOs outstanding: GPMT 2021-FL4 and GPMT 2021-FL3, totaling $0.8 billion of outstanding borrowings, financing 30 of our existing first mortgage loan investments with an aggregate principal balance, inclusive of restricted cash, totaling $1.0 billion.
As of December 31, 2023, 1.7% of our loan investments by principal balance earned a fixed rate of interest and were financed with liabilities that pay interest on a floating rate basis, which resulted in a negative correlation to rising interest rates on that amount of our financing.
As of December 31, 2024, 2.1% of our loan investments by principal balance earned a fixed rate of interest and were financed with liabilities that pay interest on a floating rate basis, which resulted in a negative correlation to elevated interest rates on that amount of our financing.
During the year ended December 31, 2023, the facility accrued interest expense of $0.4 million while collateralized by real estate owned. 51 Table of Contents Factors Affecting Our Operating Results The results of our operations are affected by a number of factors and primarily depend on, among other things, the level of our net interest income, the availability and cost of financing for us, the market value of our assets, the credit performance of our assets and the supply of, and demand for, commercial real estate loans, other commercial real estate debt instruments and other financial assets available for investment in the market and available as a source of refinancing of our assets.
During the years ended December 31, 2024 and 2023, the facility accrued interest expense of $0.2 million and $0.4 million related to the balance collateralized by real estate owned, respectively. 49 Table of Contents Factors Affecting Our Operating Results The results of our operations are affected by a number of factors and primarily depend on, among other things, the level of our net interest income, the availability and cost of financing for us, the market value of our assets, the credit performance of our assets and the supply of, and demand for, commercial real estate loans, other commercial real estate debt instruments and other financial assets available for investment in the market and available as a source of refinancing of our assets.
We continue to actively explore additional types of funding facilities in order to further diversify our financing sources. Investor concerns over inflation, rising interest rates, slowing economic growth, and geopolitical uncertainty have resulted in significant disruptions and volatility in financial markets and uncertainty about the overall macroeconomic outlook.
We continue to actively explore additional types of funding facilities in order to further diversify our financing sources. Investor concerns over inflation trends, elevated interest rates and geopolitical uncertainty have resulted in significant disruptions and volatility in financial markets and uncertainty about the overall macroeconomic and capital markets outlook.
Secured Repurchase Agreements As of December 31, 2023, we had repurchase facilities in place with five counterparties with aggregate outstanding borrowings of $0.9 billion, which financed a portion of our loans held-for-investment and real estate owned.
Secured Repurchase Agreements As of December 31, 2024, we had repurchase facilities in place with three counterparties with aggregate outstanding borrowings of $0.6 billion, which financed a portion of our loans held-for-investment and real estate owned.
During the year ended December 31, 2023, we recorded provision for credit losses of $(104.8) million, which has been excluded from Distributable Earnings, consistent with other unrealized gains (losses) and other non-cash items pursuant to our existing policy for reporting Distributable Earnings referenced above.
During the years ended December 31, 2024, and 2023, we recorded a provision for credit losses of $(201.4) million and $(104.8) million, respectively, which has been excluded from Distributable Earnings (Loss), consistent with other unrealized gains (losses) and other non-cash items pursuant to our existing policy for reporting Distributable Earnings (Loss) referenced above.
We believe that our stockholders use Distributable Earnings and Distributable Earnings before realized losses, or a comparable supplemental performance measure, to evaluate and compare the performance of our company and our peers.
We believe that our stockholders use Distributable Earnings (Loss) and Distributable Earnings (Loss) Before Realized Gains 40 Table of Contents and Losses, or a comparable supplemental performance measure, to evaluate and compare the performance of our company and our peers.
(2) Cash coupon does not include origination or exit fees. Weighted average cash coupon excludes fixed rate loans. (3) Yield includes net origination fees and exit fees, but does not include future fundings, and is expressed as a monthly equivalent. Weighted average yield excludes fixed rate loans.
(2) Cash coupon does not include origination or exit fees. Weighted average cash coupon excludes fixed rate loans and impact of loans placed on nonaccrual status. (3) Yield includes net origination fees and exit fees, but does not include future fundings, and is expressed as a monthly equivalent.
(2) Includes loans on nonaccrual status as of December 31, 2023.
(2) Includes loans on nonaccrual status as of December 31, 2024.
As of December 31, 2023, we had outstanding $1.0 billion of securitized debt obligations with a weighted average borrowing rate of 7.2% and weighted average estimated remaining maturities of 0.7 years based on the maturities of the underlying loan collateral.
As of December 31, 2024, we had outstanding $0.8 billion of securitized debt obligations with a weighted average borrowing rate of 6.6% and weighted average estimated remaining maturities of 0.7 years based on the maturities of the underlying loan collateral.
As of December 31, 2023, 98.3% of our loan investments by principal balance earned a floating rate of interest and were financed with liabilities that pay interest on a floating rate basis, which resulted in an amount of net floating rate exposure, subject to the impact of interest rate floors on certain of our floating rate loan investments, of $0.7 billion.
As of December 31, 2024, 97.9% of our loan investments by principal balance earned a floating rate of interest and were financed with liabilities that pay interest on a floating rate basis, which resulted in an amount of net floating rate exposure, subject to the impact of interest rate floors on certain of our floating rate loan investments, of $0.6 billion.
We continue to monitor the effects on each of these factors in light of the significant volatility in global markets, driven by investor concerns over inflation, rising interest rates, slowing economic growth and geopolitical uncertainty, and how they will affect our operating results.
We continue to monitor the effects on each of these factors in light of the continued volatility in global markets, driven by investor concerns over inflation, elevated interest rates and geopolitical uncertainty, and how they will affect our operating results.
Leverage From December 31, 2022, to December 31, 2023, our debt-to-equity ratio, defined as total debt, net of cash, divided by total equity, decreased from 2.3:1.0 to 2.1:1.0, mainly driven by a reduction in outstanding debt, partially offset by a reduction in total equity.
Leverage From December 31, 2023, to December 31, 2024, our debt-to-equity ratio, defined as total debt, net of cash, divided by total equity, increased modestly from 2.1:1.0 to 2.2:1.0 mainly driven by a reduction in total equity, partially offset by a reduction in outstanding debt.
Weighted average cash coupon excludes fixed rate loans. (2) Yield includes net origination fees and exit fees, but does not include future fundings, and is expressed as a monthly equivalent. Weighted average yield excludes fixed rate loans.
Weighted average cash coupon excludes fixed rate loans and impact of loans placed on nonaccrual status. (2) Yield includes net origination fees and exit fees, but does not include future fundings, and is expressed as a monthly equivalent. Weighted average yield excludes fixed rate loans and impact of loans on nonaccrual status.
Our loan-level financing as of December 31, 2023, is generally term-matched or matures in 2024 or later, and includes $0.9 billion of secured repurchase agreements, $1.0 billion of CRE CLO securitizations, which are term-matched to the underlying assets, non-recourse and non-mark-to-market, and a $84.0 million secured credit facility.
Our loan-level financing as of December 31, 2024, is generally term-matched or matures in 2025, and includes $0.6 billion of secured repurchase agreements, $0.8 billion of CRE CLO securitizations, which are term-matched to the underlying assets, non-recourse and non-mark-to-market, and a $86.8 million term-matched and non-mark-to-market secured credit facility.
For the year ended December 31, 2023, investing activities increased our cash balances by approximately $561.4 million, primarily driven by repayments of loans held-for-investment. • Cash flows from financing activities.
For the year ended December 31, 2024, investing activities increased our cash balances by approximately $435.2 million, primarily driven by repayments of loans held-for-investment. • Cash flows from financing activities.
The following table represents our recourse leverage ratio and total leverage ratio as of December 31, 2023, and December 31, 2022: December 31, 2023 December 31, 2022 Recourse leverage ratio (1) 0.9 1.2 Total leverage ratio (2) 2.1 2.3 ____________________ (1) The debt-to-equity ratio with respect to our loans held-for-investment, defined as recourse debt, net of cash, divided by total equity.
December 31, 2024 December 31, 2023 Recourse leverage ratio (1) 1.0 0.9 Total leverage ratio (2) 2.2 2.1 ______________________ (1) The debt-to-equity ratio with respect to our loans held-for-investment, defined as recourse debt, net of cash, divided by total equity.
Although our business model is such that higher interest rates will, all else being equal, generally correlate to higher net income, interest rates remaining elevated for an extended period of time has adversely affected, and may continue to adversely affect, our existing borrowers and the cost of financing their properties and lead to nonperformance.
Although our business model is such that higher interest rates should, all else being equal, generally correlate to higher net income, interest rates having remained elevated for an extended period of time have adversely affected, and may continue to adversely affect, our existing borrowers and the cost of financing their properties and lead to non-performance.
The following table details the outstanding borrowings under our secured credit facility as of December 31, 2023: (dollars in thousands) December 31, 2023 Secured Credit Facility Principal Balance Carrying Value Wtd. Avg.
The facility matures on December 21, 2025. The following table details the outstanding borrowings under our secured credit facility as of December 31, 2024: (dollars in thousands) December 31, 2024 Secured Credit Facility Principal Balance Carrying Value Wtd. Avg.
Yield/Cost (1) Collateral assets $ 141,899 $ 105,865 S+4.1% Borrowings outstanding 84,000 84,000 S+6.5% ____________________ (1) Calculations of all in yield on collateral assets at origination are based on a number of assumptions (some or all of which may not occur) and are expressed as monthly equivalent yields that include net origination fees and exit fees and exclude future fundings and any potential or completed loan amendments or modifications.
Yield/Cost (1) Collateral assets $ 148,627 $ 98,015 S+4.2% Borrowings outstanding 86,774 86,774 S+6.5% ______________________ (1) Calculations of all in yield on collateral assets at origination are based on a number of assumptions (some or all of which may not occur) and are expressed as monthly equivalent yields that include net origination fees and exit fees and exclude future fundings and any potential or completed loan amendments or modifications.
We continue to actively explore additional types of funding facilities in order to further diversify our financing sources. Investor concerns over inflation, rising interest 58 Table of Contents rates, slowing economic growth and geopolitical uncertainty have resulted in significant disruptions in financial markets and uncertainty about the overall macroeconomic outlook.
We continue to actively explore additional types of funding facilities in order to further diversify our financing sources. Investor concerns over inflation trends, elevated interest rates and geopolitical uncertainty have resulted in significant disruptions in financial markets and uncertainty about the overall macroeconomic and capital markets outlook.
Summary of Results of Operations and Financial Condition Our GAAP net (loss) attributable to common stockholders was $(77.6) million (or $(1.50) per basic weighted average share) for the year ended December 31, 2023, as compared to GAAP net (loss) attributable to common stockholders of $(55.3) million (or $(1.04) per basic weighted average share) for the year ended December 31, 2022.
Summary of Results of Operations and Financial Condition Our GAAP net (loss) attributable to common stockholders was $(221.5) million (or $(4.39) per basic weighted average share) for the year ended December 31, 2024, as compared to GAAP net income attributable to common stockholders of $(77.6) million (or $(1.50) per basic weighted average share) for the year ended December 31, 2023.
We may amend or modify a loan depending on the loan’s specific facts and circumstances. These loan modifications may include additional time for the borrower to refinance or sell the collateral property, adjustment or waiver of performance tests that are prerequisite to the extension of a loan maturity, and/or deferral of scheduled payments.
These loan modifications may include additional time for the borrower to refinance or sell the collateral property, adjustment or waiver of performance tests that are prerequisite to the extension of a loan maturity, and/or deferral of scheduled payments.
As of December 31, 2023, we had outstanding $0.9 billion of repurchase agreement facility borrowings, and the term to maturity ranged from 180 days to approximately 1.6 years. Our repurchase agreement facilities had a weighted average borrowing rate of 8.8% and weighted average remaining maturities of 1.2 years as of December 31, 2023.
As of December 31, 2024, we had outstanding $0.6 billion of repurchase agreement facility borrowings, and the term to maturity ranged from approximately 0.4 years to approximately 0.6 years. Our repurchase agreement facilities had a weighted average borrowing rate of 7.8% and weighted average remaining maturities of 0.5 years as of December 31, 2024.
Declines in economic conditions have negatively impacted, and may continue to negatively impact, real estate fundamentals and real estate capital markets, which could make it more difficult for us to obtain or maintain financing.
These conditions have negatively impacted, and may continue to 55 Table of Contents negatively impact, real estate fundamentals and real estate capital markets, which could make it more difficult for us to obtain or maintain financing.
At December 31, 2023, our loan portfolio was comprised of 73 investments, of which 72 were senior first mortgage loans totaling $2.9 billion of commitments with an unpaid principal balance of $2.7 billion, and one subordinated loan totaling $13.5 million in commitments and unpaid principal balance.
At December 31, 2024, our loan portfolio was comprised of 54 investments, of which 53 were senior first mortgage loans totaling $2.2 billion of commitments with an unpaid principal balance of $2.1 billion, and one subordinated loan totaling $13.2 million in commitments and unpaid principal balance.
Loans Held-for-Investment and Provision for Credit Losses Loans held-for-investment are reported at cost, net of any provision for credit losses, unamortized acquisition premiums or discounts, loan fees and origination costs, as applicable.
Loans Held-for-Investment and Provision for Credit Losses Loans held-for-investment are reported at cost, net of any provision for credit losses, unamortized acquisition premiums or discounts, loan fees and origination costs, as applicable. We estimate our CECL allowance for our loan portfolio at the individual loan level.
Our non-mark-to-market financing sources accounted for approximately 55.5% of portfolio loan-level financing as of December 31, 2023.
Our non-mark-to-market financing sources accounted for approximately 59.4% of portfolio loan-level financing as of December 31, 2024.
The performance of these assets has been adversely affected to varying degrees by many different factors, such as slower leasing velocity, including leasing challenges of office properties in certain markets related to work from home trends and other submarket dynamics combined with a significant rise in interest rates resulting in a meaningful reduction in real estate transaction activity, capital markets volatility and limited market liquidity affecting these borrowers’ ability to either sell or refinance their loans, and other property specific factors.
The performance of these assets, which include four office buildings, one mixed-use property with an office component, one hotel asset and one multifamily property, has been adversely affected to varying degrees by many factors, such as slower pace in leasing activity for office properties, related to work from home trends and other submarket dynamics, combined with a significant rise in interest rates contributing to a meaningful reduction in real estate transaction activity, capital markets volatility and limited market liquidity affecting property values and these borrowers’ ability to either sell or refinance their loans, and other property specific factors.
Our Company Granite Point Mortgage Trust Inc. is an internally-managed real estate finance company that focuses primarily on directly originating, investing in and managing senior floating-rate commercial mortgage loans and other debt and debt-like commercial real estate investments.
Our Company Granite Point Mortgage Trust Inc. is an internally-managed real estate finance company that focuses primarily on directly originating, investing in and managing senior floating-rate commercial mortgage loans and other debt and debt-like commercial real estate investments. Our common stock is listed on the New York Stock Exchange, or NYSE, under the symbol “GPMT”.
Liquidity Needs In addition to our loan origination activities and general operating expenses, our primary liquidity needs include interest and principal payments under our $2.0 billion of outstanding borrowings under our repurchase facilities, CRE CLOs, and secured credit facility; $160.7 million of unfunded loan commitments; and dividend distributions to our preferred and common stockholders.
Liquidity Needs In addition to our loan origination activities and general operating expenses, our primary liquidity needs include interest and principal payments under our $1.5 billion of outstanding borrowings under our repurchase facilities, CRE CLOs, and secured credit facility; $90.6 million of unfunded loan commitments; and dividend distributions to our preferred and common stockholders, which are at the discretion of our board of directors.
At December 31, 2023, the weighted average risk rating of our loan portfolio was 2.8 as compared to 2.5 at December 31, 2022, weighted by total unpaid principal balance. We may hold REO as a result of taking title to a loan’s collateral. As of December 31, 2023, we owned one office property with a carrying value of $20.5 million.
At December 31, 2024, the weighted average risk rating of our loan portfolio was 3.1 as compared to 2.8 at December 31, 2023, weighted by total unpaid principal balance. We may hold REO as a result of taking title to a loan’s collateral.
For the year ended December 31, 2023, we recorded a GAAP net (Loss) per basic share of $(1.50), declared a cash dividend of $0.80 per share of common stock and reported Distributable (Loss) of $(0.33) per basic share.
For the year ended December 31, 2024, we recorded a GAAP net (loss) per basic common share of $(4.39), declared a cash dividend of $0.30 per share of common stock and reported Distributable (loss) of $(2.85) per basic common share.
(4) Original term (years) is the initial maturity date at origination and does not include any extension options and has not been updated to reflect any subsequent extensions or modifications, if applicable.
Weighted average yield excludes fixed rate loans and impact of loans placed on nonaccrual status. (4) Original term (years) is the initial maturity date at origination and does not include any extension options and has not been updated to reflect any subsequent extensions or modifications, if applicable.
As of December 31, 2023, the weighted average borrowing rate on our repurchase facilities was 8.8%, the weighted average advance rate was 69.3%, and the term to maturity ranged from 180 days to approximately 1.6 years, with a weighted average remaining maturity of 1.2 years.
As of December 31, 2024, the weighted average borrowing rate on our repurchase facilities was 7.8%, the weighted average advance rate was 61.7%, and the term to maturity ranged from approximately 0.4 years to approximately 0.6 years, with a weighted average remaining maturity of 0.5 years.
The cash movements can be summarized by the following: • Cash flows from operating activities. For the year ended December 31, 2023, operating activities increased our cash balances by approximately $52.1 million, primarily driven by net income after removing non-cash provision, and equity compensation. • Cash flows from investing activities .
The cash movements can be summarized by the following: • Cash flows from operating activities. For the year ended December 31, 2024, operating activities increased our cash balances by approximately $8.8 million, primarily driven by equity compensation and amortization and depreciation. • Cash flows from investing activities .
Calculations of cost of funds is the weighted average coupon of the CRE CLO, exclusive of any CRE CLO issuance costs. During the year ended December 31, 2023, the financing provided transitioned from LIBOR to SOFR. (2) No restricted cash is included as of December 31, 2023. Yield on collateral assets is exclusive of restricted cash.
Calculations of cost of funds is the weighted average coupon of the CRE CLO, exclusive of any CRE CLO issuance costs. (2) $8.0 million restricted cash is included as of December 31, 2024. No restricted cash is included as of December 31, 2023. Yield on collateral assets is exclusive of restricted cash.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThese increases in interest rates have increased, and may continue to increase, our interest expense, which may not be fully offset by any increases in interest income.
Biggest changeWhile the Federal Reserve reduced its benchmark overnight interest rates in the second half of 2024, they remain high and how long they will remain at elevated levels remains uncertain. These higher interest rates have increased our interest expense, which may not be fully offset by any increases in interest income.
Generally, we: • manage our portfolio with focus on diligent, investment-specific market review, enforcement of loan and security rights and timely execution of disposition strategies; • actively employ portfolio-wide and investment-specific risk measurement and management processes in our daily operations, including utilizing risk management tools; and • seek to manage credit risk through our rigorous underwriting due diligence process prior to origination or acquisition of our target investments, and through the use of nonrecourse financing when and where available and appropriate. 63 Table of Contents
Generally, we: • manage our portfolio with focus on diligent, investment-specific market review, enforcement of loan and security rights and timely execution of disposition strategies; • actively employ portfolio-wide and investment-specific risk measurement and management processes in our daily operations, including utilizing risk management tools; and • seek to manage credit risk through our rigorous underwriting due diligence process prior to origination or acquisition of our target investments, and through the use of nonrecourse financing when and where available and appropriate. 60 Table of Contents
Certain assumptions have been made in connection with the calculation of the information set forth in the foregoing interest rate sensitivity table and, as such, there can be no assurance that assumed events will occur or that other events will not occur that would affect the outcomes. The base interest rate scenario assumes interest rates at December 31, 2023.
Certain assumptions have been made in connection with the calculation of the information set forth in the foregoing interest rate sensitivity table and, as such, there can be no assurance that assumed events will occur or that other events will not occur that would affect the outcomes. The base interest rate scenario assumes interest rates at December 31, 2024.
If we fail to resolve such margin calls when due, the lenders may exercise their rights under such repurchase facilities, including requiring payment by us of our aggregate outstanding financing obligations and/or taking ownership of the loans securing such obligations, potentially on an unfinanced basis, thereby reducing our available liquidity.
If we fail to resolve such margin calls when due, the lenders may exercise their rights under such repurchase facilities, including requiring payment by us of our aggregate outstanding financing obligations and/or taking ownership of the collateral securing such obligations, potentially on an unfinanced basis, thereby reducing our available liquidity.
From time to time, we may originate or acquire fixed-rate investments, which may expose our operating results to the risks posed by fluctuations in interest rates, which we may choose to hedge, if we deem it prudent. In response to inflationary pressures, the Federal Reserve raised benchmark overnight interest rates on multiple occasions in 2022 and 2023.
From time to time, we may originate, acquire or otherwise hold fixed-rate investments, which may expose our operating results to the risks posed by fluctuations in interest rates, which we may choose to hedge, if we deem it prudent. In response to inflationary pressures, the Federal Reserve raised its benchmark overnight interest rates on multiple occasions in 2022 and 2023.
If prepayment rates decrease in a rising interest rate environment or extension options are exercised, the life of our loan investments could extend beyond the term of the secured financing agreements.
If prepayment rates decrease in a rising interest rate environment or extension options are exercised, the life of our loan investments could extend beyond the term of the secured financing arrangements.
Nevertheless, unanticipated credit losses, including as a result of inflation, rising interest rates, slowing economic growth and geopolitical uncertainty, could occur and could adversely impact our operating results. We employ a long-term, fundamental value-oriented investment strategy and we aim to, on a loan-by-loan basis, construct an investment portfolio that is well-diversified across property types, geographies and sponsors.
Nevertheless, unanticipated credit losses, including as a result of inflation, elevated interest rates and geopolitical uncertainty, could occur and could adversely impact our operating results. We employ a long-term, fundamental value-oriented investment strategy and we aim to, on a loan-by-loan basis, construct an investment portfolio that is well-diversified across property types, geographies and sponsors.
As a result, we are exposed to risks related to the equity capital markets and our related ability to raise capital 62 Table of Contents through the issuance of our common stock or other equity instruments.
As a result, we are exposed to risks related to the equity capital markets and our related ability to raise capital through the issuance of our common stock or other equity instruments.
We are also exposed to risks related to the debt capital markets, and our related ability to finance our business through borrowings under credit facilities or other debt instruments, such as securitizations or unsecured debt.
We are also exposed to risks related to the debt capital markets, and our related ability to finance our business through borrowings under credit facilities or other debt instruments, 59 Table of Contents such as securitizations or unsecured debt.
Recent Market Conditions Due to the macroeconomic challenges driven by inflation, rising interest rates, slowing economic growth and geopolitical uncertainty, most of our borrowers, sponsors, their tenants, the properties serving as collateral for our loan investments and the economy as a whole have been, and will likely continue to be, adversely affected.
Recent Market Conditions Due to the macroeconomic challenges driven by inflation trends, elevated interest rates and geopolitical uncertainty, most of our borrowers, sponsors, their tenants, the properties serving as collateral for our loan investments and the economy as a whole have been, and will likely continue to be, adversely affected.
Various factors, such as rising interest rates, high inflation, supply chain disruptions, growing geopolitical tensions and increased volatility in public equity and fixed income markets have led to increased cost and decreased availability of capital, which may adversely impact the ability of commercial property owners to service their debt obligations and refinance their loans as they mature and/or our ability to access capital markets.
Various factors, such as elevated interest rates, inflation, geopolitical tensions and volatility in public equity and fixed income markets have led to increased cost and decreased availability of capital, which may adversely impact the ability of commercial property owners to service their debt obligations and refinance their loans as they mature and/or our ability to access capital markets.
However, many of those risks have been magnified by the continuing economic disruption and capital markets volatility resulting from inflation, rising interest rates, slowing economic growth and geopolitical uncertainty.
However, many of those risks have been magnified by the continuing economic disruption and capital markets volatility resulting from inflation, elevated interest rates and geopolitical uncertainty.
In addition, these increases have increased borrowers’ interest payments, adversely affected commercial real estate property values and, for certain of our borrowers have contributed, and may continue to contribute, to loan non-performance, modifications, defaults, foreclosures and/or property sales, which could result in us realizing losses on our investments.
In addition, these higher benchmark interest rates have increased our borrowers’ interest payments, adversely affected commercial real estate property values and, for certain of our borrowers have contributed, and may continue to contribute, to loan non-performance, modifications, defaults, foreclosures and/or property sales, which has resulted, and may continue to result, in us realizing losses on our investments.
In addition, higher interest rates imposed by the Federal Reserve to address inflationary pressures have led to, and may continue to lead to, a decrease in prepayment speeds and an increase in the number of our borrowers who exercise loan extension options. This could have a negative impact on our results of operations.
In addition, higher interest rates imposed by the Federal Reserve have led to, and may continue to lead to, a decrease in the pace of loan repayment and an increase in the number of our borrowers who exercise loan extension options. This could have a negative impact on our results of operations.
All changes in value are measured as the change from our December 31, 2023, financial position. All projected changes in annualized net interest income are measured as the change from our projected annualized net interest income based off current performance returns.
All changes in value are measured as the change from our December 31, 2024, 58 Table of Contents financial position. All projected changes in annualized net interest income are measured as the change from our projected annualized net interest income based off current performance returns.
The remaining approximately 1.7% of our portfolio earned a fixed rate of interest. If interest rates were to decline, the value of these fixed-rate investments may increase, and if interest rates were to increase, the value of these fixed-rate investments may fall; however, the interest income generated by these investments would not be affected by fluctuations in market interest rates.
If interest rates were to decline, the value of these fixed-rate investments may increase, and if interest rates were to increase, the value of these fixed-rate investments may fall; however, the interest income generated by these investments would not be affected by fluctuations in market interest rates.
Actual economic conditions or our implementation of decisions may produce results that differ significantly from the estimates and assumptions used in our analyses. 61 Table of Contents The information presented in the following interest rate sensitivity table projects the potential impact of sudden parallel changes in interest rates on our financial results and financial condition over the next 12 months, based on our interest sensitive financial instruments at December 31, 2023.
The information presented in the following interest rate sensitivity table projects the potential impact of sudden parallel changes in interest rates on our financial results and financial condition over the next 12 months, based on our interest sensitive financial instruments at December 31, 2024.
Changes in Interest Rates (in thousands) -100 bps -50 bps +50 bps +100 bps Change in value of financial position: Loans held-for-investment $ 1,028 $ 514 $ (530) $ (1,059) Repurchase facilities (365) (182) 182 365 Securitized debt obligations (414) (207) 207 414 Secured financing facility (35) (18) 18 35 Total net assets $ 214 $ 107 $ (123) $ (245) -100 bps -50 bps +50 bps +100 bps Change in annualized net interest income: $ (2,662) $ (1,331) $ 1,331 $ 2,662 The interest rate sensitivity table quantifies the potential changes in annualized net interest income and portfolio value, should interest rates immediately change.
Changes in Interest Rates (in thousands) -100 bps -50 bps +50 bps +100 bps Change in value of financial position: Loans held-for-investment $ 594 $ 315 $ (324) $ (648) Repurchase facilities (249) (125) 125 249 Securitized debt obligations (329) (164) 164 329 Secured financing facility (36) (18) 18 36 Total net assets $ (20) $ 8 $ (17) $ (34) -100 bps -50 bps +50 bps +100 bps Change in annualized net interest income: $ (17) $ (428) $ 641 $ 1,282 The interest rate sensitivity table quantifies the potential changes in annualized net interest income and portfolio value, should interest rates immediately change.
Removed
Although the Federal Reserve has indicated that no further interest rate increases are expected in 2024, how long interest rates will remain at their current levels and the direction and extent of any future rate changes remain uncertain. As of December 31, 2023, approximately 98.3% of our portfolio by principal balance earned a floating rate of interest.
Added
As of December 31, 2024, approximately 97.9% of our portfolio by principal balance earned a floating rate of interest. The remaining approximately 2.1% of our portfolio earned a fixed rate of interest.
Added
Actual economic conditions or our implementation of decisions may produce results that differ significantly from the estimates and assumptions used in our analyses.

Other GPMT 10-K year-over-year comparisons