Mortgage REIT Granite Point Is Said to Tap Evercore for Advice

(Bloomberg) -- Granite Point Mortgage Trust Inc. has tapped Evercore Inc. for strategic advice as it looks for ways to shore up its financial position, according to people familiar with the matter.

The New York-based company, which originates, invests in and manages commercial real estate-linked debt, is exploring financing alternatives among other options, said one of the people, who requested anonymity because the matter is private.

A representative for Granite Point declined to comment, while a spokesman for Evercore also declined to comment.

Granite Point in March said it had agreed to internalize its management, which is currently externally managed by Pine River Capital Management LP. As of Wednesday’s close, the company’s share price has fallen 76% since the end of 2019 to $4.36, giving it a market value of roughly $240 million. Its share price was $18.68 as recently as February 20.

Mortgage REITs, or real estate investment trusts, have been roiled by the coronavirus pandemic and the subsequent lockdowns, which may prevent property owners from collecting tenant rents. This in turn may lead to missed mortgage payments and a decline in property values. The damage has been amplified by leverage and associated margin calls from financiers, which forced some firms to sell portfolios of debt at a discount.

Granite Point, led by president and chief executive Jack Taylor, moved to address the impact of the pandemic in March by suspending its first-quarter dividend to “conserve available liquidity,” posting cash collateral with respect to certain loans and entering into “constructive discussions” with lenders.

As of March 25, its commercial real estate investment portfolio was roughly 98.8% senior loans, with the remaining 1.2% equally split across subordinated loans and securities, the firm said. The portfolio was spread across geographies and property types, and financed through a mix of term-matched, non-mark-to-market collateralized-loan obligations and asset-specific financings, as well as secured revolving repurchase facilities.

“The extraordinary macroeconomic events manifesting as a result of the COVID-19 pandemic have negatively impacted the overall level of liquidity across capital markets, including the commercial real estate loan market,” the company said at the time, adding that such events may negatively affect the performance of commercial real estate properties. “There can be no assurances that macroeconomic conditions will not worsen, which may negatively impact the company,” it added.

A number of the mortgage REIT’s peers have tapped advisers in an effort to shore up liquidity amid ongoing uncertainty. Ladder Capital Corp. secured strategic financings earlier this week, as previously reported by Bloomberg. Two Harbors Investment Corp. agreed last month to pay Pine River $144 million to end its management agreement, a move designed to attract new investors.

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