Claros Mortgage Trust, Inc. Q2 FY2025 earnings call

Key Priorities Achieved - Resolved watch list loans: $1.9 billion of UPB resolved year-to-date, reducing watch list to 17 loans with $2.1 billion of UPB. - Improved liquidity: Total liquidity was $323 million as of August 5, a $221 million increase from December 31, 2024. - Redeployed capital: Examples include completing commercial condominiumization of a New York City mixed-use building and foreclosing on multifamily assets to optimize recovery. ### REO Strategy - Hotel portfolio: Executed CMBS refinancing with nonrecourse loan and held for sale, seeking exit. - Multifamily REO: 4 multifamily loans foreclosed, with plans for value-add strategies to improve cash flow and maximize recovery, aiming to monetize first assets in coming quarters.

The held-for-investment loan portfolio of Claros Mortgage Trust decreased to $5 billion at June 30, 2025, from $5.9 billion at March 31, 2025, primarily due to loan resolutions. During the second quarter, 8 loans totaling $873 million of UPB were resolved, including 4 full borrower repayments ($480 million UPB) and 4 watch list loan resolutions ($393 million UPB). Year-to-date, total loan resolutions were $1.9 billion of UPB. The REO portfolio included foreclosures on multifamily loans and a hotel portfolio. The hotel portfolio had strong operating performance and executed a CMBS refinancing. The REO multifamily portfolio had 4 foreclosures during the quarter with plans for value-add strategies.

Forward-Looking Statements - Anticipate continued momentum in resolving watch list loans. - Expect to continue executing on REO strategy, including foreclosing on remaining multifamily loans. - Aim to further deleverage the balance sheet, considering options like term loan extension or replacement financing.

Risks - Elevated rate environment remains a headwind for commercial real estate. - Negative credit migration in the portfolio, with some loans downgraded. - Uncertainty around external factors affecting REO asset sales and timing, such as New York City election impact on hotel portfolio.

Q: Does the liquidity number factor in the discounted payoff of the New York City multifamily?

A: Yes, the $323 million liquidity amount reflects the liquidity generated by the New York multifamily loan in July.

Q: What is the outlook for continued resolutions payoffs in the second half?

A: Capital markets are healing, with expected additional payoffs, relying on regular way payoffs from borrowers absent unique situations.

Q: How should we think about the initial $2 billion gross proceeds target?

A: Tracking to exceed the $2 billion target, with resolution activities generating liquidity for other priorities.

Q: What's the status of the term loan refi?

A: Still working through the term loan process, engaging with private credit providers, expecting to reduce loan size and delever, considering preferred equity but aiming for strength from resolved assets