Claros Mortgage Trust, Inc. Q4 FY2025 earnings call

• In 2025, CMTG exceeded the $2 billion total resolution target, closing the year with $2.5 billion of total resolutions, including 11 watchlist loans with aggregate UPB of $1.3 billion. - Generated significant liquidity, used to delever the portfolio and reduce corporate debt. - Retired the Term Loan B and replaced it with a $500 million senior secured loan from HPS, extending the maturity of corporate debt to 2030. - In 2026, focus on asset management and decisive execution to resolve watchlist loans and work through REO assets, aiming to evaluate new lending opportunities towards the end of 2026. - Strengthened balance sheet by reducing leverage by $1.7 billion in 2025 and an additional $300 million in the new year. - Made progress with REO assets, including commercial condominiumization of a New York building and good performance of the New York REO hotel portfolio.

In the fourth quarter of 2025, CMTG reported a GAAP net loss of $1.56 per share and a distributable loss of $0.71 per share. The held-for-investment loan portfolio continued to decline, decreasing to $3.7 billion at December 31 compared to $4.3 billion at September 30 and $6.1 billion at year-end 2024. The portfolio no longer includes stand-alone life science, office exposure decreased from $859 million to $589 million and land exposure decreased from $489 million to $187 million. Specific to the fourth quarter, the quarter-over-quarter decrease in UPB was primarily due to 4-loan resolutions. The REO assets: significant progress with the mixed-use New York City REO asset, sold all office floors and signage component generating $67 million; the New York REO hotel portfolio performed well with 14% annual NOI growth.

• Remain optimistic but mindful of macroeconomic backdrop and uncertainty. - Anticipate gradual and steady improvement in real estate with bond market rally and rate cuts. - Focus in 2026 on asset management, resolving watchlist loans and REO assets, and evaluating new lending opportunities towards end of 2026. - After closing the senior secured term loan, have $153 million in liquidity, with plans to evaluate capital allocation options by end of 2026 such as originating new loans, further deleveraging, or other alternatives.

Q: Stock trading at a large discount to book, opportunities to create shareholder value?

A: Goal is to clean up the book to make it transparent and understandable first before evaluating shareholder value creation.

Q: NII likely lower in first and second quarter of 2026?

A: Yes, as loans are resolved, delevering occurs, and nonaccrual loans are resolved, top line interest income compresses, but deleveraging offsets to some extent on interest expense side.

Q: Percentage of reserve that could translate to losses in next 12 months?

A: Reserving is based on appropriate levels, have good sense of reserves needed to accelerate resolutions, but new information or changes in the dynamic environment could affect, and currently think appropriately reserved with data points from loan sales, DPOs, foreclosures.

Q: Liquidity levels in 2026?

A: Liquidity generated over the year used to deleverage, now have significant liquidity cushion over minimum requirement, with plans to evaluate capital allocation options by end of 2026.

Q: Pace of sales out of REO portfolio and watchlist loans?

A: More constructive environment, trying to balance reacting to market and making best execution to clean up book, seeing more regular way repayments on larger loans, expecting fewer extensions and modifications and more repayments.

Q: NOI in REO portfolio and CapEx?

A: REO portfolio has mixed NOI, some properties generating NOI, some more challenged, CapEx not expected to be meaningful and dependent on hold periods as accelerating dispositions.

Q: New term loan allowing financing of watchlist loans?

A: The new term loan is a corporate debt facility, not an asset-specific financing structure like used at direct asset level, so doesn't allow financing of watchlist loans in the same way as asset-specific facilities.