Claros Mortgage Trust, Inc.

What they do

CMTG originates senior and subordinate mortgage loans, including mezzanine loans secured by pledges of equity ownership interests in property owners, primarily on transitional CRE assets requiring repositioning, renovation, leasing, or development. It focuses on loans ranging from $50 million to $300 million and generally intends to hold its diversified loan portfolio to maturity. The company is externally managed by Claros REIT Management LP, an affiliate of Mack Real Estate Credit Strategies, L.P., and has elected to be taxed as a REIT.

Revenue drivers

• Held-for-investment loan portfolio — At June 30, 2026, CMTG reported a $2.8 billion held-for-investment loan portfolio with a weighted average all-in yield of 5.8%, which generates interest income and contractual fees.
• REO assets — The company held a $723.7 million REO portfolio of nine investments at June 30, 2026, including two classified as held-for-sale, and reported that REO generated distributable earnings prior to realized gains and losses of $0.01 per share in Q2 2026.
• Loan resolutions and repayments — CMTG's revenue and earnings are also affected by loan repayments, discounted payoffs, loan sales, and foreclosures, such as the resolution of four loans totaling $409.5 million of UPB after quarter-end.

Recent performance

For the quarter ended June 30, 2026, CMTG reported GAAP net loss of $255.4 million, or $1.81 per share, and Distributable Loss of $90.8 million, or $0.63 per share. The quarter included a provision for CECL reserves of $208.8 million, or $1.45 per share, primarily reflecting increased reserves to align with anticipated near-term resolution levels. The company downgraded four loans totaling $447 million of UPB to risk rated 5 with specific CECL reserves of $114 million, and increased specific CECL reserves by $74 million on three existing risk rated 5 loans. At June 30, 2026, book value was $8.58 per share, total liquidity was $103 million, and the net debt/equity ratio was 2.0x.

Strategy

Management stated it continued to make progress resolving watchlist assets, turning over the portfolio, and deleveraging the balance sheet, moving closer to making accretive capital allocation decisions in the coming quarters. The company resolved one watchlist loan with $25.4 million of UPB through mortgage foreclosure in Q2 2026 and sold one multifamily REO asset for $48.0 million. After quarter-end, CMTG resolved four loans totaling $409.5 million of UPB, including two full repayments, one discounted payoff, and one loan sale, and entered a binding agreement to sell a multifamily REO asset. Net financings outstanding decreased by $299 million after quarter-end, including $93 million of deleveraging payments.

Risks

• High CECL reserves and credit losses — At June 30, 2026, CMTG held $567.4 million of CECL reserves, approximately 16.9% of UPB, including specific reserves of 32.0% of UPB on risk rated 5 loans.
• Watchlist loan concentration — Watchlist held-for-investment loans totaled $1.2 billion across 12 loans at June 30, 2026, representing a significant portion of the portfolio.
• Dividend suspension — The Board paused the quarterly common stock dividend on December 16, 2024, and no dividends were declared during 2025.
• Leverage and liquidity — At June 30, 2026, total leverage ratio was 2.7x and net debt/equity was 2.0x, with total liquidity of $103 million, including $90 million of cash.

Outlook

Management said it continued to make significant progress resolving watchlist assets, turning over the portfolio and deleveraging the balance sheet, moving closer to making accretive capital allocation decisions in the coming quarters. The company reported that after quarter-end resolutions and deleveraging, net debt/equity declined to 1.7x and total leverage ratio declined to 2.4x. As of July 24, 2026, total liquidity was $168 million, including $155 million of cash.