Claros Mortgage Trust Outlines $2B+ Loan Resolution Plan, Advancing REO Strategies

Claros Mortgage Trust (CMTG) CEO Richard Jay Mack discussed the company's $2B+ loan resolution trajectory and advancing REO strategies. Despite the elevated rate environment being a headwind for commercial real estate, Mack noted signs of healing and progress on three strategic priorities: resolving watch list loans, advancing REO strategies, and reducing portfolio concentration.

Claros Mortgage Trust, Inc. (NYSE: CMTG) has reported its financial results for the quarter ended June 30, 2025, showcasing resilience and progress despite a challenging interest rate environment. The company reported a GAAP net loss of $181.7 million, or $1.30 per share, for the quarter, along with a Distributable Loss of $110.1 million, or $0.77 per share [1].

Highlights of the second quarter include the resolution of $1.0 billion of UPB (unpaid principal balance) through loan resolutions, discounted payoffs, and sales. Notably, four full repayments totaling $480.0 million of UPB and two discounted payoffs totaling $88.6 million of UPB were achieved. Additionally, two mortgage foreclosures worth $146.7 million of UPB were realized, primarily involving multifamily properties in the Phoenix and Las Vegas MSAs. Post-quarter-end, the company resolved an additional $548.4 million of UPB, including a discounted payoff of $390.0 million of UPB and two mortgage foreclosures totaling $158.4 million of UPB, primarily in Dallas, TX [1].

The company's CEO, Richard Mack, highlighted the company's progress in three strategic priorities: resolving watchlist loans, advancing REO (real estate owned) strategies, and reducing portfolio concentration. Despite the elevated interest rate environment, Mack noted signs of healing and progress in the commercial real estate market. The company has seen a meaningful uptick in portfolio activity during the second quarter, including the realization of eight loans, which has resulted in a more than doubling of liquidity since year-end [1].

As of June 30, 2025, the company's total liquidity stood at $224 million, including $209 million of cash. By August 5, 2025, total liquidity had improved to $323 million, including $310 million of cash. The company's unencumbered assets at quarter-end included $398 million of loan UPB and $115 million of REO carrying value. Additionally, the company refinanced its debt related to the real estate-owned hotel portfolio with a $235 million non-recourse loan with up to five years of term [1].

The company's provision for CECL (Current Expected Credit Loss) reserves of $189.5 million, or $1.33 per share, for the quarter, primarily driven by specific reserves, as of quarter-end, CECL reserves of $332.7 million on loans receivable, representing $2.32 per share. This represents approximately 6.4% of UPB at quarter-end, comprised of specific reserves of 12.9% on UPB of risk-rated 5 loans and general reserves of 3.8% on UPB of remaining loans [1].

The book value of $12.27 per share underscores the company's financial health. Year-to-date 2025 highlights include the resolution of fifteen loans totaling $1.9 billion of UPB, an amount exceeding the total resolution activity from each of the prior full three years. Additionally, the company resolved nine watchlist loans totaling $1.1 billion of UPB, with three remaining watchlist loans with a total UPB of $237.3 million expected to be resolved through foreclosure in coming quarters [1].

Mack expressed optimism about the company's position, stating, "We are seeing signs of a more constructive capital markets environment in commercial real estate, despite a prolonged period of elevated interest rates. We had a meaningful uptick in portfolio activity during the second quarter, including the realization of eight loans. As a result, we have more than doubled our liquidity position since year-end and feel we are well positioned to continue this positive progress into the second half of 2025" [1].

References:
[1] https://www.businesswire.com/news/home/20250806220171/en/Claros-Mortgage-Trust-Inc.-Reports-Second-Quarter-2025-Results