Claros Mortgage Trust, Inc. (NYSE:CMTG) Q2 2022 Earnings Conference Call August 3, 2022 9:00 AM ET Company Participants Anh Huynh - Vice President of Investor Relations Richard Mack - Chairman & Chief Executive Officer Mike McGillis - President & Director Jai Agarwal - Chief Financial Officer Kevin Cullinan - Executive Vice President of Originations Conference Call Participants Rick Shane - JPMorgan Don Fandetti - Wells Fargo Jade Rahmani - KBW Steve Delaney - JMP Securities Operator Welcome to today’s Clar ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-40993 Claros Mortgage Trust, Inc. (Exact Name of Registrant as Specified in its Charter) Maryland 47-4074900 (State or other juris ...

Financial Data and Key Metrics Changes - For Q1 2022, the company reported GAAP net income of $29.4 million, or $0.21 per share, and distributable earnings of $33.5 million, or $0.24 per share [12] - The loan portfolio increased by $631 million to $7.2 billion, driven by origination and loan funding outpacing repayments [13] - The total CECL reserve increased by $2.1 million quarter-over-quarter to $75.6 million, representing 1% of the portfolio [12] Business Line Data and Key Metrics Changes - The first quarter originations volume was $1.2 billion, with multifamily loans comprising 64% of the origination activity, leading to a 7% quarter-over-quarter increase in multifamily exposure [9] - Construction loans represented roughly one-third of the first quarter multifamily originations, with build-to-rent loan commitments exceeding $150 million, or 12% of the first quarter origination activity [10] Market Data and Key Metrics Changes - The company is focusing on markets with strong growth such as Dallas, Miami, Phoenix, Seattle, and Nashville, which have shown stable asset values despite rising interest rates [5][6] - The New York exposure declined to 33% due to loan repayments, indicating a strategic shift in portfolio management [9] Company Strategy and Development Direction - The company aims to capitalize on transitional real estate lending opportunities, particularly in high-growth markets, while maintaining a defensive stance in multifamily and build-to-rent sectors [6][7] - The management is opportunistic regarding lending in out-of-favor asset classes like office and hospitality, focusing on high-quality assets with strong demand [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the asset management and origination activities, despite market volatility due to inflation and rising interest rates [4] - The company anticipates continued attractive investment opportunities in transitional real estate lending, with expectations of rising lending returns due to increasing short-term rates and lending spreads [4][14] Other Important Information - The company has significant available investment capacity, with over $450 million in liquidity and unencumbered assets of $650 million [13] - The non-accrual percentage is expected to decrease to approximately 2% following the resolution of a significant non-accrual loan [8][12] Q&A Session Summary Question: What is the timeframe for becoming asset sensitive with forward rates? - Management indicated that asset sensitivity is expected to occur by the end of Q2 or beginning of Q3, depending on new loans added to the portfolio [17] Question: What drove the sequential decline in net interest income? - The decline was attributed to the payoff of higher-yielding loans in Q4, with expectations of recovery as capital is redeployed and interest rates rise [21][23] Question: When does the company envision needing to acquire more capital? - Management noted that they are not in a desperate position to raise cash due to significant liquidity and no near-term maturities [30] Question: What are the expectations for overall commercial real estate prices in light of interest rate changes? - Management expects cap rates to expand by approximately 5% to 15% in lower growth markets, while high-growth markets may see stable cap rates due to strong rent appreciation [34] Question: How is the company approaching the build-to-rent space? - The company is focusing on horizontal multifamily developments with experienced local operators and significant private equity backing, indicating a strong alignment with market expertise [46][47]

| --- | --- | --- | --- | |-------|-------|----------------------------------------|---------------------------------------------------| | | | First Quarter 2022 Earnings Supplement | Claros Mortgage Trust, Inc. (CMTG) \nMay 11, 2022 | | | | | | | | | | | The properties above are not representative of all transactions. Important Notices The information herein generally speaks as of the date hereof or such earlier date referred to on specific pages herein. In furnishing this document, Claros Mortgage Trust, ...

PART I. [FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Presents Claros Mortgage Trust, Inc.'s unaudited consolidated financial statements for Q1 2022, including balance sheets, operations, equity, cash flows, and detailed accounting notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets rose to $8.07 billion, liabilities to $5.49 billion, and equity slightly declined to $2.58 billion by March 31, 2022 Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$8,072,812** | **$7,455,271** | | Cash and cash equivalents | $444,001 | $310,194 | | Loans receivable held-for-investment, net | $6,972,638 | $6,340,295 | | Real estate owned, net | $404,947 | $406,887 | | **Total Liabilities** | **$5,493,516** | **$4,851,004** | | Repurchase agreements | $4,019,910 | $3,489,511 | | Secured term loan, net | $738,928 | $739,762 | | **Total Stockholders' Equity** | **$2,579,296** | **$2,604,267** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2022 net income decreased to $29.4 million from $58.6 million in Q1 2021 due to lower interest income and higher expenses Consolidated Statements of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net interest income | $51,114 | $59,516 | | Total revenue | $57,927 | $60,567 | | Total expenses | $26,454 | $13,641 | | **Net income** | **$29,371** | **$58,575** | | Net income attributable to common stock | $29,412 | $58,608 | | **Net income per share (basic and diluted)** | **$0.21** | **$0.44** | [Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity decreased to $2.58 billion by March 31, 2022, due to dividends and repurchases, partially offset by net income - Key changes in stockholders' equity for Q1 2022 include a net income of **$29.4 million**, offset by common stock dividends of **$51.7 million** and share repurchases of **$3.2 million**[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2022 net cash from operations was $22.6 million, investing used $456.6 million, financing provided $567.0 million, resulting in a $133.0 million cash increase Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $22,620 | $32,646 | | Net cash used in investing activities | ($456,588) | ($90,701) | | Net cash provided by (used in) financing activities | $566,972 | ($4,165) | | **Net increase (decrease) in cash** | **$133,004** | **($62,220)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations of accounting policies, including REIT structure, CECL, loan portfolio, financing, equity, income taxes, and commitments - The company is a Maryland corporation formed in 2015, operating as a Real Estate Investment Trust (REIT) focused on income-producing loans collateralized by commercial real estate. It is externally managed by Claros REIT Management LP[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - The company adopted ASU 2016-13 (CECL) on January 1, 2021, which requires estimating credit losses over the life of financial instruments. The CECL reserve is based on historical experience, current conditions, and reasonable forecasts[33](index=33&type=chunk) - Effective Q1 2022, due to a change in the Chief Operating Decision Maker (CODM), the company determined it has one operating and one reportable segment, related to investing in income-producing commercial real estate loans. This change was applied retrospectively[54](index=54&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2022 financial condition and results, covering key metrics, loan portfolio, financing, operating results, liquidity, capital, and critical accounting policies - The company focuses on originating senior and subordinate loans, typically ranging from **$50 million** to **$300 million**, on transitional commercial real estate assets in major U.S. markets[159](index=159&type=chunk) Key Financial Indicators - Q1 2022 | Indicator | Value | | :--- | :--- | | Net Income per Share | $0.21 | | Dividends Declared per Share | $0.37 | | Distributable Earnings per Share | $0.24 | | Book Value per Share | $18.20 | | Adjusted Book Value per Share | $18.76 | | Net Debt-to-Equity Ratio | 1.9x | | Total Leverage Ratio | 2.3x | [Portfolio Overview](index=34&type=section&id=Our%20Portfolio) Loan portfolio as of March 31, 2022: $8.7 billion commitment, $7.2 billion unpaid balance, 96% senior loans, 37% multifamily, weighted average risk rating 3.0 Loan Portfolio Summary as of March 31, 2022 | Loan Type | Number of Loans | Loan Commitment ($ thousands) | Unpaid Principal Balance ($ thousands) | All-In Yield | | :--- | :--- | :--- | :--- | :--- | | Senior loans | 68 | $8,450,891 | $6,973,076 | 5.5% | | Subordinate loans | 5 | $264,012 | $260,697 | 10.5% | | **Total / W.A.** | **73** | **$8,714,903** | **$7,233,773** | **5.6%** | - During Q1 2022, the company had net fundings of **$631.0 million**, comprising **$684.8 million** in initial fundings and **$140.6 million** in advances, offset by **$194.4 million** in loan repayments[173](index=173&type=chunk) - The total Current Expected Credit Loss (CECL) reserve increased by **$2.1 million** during Q1 2022 to a total of **$75.6 million**, primarily due to the increase in the size of the portfolio and unfunded loan commitments[183](index=183&type=chunk) [Portfolio Financing](index=38&type=section&id=Portfolio%20Financing) Portfolio financing capacity was $6.5 billion with $5.4 billion outstanding as of March 31, 2022, utilizing various arrangements and aiming to match-fund floating-rate assets Portfolio Financing Summary as of March 31, 2022 (in thousands) | Financing Type | Capacity | Unpaid Principal Balance | | :--- | :--- | :--- | | Repurchase agreements | $4,765,000 | $3,798,423 | | Repurchase agreements - Side Car | $271,171 | $221,487 | | Loan participations sold | $168,322 | $168,322 | | Notes payable | $277,950 | $146,089 | | Secured Term Loan | $760,810 | $760,810 | | Debt related to real estate owned | $290,000 | $290,000 | | **Total** | **$6,533,253** | **$5,385,131** | - As of March 31, 2022, **97.0%** of the company's loans by unpaid principal balance were floating rate, and **87.0%** of these had interest rate floors, providing protection against falling rates[202](index=202&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Q1 2022 net income increased to $29.4 million from Q4 2021 but decreased from Q1 2021 due to varying impacts from expenses, interest income, and credit loss provisions Quarterly Results of Operations (in thousands) | Metric | Q1 2022 | Q4 2021 | Q1 2021 | | :--- | :--- | :--- | :--- | | Total Revenue | $57,927 | $70,924 | $60,567 | | Total Expenses | $26,454 | $39,318 | $13,641 | | Provision for credit loss | ($2,102) | ($8,451) | $185 | | **Net Income** | **$29,371** | **$16,989** | **$58,575** | - The decrease in revenue from Q4 2021 was primarily due to lower net interest income (**$7.4 million**) and lower revenue from real estate owned (**$5.6 million**) due to seasonality[211](index=211&type=chunk) - The decrease in net income from Q1 2021 was driven by lower net interest income (**$8.4 million**), higher operating expenses, and a **$2.3 million** negative swing in the provision for credit losses[218](index=218&type=chunk)[226](index=226&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Total available liquidity was $1.02 billion as of March 31, 2022, with a Net Debt-to-Equity ratio of 1.9x, primarily used for unfunded loan commitments and operational needs Sources of Liquidity (in thousands) | Source | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $444,001 | $310,194 | | Undrawn financing capacity | $564,649 | $584,311 | | Loan principal payments held by servicer | $8,350 | $67,100 | | **Total Available Liquidity** | **$1,017,000** | **$961,605** | - The company has **$1.5 billion** in aggregate unfunded loan commitments as of March 31, 2022, which are expected to be funded over a weighted-average period of **2.6 years**[234](index=234&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate risk, with 97% floating-rate loans; a 100 bps rate increase would decrease annual net interest income by $11.4 million, alongside other credit and capital risks Interest Rate Sensitivity Analysis (Impact on Annual Net Interest Income) | Change in LIBOR/SOFR | Change in Net Interest Income ($ thousands) | Change per Share | | :--- | :--- | :--- | | to 0.00% | $2,047 | $0.01 | | +50 bps | ($5,484) | ($0.04) | | +100 bps | ($11,390) | ($0.08) | | +150 bps | ($11,648) | ($0.08) | - The company manages credit risk through extensive due diligence, conservative loan-to-value ratios, proactive asset management, and various lender protections in loan agreements[265](index=265&type=chunk)[267](index=267&type=chunk) - The company is exposed to capital markets risk due to its REIT structure, which requires distributing most of its taxable income, thus necessitating debt or equity capital for growth. Margin call risk exists on repurchase facilities, but no margin calls have been received to date[272](index=272&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[284](index=284&type=chunk) - No material changes were made to the internal control over financial reporting during the three months ended March 31, 2022[284](index=284&type=chunk) PART II. [OTHER INFORMATION](index=52&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) [Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company was not involved in any material legal proceedings as of March 31, 2022 - The company reports no material legal proceedings as of March 31, 2022[288](index=288&type=chunk) [Risk Factors](index=52&type=page&id=Item%201A.%20Risk%20Factors) No material changes to the company's principal risk factors from those disclosed in its Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Annual Report on Form 10-K have occurred[289](index=289&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[290](index=290&type=chunk) [Defaults Upon Senior Securities](index=52&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[291](index=291&type=chunk) [Other Information](index=52&type=section&id=Item%205.%20Other%20Information) The company reported no other information required to be disclosed under this item - None[293](index=293&type=chunk) [Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including corporate governance, securities descriptions, management, financing agreements, and officer certifications - Exhibits filed include CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002 and various financing and management agreements[294](index=294&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-40993 Claros Mortgage Trust, Inc. (Exact name of Registrant as specified in its Charter) Maryland 47-4074900 (State or other jurisdic ...

Financial Performance - GAAP net income was $52.9 million, or $0.40 per share, and Net Distributable Earnings was $45.3 million, or $0.34 per share[14, 18] - A cash dividend of $0.37 per common share was declared and paid for the third quarter of 2021[14, 18] - The CECL reserve decreased by $9.3 million, or $(0.07) per share, due to improved macroeconomic outlook and collateral performance[14] - Book Value per Share increased slightly from $18.76 to $18.78[20] Investment Portfolio - The investment portfolio totaled $6.4 billion with an all-in yield of 6.4%[13, 17] - Residential investments (multifamily and for sale condo) represented 28.3% of the portfolio[17] - Senior loans represented 93.2% of the portfolio[17] - The weighted average LTV (loan-to-value) was 66.1%[17] Originations and Fundings - Originated seven investments with $905.2 million of total commitments, of which $745.0 million was funded at closing[15] - Fundings made on existing investments totaled $248.0 million[15] - $676.1 million in full or partial loan repayments were received[17] Liquidity and Capitalization - Ended the quarter with $381.5 million of available liquidity[17] - Available capacity across financing sources totaled $1.3 billion[17] - The net debt/equity ratio was 1.8x, and the total leverage ratio was 2.1x[13, 17, 18]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to | --- | --- | |----------------------------------------------------------------------------------------------------------------|------------------------- ...