Claros Mortgage Trust(US:CMTG)2023-07-31 16:00Financial Performance - Net income attributable to common stock for the three months ended June 30, 2023, was $4.253 million, a decrease from $36.678 million for the three months ended March 31, 2023[192]. - Basic and diluted net income per share of common stock was $0.02 for the three months ended June 30, 2023, compared to $0.26 for the previous quarter[192]. - The company recognized a net income of $4.3 million for the three months ended June 30, 2023, a decrease of $32.4 million from the previous quarter[208]. - Net income for the six months ended June 30, 2023, was $40,931,000, a decrease of 56% compared to $92,560,000 in the prior year[241]. - Basic and diluted net income per share of common stock was $0.28, down from $0.66 in the previous year[241]. - The net income attributable to common stock for the three months ended June 30, 2023, was $40.9 million, a decrease of $51.7 million compared to the same period last year[241]. Earnings and Revenue - Distributable Earnings for the three months ended June 30, 2023, excluded a $41.5 million provision for CECL reserve, which was not included in the Distributable Earnings calculation[193]. - The company believes that Distributable Earnings provide meaningful information for assessing overall performance, excluding certain non-cash items and GAAP adjustments[193]. - Total net revenue for the three months ended June 30, 2023, was $80.9 million, up $11.8 million compared to the previous quarter[208]. - Revenue increased by $11.8 million during the three months ended June 30, 2023, primarily due to an increase in revenue for real estate owned of $8.9 million and net interest income of $2.9 million[237]. - Total net revenue for the six months ended June 30, 2023, was $150,027,000, an increase of 18% from $127,167,000 for the same period in 2022[241]. Expenses and Losses - Total expenses for the six months ended June 30, 2023, were $74,760,000, an increase of 31% from $56,902,000 in the same period last year[241]. - Expenses increased by $0.8 million during the three months ended June 30, 2023, primarily due to increased operating expenses from real estate owned and stock-based compensation[238]. - Total expenses increased by $17.9 million to $74.8 million for the three months ended June 30, 2023, primarily due to increased operating expenses and interest expenses[238]. - The company recorded a provision for current expected credit losses of $41.5 million during the three months ended June 30, 2023, primarily due to a $44.6 million increase in specific CECL reserves[240]. Assets and Liabilities - The total debt as of June 30, 2023, was $5.88 billion, an increase from $5.66 billion as of December 31, 2022[215]. - The net debt-to-equity ratio increased to 2.3x as of June 30, 2023, compared to 2.2x at the end of 2022[215]. - The company has total obligations of $8.59 billion, with $2.43 billion due within one year[217]. - The company had $5.9 billion in outstanding borrowings under secured financings as of June 30, 2023[243]. - As of June 30, 2023, the company had 138,385,904 shares of common stock outstanding, representing $2.4 billion of equity[243]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $253,055,000 as of June 30, 2023, down from $306,456,000 at the end of 2022[244]. - Total sources of liquidity as of June 30, 2023, were $406,580,000, a decline from $519,569,000 at the end of 2022[244]. - Net cash flows provided by operating activities for the six months ended June 30, 2023, were $41,910, compared to $72,118 for the same period in 2022, representing a decrease of approximately 42%[248]. - Net cash flows used in investing activities were $(204,106) for the six months ended June 30, 2023, compared to $(372,520) for the same period in 2022, indicating a reduction in investment outflows[248]. - Net cash flows provided by financing activities were $99,127 for the six months ended June 30, 2023, down from $463,997 in the same period in 2022, reflecting a significant decrease of approximately 79%[248]. Credit Losses and Reserves - The company recorded a provision for current expected credit losses of $38.2 million for the six months ended June 30, 2023, which included a $44.6 million increase in specific CECL reserves[201]. - The company recorded an additional specific CECL reserve of $24.9 million during the three months ended June 30, 2023, prior to a principal charge-off of $66.9 million[201]. - The fair market values used to determine specific CECL reserves included discount rates ranging from 7.3% to 7.5%[201]. - The company recorded a provision for current expected credit losses recorded was $41.5 million, primarily due to a $44.6 million increase in specific CECL reserves[240]. Portfolio Management and Acquisitions - The loan portfolio summary as of June 30, 2023, is detailed in the financial report, indicating ongoing portfolio management[196]. - The company acquired legal title to a portfolio of seven hotel properties in New York, NY, through foreclosure, recognizing real estate owned of $414.0 million[199]. - The hotel portfolio was previously collateral for a $103.9 million mezzanine loan that was in default due to non-payment of debt service[199]. - On June 30, 2023, the company acquired legal title to a mixed-use property in New York, NY, with an unpaid principal balance of $208.8 million[199]. - The mixed-use property was previously collateral for a senior loan that defaulted during the fourth quarter of 2022, leading to a specific CECL reserve of $42.0 million[199]. Risk Management - The company emphasizes prudent risk management and capital preservation by primarily originating senior loans with conservative loan-to-value ratios[256]. - The company monitors the performance of its loan portfolio and maintains regular contact with borrowers to manage credit risk effectively[256]. - There have been no material changes to the principal risks that could affect the company's business and financial condition from those disclosed in the Annual Report[265].