Claros Mortgage Trust Q2 Earnings Call Highlights

Claros Mortgage Trust reported a difficult second quarter , with a GAAP net loss of $1.81 per share and a distributable loss of $0.63 per share, while book value fell to $8.58 per share after additional loan reserves and REO write-downs. The company completed or announced $482 million of loan and REO resolutions through July, reducing watchlist exposure to $1.1 billion from $2.7 billion at the end of 2024. Proceeds helped increase liquidity to $168 million and reduce pro forma net debt-to-equity to 1.7 times. Management is prioritizing further asset resolutions, REO sales and debt repayment before restarting lending, potentially beginning new originations in late 2026 or early 2027. The timing remains dependent on market conditions and successful asset monetizations.

Claros Mortgage Trust NYSE: CMTG reported a second-quarter net loss as it continued to reduce watchlist exposure, sell or resolve loans and real estate-owned assets, and deleverage its balance sheet in preparation for eventually resuming new loan originations. The commercial mortgage REIT recorded a GAAP net loss of $1.81 per share for the second quarter of 2026 and a distributable loss of $0.63 per share. Before realized gains and losses, distributable loss was $0.07 per share, President and Chief Financial Officer Mike McGillis said during the company’s earnings call.

Chief Executive Officer and Chairman Richard Mack described the period as “continued progress, albeit painful progress” toward returning to lending on transitional real estate. He said elevated interest rates, above-target inflation and geopolitical developments have contributed to financial-market volatility, though commercial real estate fundamentals have generally improved amid limited new construction, capital seeking deployment and improving transaction activity.

During the second quarter and through July, Claros completed $482 million of loan and REO resolutions, including $223 million of regular-way loan repayments. The proceeds were used to reduce leverage by $346 million, while liquidity rose to $168 million as of July 24 from $116 million on May 5. Since the start of the second quarter, the company resolved five loans totaling $435 million of unpaid principal balance before principal charge-offs. Three of those were watchlist loans totaling $212 million. Year to date, Claros has resolved 10 loans totaling $1 billion of UPB, including seven watchlist loans with $647 million of UPB. Watchlist loans have declined from $2.7 billion at the end of 2024 to $1.7 billion at the end of 2025 and $1.1 billion following the July resolutions, McGillis said. The portfolio now includes 23 loans totaling $3.1 billion of UPB and nine REO assets with a combined carrying value of $724 million.

Claros foreclosed on a $25 million, risk-rated 5 multifamily loan in the Dallas metropolitan area. The company sold a Dallas multifamily REO asset for approximately $47 million of gross proceeds, slightly above carrying value. After the quarter ended, Claros sold a San Francisco office watchlist loan for $70.7 million in gross proceeds. The loan had been on the watchlist since early 2022. The company resolved a Salt Lake City multifamily loan through a discounted payoff of $70 million, or 94% of its $75 million UPB. Two multifamily loans collateralized by properties in Seattle and Chicago repaid in full, totaling $223 million of UPB.

Claros reported book value of $8.58 per share at June 30, a decline that Mack said was primarily attributable to nine loan and REO positions. The company took additional reserves and asset write-downs as lender-driven sales processes provided updated ma...