Claros Mortgage Trust, Inc.

Welcome to Clara's Morgas Trust second quarter 2025 earnings conference call. My name is Becky and I'll be your conference facilitator today. All participants will be in a listen only mode. After the speakers remarks, there will be a question and answer period. If you would like to ask a question, please press star followed by one on your telephone key pads. If for any reason you would like to remove your question, please press star followed by two. I would now like to hand the call over to Arn Huynh, Vice President of Investor Relations for Clara's Morgas Trust. Please proceed.

Thank you. I'm joined by Richard Mack, Chief Executive Officer and Chairman of Clara's Morgas Trust, Mike McGillis, President, Chief Financial Officer and Director of Clara's Morgas Trust. We also have Priyanka Garg, Executive Vice President who leads credit strategies for Mack Real Estate Group. Prior to this call, we distributed CMTG's earnings release and supplement. We encourage you to reference these documents in conjunction with the information presented on today's call. If you have any questions, please contact me. I'd like to remind everyone that today's call may include forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our other violins with the SEC. Any forward-looking statements made on this call represent our views only as of today, and we undertake no obligation to update them. We will also be referring to certain non-GAAP financial measures on today's call, such as distributable earnings, which we believe may be important to investors to assess our operating performance. For affiliations of non-GAAP measures to their nearest GAAP equivalent, please refer to the earnings supplement. I would now like to turn the call over to Richard.

Thank you, Ann, and thank you all for joining us this morning for CMTG's second quarter earnings call. While the elevated rate environment remains a headwind for commercial real estate, we're encouraged to see signs of healing. Investor sentiment has meaningfully improved and transaction volumes have been steadily recovering. This backdrop has been constructive for CMTG, and we have made notable progress in achieving our key objectives for the year. To quickly recap, the start of 2025, we outlined three strategic priorities that we believe will deliver long-term shareholder value. Resolving watch list loans, improving our liquidity, and accretively redeploying capital for uses such as taking assets REO, reducing leverage, and potentially refinancing or extending our TLB. I'm pleased to say that we have made significant progress across all three priorities. The healing of the real estate capital markets and consequent increase in transaction volume has benefited CMTG. During the second quarter, we resolved eight loans totaling 873 million of UPB. This activity included four loans that were paid off by the borrower in full, representing 480 million of UPB, and the resolution of four watch list loans representing 393 million of UPB. In addition to these eight resolutions, during the quarter, we also resolved two additional watch list loans collateralized by multifamily assets representing 147 million of UPB. Thus far in the third quarter, this resolution momentum has continued with three additional watch list loan resolutions totaling 548 million of UPB, one through discounted repayment and two through multifamily mortgage foreclosures. In aggregate, 2025 resolutions to date total 1.9 billion of UPB consisting of 1.5 billion of loan resolutions and 305 million of foreclosures on multifamily properties. Accounting for these resolutions, CMTG's watch list is now down to 17 loans and 2.1 billion of UPB, a net decline of 758 million of UPB and seven loans from the first quarter end. This progress demonstrates the management team's focus on resolving watch list loans for optimal outcomes across our stated priorities. We have been proactively asset managing our loans on a -by-case basis, and if needed, working with borrowers who demonstrate both the financial wherewithal and the operational commitment to the underlying asset. In this regard, we have been and will continue to be proactive in exploring all options available to us as a lender, including loan sales, discounted payoffs, and foreclosures. All this progress has enabled us to achieve our second priority of enhancing our liquidity position. As of August 5th, we reported $323 million in total liquidity, representing a $221 million increase compared to our position at December 31. Michael provided more color on this and the realizations I just discussed in his remarks. As I've noted in the past, we believe that one of our competitive advantages is our sponsor's experience as a value-add owner, operator, and developer of real estate assets. We believe this perspective has enabled us to evaluate opportunities within the existing portfolio, to foreclose on loans when we see an opportunity to enhance value, and ultimately recapture this value for our shareholders. For example, you may recall that in 2023, we foreclosed on a mixed-use New York City building with office, retail, and signage components in Times Square. I'm pleased to share that during the second quarter, we completed the commercial condomization of the building, and subsequently, we've completed the sale of five office floors, which generated $29 million in gross proceeds. We believe that the commercial condominium strategy will maximize recovery of our original investment and is a strong example of how our sponsor's deep real estate experience positions us well to create value. We also previously shared our plans to pursue foreclosure on a number of cash-flowing multifamily assets. Once again, we believe we can significantly optimize recovery values by taking over under-managed assets, repositioning them to improve cash flows in order to enhance asset value and sell the assets in a strengthening supply-demand environment. As mentioned, we recently completed four mortgage foreclosures, two during the second quarter, and two subsequent to quarter end. We're optimistic about our approach to these multifamily REO assets and anticipate being in a position to monetize the first of these assets in the coming quarters. I would now like to turn the call over to Mike.