John Nickodemus

John Nicodemus asked about the expected trajectory of liquidity levels in 2026, noting the term loan B refinancing and recent resolutions, and also inquired if the improved commercial real estate transaction activity and increased aggression from peers in resolving challenged assets have altered CMTG's expectations for the pace or timing of sales from its REO portfolio and watchlist resolutions.

Answer

Mike McGillis (President and CFO, Claros Mortgage Trust) explained that generated liquidity was used for deleveraging, which will continue, and stated that current liquidity is strong relative to minimum requirements. Richard Mack (CEO, Claros Mortgage Trust) acknowledged a more constructive environment, allowing for better performance on previously held-off resolutions, but noted the market isn't fully back. Priyanka Garg (EVP, Claros Mortgage Trust) added that healthier capital markets are leading to more regular-way repayments on larger performing loans, accelerating book turnover and generating cash.

John Nickodemus of BTIG, LLC questioned the company's progress against its initial $2 billion loan resolution target for 2025 and asked for details on the capital expenditure and operational improvements planned for the recently foreclosed Texas multifamily assets.

Answer

President and CFO Michael McGillis stated that the company is on track to exceed its $2 billion resolution target for the year. Priyanka Garg, EVP of Portfolio & Asset Management, added that improvements for the Texas assets involve 'low hanging fruit' such as rebranding, improving curb appeal, and enhancing online reviews, rather than extensive capital-intensive unit renovations, as the current lower price point is a key market advantage.

John Nicodemus inquired about TRTX's target levels for industrial exposure and whether the trend of increasing industrial allocation is expected to continue throughout 2026.

Answer

CEO Doug Bouquard explained that industrial exposure has grown significantly and a target range of 25%-30% would likely prompt a reassessment. He noted that the platform has a competitive edge in industrial assets due to extensive market intelligence and anticipates marginal growth in this sector over time.

John Nicodemus asked about the company's increasing industrial exposure, which now contributes to 72% of the book alongside multifamily. He sought details on the target levels for industrial exposure and whether this trend is expected to continue throughout 2026.

Answer

Doug Bouquard, CEO, stated that industrial exposure is currently just under 20% and the appropriate target level is likely in the 25-30% range, at which point they would reassess. He noted that the company sees a particular edge in industrial due to recapitalization needs and TPG's platform intelligence across the market, expecting marginally more growth in this sector over time.

John Nickodemus of BTIG, LLC inquired about the future pace of loan originations, asking if the strong Q2 volume of nearly $700 million would become the new norm. He also asked if the origination of larger loans during the quarter was a deliberate strategic shift.

Answer

Doug Bouquard, CEO & Director, explained that TRTX expects to maintain an elevated pace of new investments in coming quarters. He attributed this to the company's ability to utilize various balance sheet levers, such as excess liquidity and untapped financing, and a favorable lending environment as banks pull back. Regarding loan size, Mr. Bouquard stated that while the firm is active in the middle market, its scale allows it to pursue larger loans (e.g., up to $200 million) with institutional borrowers, which can provide valuable diversification, as seen with a recent industrial portfolio loan.

John Nickodemus questioned the absence of new originations in Q1 2025, despite a previously mentioned $300 million pipeline, and asked if this was due to timing or a strategic pause. He also sought an update on the pace of REO portfolio reduction, referencing a prior goal to halve it by year-end.

Answer

Executive Doug Bouquard attributed the Q1 originations timing to a combination of market discipline, as the team avoided overly tight loan spreads in January and February, and longer-than-usual closing times for deals. Executive Robert Foley addressed the REO question, stating that the company is sticking to its previously outlined disposition cadence and that recent market uncertainty has not yet altered their plans.

John Nicodemus from BTIG asked for an updated estimate on the distributable earnings per quarter that could be unlocked from reinvesting equity tied up in non-performing loans and REO, following earlier 2025 estimates of $0.08-$0.12. He also inquired about the drivers behind the updated 2026 full-year guidance for NewPoint's volumes and distributable earnings contribution, noting a decrease in volume guidance but an increase in earnings contribution compared to the September deck.

Answer

CEO Michael Comparato indicated that the potential unlocked earnings might be slightly higher than previously estimated, emphasizing that the earnings potential is clear but the timing of recouping it has taken longer than anticipated, which was a key factor in the dividend cut. CFO Jerome Baglien added that the quantum of potential earnings hasn't substantially changed, but the timing of resolutions has. Regarding NewPoint's 2026 guidance, Baglien explained that the earnings contribution was bumped up slightly from 2025 levels due to scaling and the integration of FBRT's $10 billion servicing book onto NewPoint, which is expected to be a significant driver of income growth. He noted that annual projections are provided due to the chunky nature of the business.

John Nickodemus acknowledged the significant progress on impaired loan balances and asked whether this was due to internal strategy or a broader market shift. He also inquired about the target allocation for multifamily and industrial properties within the loan portfolio, given their current 50% share.

Answer

CEO Tim Johnson attributed the progress to the strength of their asset management team and improved market liquidity, which provides greater transparency and quicker decision-making in a stabilized real estate market. President Austin Peña stated that capital allocation prioritizes investments with the best risk-adjusted returns, emphasizing diversification across sectors and geographies, including net lease and bank loan portfolios, and stock buybacks, all focused on long-term performance rather than fixed target allocations for specific asset classes.

John Nickodemus asked about the factors contributing to Blackstone Mortgage Trust's significant progress on impaired loan balances, specifically whether it was due to internal strategy or broader market shifts. He also inquired about the target allocation for multifamily and industrial properties in the portfolio.

Answer

CEO Tim Johnson attributed the progress to the strength of BXMT's asset management team and improved market liquidity, which enhances valuation transparency and accelerates resolutions in a stabilized real estate market. President Austin Peña stated that capital allocation prioritizes investments with the best risk-adjusted returns, emphasizing diversification across sectors, geographies, and new strategies like net lease and bank loan portfolios, alongside stock buybacks, all aimed at long-term performance.

John Nickodemus asked about Ares Commercial Real Estate's envisioned leverage trending throughout 2026, considering the increase observed in the fourth quarter.

Answer

CFO Jeffrey Gonzales stated that ACRE maintained moderate leverage at 1.6 times, up from 1.1 times in the prior quarter due to increased investment activity. He expects leverage to max out near 2.0 times in the near term and then return to the long-term historical target of 3.0 times debt-to-equity after resolving risk-rated 4 and 5 loans, which is expected to support historical ROE.

John Nickodemus asked about Ares Commercial Real Estate's projected leverage trend for 2026, given the increase in the fourth quarter after a period of low leverage.

Answer

CFO Jeffrey Gonzales stated that while current leverage is 1.6x, they anticipate it will likely max out near 2.0x in the near term. He added that the long-term historical target is 3.0x debt-to-equity, which they believe will enable them to achieve their historical return on equity.

John Nicodemus of BTIG asked for the outlook on the commercial real estate transaction market through year-end and inquired if ARI is considering extending portfolio duration through investments like triple-net leases or securities.

Answer

President, CEO & Director Stuart Rothstein confirmed that CRE transaction activity has picked up and expects the market to remain robust through year-end, providing ample opportunities for ARI. Regarding strategy, he stated that while the team monitors opportunities in net lease and securities, there is no meaningful shift in ARI's core lending strategy expected in the near term.

John Nickodemus of BTIG inquired about the prevalence of 'extend and pretend' strategies among borrowers, given rate uncertainty, and asked if there have been noticeable changes in borrower behavior to start 2025.

Answer

Chief Investment Officer Scott Weiner stated that ARI does not engage in 'extend and pretend,' ensuring sponsors have a viable plan. He observed that borrowers now have much better visibility and have largely decided which assets in their portfolios are 'winners.' While challenges persist, particularly in the office sector, Weiner believes borrowers generally have a good sense of their path forward and are not simply delaying inevitable issues.

John Nickodemus of BTIG inquired about the concentration of Q3 originations in the UK and whether wider market value recovery could benefit ARI's watchlist loans.

Answer

CIO Scott Weiner explained that ARI has a large, long-standing presence in the UK and Europe, leading to significant deal flow. He noted the market is active for both originations and repayments. Weiner confirmed that the positive macro environment is helping watchlist assets, citing strength in open-air retail, hospitality, and particularly the Brooklyn multifamily development, which benefits from strong market fundamentals and investor liquidity.

John Nickodemus of BTIG asked about the expected trajectory for loan repayments for the remainder of 2025 and inquired about any impact from recent Texas legislation changes on HFCs.

Answer

President & COO Andrew Witt anticipates a significant uptick in repayments and REO proceeds in the second half of the year. CEO Mike Mazzei added that the Texas legislation change will not impact their strategy for their REO assets there, as they plan to sell them before the two-year tax benefit horizon, and provided updates on the sale timelines for the Fort Worth and Arlington properties.

John Nickodemus of BTIG referenced a prior comment about needing $1 billion in originations to grow the dividend and asked if this was still the case. He also inquired about the details of a large $70 million loan committed after the quarter's end, noting it was the largest in several years.

Answer

CEO Mike Mazzei clarified that the primary goal is to grow the loan portfolio from $2.4 billion to $3.5 billion to support earnings of around $0.20 per share, confirming the plan is to maintain the dividend during this process. President & COO Andy Witt added that the $70 million loan was for a repeat sponsor on a stabilized property and fits within their target loan size. Mazzei also noted that favorable warehouse financing allowed them to achieve their target ROE on the deal despite a tighter spread.

John Nickodemus of BTIG questioned the team's current thoughts on ramping up leverage now that the investment grade rating has been achieved. He also asked for more detail on how Ladder is thinking about conduit lending as part of its strategy for the second half of the year.

Answer

President Pamela McCormack clarified that Ladder's leverage target remains between two and three times, consistent with investment grade parameters. She explained the key change is the composition of leverage, shifting from secured to unsecured funding, and that current low leverage is temporary pending capital deployment. CEO Brian Harris added that the conduit business is attractive and profitable, but activity is currently constrained by a lack of loan supply in the broader market.

John Nickodemus asked about the expected evolution of Ladder's asset allocation between cash, securities, and loans throughout the year and whether there is a target steady-state mix. He also inquired if the origination pipeline's composition is expected to remain heavily weighted towards multifamily and industrial assets.

Answer

CEO Brian Harris responded that there is no fixed target for asset allocation, as the primary focus is maintaining liquidity. However, he expects the portfolio to shift towards more loans and less securities and cash as capital is deployed. Executive Pamela McCormack added that the current pipeline mirrors Q1's 70% multifamily concentration, but this could change if unique, high-spread opportunities arise in other sectors.

John Nickodemus from BTIG asked about the resolution plan for the recently downgraded Boston life science loan and the outlook for the other five life science loans. He also inquired about KREF's perspective on peers moving into owned net-lease real estate and whether KREF would consider a similar strategy.

Answer

CEO Matthew Salem stated that a resolution for the Boston asset is still being worked on with the borrower. For the other life science loans, he expressed confidence in the high-quality, purpose-built nature of the assets and noted early signs of tenants returning to the market. Regarding net-lease, Salem said that while KKR has expertise in the sector, and it's being evaluated for KREF, there are no imminent plans to add it to the portfolio, viewing the industry's evolution as a positive.

John Nickodemus of BTIG asked for an update on KREF's life science loans, specifically the resolution plan for the downgraded Boston asset and the stability of the other five loans. He also inquired about the company's perspective on peers moving into owned net lease real estate and whether KREF would consider such a strategy.

Answer

CEO Matt Salem stated that a resolution for the Boston life science asset is still being worked on with the borrower. He expressed confidence in the other life science assets, citing their high quality and strong sponsors. Regarding net lease, Salem acknowledged it as a positive industry evolution and a sector KKR knows well, but said that while KREF is evaluating it, there are no imminent plans to enter the space.