Sign in

You're signed outSign in or to get full access.

CM

Claros Mortgage Trust, Inc. (CMTG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 results were loss-heavy as management prioritized balance-sheet cleanup: GAAP net loss of $100.7M ($0.72/share), driven by an $80.5M loss to mark the NYC hotel REO to held-for-sale and a $30.0M CECL provision; Distributable loss was $(0.59)/share while Distributable Earnings prior to realized gains/losses were $0.18/share . Book value ended at $14.12/share and liquidity at $102M (cash $99M) with the loan portfolio at $6.1B and a 7.6% weighted average all-in yield .
  • Management pivoted to accelerate resolutions: planning to foreclose on five multifamily loans (avg. 12% specific CECL on UPB) and reclassified the NYC hotel portfolio to held-for-sale (expected to generate ~ $60M of liquidity). A gross realizations pipeline “just under” $2B is underway, with 1/3–2/3 expected over the coming quarters and ~40% flowing to liquidity, positioning for deleveraging and redeployment .
  • Dividend paused beginning with the Q4 dividend (would have been payable Jan-2025) to preserve capital after paying $0.60/share in 2024 (including $0.10 in Q3). Reinstatement will depend on markets, financial performance, and taxable income .
  • Deleveraging and liquidity focus continue: outstanding financings fell $244M in Q4 (including $81M of deleveraging); net debt/equity remained 2.4x; management plans to address the Term Loan B (Aug-2026 maturity) via A&E or replacement in mid-2025 .
  • Consensus estimates from S&P Global were unavailable at time of analysis (data access limit), so beat/miss versus Street is not presented.

What Went Well and What Went Wrong

  • What Went Well

    • Executed portfolio de-risking actions: three Q4 loan sales totaling $205M UPB (two previously HFS) at ~99–100% of UPB; a $101M hotel loan sale closed in January at par, supporting book value preservation and liquidity .
    • Clear plan to accelerate resolutions and liquidity creation in 2025, including foreclosing five multifamily loans (specific CECL ~12% of UPB) and resuming the NYC hotel sale process post Safe Hotels Act passage; dual-track CMBS refi if sale slips .
    • Realizations momentum and identified pipeline: company executed $1.3B of FY 2024 realizations (even split between repayments and sales) and sees nearly $2B of gross realizations ahead, with ~40% of proceeds adding to liquidity—a key catalyst for deleveraging and redeployment .

  • What Went Wrong

    • Large non-cash loss tied to NYC hotel REO reclassification to held-for-sale ($80.5M), pushing GAAP net loss to $(100.7)M and Distributable loss to $(83.2)M in Q4 .
    • Credit migration and reserve build persisted (albeit smaller than Q3): CECL provision was $30.0M in Q4; total CECL reserve rose to 4.3% of UPB (specific 18.2% on 5-rated loans; general 2.6% on 3- and 4-rated loans) .
    • Liquidity and dividend optics: total liquidity fell to $102M; dividend suspension (after $0.60/share paid in 2024) highlights capital preservation needs and may weigh on income-oriented holders until resolution proceeds materialize .

Financial Results

Income Statement and Per-Share Metrics

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Interest & related income ($MM)170.9 155.1 152.9 132.6
Net interest income ($MM)49.7 41.9 41.8 32.5
Revenue from REO ($MM)26.2 22.6 23.1 27.8
Total net revenue ($MM)76.0 64.5 64.9 60.2
GAAP net income (loss) ($MM)34.0 (11.6) (56.2) (100.7)
GAAP EPS ($)0.24 (0.09) (0.40) (0.72)
Distributable EPS prior to realized ($)—0.21 0.22 0.18
Distributable (Loss) EPS ($)—0.20 (0.17) (0.59)

Notes: Q4 2024 included an $80.5M loss on REO held-for-sale and a $30.0M CECL provision; Q3 2024 had a $78.8M CECL provision .

Key Portfolio and Balance Sheet Metrics

KPIQ2 2024Q3 2024Q4 2024
Loan portfolio ($Bn)6.8 6.3 6.1
Wtd. avg. all-in yield (%)9.0% 8.4% 7.6%
Total liquidity ($MM)191 (cash 148) 116 (cash 114) 102 (cash 99)
Book value per share ($)15.27 14.83 14.12
Adjusted BVPS ($)16.44 15.96 15.17
CECL reserve (% of UPB)3.1% 3.7% 4.3%
Net debt / equity (x)2.4x 2.4x 2.4x
Total leverage ratio (x)2.8x 2.8x 2.8x

Loan Portfolio Mix (Q4 2024)

Collateral TypeNo. of LoansCarrying Value ($MM)% of Total
Multifamily192,58543%
Hospitality71,13019%
Office885914%
Mixed-use45419%
Land54898%
Other94667%
Total526,069100%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Common stock dividendQ4 2024 (Jan-2025 payable)Paid $0.10 in Q3 2024; $0.60 total in 2024 Dividend paused commencing Q4 to preserve capital Lowered
Gross realizations pipeline2025 “coming quarters”Not previously quantified“Just under” $2B gross realizations identified; 1/3–2/3 expected in coming quarters; ~40% to liquidity New disclosure (liquidity-positive)
Multifamily resolutions2025 “coming quarters”Not specifiedPlan to foreclose on 5 multifamily loans; ~12% specific CECL average; upside under company management with modest capital New resolution plan
NYC hotel portfolio (REO)Near-termREO; sale process delayed by Safe Hotels Act Reclassified to held-for-sale; expected to generate ~ $60M liquidity; sale process resumed; CMBS refi as back-up Executing sale/liquidity
Term Loan B (secured term loan)2025Not addressedAug-2026 maturity; plan A&E or replacement during mid-2025 Refinancing roadmap

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Macro / rates / CMBSQ2: Expectation of Fed cuts; improving capital markets . Q3: “Positive momentum”; continued realizations .Notes spreads tightened, issuance higher; recovery still slow; strategy pivot to liquidity and resolutions .Improving market plumbing, but macro still a headwind.
Liquidity & deleveragingQ2: Liquidity $191M; deleveraging $128M; net debt/equity 2.4x . Q3: Liquidity $116M; deleveraging $197M; ND/E 2.4x .Liquidity $102M; financing down $244M; ND/E 2.4x; focus on resolving 4/5-rated loans to release capital .Liquidity tighter near-term; resolutions targeted to rebuild.
Watchlist loans / CECLQ2: CECL $33.9M; reserve 3.1% . Q3: CECL $78.8M; reserve 3.7% .CECL $30.0M; reserve 4.3%; plan to foreclose 5 multifamily loans; multifamily 5-rated ~50% of 5-rated UPB .Credit migration moderated vs Q3; active resolution plan.
Dividend policyQ2: Declared $0.10 for Q3 . Q3: Paid $0.10; BVPS $14.83 .Dividend suspended to preserve capital; revisit based on conditions and taxable income .Conserving capital near-term.
Regulatory / legalQ3: NYC Safe Hotels Act delayed hotel sale process .Act passed in Oct; resumed hotel sale; REO marked and moved to HFS; dual-track with CMBS refi .Regulatory clarity enables execution.
Valuation vs bookQ3: Not emphasized.Mgmt argues stock below intrinsic value; believes liquidity/deleveraging can re-rate shares .Re-rating hinges on execution.

Management Commentary

  • “Accelerating the resolution of these watchlist loans will enable us to... reduce the drag on earnings; enhance our overall portfolio credit metrics and liquidity; and... redeploy capital to more accretive uses.” — Richard Mack, CEO/Chairman .
  • “We planned to foreclose on [five multifamily] assets in the coming quarters… we recorded specific CECL reserves at an average of 12% of the UPB… we believe these loans have substantial upside under our management with a modest capital injection.” — Mike McGillis, President/CFO .
  • “There are sales and refinancing transactions underway, which could result in just under $2B of gross realization proceeds… ~40% of such proceeds increasing our liquidity.” — Mike McGillis .
  • “We have zero exposure to the Chrysler Building… [a Q3 modification] improved the collateral package and created an accelerated path to get paid off.” — Priyanka Garg, EVP .
  • “We’re going to lean a little bit more towards liquidity and away from REO… because we believe that once we can fix liquidity, our valuation… is going to be a lot better.” — Richard Mack .

Q&A Highlights

  • Liquidity and deleveraging path: Mgmt intends further deleveraging in 2025 and is finalizing financing to take REO at repo-like advance levels; Term Loan B (Aug-2026) to be addressed mid-2025 via A&E or replacement .
  • Realizations pipeline and capital raises: With ~$2B gross realization opportunities (1/3–2/3 in coming quarters; ~40% to liquidity), management currently has no plans to raise additional equity; focus is on unlocking liquidity via resolutions/sales .
  • Reserve setting and near-term repayments on risk-rated 4 assets: One NY multifamily loan has a general reserve sized to a discounted payoff; a CA multifamily asset is on a “good path” for near-term repayment without additional reserve .
  • NYC hotel write-down context: Underlying EBITDA exceeds 2019, but Safe Hotels Act introduced valuation uncertainty for non-union assets; sale process resumed with CMBS refi as backup .
  • Collateral clarification: No current exposure to Chrysler Building; Q3 modification exchanged collateral and improved payoff path .

Estimates Context

  • S&P Global consensus estimates (EPS, revenue) for Q4 2024 could not be retrieved at this time due to data access limits; therefore, we do not present beat/miss versus Street. Going forward, we recommend updating once SPGI access is restored to assess estimate revisions and surprise.

Key Takeaways for Investors

  • Execution pivot toward liquidity is the 2025 catalyst: Nearly $2B gross realization pipeline (with ~40% to liquidity) plus planned foreclosures on five multifamily loans should drive deleveraging and funds for accretive redeployment if management hits timelines .
  • Credit risk is concentrated but actively addressed: CECL reserve at 4.3% of UPB and 45% of portfolio risk-rated 4+ reflect stress, yet planned foreclosures/sales aim to convert non-/low-earning assets into cash and reduce earnings drag .
  • REO hotel headwind now recognized: The $80.5M loss resets hotel carrying value and, alongside held-for-sale status, should clear a major overhang if sale executes near expectations ($60M liquidity) .
  • Dividend suspension underscores capital discipline: Income investors may remain sidelined near-term, but resumption becomes plausible as resolution proceeds rebuild liquidity and reduce leverage .
  • Valuation upside case tied to balance-sheet progress: Management believes stock trades below portfolio value; closing the gap requires visible realizations, lower watchlist exposure, and TERM loan/B repo-line stability .
  • Monitor near-term markers: hotel sale outcome; timing/magnitude of discounted payoffs; speed of multifamily foreclosures; incremental loan sales near par; and TLB refinancing progress.

Appendices (Select Data Points)

  • Q4 2024 one-time/non-core drivers: Loss on REO held-for-sale $80.5M; CECL provision $30.0M; valuation adjustment on loan HFS $7.2M .
  • FY 2024 activity: $1.3B of loan repayments/sales, generating $435M liquidity; outstanding financings down $794M; general CECL reserve $1.02/share and specific $0.85/share at year-end .

Additional primary sources referenced:

  • Q4 2024 8-K press release and supplement - .
  • Q3 2024 8-K press release and supplement -.
  • Q2 2024 8-K press release and supplement -.
  • Dividend suspension press release (Dec 16, 2024) .