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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40993

 

Claros Mortgage Trust, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Maryland

47-4074900

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

c/o Mack Real Estate Credit Strategies, L.P.

 

60 Columbus Circle, 20th Floor, New York, NY

10023

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (212) 484-0050

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.01 par value per share

 

CMTG

 

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of May 2, 2023, the registrant had 138,376,144 shares of common stock, $0.01 par value per share, outstanding.

 

 


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

3

Item 1.

Financial Statements (Unaudited)

3

Consolidated Balance Sheets

3

Consolidated Statements of Operations

4

Consolidated Statements of Changes in Equity

5

Consolidated Statements of Cash Flows

6

Notes to Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

47

Item 4.

Controls and Procedures

50

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

51

Item 1A.

Risk Factors

51

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

51

Item 3.

Defaults Upon Senior Securities

51

Item 4.

Mine Safety Disclosures

51

Item 5.

Other Information

51

Item 6.

Exhibits

52

Signatures

54

 

 

 

2


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Claros Mortgage Trust, Inc.

Consolidated Balance Sheets

(unaudited, in thousands, except share data)

 

 

 

March 31, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

426,503

 

 

$

306,456

 

Restricted cash

 

 

39,598

 

 

 

41,703

 

Loan principal payments held by servicer

 

 

912

 

 

 

-

 

Loans receivable held-for-investment

 

 

7,610,620

 

 

 

7,489,074

 

Less: current expected credit loss reserve

 

 

(127,626

)

 

 

(128,647

)

Loans receivable held-for-investment, net

 

 

7,482,994

 

 

 

7,360,427

 

Equity method investment

 

 

43,443

 

 

 

41,880

 

Real estate owned, net

 

 

399,807

 

 

 

401,189

 

Other assets

 

 

91,163

 

 

 

89,858

 

Total assets

 

$

8,484,420

 

 

$

8,241,513

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

Repurchase agreements

 

$

4,112,004

 

 

$

3,966,859

 

Term participation facility

 

 

340,154

 

 

 

257,531

 

Loan participations sold, net

 

 

263,940

 

 

 

263,798

 

Notes payable, net

 

 

176,710

 

 

 

149,521

 

Secured term loan, net

 

 

736,190

 

 

 

736,853

 

Debt related to real estate owned, net

 

 

289,520

 

 

 

289,389

 

Other liabilities

 

 

58,130

 

 

 

59,223

 

Dividends payable

 

 

52,404

 

 

 

52,001

 

Management fee payable - affiliate

 

 

9,656

 

 

 

9,867

 

Incentive fee payable - affiliate

 

 

1,558

 

 

 

-

 

Total liabilities

 

 

6,040,266

 

 

 

5,785,042

 

 

 

 

 

 

 

Commitments and contingencies - Note 14

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Common stock, $0.01 par value, 500,000,000 shares authorized, 140,055,714 shares
  issued and
138,376,144 shares outstanding at March 31, 2023 and December 31,
  2022, respectively

 

 

1,400

 

 

 

1,400

 

Additional paid-in capital

 

 

2,715,725

 

 

 

2,712,316

 

Accumulated deficit

 

 

(272,971

)

 

 

(257,245

)

Total equity

 

 

2,444,154

 

 

 

2,456,471

 

Total liabilities and equity

 

$

8,484,420

 

 

$

8,241,513

 

 

The accompanying notes are an integral part of these consolidated financial statements.

3


 

Claros Mortgage Trust, Inc.

Consolidated Statements of Operations

(unaudited, in thousands, except share and per share data)

 

 

 

Three Months Ended

 

 

 

March 31, 2023

 

 

March 31, 2022

 

Revenue

 

 

 

 

 

 

Interest and related income

 

$

164,166

 

 

$

90,694

 

Less: interest and related expense

 

 

106,027

 

 

 

39,580

 

Net interest income

 

 

58,139

 

 

 

51,114

 

Revenue from real estate owned

 

 

10,963

 

 

 

6,813

 

Total revenue

 

 

69,102

 

 

 

57,927

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Management fees - affiliate

 

 

9,656

 

 

 

9,807

 

Incentive fees - affiliate

 

 

1,558

 

 

 

-

 

General and administrative expenses

 

 

4,923

 

 

 

4,343

 

Stock-based compensation expense

 

 

3,366

 

 

 

-

 

Real estate owned:

 

 

 

 

 

 

Operating expenses

 

 

10,000

 

 

 

7,780

 

Interest expense

 

 

5,444

 

 

 

2,584

 

Depreciation

 

 

2,058

 

 

 

1,940

 

Total expenses

 

 

37,005

 

 

 

26,454

 

 

 

 

 

 

 

 

Proceeds from interest rate cap

 

 

1,183

 

 

 

-

 

Unrealized loss on interest rate cap

 

 

(1,404

)

 

 

-

 

Income from equity method investment

 

 

1,563

 

 

 

-

 

Reversal of (provision for) current expected credit loss reserve

 

 

3,239

 

 

 

(2,102

)

 

 

 

 

 

 

 

Net income

 

 

36,678

 

 

 

29,371

 

Net loss attributable to non-controlling interests

 

 

-

 

 

 

(41

)

Net income attributable to common stock

 

$

36,678

 

 

$

29,412

 

 

 

 

 

 

 

 

Net income per share of common stock:

 

 

 

 

 

 

Basic and diluted

 

$

0.26

 

 

$

0.21

 

Weighted-average shares of common stock outstanding:

 

 

 

 

 

 

Basic and diluted

 

 

138,385,810

 

 

 

139,712,501

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


 

Claros Mortgage Trust, Inc.

Consolidated Statements of Changes in Equity

(unaudited, in thousands, except share data)

 

 

 

Common Stock

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Par Value

 

 

Repurchased Shares

 

 

Paid-In Capital

 

 

Accumulated Deficit

 

 

Total Equity

 

 

 

 

Balance at December 31, 2022

 

 

140,055,714

 

 

$

1,400

 

 

 

(1,679,570

)

 

$

2,712,316

 

 

$

(257,245

)

 

$

2,456,471

 

 

 

 

Stock-based compensation expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,409

 

 

 

-

 

 

 

3,409

 

 

 

 

Dividends declared

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(52,404

)

 

 

(52,404

)

 

 

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

36,678

 

 

 

36,678

 

 

 

 

Balance at March 31, 2023

 

 

140,055,714

 

 

$

1,400

 

 

 

(1,679,570

)

 

$

2,715,725

 

 

$

(272,971

)

 

$

2,444,154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

Additional

 

 

 

 

 

Non-

 

 

 

 

 

 

Shares

 

 

Par Value

 

 

Repurchased Shares

 

 

Paid-In Capital

 

 

Accumulated Deficit

 

 

controlling Interests

 

 

Total Equity

 

Balance at December 31, 2021

 

 

140,055,714

 

 

$

1,400

 

 

 

(215,626

)

 

$

2,726,190

 

 

$

(160,959

)

 

$

37,636

 

 

$

2,604,267

 

Repurchased Shares

 

 

-

 

 

 

-

 

 

 

(186,289

)

 

 

(3,179

)

 

 

-

 

 

 

-

 

 

 

(3,179

)

Contributions from non-controlling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

539

 

 

 

539

 

Offering costs

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(30

)

 

 

-

 

 

 

-

 

 

 

(30

)

Dividends declared

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(51,672

)

 

 

-

 

 

 

(51,672

)

Net income (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

29,412

 

 

 

(41

)

 

 

29,371

 

Balance at March 31, 2022

 

 

140,055,714

 

 

$

1,400

 

 

 

(401,915

)

 

$

2,722,981

 

 

$

(183,219

)

 

$

38,134

 

 

$

2,579,296

 

 

The accompanying notes are an integral part of these consolidated financial statements.

5


 

Claros Mortgage Trust, Inc.

Consolidated Statements of Cash Flows

(unaudited, in thousands)

 

 

 

Three Months Ended

 

 

 

March 31, 2023

 

 

March 31, 2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

36,678

 

 

$

29,371

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Accretion of origination fees on loans receivable

 

 

(5,247

)

 

 

(4,304

)

Accretion of origination fees on interests in loans receivable

 

 

-

 

 

 

(204

)

Amortization of deferred financing costs

 

 

5,967

 

 

 

4,632

 

Non-cash stock-based compensation expense

 

 

3,409

 

 

 

-

 

Depreciation on real estate owned

 

 

2,058

 

 

 

1,940

 

Unrealized loss on interest rate cap

 

 

1,404

 

 

 

-

 

Income from equity method investment

 

 

(1,563

)

 

 

-

 

Non-cash advances on loans receivable in lieu of interest

 

 

(22,376

)

 

 

(13,507

)

Non-cash advances on interests in loans receivable in lieu of interest

 

 

-

 

 

 

(2,427

)

Non-cash advances on secured financings in lieu of interest

 

 

478

 

 

 

-

 

Repayment of non-cash advances on loans receivable in lieu of interest

 

 

2,114

 

 

 

10,745

 

Repayment of non-cash advances on interests in loans receivable in lieu of interest

 

 

-

 

 

 

1,834

 

(Reversal of) provision for current expected credit loss reserve

 

 

(3,239

)

 

 

2,102

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Other assets

 

 

(2,648

)

 

 

(8,170

)

Other liabilities

 

 

1,125

 

 

 

784

 

Management fee payable - affiliate

 

 

(211

)

 

 

(176

)

Incentive fee payable - affiliate

 

 

1,558

 

 

 

-

 

Net cash provided by operating activities

 

 

19,507

 

 

 

22,620

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Loan originations, acquisitions and advances, net of fees

 

 

(305,658

)

 

 

(782,806

)

Advances of interests in loans receivable

 

 

-

 

 

 

(14,653

)

Repayments of loans receivable

 

 

207,761

 

 

 

302,437

 

Repayments of interests in loans receivable

 

 

-

 

 

 

23,971

 

Extension and exit fees received from loans receivable

 

 

948

 

 

 

1,095

 

Extension and exit fees received from interests in loans receivable

 

 

-

 

 

 

65

 

Reserves and deposits held for loans receivable

 

 

-

 

 

 

13,303

 

Capital expenditures on real estate owned

 

 

(676

)

 

 

-

 

Net cash used in investing activities

 

 

(97,625

)

 

 

(456,588

)

 

The accompanying notes are an integral part of these consolidated financial statements.

6


 

Claros Mortgage Trust, Inc.

Consolidated Statements of Cash Flows

(unaudited, in thousands)

 

 

 

Three Months Ended

 

 

 

March 31, 2023

 

 

March 31, 2022

 

Cash flows from financing activities

 

 

 

 

 

 

Repurchase of common stock

 

 

-

 

 

 

(3,179

)

Contributions from non-controlling interests

 

 

-

 

 

 

539

 

Offering costs

 

 

-

 

 

 

(300

)

Dividends paid

 

 

(52,001

)

 

 

(51,741

)

Proceeds from secured financings

 

 

603,173

 

 

 

999,441

 

Payment of deferred financing costs

 

 

(4,215

)

 

 

(4,928

)

Repayments of secured financings

 

 

(348,990

)

 

 

(370,953

)

Repayments of secured term loan

 

 

(1,907

)

 

 

(1,907

)

Net cash provided by financing activities

 

 

196,060

 

 

 

566,972

 

Net increase in cash, cash equivalents and restricted cash

 

 

117,942

 

 

 

133,004

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

348,159

 

 

 

334,136

 

Cash, cash equivalents and restricted cash, end of period

 

$

466,101

 

 

$

467,140

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

426,503

 

 

$

444,001

 

Restricted cash, end of period

 

 

39,598

 

 

 

23,139

 

Cash, cash equivalents and restricted cash, end of period

 

$

466,101

 

 

$

467,140