Claros Mortgage Trust, Inc. (NYSE:CMTG) Q2 2023 Results Conference Call August 2, 2023 11:00 AM ET

Company Participants

Anh Huynh - VP, IR

Richard Mack - Chairman and CEO

Michael McGillis - President and Director

Jai Agarwal - CFO

Kevin Cullinan - EVP, Emric Originations

Priyanka Garg - EVP, MREG Portfolio and Asset Management

Conference Call Participants

Don Fandetti - Wells Fargo

Vilas Abraham - UBS

Richard Shane - JPMorgan

Jade Rahmani - KBW

Sarah Barcomb - BTIG

Operator

Hello, everyone, and welcome to Claros Mortgage Trust Second Quarter 2023 Earnings Conference Call. My name is Bruno, and I’ll be your conference facilitator today. [Operator Instructions]

I will now hand over to your host, Anh Huynh, Vice President of Investor Relations for Claros Mortgage Trust. Please proceed.

Anh Huynh

Thank you. I’m joined by Richard Mack, Chief Executive Officer and Chairman of Claros Mortgage Trust; Michael McGillis, President and Director of Claros Mortgage Trust; and Jai Agarwal, CMTG’s Chief Financial Officer. We also have Kevin Cullinan, Executive Vice President, who leads Emric Originations; and Priyanka Garg, Executive Vice President, who leads MREG Portfolio and Asset Management.

Prior to this call, we distributed CMTG’s earnings release supplement. We encourage you to reference these documents in conjunction with the information presented on today’s call. If you have any questions following today’s call, please contact me. I’d like to remind everyone that today’s call may include forward-looking statements within the meaning 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 filings 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 reconciliations 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.

Richard Mack

Thank you, Huynh, and thank you, everyone, for joining us for CMTG’s Second Quarter Earnings Call. Most of us have seen the headlines this summer. They tell a consistent story. 2020 has been a challenging year for the entire commercial real estate industry, owners, operators, developers and lenders alike adjust business plans in an environment of higher rate and sharply reduced bank lending. This has resulted in very tight credit conditions, unit transact in volume and continued asset value decline, reset, reflecting interest rate increases. These conditions are exacerbated by sluggish office fundamentals and valuations as well as conflicting signals around recessionary and inflationary risk. Last month inflation print registered inflation down broadly against the backdrop of strong economic activity and employment. Many interpreted the data suggest that we may be nearing the end of interest rate hike at stance of a recession has lessened, not surprisingly long bonds and equity restock rally. However, the next several months of inflation readings and economic reports will be critical to the Fed’s plan for the remainder of the year, and we expect volatility will continue to be the watch word as the market and the Fed incorporate and react to the data and determine whether or not more rate hikes are necessary.