Claros Mortgage Trust, Inc. (NYSE:CMTG) Q1 2022 Earnings Conference Call May 11, 2022 10:00 AM ET

Company Participants

Anh Huynh - Vice President of Investor Relations

Richard Mack - Chief Executive Officer and Chairman

Mike McGillis - President and Director

Jai Agarwal - Chief Financial Officer

Kevin Cullinan - Executive Vice President of Originations

Conference Call Participants

Richard Shane - J.P. Morgan

Steven DeLaney - JMP Securities

Jade Rahmani - Keefe, Bruyette & Woods

Brock Vandervliet - UBS

Operator

Welcome to Claros Mortgage Trust First Quarter 2022 Earnings Conference Call. My name is Jordan, and I will be your conference facilitator today. [Operator Instructions] I would now like to hand over the call to Anh Huynh, Vice President of Investor Relations for Claros Mortgage Trust. Please proceed.

Anh Huynh

Thank you. I am joined by Richard Mack, Chief Executive Officer and Chairman of Claros Mortgage Trust; Mike 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 MRECS originations; and Priyanka Garg, Executive Vice President, who leads MRECS portfolio and asset management. Prior to this call, we distributed CMTG's earnings 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 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 other filings with the SEC. And forward-looking statements made on this call represents 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 net distributable earnings which we believe may be important to investors to assess our operating performance. For non-GAAP reconciliations, please refer to the earnings supplement.

I would now like to turn the call over to Richard.

Richard Mack

Good morning, everyone. Thank you for joining us today for CMTG's first quarter earnings call. I'm pleased to share that the first quarter and the beginning of the second quarter were excellent from an asset management and originations perspective. Our first quarter originations volume of $1.2 billion drove portfolio growth, resulting in CMTG ending the quarter with an all-time portfolio high of $7.2 billion of total loans, and $8.7 billion of loans and commitments. Our strong origination, however, come at a time of great market volatility. Today, we find ourselves at an intersection of events that individually and collectively have created significant financial uncertainty and volatility across the equity and credit markets, or inflation, rising interest rates have backed up securitization market and the possibility of an economic slowdown continue to make economic outcomes unpredictable to say the least. But also create originations opportunities for the strong lead positions. Although, there are a range of opinions about what may unfold in the coming year, we believe there will continue to be attractive investment opportunities in transitional real estate lending for well capitalized and scaled lenders like CMTG. Short term rates and lending spreads are rising, increasing our lending returns. And while this usually creates real estate value reduction, at this moment, rent inflation is also increasing, keeping asset values stable to up in the high growth markets and asset sectors that CMTG has the greatest exposure. In light of this environment, we are particularly pleased with the asset classes end markets that defined our origination activity in the first and second quarters. We've been focused on markets that continue to demonstrate strong growth, such as Dallas, Miami, Phoenix, Seattle and Nashville, and had been instructed to follow the lead of our equity business into many of these markets.