Q2 2025 Claros Mortgage Trust Inc Earnings Call

Speaker #1: Thank you for your patience on today's call. We will be starting shortly.

Speaker #2: Hello, and welcome to Claros Mortgage Trust's second quarter 2025 earnings conference call. My name is Becky, and I'll be your conference facilitator today. All participants will be in a listen-only mode.

Speaker #2: After the speakers' remarks, there will be a question-and-answer period. If you would like to ask a question, please press star followed one on your telephone keypads.

Speaker #2: If, for any reason, ou would like to remove your question, please press star followed by two. I would now like to hand the call over to Anh Huynh, Vice President of Investor Relations for Claros Mortgage Trust.

Speaker #2: Please proceed.

Speaker #3: Thank you. I'm joined by Richard Mack, Chief Executive Officer and Chairman of Claros Mortgage Trust. Mike McGillis, President, Chief Financial Officer, and Director of Claros Mortgage Trust.

Speaker #3: We also have Priyanka Garg, Executive Vice President, who leads credit strategies for Mack Real Estate Group. Prior to this call, we distributed CMTG's earnings release and supplement.

Speaker #3: We encourage you to reference these documents in conjunction with the information presented on today's call. If you have any questions, please contact me. I'd like to remind everyone that today's call may include forward-looking statements.

Speaker #3: Within the meaning of the private securities litigation reform act of 1995. As a result, it may differ materially from those indicated by these forward-looking statements.

Speaker #3: As a 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.

Speaker #3: 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.

Speaker #3: For reconciliations of non-GAAP measures to their nearest GAAP equivalents, please refer to the earnings supplement. I would now like turn the call over to Richard.

Speaker #4: Thank you, Anh, and thank you all for joining us this morning for CMTG's second quarter earnings call. While the elevated rate environment remains a headwind for commercial real estate, we're encouraged to see signs of healing.

Speaker #4: Investor sentiment has meaningfully improved and transaction volumes have been steadily recovering. This backdrop has been constructive for CMTG, and we have made notable progress in achieving our key objectives for the year.

Speaker #4: To quickly recap, the start of 2025, we outlined three strategic priorities that we believe will deliver long-term shareholder value. Resolving watchlist loans, improving our liquidity, and a creatively redeploying capital for uses such as taking assets REO, reducing leverage, and potentially refinancing or extending our TLB.

Speaker #4: I'm pleased to say that we have made significant progress across all three priorities. The healing of the real estate capital markets and consequent increase in transaction volume has benefited CMTG.

Speaker #4: During the second quarter, we resolved eight loans totaling $873 million of UPB, this activity included four loans that were paid off by the borrower in full, representing $480 million of UPB, and the resolution of four watchlist loans representing $393 million of UPB.

Speaker #4: In addition to these eight resolutions, during the quarter, we also resolved two additional watchlist loans collateralized by multifamily assets representing $147 million of UPB.

Speaker #4: Thus far, in the third quarter, this resolution momentum has continued, with three additional watchlist loan resolutions totaling $548 million of UPB, one through a discounted repayment and two through multifamily mortgage foreclosures.

Speaker #4: In aggregate, 2025 resolutions to date total $1.9 billion of UPB, consisting of $1.5 billion of loan resolutions and $350 million of foreclosures on multifamily properties.

Speaker #4: Accounting these resolutions, CMTG's watchlist is now down to 17 loans and $2.1 billion of UPB, a net decline of $758 million of UPB and seven loans from the first quarter end.

Speaker #4: This progress demonstrates the management team's focus on resolving watchlist loans for optimal outcomes across our stated priorities. We have been proactively asset managing our loans on a case-by-case basis and, if needed, working with borrowers who demonstrate both the financial wherewithal and the operational commitment to the underlying asset.

Speaker #4: In this regard, we have been and will continue to be proactive in exploring all options available to us as a lender, including loan sales, discounted payoffs, and foreclosures.

Speaker #4: All of this progress has enabled us to achieve our second priority of enhancing our liquidity position, as of August 5th, we reported $323 million in total liquidity representing a $221 million increase compared to our position at December 31.

Speaker #4: Michael provides more color on this and the realizations I just discussed in his remarks. As I've noted in the past, we believe that one of our competitive advantages is our sponsors' experience as a value-add owner operator and developer of real estate assets.

Speaker #4: We believe this perspective has enabled us to evaluate opportunities within the existing portfolio, to foreclose on loans when we see an opportunity to enhance value, and ultimately, recapture this value for our shareholders.

Speaker #4: For example, you may recall that in 2023, we foreclosed on a mixed-use New York City building with office retail and signage components in Times Square.

Speaker #4: I'm pleased to share that during the second quarter, we completed the commercial condemnation of the building, and subsequently, we've completed the sale of five office floors, which generated $29 million in gross proceeds.

Speaker #4: We believe that the commercial condemnation strategy will maximize recovery of our original investment and is a strong example of how our sponsors' deep real estate experience positions us well to create value.

Speaker #4: We also previously shared our plans to pursue foreclosure on a number of cash-flowing multifamily assets. Once in, we believe we can significantly optimize recovery values by taking over undermanaged assets, repositioning them to improve cash flows, in order to enhance asset value and sell the assets in a strengthening supply-demand environment.

Speaker #4: As mentioned, we recently completed four mortgage foreclosures, two during the second quarter and two subsequent to quarter end. We're optimistic about our approach to these multifamily REO assets and anticipate being in a position to monetize the first of these assets in the coming quarters.

Speaker #4: I would now like to turn the call over to Mike.

Speaker #5: Thank ou, Richard. For the second quarter 2025, CMTG reported the GAAP net loss of $1.30 per share in a distributable loss of $77 per share.

Speaker #5: Distributable earnings prior to realized losses were $0.10 per share. Earnings from REO investments contributed $0.01 per share to distributable earnings net of financing costs.

Speaker #5: CMTG's health for investment loan portfolio decreased to $5 billion at June 30th, compared to $5.9 billion at March 31st. The quarter-over-quarter decrease was primarily the result of loan resolutions that occurred during the second quarter.

Speaker #5: Of the eight full loan realizations, totaling $873 million of UPB that Richard mentioned, four loans totaling $480 million were regular way full repayments; two loans totaling $340 million were through loan sales, and two loans totaling $89 million were negotiated discounted payoffs.

Speaker #5: We also received $25 million of partial loan repayments resulting in total repayment and sale proceeds of $773 million for the quarter net of charge-offs.

Speaker #5: As mentioned on our first quarter call, we received the discounted payoff of an $88 million Texas office loan that was previously a watchlist loan.

Speaker #5: The realization of this loan resulted in proceeds equal to $73% of UPB and allowed us to resolve a watchlist loan while reducing our office exposure.

Speaker #5: We also received the discounted payoff of a sub-$1 million residual loan position on a 125 million loan that was otherwise repaid. Moving on to the two loan sales, which were at a weighted average recovery of 67% of UPB.

Speaker #5: The first loan was the sale of a California condo loan. The loan was previously classified as held for sale and non-accrual in our carrying value of $146 million at March 31st, which reflected a previously recorded $78 million loss on UPB.

Speaker #5: As this loan was unencumbered, the $146 million of sale proceeds received were the primary driver in the increase in liquidity during the quarter. The second loan was an $80 million loan collateralized by a previously four-rated Southern California hospitality loan originated in 2018 that was sold at 70% of UPB, after consideration of customary prorations and transaction costs.

Speaker #5: Given the sponsors' challenges, we viewed this decision as an opportunity to proactively resolve a watchlist loan and reallocate capital to more creative uses. Not only have we remained proactive in pursuing resolutions, but we've also taken a disciplined approach.

Speaker #5: Balancing effectuating loan resolutions deleveraging the balance sheet and generating liquidity. We believe this discipline is reflected in our results. As Richard mentioned on a year-to-date basis, we had a total of $1.9 billion of UPB in loan resolutions, consisting of $1.55 billion of loan repayments and sales, and $305 million of multifamily property foreclosures.

Speaker #5: On a blended basis, we achieved an 88% recovery rate on these loans. We have reduced our watchlist loans by $776 million of UPB, now down to $2.1 billion since year-end 2024.

Speaker #5: Turning to portfolio credit, while we have made meaningful progress in resolving loans and reducing our watchlist, we continue to experience negative credit migration in the portfolio.

Speaker #5: During the quarter, we moved four loans from a for-risk rating to a five-risk rating. The first is a $420 million loan collateralized by multifamily property located in Southern California.

Speaker #5: The borrower recently initiated a sales process. However, the sale of the property did not materialize, which was a key factor behind the downgrade. We are currently evaluating all options available to us to pursue our remedies as a lender.

Speaker #5: The second and third loans totaling $212 million of UPB are both collateralized by multifamily properties located in Dallas, Texas. After evaluating the borrower's financial wherewithal and operational commitment to the asset, we determined that it would be prudent to foreclose on these loans in order to reposition these assets and improve operating cash flow under our sponsors' management, similar to the four assets that Richard mentioned.

Speaker #5: The fourth loan downgrade resolved last week at our carrying value. As disclosed at year-end 2024, we entered into a contingent discounted payoff arrangement with a borrower on a $390 million loan collateralized by a multifamily property in New York City.

Speaker #5: The borrower is able to perform in accordance with the modification agreement and completed the discounted payoff at 90% of UPB. This transaction resulted in additional liquidity of $107 million dollars, which will be redeployed into more creative uses.

Speaker #5: In addition, during the quarter, we also downgraded a $71 million office loan located in Seattle, to a four-rated loan. The loan is in good standing, and borrower is performing under its guarantee obligations.

Speaker #5: However, there is a pending maturity in the performance at the asset that is tracking below our expectations. It's important to note that we have seven office loans with a UPB in carrying value of $834 million and $782 million respectively, in our portfolio.

Speaker #5: Reflecting third quarter resolutions to date, loans with a risk rating of four or five are $2.1 billion of UPB, or 42% of the loan portfolio based on carrying value, compared to $2.8 billion of UPB, or 46% of the loan portfolio, based on carrying value at March 31st.

Speaker #5: And as it relates to Cecil, our total Cecil reserve on loans at June 30th is $333 million, or $6.4% of UPB, compared to $243 million, or $4.1% of UPB at March 31st, and our general Cecil reserve increased by $15 million, to $139 million, or $3.8% of UPB, subject to our general Cecil reserve.

Speaker #5: Compared to $2.4% as of the first quarter. General Cecil reserve levels reflect our conservative outlook amidst capital market and political uncertainty. Specific Cecil reserves also increased during the period to reflect the redit downgrades during the quarter.

Speaker #5: Moving on to CMTG's REO portfolio, we continue to leverage our sponsors' platform as a key component of our loan resolution strategy. This approach enables us to apply a value-add approach to optimize recovery results.

Speaker #5: Richard already spoke to the mixed-use New York City asset, so I'll turn to rest of the REO portfolio. Starting with the hotel portfolio, operating performance of the underlying assets remains strong.

Speaker #5: During the second quarter, we successfully executed CMBS refinancing of the portfolio, and secured attractive pricing on a non-recourse loan with up to five years of duration.

Speaker #5: The portfolio remains health for sale on our balance sheet, generating an attractive leverage yield as we continue to seek an exit amidst uncertainty around the upcoming New York City election.

Speaker #5: As Richard mentioned, we have identified seven multifamily loans where we believe that foreclosing and leveraging our sponsors' multifamily ownership and management platform will allow us to reposition these assets and optimize outcomes for our shareholders.

Speaker #5: During the second quarter, we began executing this strategy, and completed mortgage foreclosures on two loans. The first was a $50 million loan collateralized by a multifamily property comprising a total of $206 units in Phoenix, Arizona.

Speaker #5: The second was a $97 million loan secured by a multifamily complex totaling $376 units in the Las Vegas MSA. Subsequent to quarter end, we completed mortgage foreclosures on two additional multifamily loans.

Speaker #5: The first was a 119 million loan on two assets in Dallas, Texas, comprising a total of $555 units. The second was a $39 million loan on a multifamily asset also located in Dallas, totaling $370 units.

Speaker #5: Collateral for all four loans are cash flowing, and we believe they provide opportunities for value creation. We intend to implement a value-add strategy across each of these properties, drawing on our sponsors' multifamily operating expertise to stabilize operations and improve cash flow and ultimately maximize recovery value.

Speaker #5: Looking forward, we expect to foreclose on the three remaining multifamily loans, which we have targeted for foreclosure. Moving to the right side of the balance sheet, in March, we closed on a $214 million financing facility that specifically enables us to finance non-performing loans and hold the underlying collateral as REO assets upon foreclosure.

Speaker #5: During the second quarter, we upsized the facility to $664 million pledging an additional five loans, four of which are performing, which improves our cost of capital for this facility.

Speaker #5: Securing this facility has been a critical component in effectively executing our REO strategy, as it's allowed us to complete four mortgage foreclosures on a cash-neutral basis.

Speaker #5: During the second quarter, we continue to aggressively reduce our indebtedness by $652 million in accordance with our stated priorities. The deleveraging includes $188 million of incremental deleveraging, which reduced our net debt to equity ratio from 2.4 to 2.2X.

Speaker #5: Quarter to date in the third quarter, we further reduced leverage by $255 million in connection with loan repayments received, reducing our net debt to equity ratio on a pro forma basis to 2.0X.

Speaker #5: We feel positive about the progress that has been made in executing our strategic priorities year to date. Resolving watchlist loans enhancing liquidity and redeploying capital into more creative uses.

Speaker #5: Given this progress, an additional focal point remains on addressing the upcoming maturity of our term loan B in August of 2026. As it stands, as of August 5th, one of the potential uses of the $323 million of current liquidity and $513 million of unencumbered assets could be used to facilitate a partial paydown in connection with an extension of the existing term loan or to facilitate replacement financing.

Speaker #5: To reiterate, year to date, we've resolved $1.9 billion of UPB of loans, reduced the UPB of outstanding financing by $1.1 billion, and increased our liquidity position to $323 million.

Speaker #5: Looking ahead, we anticipate continued momentum as we further resolve watchlist loans and execute on our REO strategy. We look forward to updating you on our progress next quarter.

Speaker #5: I would now like to turn the call over to the operator.

Speaker #2: Thank you. If you wish to ask a question, please press star followed by one on your telephone keypad. If any reason you want to remove your question, please press star followed by two.

Speaker #2: When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Doug Harter from UBS. Your line is now open.

Speaker #2: Please go ahead.

Speaker #6: Thanks and good ning. just wanted to make re that the the liquidity number you gave, does that already factor in that the discounted payoff of the New York City multifamily?

Speaker #5: Yeah, the $323 million amount reflects the liquidity generated by the New York multifamily loan in July.

Speaker #6: Great. And then, you know, clearly success in generating payoffs and liquidity in the first half. You know, what is your outlook for continued resolutions, payoffs in the second half, you know, and kind of the amount of liquidity that those payoffs might generate?

Speaker #7: It's Priyanka. Hi, Doug. I'll ump in here. we we what the capital markets are healing. We're seeing a lot more activity. So I think we think that there will be additional payoffs between now and the end of the year.

Speaker #7: that said, we have been obviously using all the tools in our toolkit up to this point to generate liquidity and resolve those watchlist loans.

Speaker #7: So it's an, you know, it's a it's a larger number because of that, but that's what we said we would do to enhance shareholder value.

Speaker #7: And you can see we've, you ow, unlocked significant equity, given the low leverage at we are operating. And so I think going forward, we're going to be relying more on the regular way payoffs from our borrowers.

Speaker #7: absent some unique situations that come along.

Speaker #6: Yeah. And then I guess what, you know, as you look at that liquidity, you know, what what are what are the signposts you're looking for to to to maybe start deploying that liquidity, whether that be you know into you know further you ow debt reduction of of the term loan, whether you know would you consider stock buyback at at current valuations?

Speaker #6: you know, kind of how are you inking about you know using that liquidity?

Speaker #5: Sure, Doug. Thanks. Thanks for the estion. I think as as we stated, I think we'll continue to look to deleverage the balance sheet. We although we think the stock price is attractive and is an attractive buy opportunity, you know, there's other considerations that that we need to think through.

Speaker #5: With respect to that, and you know the other thing that we've made significant progress on the liquidity front in the last couple of years is really significantly bringing down our unfunded loan commitments and you know really that is we expect that to be a much less significant call it use of cash going forward given that the net future funding obligations are now down to about $123 million, net of existing financing on those, and a the majority that is good news money.

Speaker #5: Associated with leasing activity. So, I think the other uses we really want to get comfortable with are either getting replacement financing done in our term loan or extending.

Speaker #5: and you know, I think a combination of those things as those occur may allow us to reevaluate pivoting back to offense.

Speaker #6: Great. Appreciate those answers.

Speaker #2: Thank you. Our next estion comes from Rick Shane from JP Morgan. Your line is now open. Please go ahead.

Speaker #6: Terrific. Thanks for taking my questions this morning. I'd like to focus on the REO and and some of this may be redundant, but there's just so many moving parts.

Speaker #6: I just want to make sure we have this all right. end of the quarter, with about $525 million of REO, foreclosed on another call it $235 million.

Speaker #6: So as of today, REO balance would be $650 to $660. Is that correct on the ance sheet?

Speaker #7: Yes, that's correct.

Speaker #6: Okay. Got it. so the six assets that you show, for each one of them, you outline a strategy pursuing asset sale, pursuing unit sales, improving operational performance for eventual asset sale.

Speaker #6: Can we just go through one by one the six assets and give some rough timeline in terms of how long you think it will take to play out?

Speaker #6: Is it, you ow, it again, I realize this is this is a tough exercise, but is it two quarters for the hotel portfolio? Six quarters for multifamily in Dallas?

Speaker #6: If you can just help us understand how this is going to go through, over the next call it 18 to 24 months.

Speaker #7: Yeah, sure, Doug. sorry, Rick. Happy to happy do that. so on, you know, as you said, it is tough to pinpoint timeframes. It is obviously dependent on a number of external factors and I'll I'll start with the hotel portfolio, which, you ow, underlying performance has been really excellent and, TTM through June 30th is at, you know, peak during our ownership period.

Speaker #7: We have, much higher EBITDA than than last year, higher ADR, everything's tracking in the right direction. I mean, just to put numbers on it, EBITDA 16% higher than it was last year for the second quarter.

Speaker #7: And the balance of the year is looking very, very strong in New York City in terms of compression historically, third and fourth quarters are much stronger in New York.

Speaker #7: So I think we we and and we refinanced the portfolio, which gives us time to execute a sale. We are holding it for sale.

Speaker #7: We anticipate selling the the assets, but we want to make sure that we're etting appropriate value and and so we're going to take our time doing that.

Speaker #7: But that does, you know, it is health for sale, so we are targeting to do that over the next couple of quarters. It is absolutely not a long-term hold.

Speaker #7: And we think we've one a really good job demonstrating value there in terms increasing EBITDA. And in terms the mixed-use property, you, I'm sure saw, but in case you missed it, we have executed on our commercial condominiumization strategy.

Speaker #7: We've already sold five of the nine office floors. We have two more that are under contract, so that those should be near-term, sales and then the the balance of the majority of the balance of the value is in the, retail and signage components.

Speaker #7: And we are marketing those now and we will, you know, ultimately determine if we think the bids that come in are, we're better off, holding them or if, you know, and benefiting from the the cash yield that's coming off of those components because it is 100% leased, or if we're ter off, selling and you and then redeploying that capital and optimizing the balance sheet.

Speaker #7: in terms of the multifamily, the the first two Arizona and Nevada, you know, since we foreclosed because those we we foreclosed several months ago, we have seen higher, values come in unsolicited in terms of offers.

Speaker #7: Just the value created in just foreclosing and some of the really really easy low-hanging fruit we executed on there. And we, so we think those could be very near-term resolutions over the next couple of quarters.

Speaker #7: We, have seen improvement in operations. We've en improvement in each of those markets. So we're optimistic about, about the Arizona and Nevada assets. The Dallas assets are, you know, very fresh foreclosures and there is, we need to do the same amount work there before we can really talk about timing, as we've done in the other two.

Speaker #6: Terrific. I I really appreciate you, it does. It's it's a very thoughtful answer and I really appreciate it.

Speaker #7: I thank you for question.

Speaker #2: Thank you. Our next question comes from John Nicodemus from BTIG. Your line is now open. Please go ahead.

Speaker #8: Oh, and good morning, everyone. Somewhat along the lines of one of Doug's questions, I wanted look back to the start of the year where you mentioned transactions underway at the time that could lead to $2 billion of gross proceeds now that we're a bit more than halfway through the year.

Speaker #8: We've seen that $1.9 billion of loans resolved. How should we be thinking that initial $2 billion number? Has that changed? Has it gone in line with your expectations?

Speaker #8: And how are you viewing that playing out throughout the rest of 2025? Thank you.

Speaker #5: Thank ou. this is Michael. Take a shot and Priyanka can add on. I think based on what we see coming down the pike, which Priyanka touched on a little bit, I ink we are we're tracking to, exceed that target.

Speaker #5: all these resolution activities are good, just because it results in churn of the portfolio, generation of liquidity for us that we can use in other ways.

Speaker #5: in line with our stated priorities. So, we feel pretty comfortable we'll exceed that that $2 billion target of UPB of resolutions that we laid out earlier in the year.

Speaker #7: Yeah, I I agree with all that and have nothing to add. I mean, it it's it's our we're using all the the tools in the toolkit to make sure that we're achieving the goal of turning over the portfolio.

Speaker #6: much, Mike and Priyanka. Very helpful. And then following Rick's question about the REO, just wanted to, go a ittle into that. For the two recently foreclosed Texas assets, I know it's still early days, what sort of, you know, CapEx operating improvement needs, are you eing at those properties?

Speaker #6: Just curious sort of what that whole process is going to look like before, you know, they're in a stable state the way the, Arizona and Nevada ones are.

Speaker #6: Thank you.

Speaker #7: Yeah, I, I really appreciate that question, Sean, because I think it goes back to demonstrating the sponsors' ability to really, step in here. I, I, we have been really pleasantly surprised at just the low-hanging fruit.

Speaker #7: I mean, it's not, it's not a lot that needs to be done. To, to really reposition the asset in these markets, they have, they need to be, you know, for example, they need to be rebranded and you need to take the the prior sponsor's name off the buildings.

Speaker #7: And you need to make sure, you know, so as a consumer product, at the end of the day, so you ed to make sure that what people are saying, online and the reviews match the the product that we want to deliver.

Speaker #7: but then beyond , there's a lot of just low-hanging ruit around landscaping and curb appeal and, you know, very, very easy things to execute.

Speaker #7: And I I think one of the other things that we've been surprised by is we we strongly believe in, you know, unit renovations and upgrading units, but only if there is the ROI there.

Speaker #7: And in some of these assets in in Dallas, and they're wide-ranging, the, economics don't make sense because it is catering to a target market that really appreciates the lower price point and, you know, in a in a well-managed asset.

Speaker #7: So it's it's not a lot of capital and, we, you know, we think we can make a a big difference in the matter of just several quarters.

Speaker #6: Thanks so much, Priyanka. That's all for me.

Speaker #7: Thanks, John.

Speaker #2: Thank you. Our next question that comes from Jade Romani from KBW. Your line is now

Speaker #9: Sorry.

Speaker #2: open. Please go head.

Speaker #9: Thanks. Thanks very much. I might be wrong, but it it does sound like the outlook for resolutions in the second half of the year is a bit muted.

Speaker #9: I'm not sure if you agree with that, but that is a little at odds with, the very strong transaction environment we're seeing, you know, the theory brokers report as well as, ou know, the select mortgage REITs that are robustly originating loans right .

Speaker #9: So what do you think is driving that? Is it the stories of each of the assets or something else?

Speaker #7: Yeah, hi, Jade. It's Priyanka. I'll take that one. So, I think one, I would just say we sort of accelerated a lot of that activity.

Speaker #7: We have, you know, we we saw significant turnover in the book year to date, on a percentage basis, much higher than our peers and and what a lot of other people have seen.

Speaker #7: So, it's a timing question, and we were very focused on encouraging that activity to happen more quickly. We now, I think, can be more patient around regular repayments, and we have a number of loans where our sponsors are under term sheet and working on refinancings.

Speaker #7: I just don't control those outcomes, so I think we're a little more, hesitant to provide forward-looking guidance on that, but that said, completely agree with the sentiment out there in terms transaction volume and, ability, you know, strength of capital markets and and sponsors' abilities to refinance this out.

Speaker #7: We just, we don't control those outcomes, so we're just being, you know, thoughtful in our response to those questions.

Speaker #6: Okay. That's great. just on the July New York multifamily, I'm not sure if you said this, there's lots of conference calls at this time, but, do you know what the discounted payoff was if you could give that amount?

Speaker #7: On the one that happened in July? Yeah, it was, it was 90 cents a par, so 3.90 was the loan amount, 3.50 it was the discounted payoff number.

Speaker #6: Okay. Is that the only realized loss?

Speaker #7: Which is just to be clear, that was, sorry, Jade, don't mean to interrupt you. I just want to ake clear that that was already embedded in our book value as of year-end.

Speaker #7: That that loss.

Speaker #6: Okay. That's good to know. Are there any other expected losses in the third quarter that you know of right now?

Speaker #7: No, everything that we we know of, we have reflected in our in our numbers at this point.

Speaker #6: Okay. And then could Mike give an update on the term loan refi? How that's going? What you're thinking there? Will you downsize the loan?

Speaker #6: Will you go with a, you ow, private credit option? Or issue some other form of debt? And then just broadly speaking, the capital structure of company.

Speaker #6: Do you think issuing a preferred, would be attractive because that would bolster total equity and therefore improve the, financing options, the leverage options, because there'd be a much bigger equity base, which would help cushion, you know, some of the transitions you're seeing in these assets like the REO and such?

Speaker #5: Yeah. Thanks, Jade. Very thoughtful question. you know, we're still working through the term loan. Process, so I can't give a ton of specifics around it, but we have a number of private credit providers who we're speaking with.

Speaker #5: you know, with respect to the existing holders, we, expect to engage we've ed engaging with them. and you know, I would expect that we will reduce the size of that financing given the amount of liquidity we have in our balance sheet and our stated objective of reducing leverage.

Speaker #5: With respect to preferred, we have we have thought about it. I think that our best source of capital really continues to be continuing to resolve some of the watchlist assets in the portfolio, generate liquidity from that, that we can use to delever.

Speaker #5: Obviously, I think a preferred would be very helpful, in the future. but we'd like to approach that from more of a position of strength.

Speaker #5: Which I think we're continuing to get there.

Speaker #6: Okay. Thanks very much.

Speaker #2: Thank you. We currently have no further questions, so I'll hand it back to you, Richard Mack, for closing remarks.

Speaker #6: Thank you. and I want , again, thank thank everyone for this thoughtful questions. I I would summarize by saying, we're ahead of our projections for our priorities.

Speaker #6: And just restate them again: resolving watchlist loans, improving liquidity, and redeploying cash to higher and better uses, including stabilizing the business. But before I let everyone go, I want to follow many of our mortgage REIT peers by acknowledging the magnitude of loss created by the senseless tragedy which occurred at 3:45 PM.

Speaker #6: We live in a very small New York City real estate community, and many of us here at CMTG have close ties with the victims and with the Blackstone and Rudin teams.

Speaker #6: I just want to say on behalf of everyone at CMTG that we mourn their passing, we send our condolences to their families and their colleagues, and just note that the world is a much poorer place for their loss.

Speaker #6: Thank you all, and we look forward to reconvening next quarter.