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Published: 2022-05-10 00:00:00 ET

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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, 2022

☐	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) c/o Mack Real Estate Credit Strategies, L.P.	(I.R.S. Employer Identification No.)
60 Columbus Circle, 20^th 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.

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 5, 2022, the registrant had 139,633,162 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	2
	Consolidated Balance Sheets	2
	Consolidated Statements of Operations	3
	Consolidated Statements of Changes in Redeemable Common Stock and Stockholders’ Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	51
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	52
Signatures		58

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Claros Mortgage Trust, Inc.

Consolidated Balance Sheets

(unaudited, in thousands, except share data)

	March 31, 2022			December 31, 2021
Assets
Cash and cash equivalents	$	444,001		$	310,194
Restricted cash		23,139			23,942
Loan principal payments held by servicer		9,999			154,600
Loans receivable held-for-investment		7,038,246			6,407,305
Less: current expected credit loss reserve		(65,608	)		(67,010	)
Loans receivable held-for-investment, net		6,972,638			6,340,295
Interests in loans receivable held-for-investment, net		153,236			161,850
Real estate owned, net		404,947			406,887
Other assets		64,852			57,503
Total assets	$	8,072,812		$	7,455,271

Liabilities and Stockholders' Equity
Repurchase agreements	$	4,019,910		$	3,489,511
Loan participations sold, net		167,875			167,744
Notes payable, net		143,527			48,000
Secured term loan, net		738,928			739,762
Debt related to real estate owned, net		289,829			289,806
Other liabilities		71,968			54,457
Dividends payable		51,672			51,741
Management fee payable - affiliate		9,807			9,983
Total liabilities		5,493,516			4,851,004

Commitments and contingencies - Note 12

Stockholders' Equity
Common stock, $0.01 par value, 500,000,000 shares authorized, 140,055,714 and 140,055,714 shares issued and 139,653,799 and 139,840,088 shares outstanding at March 31, 2022 and December 31, 2021, respectively		1,400			1,400
Additional paid-in capital		2,722,981			2,726,190
Dividends declared		(877,331	)		(825,659	)
Retained earnings		694,112			664,700
Total Claros Mortgage Trust, Inc. equity		2,541,162			2,566,631
Non-controlling interests		38,134			37,636
Total stockholders' equity		2,579,296			2,604,267

Total liabilities and stockholders' equity	$	8,072,812		$	7,455,271

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

Claros Mortgage Trust, Inc.

Consolidated Statements of Operations

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

	Three Months Ended
	March 31, 2022			March 31, 2021
Revenue
Interest and related income	$	90,694		$	105,803
Less: interest and related expense		39,580			46,287
Net interest income		51,114			59,516
Revenue from real estate owned		6,813			1,051
Total revenue		57,927			60,567
Expenses
Management fees - affiliate		9,807			9,626
Equity compensation		-			(1,642	)
General and administrative expenses		4,343			1,189
Operating expenses from real estate owned		7,780			1,700
Interest expense from debt related to real estate owned		2,584			1,475
Depreciation on real estate owned		1,940			1,293
Total expenses		26,454			13,641
Gain on foreclosure of real estate owned		-			1,430
Other income		-			5,855
(Provision) reversal of current expected credit loss reserve		(2,102	)		185
Income before income taxes		29,371			54,396
Income tax benefit		-			4,179
Net income	$	29,371		$	58,575
Net loss attributable to non-controlling interests	$	(41	)	$	(37	)
Net income attributable to preferred stock	$	-		$	4
Net income attributable to common stock	$	29,412		$	58,608
Net income per share of common stock
Basic and diluted	$	0.21		$	0.44
Weighted-average shares of common stock outstanding
Basic and diluted		139,712,501			133,609,126

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

Claros Mortgage Trust, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited, in thousands, except share data)

	Preferred		Preferred		Common		Common		Additional											Non-			Total
	Stock		Stock Par		Stock		Stock Par		Paid-In			Repurchased			Dividends			Retained		controlling			Stockholders'
	Shares		Value		Shares		Value		Capital			Shares			Declared			Earnings		Interests			Equity
Balance at December 31, 2021		-	$	-		140,055,714	$	1,400	$	2,726,190			(215,626	)	$	(825,659	)	$	664,700	$	37,636		$	2,604,267
Repurchased shares		-		-		-		-		(3,179	)		(186,289	)		-			-		-			(3,179	)
Contributions from non-controlling interests		-		-		-		-		-			-			-			-		539			539
Offering costs		-		-		-		-		(30	)		-			-			-		-			(30	)
Dividends on common stock		-		-		-		-		-			-			(51,672	)		-		-			(51,672	)
Net income (loss)		-		-		-		-		-			-			-			29,412		(41	)		29,371
Balance at March 31, 2022		-	$	-		140,055,714	$	1,400	$	2,722,981			(401,915	)	$	(877,331	)	$	694,112	$	38,134		$	2,579,296

	Preferred		Preferred			Common		Common		Additional											Non-			Total			Redeemable
	Stock		Stock Par			Stock		Stock Par		Paid-In			Repurchased		Dividends			Retained			controlling			Stockholders'			Common
	Shares		Value			Shares		Value		Capital			Shares		Declared			Earnings			Interests			Equity			Stock
Balance at December 31, 2020		125	$	125			125,541,736	$	1,255	$	2,491,836			-	$	(573,677	)	$	526,205		$	35,286		$	2,481,030		$	141,356
Adoption of ASU 2016-13		-		-					-		-			-		-			(73,975	)		-			(73,975	)		(4,276	)
Restricted stock units earned		-		-			-		-		(7,394	)		-		-			-			-			(7,394	)		-
Contributions from non-controlling interests		-		-			-		-		-			-		-			-			897			897			-
Offering costs		-		-			-		-		(28	)		-		-			-			-			(28	)		(2	)
Dividends on preferred stock		-		(4	)		-		-		-			-		-			-			-			(4	)		-
Dividends on common stock, redeemable common stock and vested restricted stock units		-		-			-		-		-			-		(47,262	)		-			-			(47,262	)		(2,738	)
Dividends on unvested restricted stock units		-		-			-		-		-			-		389			-			-			389			-
Accretion of redeemable common stock		-		-			-		-		81			-		-			-			-			81			(81	)
Net income (loss)		-		4			-		-		-			-		-			55,400			(37	)		55,367			3,208
Balance at March 31, 2021		125	$	125			125,541,736	$	1,255	$	2,484,495			-	$	(620,550	)	$	507,630		$	36,146		$	2,409,101		$	137,467

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

Claros Mortgage Trust, Inc.

Consolidated Statements of Cash Flows

(unaudited, in thousands)

	Three Months Ended
	March 31, 2022			March 31, 2021
Cash flows from operating activities
Net income	$	29,371		$	58,575
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion of origination fees on loans receivable		(4,304	)		(5,791	)
Accretion of origination fees on interests in loans receivable		(204	)		(258	)
Amortization of financing costs		4,632			5,032
Non-cash equity compensation		-			(1,642	)
Other income		-			(5,855	)
Depreciation on real estate owned		1,940			1,293
Gain on foreclosure of real estate owned		-			(1,430	)
Non-cash advances on loans receivable in lieu of interest		(13,507	)		(18,494	)
Non-cash advances on interests in loans receivable in lieu of interest		(2,427	)		(4,769	)
Non-cash advances on secured financings in lieu of interest		-			5,203
Repayment of non-cash advances on loans receivable in lieu of interest		10,745			5,134
Repayment of non-cash advances on interests in loans receivable in lieu of interest		1,834			261
Repayment of non-cash advances on secured financings in lieu of interest		-			(1,112	)
Provision (reversal) of current expected credit loss reserve		2,102			(185	)
Changes in operating assets and liabilities:
Other assets		(8,170	)		(2,904	)
Other liabilities		784			(2	)
Management fee payable - affiliate		(176	)		(223	)
Incentive fee payable - affiliate		-			(187	)
Net cash provided by operating activities		22,620			32,646
Cash flows from investing activities
Loan originations, acquisitions and advances, net of fees		(782,806	)		(146,244	)
Advances of interests in loans receivable, net of fees		(14,653	)		(29,273	)
Repayments of loans receivable		302,437			80,776
Repayments of interests in loans receivable		23,971			2,429
Extension and exit fees received from loans receivable		1,095			1,666
Extension and exit fees received from interests in loans receivable		65			-
Cash, cash equivalents and restricted cash from foreclosure of properties		-			9,580
Foreclosure of real estate owned		-			(11,463	)
Reserves and deposits held for loans receivable		13,303			1,828
Net cash used in investing activities		(456,588	)		(90,701	)

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

Claros Mortgage Trust, Inc.

Consolidated Statements of Cash Flows

(unaudited, in thousands)

	Three Months Ended
	March 31, 2022			March 31, 2021
Cash flows from financing activities
Repurchase of common stock		(3,179	)		-
Contributions from non-controlling interests		539			897
Offering costs		(300	)		(30	)
Dividends paid on common stock and vested restricted stock units		(51,741	)		(47,268	)
Dividends paid on redeemable common stock		-			(2,732	)
Proceeds from secured financings		999,441			103,940
Payment of financing costs		(4,928	)		(3,570	)
Repayments of secured financings		(370,953	)		(53,456	)
Repayments of secured term loan		(1,907	)		(1,946	)
Net cash provided by (used in) financing activities		566,972			(4,165	)

Net increase (decrease) in cash, cash equivalents and restricted cash		133,004			(62,220	)
Cash, cash equivalents and restricted cash, beginning of period		334,136			430,974
Cash, cash equivalents and restricted cash, end of period	$	467,140		$	368,754
Cash and cash equivalents, beginning of period	$	310,194		$	427,512
Restricted cash, beginning of period		23,942			3,462
Cash, cash equivalents and restricted cash, beginning of period	$	334,136		$	430,974
Cash and cash equivalents, end of period	$	444,001		$	348,773
Restricted cash, end of period		23,139			19,981
Cash, cash equivalents and restricted cash, end of period	$	467,140		$	368,754
Supplemental disclosure of cash flow information:
Cash paid for interest	$	36,167		$	37,268
Supplemental disclosure of non-cash investing and financing activities:
Dividends accrued on common stock and vested restricted stock units	$	51,672		$	50,000
Dividends accrued on preferred stock	$	-		$	4
Dividends accrued on unvested restricted stock units	$	-		$	2,988
Loan principal payments held by servicer	$	9,999		$	3,694
Accrued financing costs	$	6,250		$	167
Accrued offering costs	$	-		$	1,516
Non-cash fees on loans receivable	$	-		$	402
Working capital consolidated	$	-		$	(18,546	)
Settlement of loan receivable	$	-		$	(103,901	)
Real estate acquired in settlement of loan receivable	$	-		$	414,000
Assumption of debt related to real estate owned	$	-		$	(300,000	)

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

Claros Mortgage Trust, Inc.

Notes to Consolidated Financial Statements

(unaudited)

Note 1. Organization

Claros Mortgage Trust, Inc. (referred to throughout this report as the “Company,” “we”, “us” and “our”) is a Maryland Corporation formed on April 29, 2015 for the purpose of creating a diversified portfolio of income-producing loans collateralized by institutional quality commercial real estate. We commenced operations on August 25, 2015 (“Commencement of Operations”) and generally conduct our business through wholly-owned subsidiaries or investments in joint ventures. Any references to the Company refer to the Company, its consolidated joint venture, CMTG/TT Mortgage REIT LLC (“CMTG/TT” or “JV REIT”), a Delaware limited liability company, and the consolidated subsidiaries of each entity. The Company is traded on the New York Stock Exchange, or NYSE, under the symbol “CMTG”.

We elected and intend to maintain our qualification to be taxed as a real estate investment trust (“REIT”) under the requirements of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), for U.S. federal income tax purposes. As such, we generally are not subject to U.S. federal income tax on that portion of our income that we distribute to stockholders. See Note 11 – Income Taxes regarding taxes applicable to the Company.

We are externally managed by Claros REIT Management LP (the “Manager”), our affiliate, through a management agreement (the "Management Agreement") pursuant to which the Manager provides a management team and other professionals who are responsible for implementing our business strategy, subject to the supervision of our board of directors. In exchange for its services, the Manager is entitled to management fees and incentive fees. See Note 9 – Related Party Transactions regarding the Management Agreement.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

References to common stock in 2021 includes redeemable common stock.

These unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of our financial position, results of operations and cash flows have been included. Our results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year or any other future period. The consolidated balance sheet at December 31, 2021 was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Estimates that are particularly susceptible to our judgment include, but are not limited to, the adequacy of allowance for loan losses, the determination of effective yield for recognition of interest income and interest expense and recognition of equity compensation expense.

The novel coronavirus (“COVID-19”) pandemic has evolved since its onset during the first quarter of 2020, and while the global economy has begun to recover, uncertainty around future developments remain. Over the course of the pandemic, variants of COVID-19 have emerged and resulted in periods of increased infection rates, which caused many countries to re-implement quarantines and travel restrictions. The ongoing pandemic state has also affected global supply chains, the labor market, and inflation, which continue to impact many industries, including the collateral underlying certain of our loans. The overall impact to the global economy will depend largely on the recovery of disrupted supply chains and industries, the extent of the labor market interruptions, and the results of government interventions. The impact of COVID-19 on the current and future financial, economic and capital markets environment

could remain uneven, and presents uncertainty and risk with respect to the performance of our loans receivable, interests in loans receivable and real estate owned, our financial condition, results of operations, liquidity, and ability to pay dividends.

Current Expected Credit Losses

The current expected credit loss (“CECL”) reserve required under ASU 2016-13 “Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments (Topic 326)” (“ASU 2016-13”), reflects our current estimate of potential credit losses related to our loan portfolio. The initial CECL allowance recorded on January 1, 2021 is reflected as a direct charge to retained earnings on our consolidated statements of changes in stockholders’ equity. Subsequent changes to the CECL allowance are recognized through net income on our consolidated statements of operations. ASU 2016-13 specifies the reserve should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions and reasonable and supportable forecasts for the duration of each respective loan.

General CECL Allowance

Our loans are typically collateralized by real estate, or in the case of mezzanine loans, by an equity interest in an entity that owns real estate. We consider key credit quality indicators in underwriting loans and estimating credit losses, including, but not limited to: the capitalization of borrowers and sponsors; the expertise of the borrowers and sponsors in a particular real estate sector and geographic market; collateral type; geographic region; use and occupancy of the property; property market value; loan-to-value (“LTV”) ratio; loan amount and lien position; debt service coverage ratio; our risk rating for the same and similar loans; and prior experience with the borrower and sponsor. This information is used to assess the financial and operating capability, experience and profitability of the sponsor/borrower. Ultimate repayment of our loans is sensitive to interest rate changes, general economic conditions, liquidity, LTV ratio, existence of a liquid investment sales market for commercial properties, and availability of replacement short-term or long-term financing.

We regularly evaluate on a loan-by-loan basis, the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property, the financial and operating capability of the borrower/sponsor, the financial strength of loan guarantors, if any, and the overall economic environment, real estate sector, and geographic sub-market in which the borrower operates, at least quarterly. Such analyses are completed and reviewed by asset management personnel and evaluated by senior management, who utilize various data sources, including, to the extent available (i) periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, and capitalization and discount rates, (ii) site inspections, (iii) sales and financing comparables, (iv) current credit spreads for refinancing and (v) other market data.

Given the length of our loan terms, management’s reasonable and supportable forecast period exceeds the loan terms and as such we do not need to apply a reversion method.

We have classified our loans receivable into the following categories to assess the impact of CECL:

Transitional Loans

Steady & Improving Loans

Stabilized Loans

Construction/Future Funding Loans

For our loan receivable portfolio, we, with assistance from a third-party service provider, performed a quantitative assessment of the impact of CECL using the Expected Loss (“EL”) approach and the Lifetime Loss Rate (“LLR”) method depending on the allocated category. For transitional loans, steady & improving loans and stabilized loans, we have applied an EL approach because of the consistency in assessing credit risks and estimating expected credit losses. Due to the nature of construction loans, where repayment does not depend on the operating performance of the underlying property, we have applied a LLR approach to estimate the CECL impact.

Our allowance for loan losses reflects our estimate of the current and future economic conditions that impact the performance of the commercial real estate assets securing our loans. These estimates include unemployment rates, interest rates, price indices for commercial property, and other macroeconomic factors that may influence the likelihood and magnitude of potential credit losses for our loans during their anticipated term. We license certain macroeconomic financial forecasts to inform of its view of the potential future impact that broader economic conditions may have on our loan portfolio’s performance. The forecasts are embedded in the licensed model that we use to estimate its allowance for loan losses. Selection of these economic forecasts require significant judgment about future events that, while based on the information available to us as of the balance sheet date, are ultimately unknowable with certainty, and the actual economic conditions impacting our portfolio could vary significantly from the estimates we made for the periods presented.

Additionally, we assess the obligation to extend credit through our unfunded loan commitments over each loan’s contractual period, which is considered in the estimate of the allowance for loan losses.

We evaluate the credit quality of each of our loans receivable on an individual basis and assign a risk rating at least quarterly. We have developed a loan grading system for all of its outstanding loans receivable that are collateralized directly or indirectly by real estate. Grading criteria include as-is or as-stabilized debt yield and debt service coverage ratios, term of loan, property type, loan type and other more subjective variables that include property or collateral location, as-is or as-stabilized collateral value, market conditions, industry conditions and sponsor’s financial stability. We utilize the grading system to determine each loan’s risk of loss and to provide a determination as to whether an individual loan is impaired and whether a special loan loss allowance is necessary. Based on a 5-point scale, the loans are graded “1” through “5,” from less risk to greater risk, which gradings are defined as follows:

Very Low Risk

Low Risk

Medium Risk

High Risk/Potential for Loss: A loan that has a risk of realizing a principal loss

Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss

Specific CECL Allowance

In certain circumstances we may determine that a loan is no longer suited for the model-based approach due to its unique risk characteristics, where we have deemed the borrower/sponsor to be experiencing financial difficulty, or because the repayment of the loan’s principal is collateral-dependent. We may instead elect to employ different methods to estimate loan losses that also conform to ASU 2016-13 and related guidance. If the recovery of a loan’s principal balance is entirely collateral-dependent, we may assess such an asset individually and elect to apply a practical expedient in accordance with ASU 2016-13.

For such loan we would measure the specific allowance of each loan separately by using the fair value of the collateral or the net present value of its expected future cash flows. If the fair value of the collateral is less than the carrying value of the loan, an asset-specific allowance is created as a component of our overall allowance for loan losses (following the adoption of CECL, or as a loan loss allowance prior to the adoption of CECL). Specific allowances are equal to the excess of a loan’s carrying value to the present value of its expected cash flows discounted at the loan’s effective rate or the fair value of the collateral, less estimated costs to sell, if recovery of our investment is expected solely from the collateral.

If we have determined that a loan or a portion of a loan is uncollectible, we will write-off the loan through a charge to our current expected credit loss reserve based on the present value of expected future cash flows or the fair value of the collateral less costs to sell, if repayment is expected solely from the collateral. Significant judgment is required in determining impairment and in estimating the resulting credit loss reserve, and actual losses, if any, could materially differ from those estimates.

For additional information on our General and Specific CECL Allowance please refer to Footnote 3—"Loans Portfolio—Current Expected Credit Losses”.

Real Estate Owned (and Associated Debt)

We may assume legal title or physical possession of the underlying collateral of a defaulted loan through foreclosure. If we intend to hold, operate or develop the property for a period of at least 12 months, the asset is classified as real estate owned, net. If we intend to market a property for sale in the near subsequent term, the asset is classified as real estate held for sale. Real estate owned is initially recorded at estimated fair value and is subsequently presented net of accumulated depreciation. Depreciation is computed using a straight-line method over the estimated useful lives.

Real estate assets are evaluated for indicators of impairment on a quarterly basis. Factors that we may consider in our impairment analysis include, among others: (1) significant underperformance relative to historical or anticipated operating results; (2) significant negative industry or economic trends; (3) costs necessary to extend the life or improve the real estate asset; (4) significant increase in competition; and (5) ability to hold and dispose of the real estate asset in the ordinary course of business. A real estate asset is considered impaired when the sum of estimated future undiscounted cash flows expected to be generated by the real estate asset over the estimated remaining holding period is less than the carrying amount of such real estate asset. Cash flows include operating cash flows net of anticipated capital proceeds generated by the real estate asset. If the sum of such estimated cash flows are less than the fair value of the real estate, an impairment charge is recorded equal to the excess of the carrying value of the real estate asset over the fair value. When determining the fair value of a real estate asset, we make certain assumptions including, but not limited to, consideration of projected operating cash flows, comparable selling prices and projected cash flows from the eventual disposition of the real estate asset based upon our estimate of a capitalization rate and discount rate.

Debt assumed in an acquisition/foreclosure of real estate is recorded at its estimated fair value at the time of the acquisition. Subsequently, debt related to real estate owned, net is held net of principal repayments and any unamortized debt issuance costs. Other than amounts guaranteed by us, debt related to real estate owned is non-recourse to us.

Other Assets

Other assets include interest receivable, miscellaneous receivables, prepaid expenses, deferred tax asset (net of any valuation allowance), deposits funded relating to unclosed transactions, deferred financing costs and repurchased shares not yet settled.

Other Liabilities

Other liabilities include interest payable, accounts payable, accrued expenses, reserves held for loans receivable and deposits.

Revenue Recognition

Interest income from loans receivable is recorded on the accrual basis based on the outstanding principal amount and the contractual terms of the loans. Recognition of fees, premiums, discounts and direct costs associated with these investments is deferred until the loan is advanced and is then amortized or accreted into interest income over the term of the loan as an adjustment to yield using the effective interest method based on expected cash flows through the expected recovery period. Income accrual may be suspended for loans when we determine that the payment of income and principal is no longer probable. Factors considered when making this determination include our assessment of the underlying collateral value, delinquency in excess of 90 days, and overall market conditions. While on non-accrual status, based on our estimation as to collectability of principal, loans are either accounted for on a cash basis, where interest income is recognized only upon actual receipt of cash, or on a cost-recovery basis, where all cash receipts reduce a loan's carrying value. If and when a loan is brought back into compliance with its contractual terms, and our Manager has determined that the borrower has demonstrated an ability and willingness to continue to make contractually required payments related to the loan, we resume accrual of interest.

Revenue from real estate owned represents revenue associated with the operations of hotel properties classified as real estate owned. Revenue from the operations of the hotel properties is recognized when guestrooms are occupied, services have been rendered or fees have been earned. Revenues are recorded net of any discounts and sales and other taxes collected from customers. Revenues consist of room sales, food and beverage sales and other hotel revenues.

Reportable Segments

We evaluate the operating performance of our investments as a whole. We previously determined that we had two operating segments and one reporting segment as a result of the foreclosure of the hotel portfolio on February 8, 2021. During the three months ended March 31, 2022, we had a change in our Chief Operating Decision Maker (CODM) who determined that we evaluate the operating performance of our investments as a whole and make operating decisions accordingly. Therefore, we have one operating segment and one reporting segment, with activities related to investing in income-producing loans collateralized by institutional quality commercial real estate. This change has been applied retrospectively to all periods presented.

Reclassifications

Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform with the current period presentation. These reclassifications had no effect on the results of operations or financial position for any period presented.

Recent Accounting Guidance

On March 31, 2022, the FASB issued ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326), Troubled Debt restructurings and Vintage Disclosures”, (“ASU 2022-02”). The standard eliminates the recognition and measurement guidance for troubled debt restructurings (“TDRs”) for creditors that have adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, (CECL). In addition to eliminating the TDR accounting guidance, ASU 2022-02 changes existing disclosure requirements and introduces new disclosures related to certain modifications of instruments with borrowers experiencing financial difficulty. The standard is effective for periods beginning after December 15, 2022, with early adoption permitted. We are currently evaluating the impact ASU 2022-02 will have on our consolidated financial statements.

The FASB issued ASU 2019-12, Income Taxes (Topic 740), (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. ASU 2019-12 also improves the consistent application of, and simplifies, GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2021, with early adoption permitted. We adopted ASU 2019-12 on January 1, 2022 and the adoption of ASU 2019-12 did not have a material impact on our consolidated financial statements.

The FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective upon issuance of ASU 2020-04 for contract modifications and hedging relationships on a prospective basis. We have not adopted any of the optional expedients or exceptions through March 31, 2022, but will continue to evaluate the possible adoption of any such expedients or exceptions during the effective period as circumstances evolve.

Note 3. Loans Portfolio

Loans receivable

Our loans receivable portfolio as of March 31, 2022 was comprised of the following loans ($ in thousands, except for number of loans):

	Number of Loans	Loan Commitment⁽⁵⁾		Unpaid Principal Balance		Carrying Value			Weighted Average Spread⁽²⁾			Weighted Average Interest Rate⁽⁴⁾
Loans receivable held-for-investment:
Variable:
Senior loans^(1,3)	64	$	8,219,356	$	6,763,623	$	6,720,583			+ 4.02%	%		5.12	%
Subordinate loans	3		138,085		134,770		135,258			+ 10.59%	%		11.61	%
	67		8,357,441		6,898,393		6,855,841			+ 4.15%	%		5.25	%
Fixed:
Senior loans⁽¹⁾	3	$	56,612	$	56,612	$	56,770		N/A				10.41	%
Subordinate loans	2		125,927		125,927		125,635		N/A				8.49	%
	5		182,539		182,539		182,405						9.09	%
Total/Weighted Average	72	$	8,539,980	$	7,080,932	$	7,038,246		N/A				5.35	%
Current expected credit loss reserve							(65,608	)
Loans receivable held-for-investment, net						$	6,972,638

(1)	Senior loans include senior mortgages and similar loans, including related contiguous subordinate loans (if any), and pari passu participations in senior mortgage loans.

(2)	The weighted average spread is expressed as a spread over the relevant floating benchmark rates. One-month LIBOR as of March 31, 2022 was 0.45%. One-month SOFR as of March 31, 2022 was 0.30%. Weighted average is based on outstanding principal as of March 31, 2022.

(3)

Includes a fixed rate loan with an outstanding principal balance of $37.9 million and a loan commitment of $39.7 million at March 31, 2022, which shares the same collateral as floating rate loans with an outstanding principal balance of $31.8 million and a loan commitment of $32.6 million at March 31, 2022.

(4)	Reflects the weighted average interest rate based on the applicable floating benchmark rate (if applicable), including LIBOR/SOFR floors (if applicable). Weighted average is based on outstanding principal as of March 31, 2022 and includes loans on non-accrual status.

(5)	Loan commitment represents principal outstanding plus remaining unfunded loan commitments.

Our loans receivable portfolio as of December 31, 2021 was comprised of the following loans ($ in thousands, except for number of loans):

	Number of Loans	Loan Commitment⁽⁵⁾		Unpaid Principal Balance		Carrying Value			Weighted Average Spread⁽²⁾			Weighted Average Interest Rate⁽⁴⁾
Loans receivable held-for-investment:
Variable:
Senior loans^(1,3)	51	$	7,163,032	$	6,119,619	$	6,085,351			+ 4.06%	%		5.16	%
Subordinate loans	3		137,079		133,119		133,552			+ 10.38%	%		11.37	%
	54		7,300,111		6,252,738		6,218,903			+ 4.19%	%		5.29	%
Fixed:
Senior loans⁽¹⁾	3	$	62,573	$	62,573	$	62,782		N/A				10.09	%
Subordinate loans	2		125,927		125,927		125,620		N/A				8.49	%
	5		188,500		188,500		188,402						9.02	%
Total/Weighted Average	59	$	7,488,611	$	6,441,238	$	6,407,305		N/A				5.40	%
Current expected credit loss reserve							(67,010	)
Loans receivable held-for-investment, net						$	6,340,295

(1)	Senior loans include senior mortgages and similar loans, including related contiguous subordinate loans (if any), and pari passu participations in senior mortgage loans.

(2)	The weighted average spread is expressed as a spread over the relevant floating benchmark rates. One-month LIBOR as of December 31, 2021 was 0.10%. Weighted average is based on outstanding principal as of December 31, 2021.

(3)

Includes a fixed rate loan with an outstanding principal balance of $33.5 million and a loan commitment of $39.7 million as of December 31, 2021, which shares the same collateral as floating rate loans with an outstanding principal balance of $103.1 million and a loan commitment of $104.4 million at December 31, 2021.

(4)	Reflects the weighted average interest rate based on the applicable floating benchmark rate (if applicable), including LIBOR floors (if applicable). Weighted average is based on outstanding principal as of December 31, 2021 and includes loans on non-accrual status.

(5)	Loan commitment represents principal outstanding plus unfunded loan commitments.

Certain loans receivable held by us include LIBOR/SOFR floors, which establish the minimum interest rate a borrower may pay on a loan. The weighted average LIBOR/SOFR floor in place based on unpaid principal balance on floating rate loans is 0.95% as of March 31, 2022.

The following table presents the range of LIBOR/SOFR floors held in our loan portfolio as of March 31, 2022 based on outstanding principal ($ in thousands):

One-month LIBOR/SOFR Floor Range	Unpaid Principal Balance		% of Total			Cumulative %
2.00% - 2.50%		1,197,145		17	%		17	%
1.50% - 1.99%		1,371,794		20	%		37	%
1.00% - 1.49%		743,393		10	%		47	%
0.50% - 0.99%		216,114		3	%		50	%
< 0.50%		2,418,783		34	%		84	%
No floor		913,270		13	%		97	%
Total Floating Rate Loans		6,860,499
Total Fixed Rate Loans		220,433		3	%		100	%
Total Loans	$	7,080,932

The following table presents the carrying value and significant characteristics of our loans receivable on non-accrual status as of March 31, 2022 ($ in thousands):

Origination Date	Initial Maturity Date	Date Through Which Interest Collected	Risk Rating		Carrying Value		Unpaid Principal Balance		Specific CECL Reserve			Net Carrying Value			Interest Recognition Method⁽¹⁾
5/5/2017	1/1/2023	4/1/2022		5	$	8,599	$	8,599	$	(200	)	$	8,399		Cost Recovery
Total current						8,599		8,599		(200	)		8,399
9/21/2018⁽²⁾	10/1/2020	2/1/2020		4		116,211		116,020		-			116,211		Cash Basis
3/29/2018	1/26/2021	7/9/2020		4		77,075		76,585		-			77,075		Cash Basis
8/2/2019	10/30/2021	11/1/2021		4		67,000		67,000		-			67,000		Cash Basis
7/1/2019	12/30/2020	7/1/2020		5		15,000		15,000		(6,000	)		9,000		Cost Recovery
Total delinquent⁽³⁾						275,286		274,605		(6,000	)		269,286
Total non-accrual⁽⁴⁾					$	283,885	$	283,204	$	(6,200	)	$	277,685
Carrying value of associated financings												$	(81,421	)
Net carrying value												$	196,264

(1)	No interest income was recognized on these loans for the three months ended March 31, 2022.

(2)	Subsequent to quarter end, this loan was fully satisfied. Loans classified as non-accrual and delinquent on debt service after this repayment represented 2.2% of the total loan portfolio, based on unpaid principal balance. See Note 13 – Subsequent Events for further details.

(3)	Excludes one additional loan with a carrying value of $105.3 million that was over 90 days delinquent on March 31, 2022 which remains on accrual status. A portion of interest was collected subsequent to March 31, 2022, however the loan remains in maturity default.

(4)	Loans classified as non-accrual and delinquent on debt service represented 3.8% of the total loan portfolio at March 31, 2022, based on unpaid principal balance.

The following table presents the carrying value and significant characteristics of our loans receivable on non-accrual status as of December 31, 2021 ($ in thousands):

Origination Date	Initial Maturity Date	Date Through Which Interest Collected	Risk Rating		Carrying Value		Unpaid Principal Balance		Specific CECL Reserve			Net Carrying Value			Interest Recognition Method
5/5/2017	1/1/2023	12/1/2021		5	$	11,533	$	11,533	$	(333	)	$	11,200		Cost Recovery
7/10/2018⁽¹⁾	12/10/2023	12/1/2021		4		77,530		81,380		-			77,530		Cash Basis
Total current						89,063		92,913		(333	)		88,730
8/2/2019	10/30/2021	11/1/2021		4		67,000		67,000		-			67,000		Cash Basis
9/21/2018	10/1/2020	2/1/2020		4		116,211		116,020		-			116,211		Cash Basis
3/29/2018	1/26/2021	7/9/2020		4		76,069		75,579		-			76,069		Cash Basis
7/1/2019	12/30/2020	7/1/2020		5		15,000		15,000		(6,000	)		9,000		Cost Recovery
Total delinquent						274,280		273,599		(6,000	)		268,280
Total non-accrual⁽²⁾					$	363,343	$	366,512	$	(6,333	)	$	357,010
Carrying value of associated financings												$	(122,450	)
Net carrying value												$	234,560

(1)	During the three months ended March 31, 2022, $0.7 million of income was recognized related to this loan. Prior to March 31, 2022, this loan was returned to accrual basis in accordance with our policy.

(2)	Loans classified as non-accrual and delinquent on debt service represented 4.1% of the total loan portfolio at December 31, 2021, based on unpaid principal balance.

Activity relating to the loans receivable portfolio for the three months ended March 31, 2022 ($ in thousands):

	Unpaid Principal Balance			Deferred Fees			Specific CECL Allowance			Carrying Value⁽¹⁾
Balance at December 31, 2021	$	6,441,238		$	(33,933	)	$	(6,333	)	$	6,400,972
Initial funding of new loan originations and acquisitions		684,789			—			—			684,789
Advances on existing loans		109,979			—			—			109,979
Non-cash advances in lieu of interest		13,507			—			—			13,507
Origination fees, extension fees and exit fees		—			(13,057	)		—			(13,057	)
Repayments of loans receivable		(157,836	)		—			—			(157,836	)
Repayments of non-cash advances in lieu of interest		(10,745	)		—			—			(10,745	)
Accretion of fees		—			4,304			—			4,304
Specific CECL Allowance		—			—			133			133
Balance at March 31, 2022	$	7,080,932		$	(42,686	)	$	(6,200	)	$	7,032,046
General CECL Allowance										$	(59,408	)
Carrying Value										$	6,972,638

(1)

Balance at December 31, 2021 does not include general CECL allowance.

Interests in loans receivable held-for-investment

Our interests in loans receivable portfolio as of March 31, 2022 was comprised of the following loan ($ in thousands):

	Number of Loans	Loan Commitment⁽³⁾		Unpaid Principal Balance		Carrying Value			Stated Rate⁽²⁾	Interest Rate⁽⁴⁾
Senior loans⁽¹⁾	1	$	174,923	$	152,841	$	153,278		L + 4.25%	5.50%
Current expected credit loss reserve							(42	)
Interests in loans receivable held-for-investment, net						$	153,236

(1)	Senior loans include senior mortgages and similar loans, including related contiguous subordinate loans (if any), and pari passu participations in senior mortgage loans.

(2)	One-month LIBOR as of March 31, 2022 was 0.45%.

(3)	Loan commitment represents principal outstanding plus unfunded loan commitments.

(4)	Reflects the interest rate based on the applicable floating benchmark rate (if applicable), including LIBOR/SOFR floors (if applicable).

Our interests in loans receivable portfolio as of December 31, 2021 was comprised of the following loan ($ in thousands):

	Number of Loans	Loan Commitment⁽³⁾		Unpaid Principal Balance		Carrying Value			Stated Rate⁽²⁾	Interest Rate⁽⁴⁾
Senior loans⁽¹⁾	1	$	200,727	$	161,566	$	161,864		L + 4.25%	5.50%
Current expected credit loss reserve							(14	)
Interests in loans receivable held-for-investment, net						$	161,850

(1)	Senior loans include senior mortgages and similar loans, including related contiguous subordinate loans (if any), and pari passu participations in senior mortgage loans.

(2)	One-month LIBOR as of December 31, 2021 was 0.10%.

(3)	Loan commitment represents principal outstanding plus unfunded loan commitments.

(4)	Reflects the interest rate based on the applicable floating benchmark rate (if applicable), including LIBOR/SOFR floors (if applicable).

Activity relating to the interests in loans receivable portfolio for the three months ended March 31, 2022 ($ in thousands):

	Unpaid Principal Balance			Deferred Fees			Carrying Value⁽¹⁾
Balance at December 31, 2021	$	161,566		$	298		$	161,864
Advances on existing interests in loans receivable		14,653			—			14,653
Non-cash advances in lieu of interest		2,427			—			2,427
Origination fees, extension fees and exit fees		—			(65	)		(65	)
Repayments of interests in loans receivable		(23,971	)		—			(23,971	)
Repayment of non-cash advances in lieu of interest		(1,834	)		—			(1,834	)
Accretion of origination fees, net		—			204			204
Balance at March 31, 2022	$	152,841		$	437		$	153,278
General CECL Allowance								(42	)
Carrying Value							$	153,236

(1)	Balance at December 31, 2021 does not include general CECL allowance.

The following table details overall statistics for our loans receivable and interests in loans receivable portfolio ($ in thousands):

Loans Receivable

Interests in Loans Receivable

March 31, 2022

December 31, 2021

March 31, 2022

December 31, 2021

Weighted average yield to maturity

5.6

5.5

6.7

Weighted average term to initial maturity

1.9 years

1.8 years

0.1 year

Weighted average term to fully extended maturity

3.4 years

3.3 years

1.4 years

1.6 years

Concentration of Risk

The following table presents our loans receivable and interests in loans receivable portfolio by loan type, as well as property type and geographic location of the properties collateralizing these loans as of March 31, 2022 and December 31, 2021 ($ in thousands):

	March 31, 2022						December 31, 2021
Loan Type (1)	Carrying Value			Percentage			Carrying Value			Percentage
Senior loans⁽¹⁾	$	6,930,631			96	%	$	6,309,997			96	%
Subordinate loans		260,893			4	%		259,172			4	%
	$	7,191,524			100	%	$	6,569,169			100	%
Current expected credit loss reserve	$	(65,650	)				$	(67,024	)
	$	7,125,874					$	6,502,145

Property Type	Carrying Value			Percentage			Carrying Value			Percentage
Office	$	1,077,767			15	%	$	1,113,805			17	%
Mixed-use		751,363			10	%		734,613			11	%
Hospitality		1,233,693			17	%		1,176,842			18	%
Land		633,588			9	%		631,713			10	%
Multifamily		2,652,615			37	%		1,986,628			30	%
For Sale Condo		614,752			9	%		710,660			11	%
Other		227,746			3	%		214,908			3	%
	$	7,191,524			100	%	$	6,569,169			100	%
Current expected credit loss reserve	$	(65,650	)				$	(67,024	)
	$	7,125,874					$	6,502,145

Geographic Location	Carrying Value			Percentage			Carrying Value			Percentage
United States
Northeast	$	2,625,860			37	%	$	2,734,550			41	%
Mid Atlantic		1,238,460			17	%		1,235,527			19	%
Midwest		283,722			4	%		309,298			5	%
Southeast		952,316			13	%		836,904			13	%
Southwest		448,796			6	%		269,461			4	%
West		1,618,771			23	%		1,156,896			18	%
Other		23,599			0	%		26,533			0	%
	$	7,191,524			100	%	$	6,569,169			100	%
Current expected credit loss reserve	$	(65,650	)				$	(67,024	)
	$	7,125,874					$	6,502,145

(1)	Senior loans include senior mortgages and similar credit quality loans, including related contiguous subordinate loans and pari passu participations in senior mortgage loans.

Interest Income and Accretion

The following table summarizes our interest and accretion income from loans receivable held-for-investment and from interests in loans receivable held-for-investment, and from interest on cash balances for the three months ended March 31, 2022 and 2021 ($ in thousands):

	Three Months Ended
	March 31, 2022		March 31, 2021
Coupon interest	$	86,186	$	99,754
Accretion of fees		4,508		6,049
Total interest and related income	$	90,694	$	105,803

Loan Risk Ratings

As further described in Note 2 – Summary of Significant Accounting Policies, we evaluate the credit quality of our loan portfolio on a quarterly basis. In conjunction with our quarterly loan portfolio review, we assess the risk factors of each loan and assign a risk rating based on several factors. Factors considered in the assessment include, but are not limited to, current loan-to-value, debt yield, structure, cash flow volatility, exit plan, current market environment and sponsorship level. Loans are rated “1” (less risk) through “5” (greater risk), which ratings are defined in Note 2 – Summary of Significant Accounting Policies.

The following table allocates the principal balance and carrying value of the loans receivable and interests in loans receivable based on our internal risk ratings ($ in thousands):

March 31, 2022
Risk Rating	Number of Loans	Unpaid Principal Balance		Carrying Value			% of Total of Unpaid Principal Balance
1	2	$	188,562	$	188,990		3%
2	6		661,452		657,000		9%
3	52		5,073,326		5,036,859		70%
4	11		1,286,834		1,285,076		18%
5	2		23,599		23,599		0%
	73	$	7,233,773	$	7,191,524
Current expected credit loss reserve					(65,650	)
				$	7,125,874

December 31, 2021
Risk Rating	Number of Loans	Unpaid Principal Balance		Carrying Value			% of Total of Unpaid Principal Balance
1	1	$	35,721	$	35,699		1%
2	6		705,886		703,714		10%
3	42		4,678,785		4,649,076		71%
4	9		1,155,879		1,154,147		18%
5	2		26,533		26,533		0%
	60	$	6,602,804	$	6,569,169
Current expected credit loss reserve					(67,024	)
				$	6,502,145

As of March 31, 2022 and December 31, 2021, the average risk rating of our portfolio was 3.0 and 3.1, respectively, weighted by unpaid principal balance.

Current Expected Credit Losses

The current expected credit loss reserve required under GAAP reflects our current estimate of potential credit losses related to loans receivable, interests in loans receivable, accrued interest receivable and unfunded loan commitments. See Note 2 for further discussion of our allowance for loan losses.

In December 2021, we received principal repayments of $81.7 million on a senior loan with an outstanding principal balance of $95.0 million, and a maturity date of May 31, 2021, and recorded a principal charge-off of $1.8 million. Following the repayment, the maturity date of the loan was extended to January 1, 2023. As of March 31, 2022 and December 31, 2021, the loan had a specific loan loss allowance of $0.2 million and $0.3 million, respectively, which represents additional collectible interest through the maturity date as the loan remains on non-accrual status.

During three months ended March 31, 2022, we recorded a net provision of $2.1 million in the allowance for credit losses, thus increasing the total allowance for loan losses to $75.6 million as of March 31, 2022. The increase was primarily attributable to the increase in size of the portfolio and unfunded loan commitments.

The following table illustrates the quarterly changes in the current expected credit loss reserve for the three months ended March 31, 2022 and 2021 ($ in thousands):

				General CECL Allowance
	Specific CECL Allowance⁽¹⁾			Loans receivable held-for-investment			Interests in loans receivable held-for-investment			Accrued interest receivable			Unfunded loan commitments⁽²⁾			Total
Total current expected credit loss reserve, December 31, 2020	$	6,000		$	-		$	-		$	-		$	-		$	6,000
Initial CECL allowance, January 1, 2021		-			64,274			406			357			13,214			78,251
Increase (reversal) in current credit loss reserve		-			1,547			(141	)		(14	)		(1,577	)		(185	)
Total current expected credit loss reserve, March 31, 2021	$	6,000		$	65,821		$	265		$	343		$	11,637		$	84,066
Total current expected credit loss reserve, December 31, 2021	$	6,333		$	60,677		$	14		$	218		$	6,286		$	73,528
Increase (reversal) in current credit loss reserve		(133	)		(1,269	)		28			(218	)		3,694			2,102
Total current expected credit loss reserve, March 31, 2022	$	6,200		$	59,408		$	42		$	-		$	9,980		$	75,630
Percent of Unpaid Principal Balance at March 31, 2022																	1.0	%

(1)	As of December 31, 2020, amounts represent specific loan loss provisions recorded on assets before the adoption of ASU 2016-13. After the adoption of ASU 2016-13 on January 1, 2021, amounts represent Specific CECL allowance.

(2)	The CECL allowance for unfunded commitments is included in other liabilities on the consolidated balance sheets.

Our primary credit quality indicator is our internal risk ratings, which are further discussed above. The following table presents the amortized cost basis of our loans receivable and interest in loans receivable as of March 31, 2022 by year of origination and risk rating ($ in thousands):

				Amortized Cost Basis by Origination Year
Risk Rating	Number of Loans	Amortized Cost Basis		2022		2021		2020		2019		2018		2017
1	2	$	188,990	$	-	$	-	$	-	$	-	$	188,990	$	-
2	6		657,000		-		555,869		-		-		75,191		25,940
3	52		5,036,859		680,412		1,781,663		63,175		1,982,302		431,881		97,426
4	11		1,285,076		-		-		198,788		67,000		1,019,288		-
5	2		23,599		-		-		-		15,000		-		8,599
	73	$	7,191,524	$	680,412	$	2,337,532	$	261,963	$	2,064,302	$	1,715,350	$	131,965

Note 4. Real Estate Owned, net

On February 8, 2021, we acquired legal title to a portfolio of hotel properties located in New York, NY through a foreclosure. Prior to February 8, 2021, the hotel portfolio represented the collateral for a $103.9 million mezzanine loan held by us. The loan was in default as a result of the borrower failing to pay debt service. A $300.0 million securitized senior mortgage held by a third party was in default as well. The securitized senior mortgage is non-recourse to us. We recorded a gain of $1.4 million resulting from the foreclosure of the loan, which was based upon the estimated fair value of the hotel properties as determined by a third-party appraisal. The fair value of $414.0 million was determined using discount rates ranging from 8.50% to 8.75% and a terminal capitalization rate of 6.00%.

On June 2, 2021, terms of the securitized senior mortgage were modified to include an extension of the maturity date to February 9, 2024, a principal repayment of $10.0 million, and the payment of $7.6 million of fees and modification costs, which included among other items, $6.3 million of interest, $1.1 million of general and administrative expenses, and $0.2 million of debt issuance costs.

The following table presents additional detail related to our real estate owned, net as of March 31, 2022 and December 31, 2021 ($ in thousands):

	March 31, 2022			December 31, 2021
Land	$	123,100		$	123,100
Building		284,400			284,400
Furniture, fixtures and equipment		6,500			6,500
Real estate assets		414,000			414,000
Less: accumulated depreciation		(9,053	)		(7,113	)
Real estate owned, net	$	404,947		$	406,887

Note 5. Repurchase Agreements, Loan Participations Sold, Net, Notes Payable, Net, Secured Term Loan, Net and Debt Related to Real Estate Owned, Net

As of March 31, 2022 and December 31, 2021, we financed certain of our loans receivables using repurchase agreements, the sale of loan participations, and notes payable. The financings bear interest at a rate equal to LIBOR/SOFR plus a credit spread or at a fixed rate. Financing agreements generally contain covenants that include certain financial requirements, including maintenance of minimum liquidity, minimum tangible net worth, maximum debt to tangible net worth ratio, and minimum debt service coverage ratio as defined in agreements.

The following table summarizes our portfolio financings as of March 31, 2022 ($ in thousands):

	March 31, 2022							December 31, 2021
	Capacity		Borrowing Outstanding		Weighted Average Spread⁽¹⁾			Capacity		Borrowing Outstanding		Weighted Average Spread⁽¹⁾
Repurchase agreements	$	4,765,000	$	3,798,423		+ 2.00	%	$	4,065,000	$	3,274,508		+ 2.00	%
Repurchase agreements - Side Car		271,171		221,487		+ 4.51	%		271,171		215,003		+ 4.50	%
Loan participations sold		168,322		168,322		+ 3.75	%		168,322		168,322		+ 3.79	%
Notes payable		277,950		146,089		+ 3.35	%		48,000		48,000		+ 4.00	%
Secured Term Loan		760,810		760,810		+ 4.50	%		762,717		762,717		+ 4.50	%
Debt related to real estate owned		290,000		290,000		+ 2.78	%		290,000		290,000		+ 2.78	%
Total / weighted average	$	6,533,253	$	5,385,131		+ 2.59	%	$	5,605,210	$	4,758,550		+ 2.65	%

(1)

Weighted average spread over the applicable benchmark rate is based on unpaid principal balance. One-month LIBOR as of March 31, 2022 was 0.45%. One-month SOFR at March 31, 2022 was 0.30%.

Repurchase Agreements

The following table summarizes our repurchase agreements by lender as of March 31, 2022 ($ in thousands):

Lender	Initial Maturity	Fully Extended Maturity ⁽¹⁾	Maximum Capacity		Borrowing Outstanding		Undrawn Capacity
JP Morgan Chase Bank, N.A. - Main Pool	6/29/2025	6/29/2027	$	1,500,000	$	1,305,718	$	194,282
JP Morgan Chase Bank, N.A. - Side Car⁽²⁾	5/27/2023	5/27/2024		271,171		221,487		49,684
Morgan Stanley Bank, N.A.⁽³⁾	1/26/2023	1/26/2025		1,000,000		1,000,000		-
Goldman Sachs Bank USA⁽⁴⁾	5/31/2022	5/31/2023		750,000		428,543		321,457
Wells Fargo Bank, N.A.	9/29/2023	9/29/2026		750,000		655,195		94,805
Barclays Bank PLC	12/20/2022	12/20/2025		500,000		186,384		313,616
Deutsche Bank AG, New York Branch	6/26/2022	6/26/2023		265,000		222,583		42,417
Total			$	5,036,171	$	4,019,910	$	1,016,261

(1)	Facility maturity dates may be extended based on certain conditions being met.

(2)	This financing has a LIBOR floor of 0.25% for financings with a reference rate of LIBOR and a SOFR floor of 0.15% for financings with a reference rate of SOFR.

(3)	One asset on this financing has a SOFR floor of 0.90% and another of 0.15%.

(4)	This financing has a LIBOR floor of 0.35% and a SOFR floor of 0.25% with respect to certain transactions where the initial financing date was before May 27, 2021.

The following table summarizes our repurchase agreements by lender as of December 31, 2021 ($ in thousands):

Lender	Initial Maturity	Fully Extended Maturity⁽¹⁾	Maximum Capacity		Borrowing Outstanding		Undrawn Capacity
JP Morgan Chase Bank, N.A. - Main Pool⁽²⁾	6/29/2025	6/29/2027	$	1,250,000	$	1,173,280	$	76,720
JP Morgan Chase Bank, N.A. - Side Car⁽³⁾	5/27/2023	5/27/2024		271,171		215,003		56,168
Morgan Stanley Bank, N.A.⁽⁴⁾	1/26/2023	1/26/2024		1,000,000		1,000,000		-
Goldman Sachs Bank USA⁽⁵⁾	5/31/2022	5/31/2023		750,000		410,551		339,449
Barclays Bank PLC	12/20/2022	12/20/2025		500,000		193,884		306,116
Deutsche Bank AG, New York Branch	6/26/2022	6/26/2023		265,000		211,372		53,628
Wells Fargo Bank, N.A.	9/29/2023	9/29/2026		300,000		285,421		14,579
Total			$	4,336,171	$	3,489,511	$	846,660

(1)	Facility maturity dates may be extended based on certain conditions being met.

(2)	On January 14, 2022, the facility capacity was increased to $1.5 billion.

(3)	This financing has a LIBOR floor of 0.25%

(4)	One asset on this financing has a LIBOR floor of 1.00% and another of 0.25%. On January 25, 2022, the reference rate on this facility was changed from LIBOR to SOFR, and the fully extended maturity was extended to January 26, 2025.

(5)	This financing has a LIBOR floor of 0.35% with respect to transactions where the initial financing date was before May 27, 2021.

Liabilities under our repurchase agreements as of March 31, 2022 are summarized as follows ($ in thousands):

Lender	Weighted Average Term⁽¹⁾		Borrowing Outstanding		Carrying Value		Carrying Value of Collateral
JP Morgan Chase Bank, N.A. - Main Pool		2.1	$	1,305,718	$	1,305,718	$	1,877,691
JP Morgan Chase Bank, N.A. - Side Car		0.8		221,487		221,487		443,645
Morgan Stanley Bank, N.A.		2.0		1,000,000		1,000,000		1,590,552
Goldman Sachs Bank USA		1.4		428,543		428,543		612,301
Wells Fargo Bank, N.A.		2.8		655,195		655,195		832,876
Barclays Bank PLC		1.7		186,384		186,384		284,166
Deutsche Bank AG, New York Branch		2.0		222,583		222,583		341,680
Total/Weighted Average		2.0	$	4,019,910	$	4,019,910	$	5,982,911

(1)	The weighted average term (years) is determined based on the contractual maturity date of the corresponding loans collateralizing each facility. Weighted average is based on borrowing outstanding as of March 31, 2022.

Liabilities under our repurchase agreements as of December 31, 2021 are summarized as follows ($ in thousands):

Lender	Weighted Average Term⁽¹⁾		Borrowing Outstanding		Carrying Value		Carrying Value of Collateral
JP Morgan Chase Bank, N.A. - Main Pool		1.6	$	1,173,280	$	1,173,280	$	1,626,719
JP Morgan Chase Bank, N.A. - Side Car		0.9		215,003		215,003		436,325
Morgan Stanley Bank, N.A.		2.4		1,000,000		1,000,000		1,709,758
Goldman Sachs Bank USA		1.3		410,551		410,551		589,825
Barclays Bank PLC		1.4		193,884		193,884		283,716
Deutsche Bank AG, New York Branch		2.3		211,372		211,372		327,671
Wells Fargo Bank, N.A.		2.8		285,421		285,421		362,742
Total/Weighted Average		1.9	$	3,489,511	$	3,489,511	$	5,336,756

(1)	The weighted average term (years) is determined based on the contractual maturity date of the corresponding loans collateralizing each facility. Weighted average is based on borrowing outstanding as of December 31, 2021.

As part of our repurchase agreements, we are required to comply with certain financial covenants on an ongoing basis. As of March 31, 2022 and December 31, 2021, we were in compliance with all covenants under our repurchase agreements. The repurchase facilities are partially recourse to us. The maximum guaranty under the repurchase agreements that we would be responsible for as of March 31, 2022 and December 31, 2021 was $1.2 billion and $944.0 million, respectively.

Loan Participations Sold

Our loan participations sold as of March 31, 2022 are summarized as follows ($ in thousands):

			Contractual Maturity Date	Maximum Extension Date	Borrowing Outstanding		Carrying Value		Carrying Value of Collateral
Variable:
	⁽¹	⁾	8/1/2022	8/1/2023		148,322		148,213		291,063
Fixed:
			12/31/2024	12/31/2025		20,000		19,662		132,904
Total/Weighted Average					$	168,322	$	167,875	$	423,967

(1)	This financing has a LIBOR floor of 1.85%

Our loan participations sold as of December 31, 2021 are summarized as follows ($ in thousands):

			Contractual Maturity Date	Maximum Extension Date	Borrowing Outstanding		Carrying Value		Carrying Value of Collateral
Variable:
	(1	)	8/1/2022	8/1/2023		148,322		148,133		290,783
Fixed:
			12/31/2024	12/31/2025		20,000		19,611		130,061
Total/Weighted Average					$	168,322	$	167,744	$	420,844

(1)	This financing has a LIBOR floor of 1.85%

Notes Payable

Our notes payable as of March 31, 2022 are summarized as follows ($ in thousands):

			Contractual Maturity Date	Maximum Extension Date	Borrowing Outstanding		Carrying Value		Carrying Value of Collateral⁽¹⁾
	⁽²	⁾	7/5/2022	1/4/2023	$	48,000	$	47,921	$	117,301
	⁽³	⁾	12/31/2024	12/31/2025		94,322		92,840		132,904
	⁽⁴	⁾	2/2/2026	2/2/2027		3,767		2,766		3,781
Total/Weighted Average⁽¹⁾					$	146,089	$	143,527	$	253,986

(1)	Includes all cash reserve balances held by the servicer.

(2)	This financing has a LIBOR floor of 2.43%. This financing was fully satisfied in April 2022.

(3)	This financing has a SOFR floor of 1.75%.

(4)	This financing has a SOFR floor of 0.32%.

Our notes payable as of December 31, 2021 are summarized as follows ($ in thousands):

Contractual

Maturity

Date

Maximum

Extension

Date

Borrowing Outstanding

Carrying

Value

Carrying

Value of

Collateral⁽¹⁾

⁽²

⁾

1/4/2022

48,000

116,512

(1)	Includes all reserve balances held by servicer.

(2)	In January 2022, the initial maturity was extended to July 5, 2022 and the maximum maturity date was extended to January 4, 2023. This financing has a LIBOR floor of 2.43%.

Secured Term Loan, Net

On August 9, 2019, we entered into a $450.0 million secured term loan. On December 1, 2020, the secured term loan was modified to increase the aggregate principal amount by $325.0 million, increase the interest rate, and to increase the quarterly amortization payment. On December 2, 2021, we entered into a modification of our secured term loan which reduced the interest rate to the greater of (i) 1-month SOFR plus a 0.10% credit spread adjustment, and (ii) 0.50%, plus a credit spread of 4.50%.

The secured term loan as of March 31, 2022 is summarized as follows ($ in thousands):

Contractual

Stated

Borrowing

Maturity Date

Rate (1)

Interest Rate

Outstanding

Carrying Value

8/9/2026

S + 4.50%

5.00%

760,810

738,928

(1)	One-month SOFR at March 31, 2022 was 0.30% The secured term loan has a floor equal to the greater of one-month SOFR plus 0.10% and 0.50%.

The secured term loan as of December 31, 2021 is summarized as follows ($ in thousands):

Contractual

Stated

Borrowing

Maturity Date

Rate (1)

Interest Rate

Outstanding

Carrying Value

8/9/2026

S + 4.50%

5.00%

762,717

739,762

(1)	One-month SOFR at December 31, 2021 was 0.05%. Following the modification on December 1, 2021, the secured term loan has a floor equal to the greater of one-month SOFR plus 0.10% and 0.50%.

The secured term loan is partially amortizing, with principal payments of $1.9 million due in quarterly installments.

Debt Related to Real Estate Owned, Net

On February 8, 2021 we assumed a $300.0 million securitized senior mortgage in connection with a UCC foreclosure on a portfolio of seven limited service hotels. On June 2, 2021, we entered into an agreement to amend the terms of the securitized senior mortgage which included an extension of the maturity date to February 9, 2024, a principal repayment of $10.0 million, and the payment of $7.6

million of fees and modification costs, which included among other items, $6.3 million of interest expense, $1.1 million of general and administrative expenses, and $0.2 million of debt issuance costs.

Our debt related to real estate owned as of March 31, 2022 is summarized as follows ($ in thousands):

Contractual

Stated

Borrowing

Maturity Date

Rate (1)

Interest Rate

Outstanding

Carrying Value

February 9, 2024

L + 2.78%

3.53

290,000

289,829

(1)	One-month LIBOR at March 31, 2022 was 0.45%. This financing has a LIBOR floor of 0.75%.

Our debt related to real estate owned as of December 31, 2021 is summarized as follows ($ in thousands):

Contractual

Stated

Borrowing

Maturity Date

Rate (1)

Interest Rate

Outstanding

Carrying Value

February 9, 2024

L + 2.78%

3.53

290,000

289,806

(1)	One-month LIBOR at December 31, 2021 was 0.10%. This financing has a LIBOR floor of 0.75%.

Interest Expense and Amortization

The following table summarizes our interest and amortization expense on secured financings, debt related to real estate owned and on the secured term loan for the three months ended March 31, 2022 and 2021 ($ in thousands):

	Three Months Ended
	March 31, 2022		March 31, 2021
Interest on secured financings	$	25,411	$	29,702
Interest on secured term loan		9,559		11,553
Interest on Debt related to real estate owned ⁽¹⁾		2,584		1,475
Amortization of financing costs		4,610		5,032
Total interest and related expense	$	42,164	$	47,762

(1)

Interest on debt related to real estate owned includes $22,000 and $0 of amortization of financing costs for the three months ended March 31, 2022 and 2021, respectively.

Note 6. Fair Value Measurements

ASC 820, “Fair Value Measurement and Disclosures” establishes a framework for measuring fair value as well as disclosures about fair value measurements. It emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use when pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, the standards establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability other than quoted prices, such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement fall is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Financial Instruments Not Reported at Fair Value

The carrying value and estimated fair value of financial instruments not recorded at fair value on a recurring basis but required to be disclosed at fair value were as follows ($ in thousands):

	March 31, 2022
							Fair value hierarchy level
	Carrying Value		Unpaid Principal Balance		Fair Value		Level 1		Level 2		Level 3
Loans receivable held-for-investment, net	$	6,972,638	$	7,080,932	$	7,069,599	$	-	$	-	$	7,069,599
Interests in loans receivable held-for- investment, net		153,236		152,841		152,841		-		-		152,841
Repurchase agreements		4,019,910		4,019,910		4,019,910		-		-		4,019,910
Loan participations sold, net		167,875		168,322		168,228		-		-		168,228
Notes payable, net		143,527		146,089		146,612		-		-		146,612
Secured term loan, net		738,928		760,810		757,957		-		-		757,957
Debt related to real estate owned, net		289,829		290,000		281,706		-		-		281,706

	December 31, 2021
							Fair value hierarchy level
	Carrying Value		Unpaid Principal Balance		Fair Value		Level 1		Level 2		Level 3
Loans receivable held-for-investment, net	$	6,340,295	$	6,441,238	$	6,434,157	$	-	$	-	$	6,434,157
Interests in loans receivable held-for- investment, net		161,850		161,566		161,883		-		-		161,883
Repurchase agreements		3,489,511		3,489,511		3,484,834		-		-		3,484,834
Loan participations sold, net		167,744		168,322		168,738		-		-		168,738
Notes payable, net		48,000		48,000		48,000		-		-		48,000
Secured term loan, net		739,762		762,717		762,717		-		-		762,717
Debt related to real estate owned, net		289,806		290,000		281,723		-		-		281,723

Note 7. Equity

Common Stock

Our charter provides for the issuance of up to 500,000,000 shares of common stock with a par value of $0.01 per share. We had 140,055,714 common shares issued and 139,653,799 and 139,840,088 common shares outstanding as of March 31, 2022 and December 31, 2021.

The following table provides a summary of the number of common shares issued and outstanding at March 31, 2022 and 2021, including redeemable common stock:

	Three Months Ended
Common Stock Outstanding	March 31, 2022			March 31, 2021
Beginning balance		139,840,088			132,848,720
Repurchase of common shares		(186,289	)		-
Ending balance		139,653,799			132,848,720

Repurchased Shares

We entered into an agreement (the “10b5-1 Purchase Plan”) with Morgan & Stanley Co. LLC, pursuant to which Morgan Stanley & Co. LLC, as our agent, will buy in the open market up to $25.0 million of our common stock in the aggregate during the period beginning on December 6, 2021 and ending at the earlier of 12 months and the date on which all the capital committed to the 10b5-1 Purchase Plan is expended. The 10b5-1 Purchase Plan will require Morgan Stanley & Co. LLC to purchase shares of our common stock on our behalf when the market price per share is below the book value per common share, subject to certain daily limits prescribed by the 10b5-1 Purchase Plan. For the period from December 6, 2021 through March 31, 2022, we repurchased 401,915 shares of common stock under the repurchase program at an average price per share of $16.87 for a total of $6.8 million.

Dividends

The following table details our dividend activity for common and preferred stock ($ in thousands, except per share data):

	For the Quarter Ended
	March 31, 2022
	Amount		Per Share
Dividends declared - common stock	$	51,672	$	0.37
Record Date - common stock	March 31, 2022
Payment Date - common stock	April 15, 2022

	For the Quarter Ended
	March 31, 2021
	Amount		Per Share
Dividends declared - common stock	$	50,000	$	0.37
Dividends declared - preferred stock⁽¹⁾	$	4	$	0.03
Record Date - common stock	March 19, 2021
Payment Date - common stock	April 1, 2021

(1)	Includes 125 preferred units issued at a price of $1,000 per unit and entitled to a 12.5% dividend paid semi-annually that were redeemed on December 15, 2021 at a price of $1,000 per unit.

Note 8. Earnings per Share

Basic earnings per share (“EPS”) is calculated by dividing our net income by the weighted average number of shares of common stock outstanding during each period using the two-class method. Diluted EPS is calculated by dividing net income by the weighted average number of shares of common stock outstanding plus the additional dilutive effect of common stock equivalents during each period using the treasury stock method.

As of March 31, 2022 and 2021 we had no dilutive securities. As a result, basic and diluted EPS are the same. The calculation of basic and diluted EPS is as follows ($ in thousands, except for share and per share data):

	Three Months Ended
	March 31, 2022		March 31, 2021
Net income attributable to Claros Mortgage Trust, Inc. common stockholders	$	29,412	$	58,608
Weighted average number of common stock, basic and diluted		139,712,501		133,609,126
Net income per share of common stock, basic and diluted	$	0.21	$	0.44

Note 9. Related Party Transactions

The activities of the Company are managed by the Manager. Pursuant to the terms of the Management Agreement, the Manager is responsible for originating investment opportunities, providing asset management services and administering the day-to-day operations of the Company. The Management Agreement will remain in-place until August 25, 2025 unless terminated at an earlier date upon the occurrence of certain events. The Manager is entitled to receive a management fee, an incentive fee and a termination fee as defined below.

The following table summarizes our management fees ($ in thousands):

	Three Months Ended
	March 31, 2022		March 31, 2021
Management fees	$	9,807	$	9,626

Management Fees

Effective October 1, 2015, the Manager earns a base management fee in an amount equal to 1.50% per annum of Stockholders’ Equity. Management fees are reduced by our pro rata share of any management fees and incentive fees (if incentive fees are not incurred by us) paid to the Manager by CMTG/TT. Management fees are paid quarterly, in arrears. Management fees of $9.8 million and $10.0 million were accrued and were included in management fee payable – affiliate, in the consolidated balance sheets at March 31, 2022 and December 31, 2021.

Incentive Fees

The Manager is entitled to an incentive fee equal to 20% of the excess of our Core Earnings on a rolling four-quarter basis, as defined in the Management Agreement, over a 7.00% return on Stockholders’ Equity, as defined in the Management Agreement of the Company. Incentive fees are reduced by our pro rata share of any incentive fees paid to the Manager by CMTG/TT.

The Manager is entitled to an incentive fee equal to 3.33% of the excess of CMTG/TT’s Core Earnings on a rolling four-quarter basis, as defined in the Management Agreement, over a 7.00% return on Unitholders’ Equity of CMTG/TT.

There were no accrued incentive fees on the consolidated balance sheets at March 31, 2022 and December 31, 2021, respectively.

Termination Fees

If we elect to terminate the Management Agreement, we are required to pay the Manager a termination fee equal to three times the sum of the average total annual amount of management fees and the average annual incentive fee paid by us over the prior two years.

Reimbursable Expenses

The Manager or its affiliates are entitled to reimbursement for certain documented costs and expenses incurred by them on our behalf, as set forth in the Management Agreement, excluding any expenses specifically required to be borne by the Manager under the Management Agreement. For the three months ended March 31, 2022 and 2021, we reimbursed $0.1 million and $0 of out-of-pocket costs incurred on our behalf by our manager.

Loans receivable held-for-investment

As of March 31, 2022 and December 31, 2021, we have one loan with an outstanding principal balance of $64.4 million and $54.0 million, respectively, and a loan commitment of $141.1 million, whereby the borrower is an affiliate of a shareholder in our common stock who owns 10.8% of common stock outstanding as of March 31, 2022.

Note 10. Equity Compensation

We are externally managed and do not currently have any employees. On March 30, 2016, we adopted the 2016 Incentive Award Plan (the “Plan”) to promote the success and enhance the value of the Company by linking the individual interests of employees of the Manager and its affiliates to those of our stockholders. The maximum number of shares that may be issued under the Plan is equal to 8,281,594 shares.

We had no compensation expense for the three months ended March 31, 2022.

On April 4, 2019, the Board granted 877,498 time-based RSUs which immediately became vested. Dividend equivalent payments accrued as if those shares were outstanding for all dividends declared during the period beginning August 25, 2015. The fair value of time-based RSUs was recognized immediately. The fair value of the 877,498 RSUs was determined to be $20.00 per share on the grant date based on our share issuances proximate to the grant date. On April 4, 2021, 584,767 fully vested RSUs were delivered and converted to common shares. During the three months ended March 31, 2021, 292,731 time-based RSUs were forfeited prior to their delivery, resulting in the reversal of $5.9 million of previously recognized equity compensation expense which is included as other income in the consolidated statements of operations.

On April 4, 2019, the Board granted 1,622,499 performance-based RSUs of which 0% to 100% were scheduled to vest at the conclusion of a three-year performance period commencing on January 1, 2019, at varying levels, if we achieved a minimum cumulative Total Stockholder Return Percentage in excess of 18% over that period. Total Stockholder Return Percentage is equal to the quotient of (i) the sum of (A) the tangible net book value per common share as of December 31, 2021 less $19.84 and (B) the aggregate amount of dividends paid with respect to common stock during the performance period, (ii) and $19.84, calculated on a fully diluted basis. Dividend equivalents were scheduled to accrue and be paid to participants at the conclusion of the performance period based on the number of RSUs that vested. The fair value of the 1,622,499 performance-based RSUs was determined to be $20.00 per share on the grant date based on our share issuances proximate to the grant date. In the event that a change in control or an initial public offering (“IPO”) had occurred prior to the completion of the performance period, the RSUs would have immediately vested prior to such change in control or IPO and dividend equivalents would have become payable. Upon completion of our IPO in November 2021, 1,097,293 RSUs immediately vested and dividend equivalents of $4.9 million were paid.

For the three months ended March 31, 2021, we recognized a net reversal of previously recognized compensation expense of $1.6 million relating to the performance-based RSUs, primarily due to the forfeiture of 525,206 RSUs, offset in part, by the impact of the expense recognized on shares related to performance-based RSUs that were not forfeited. Equity compensation expense is considered non-cash compensation expense for the three months ended March 31, 2021.

The following table details the RSU activity during the three months ended March 31, 2021:

	Time-based Restricted Stock Units				Performance-based Restricted Stock Units
			Weighted-Average					Weighted-Average
	Number of		Grant Date Fair		Number of			Grant Date Fair
	Restricted Shares		Value Per Share		Restricted Shares			Value Per Share
Unvested, December 31, 2020		-	$	-		1,622,499		$	20.00
Forfeited/cancelled		-		-		(525,206	)	$	20.00
Unvested, March 31, 2021		-	$	-		1,097,293		$	20.00

Note 11. Income Taxes

We have elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with our taxable year ended December 31, 2015 and expect to continue to operate so as to qualify as a REIT. As a result, we will generally not be subject to federal and state income tax on that portion of our income that we distribute to stockholders if we distribute at least 90% of our taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains and activity conducted within our taxable REIT subsidiary (“TRS”), and comply with certain other requirements to qualify as a REIT. Since Commencement of Operations, we were in compliance with all REIT requirements and we plan to continue to operate so that we meet the requirements for taxation as a REIT. Therefore, other than amounts relating to our TRS, as described below, we have not provided for current income tax expense related to our REIT taxable income for the three months ended March 31, 2022 and 2021, respectively. Additionally, no provision has been made for federal or state income taxes in the accompanying financial statements, as we believe we have met the prescribed requisite requirements.

Our real estate owned is held in a TRS. A TRS is a corporation that is owned directly or indirectly by a REIT and has jointly elected with the REIT to be treated as a TRS for tax purposes. TRSs provide REITs the flexibility to hold, up to 20% of their total assets, entities or investments that otherwise wouldn’t be permissible in the REIT structure. Our TRS is not consolidated for U.S. federal income tax purposes and is taxed separately as a corporation. For financial reporting purposes, a provision or benefit for current and deferred taxes is established for the portion of earnings or expense recognized by us with respect to our TRS. We recorded deferred income tax benefit of $0 and $4.2 million for the three months ended March 31, 2022 and 2021.

We did not have any deferred tax assets or deferred tax liabilities at March 31, 2022 or December 31, 2021 due to a full valuation allowance that was established against our deferred tax assets.

For the three months ended March 31, 2022 and 2021, the TRS’s federal statutory income tax rate was 21.00% and 14.44% for state and local income tax purposes for a combined rate of 35.44%. The combined rate includes the federal benefit arising from the state and local income tax deduction allowable for federal tax purposes. For the three months ended March 31, 2022 and 2021, our effective tax rate was 0.0% and (7.68)%, respectively, based on our income tax benefit generated at our TRS relative to our consolidated income before taxes.

The components of the deferred tax assets consist of the following ($ in thousands):

	March 31, 2022			December 31, 2021
Investment basis difference in real estate owned	$	4,000		$	4,018
Net operating loss carryforward		13,490			10,627
		17,490			14,645
Valuation allowance		(17,490	)		(14,645	)
Deferred tax asset	$	—		$	—

The TRS had a net operating loss (“NOL”) carryforward in the amount of $38.1 million at March 31, 2022, the impact of which has been reflected in the deferred tax asset recorded by us. Deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The NOL could be carried forward indefinitely for federal income tax purposes and generally for a period of 20 years for state and local purposes. Based upon the available objective evidence at March 31, 2022, we determined it was more likely than not that the deferred tax assets of our TRS would not be utilized in future periods. As a result, we recorded a $17.5 million valuation allowance to fully reserve against these deferred tax assets.

We recognize tax benefits for uncertain tax positions only if it is more likely than not that the position is sustainable based on its technical merits. Interest and penalties on uncertain tax positions are included as a component of the provision for income taxes in our consolidated statements of income. As of March 31, 2022 and December 31, 2021, we have not recorded any amounts for uncertain tax positions.

Our tax returns are subject to audit by taxing authorities. Tax years 2018 through 2021 remain open to examination by major taxing jurisdictions to which we are subject to taxes.

Note 12. Commitments and Contingencies

We hold a 51% interest in CMTG/TT as a result of committing to invest $124.9 million in CMTG/TT. Distributions representing repayment proceeds from CMTG/TT’s loans may be recalled by CMTG/TT, if the repayment occurred at least six months prior to the loan’s initial maturity date. As of March 31, 2022 and December 31, 2021, we contributed $162.7 million and $162.1 million, respectively to CMTG/TT and have received return of capital distributions of $123.2 million, of which $111.1 million were recallable. As of March 31, 2022 and December 31, 2021, CMTG’s remaining capital commitment to CMTG/TT was $73.2 million and $73.8 million, respectively.

As of March 31, 2022 and December 31, 2021, we had aggregate unfunded loan commitments of $1.5 billion and $1.1 billion, which amounts will generally be funded to finance lease-related or capital expenditures by our borrowers, subject to borrowers achieving certain conditions precedent to such funding. These future commitments will expire over the remaining term of the loans, none of which exceed five years.

As of March 31, 2022 and December 31, 2021, we had $564.6 million and $584.3 million of undrawn capacity on existing secured financing commitments relating to both the current unpaid principal balance of our loan portfolio and our unfunded loan commitments, which are subject to us pledging additional collateral that is subsequently approved by our financing counterparty.

Our contractual payments under all borrowings by maturity were as follows as of March 31, 2022 ($ in thousands):

Year	Amount
2022	$	988,575
2023		786,245
2024		1,993,750
2025		709,906
2026		906,655
	$	5,385,131

In the normal course of business, we may enter into contracts that contain a variety of representations and provide for general indemnifications. Our maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against us that have not yet occurred. However, based on experience, we expect the risk of loss to be remote.

The full impact of COVID-19 on the global economy and our business is uncertain. As of March 31, 2022, no contingencies have been recorded on our consolidated balance sheets as a result of COVID-19, however as the global pandemic continues and the economic implications become better known, it may have long-term impacts on our financial condition, results of operations, and cash flows. Refer to Note 2 for further discussion of COVID-19.

Note 13. Subsequent Events

We have evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that the following events or transactions that have occurred:

On April 15, 2022, the mezzanine lender subordinate to our mortgage with a carrying value of $116.2 million exercised their option, pursuant to an intercreditor agreement, to purchase our loan for $147.8 million (principal, accrued contractual and default interest, and certain fees). The loan had been on non-accrual status since May 2020. This investment generated a net gain on sale of approximately $30.1 million (approximately $0.22 per share based on shares outstanding as of March 31, 2022), which will be reflected as such in the second quarter. Excluding this transaction, the portion of our loan portfolio (based on unpaid principal balance) on non-accrual declined to 2.2% from 3.8% at March 31, 2022.

We originated four floating rate loans with aggregate loan commitments of $392.7 million, of which $299.8 million was funded at closing.

We received the full repayment of two loans with a combined unpaid principal balance of $346.0 million at March 31, 2022.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q. References herein to “Claros Mortgage Trust,” “Company”, “we”, “us” or “our” refer to Claros Mortgage Trust, Inc. and its subsidiaries unless the context specifically require otherwise.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make forward-looking statements herein and will make forward-looking statements in future filings with the SEC, press releases or other written or oral communications within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For these statements, we claim the protections of the safe harbor for forward-looking statements contained in such Sections. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. When we use the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may" or similar expressions, it intends to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: the macro- and micro-economic impact of the COVID-19 pandemic; the severity and duration of the COVID-19 pandemic; actions taken by governmental authorities to contain the COVID-19 pandemic or treat its impact; the efficacy of the vaccines or other remedies and the speed of their distribution and administration; the impact of the COVID-19 pandemic on our financial condition, results of operations, liquidity and capital resources; market trends in our industry, interest rates, real estate values, the debt securities markets or the general economy; the demand for commercial real estate loans; our business and investment strategy; our operating results; actions and initiatives of the U.S. government and governments outside of the United States, changes to government policies and the execution and impact of these actions, initiatives and policies; the state of the economy generally or in specific geographic regions; economic trends and economic recoveries; our ability to obtain and maintain financing arrangements, including secured debt arrangements and securitizations; the timing and amount of expected future fundings of unfunded commitments; the availability of debt financing from traditional lenders; the volume of short-term loan extensions; the demand for new capital to replace maturing loans; expected leverage; general volatility of the securities markets in which we participate; changes in the value of our assets; the scope of our target assets; interest rate mismatches between our target assets and any borrowings used to fund such assets; changes in interest rates and the market value of our target assets; changes in prepayment rates on our target assets; effects of hedging instruments on our target assets; rates of default or decreased recovery rates on our target assets; the degree to which hedging strategies may or may not protect us from interest rate volatility; impact of and changes in governmental regulations, tax law and rates, accounting, legal or regulatory issues or guidance and similar matters; our continued maintenance of our qualification as a REIT for U.S. federal income tax purposes; our continued exclusion from registration under the Investment Company Act of 1940, as amended (the "1940 Act"); the availability of opportunities to acquire commercial mortgage-related, real estate-related and other securities; the availability of qualified personnel; estimates relating to our ability to make distributions to our stockholders in the future; our present and potential future competition; and unexpected costs or unexpected liabilities, including those related to litigation.

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Forward-looking statements are not predictions of future events. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. See "Item 1A. Risk Factors" of this Quarterly Report on Form 10-Q and our Annual Report. These and other risks, uncertainties, and factors, including those described in the annual, quarterly and current reports that we file with the SEC, could cause our actual results to differ materially from those included in any forward-looking statements we make. All forward-looking statements speak only as of the date they are made. New risks and uncertainties arise over time and it is not possible to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Introduction

We are a CRE finance company focused primarily on originating senior and subordinate loans on transitional CRE assets located in major U.S. markets, including mortgage loans secured by a first priority or subordinate mortgage on transitional CRE assets, and subordinate loans including mezzanine loans secured by a pledge of equity ownership interests in the direct or indirect property owner rather than directly in the underlying commercial properties. These loans are subordinate to a mortgage loan but senior to the property owner’s equity ownership interests. Transitional CRE assets are properties that require repositioning, renovation, rehabilitation, leasing, development or redevelopment or other value-added elements in order to maximize value. We believe our Sponsor’s real estate development, ownership and operations experience and infrastructure differentiates us in lending on these transitional CRE assets. Our objective is to be a premier provider of debt capital for transitional CRE assets and, in doing so, to generate attractive risk-adjusted

returns for our stockholders over time, primarily through dividends. We strive to create a diversified investment portfolio of CRE loans that we generally intend to hold to maturity. We focus primarily on originating loans ranging from $50 million to $300 million on transitional CRE assets located in major markets with attractive fundamental characteristics supported by macroeconomic tailwinds.

We were organized as a Maryland corporation on April 29, 2015 and commenced operations on August 25, 2015, and are traded on the New York Stock Exchange, or NYSE, under the symbol “CMTG”. We have elected and believe we have qualified to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2015. We are externally managed and advised by our Manager, an investment adviser registered with the SEC pursuant to the Investment Advisers Act of 1940, as amended. We operate our business in a manner that permits us to maintain our exclusion from registration under the 1940 Act.

I. Key Financial Measures and Indicators

As a CRE finance company, we believe the key financial measures and indicators for our business are net income per share, dividends declared per share, Distributable Earnings per share, Net Distributable Earnings per share, book value per share, adjusted book value per share, Net Debt-to-Equity Ratio and Total Leverage Ratio. During the three months ended March 31, 2022, we had net income per share of $0.21, declared dividends of $0.37 per share, had Distributable Earnings per share of $0.24, and had Net Distributable Earnings per share of $0.24. As of March 31, 2022, our book value per share was $18.20, our adjusted book value per share was $18.76, our Net-Debt-to-Equity Ratio was 1.9x, and our Total Leverage Ratio was 2.3x. We use Net Debt-to-Equity Ratio and Total Leverage Ratio, financial measures which are not prepared in accordance with GAAP, to evaluate our financial leverage, which in the case of our Total Leverage Ratio, makes certain adjustments that we believe provide a more conservative measure of our financial condition.

Net Income Per Share and Dividends Declared Per Share

The following table sets forth the calculation of basic and diluted net income per share and dividends declared per share ($ in thousands, except share and per share data):

	Three Months Ended
	March 31, 2022		31-Dec-21
Net income attributable to common stock	$	29,412	$	17,031
Weighted average shares of common stock outstanding, basic and diluted		139,712,501		137,650,229
Basic and diluted net income per share of common stock	$	0.21	$	0.12
Dividends declared per share of common stock	$	0.37	$	0.37

Distributable Earnings and Net Distributable Earnings

Distributable Earnings and Net Distributable Earnings are non-GAAP measures used to evaluate our performance excluding the effects of certain transactions, non-cash items and GAAP adjustments, as determined by our Manager, that we believe are not necessarily indicative of our current performance and operations. Distributable Earnings is a non-GAAP measure, which we define as net income as determined in accordance with GAAP, excluding (i) non-cash equity compensation expense (income), (ii) incentive fees, (iii) real estate depreciation and amortization, (iv) any unrealized gains or losses from mark-to-market valuation changes (other than permanent impairments) that are included in net income for the applicable period, (v) one-time events pursuant to changes in GAAP and (vi) certain non-cash items, which in the judgment of our Manager, should not be included in Distributable Earnings. Net Distributable Earnings is Distributable Earnings less incentive fees due to our Manager. Pursuant to the Management Agreement, we use Core Earnings, which is substantially the same as Distributable Earnings, to determine the incentive fees we pay our Manager. Distributable Earnings is substantially the same as Core Earnings, as defined in the Management Agreement, for the periods presented.

Net Distributable Earnings, and other similar measures, have historically been a useful indicator of mortgage REITs’ ability to cover their dividends, and to mortgage REITs themselves in determining the amount of any dividends. Net Distributable Earnings is a key factor, among others, considered by the board of directors in setting the dividend and as such we believe Net Distributable Earnings is useful to investors. Accordingly, we believe providing Net Distributable Earnings on a supplemental basis to our net income as determined in accordance with GAAP is helpful to our stockholders in assessing the overall performance of our business.

We believe that Distributable Earnings and Net Distributable Earnings provide meaningful information to consider in addition to our net income and cash flows from operating activities determined in accordance with GAAP. We believe the Distributable Earnings and Net Distributable Earnings measures help us to evaluate our performance excluding the effects of certain transactions, non-cash

items and GAAP adjustments, as determined by our Manager, that we believe are not necessarily indicative of our current performance and operations. Distributable Earnings and Net Distributable Earnings do not represent net income or cash flows from operating activities and should not be considered as an alternative to GAAP net income, an indication of our cash flows from operating activities, a measure of our liquidity or an indication of funds available for our cash needs. In addition, our methodology for calculating Distributable Earnings and Net Distributable Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures and, accordingly, our reported Distributable Earnings and Net Distributable Earnings may not be comparable to the Distributable Earnings and Net Distributable Earnings reported by other companies.

While Distributable Earnings and Net Distributable Earnings excludes the impact of our unrealized current provision for credit losses, loan losses are charged off and recognized through Distributable Earnings when deemed non-recoverable. Non-recoverability is determined (i) upon the resolution of a loan (i.e. when the loan is repaid, fully or partially, or in the case of foreclosure, when the underlying asset is sold), or (ii) with respect to any amount due under any loan, when such amount is determined to be non-collectible. During the three months ended March 31, 2022, we recorded a $2.1 million increase in the CECL reserve, which has been excluded from Distributable Earnings and Net Distributable Earnings.

The following table provides a reconciliation of net income attributable to common stock to Distributable Earnings and Net Distributable Earnings ($ in thousands, except share and per share data):

	Three Months Ended
	March 31, 2022		March 31, 2021
Net income attributable to common stock:	$	29,412	$	58,608
Adjustments:
Non-cash equity compensation expense		—		(1,642	)
Gain on foreclosure of real estate owned		—		(1,430	)
Other income		—		(5,855	)
Provision for (reversal of) current expected credit loss reserve		2,102		(185	)
Income tax expense (benefit)		—		(4,179	)
Depreciation expense		1,940		1,293
Distributable Earnings	$	33,454	$	46,610
Less: incentive fee adjustments	$	—	$	—
Net Distributable Earnings	$	33,454	$	46,610
Weighted average shares of common stock outstanding, basic and diluted		139,712,501		133,609,126
Basic and diluted earnings per share	$	0.21	$	0.44
Distributable Earnings per share, basic and diluted	$	0.24	$	0.35
Net Distributable Earnings per share, basic and diluted	$	0.24	$	0.35

Book Value Per Share

We believe that presenting book value per share adjusted for the general allowance for loan losses and accumulated depreciation is useful for investors as it enhances the comparability to prior years. Our lenders consider book value per share prior to the general allowance for loan losses and accumulated depreciation as an important metric related to our overall capitalization and we believe disclosing book value per share prior to the general current expected credit losses and accumulated depreciation is important to investors such that they have the same visibility.

The following table sets forth the calculation of our book value and our adjusted book value per share ($ in thousands, except share and per share data):

	March 31, 2022			December 31, 2021
Total Stockholders’ Equity	$	2,579,296		$	2,604,267
Non-controlling interest		(38,134	)		(37,636	)
Stockholders’ Equity, net of non-controlling interest	$	2,541,162		$	2,566,631
Number of Shares Common Stock Outstanding at Period End		139,653,799			139,840,088
Book Value per share⁽¹⁾	$	18.20		$	18.35
Add back: accumulated depreciation on real estate owned		0.06			0.05
Add back: general current expected credit losses		0.50			0.48
Adjusted Book Value per share	$	18.76		$	18.88

(1)	Calculated as (i) total stockholders’ equity less non-controlling interest divided by (ii) number of shares of common stock outstanding at period end.

II. Our Portfolio

The below table summarizes our loan portfolio as of March 31, 2022 ($ in thousands):

							Weighted Average⁽²⁾
	Number of Loans		Loan Commitment⁽¹⁾		Unpaid Principal Balance		All-In Yield⁽³⁾			Term to Fully Extended Maturity (in years) ⁽⁴⁾		LTV⁽⁵⁾
Senior loans		68	$	8,450,891	$	6,973,076		5.5	%		3.4		67.0	%
Subordinate loans		5		264,012		260,697		10.5	%		2.5		68.2	%
Total / Weighted Average		73	$	8,714,903	$	7,233,773		5.6	%		3.4		67.7	%

(1)	Loan commitment represents principal outstanding plus remaining unfunded loan commitments.

(2)	Weighted averages are based on unpaid principal balance.

(3)

All-in yield represents the weighted average annualized yield to initial maturity of each loan, inclusive of coupon, and fees received, based on the applicable floating benchmark rate/floors (if applicable), in place as of March 31, 2022. This includes loans on non-accrual status; excluding those, the all-in yield on the loan portfolio was 5.3% at March 31, 2022.

(4)	Fully extended maturity assumes all extension options are exercised by the borrower upon satisfaction of the applicable conditions.

(5)

LTV represents “loan-to-value” or “loan-to-cost”, which is calculated as our total loan commitment from time to time, as if fully funded, plus any financings that are pari passu with or senior to our loan, divided by our estimate of either (1) the value of the underlying real estate, determined in accordance with our underwriting process (typically consistent with, if not less than, the value set forth in a third-party appraisal) or (2) the borrower’s projected, fully funded cost basis in the asset, in each case as we deem appropriate for the relevant loan and other loans with similar characteristics. Underwritten values and projected costs should not be assumed to reflect our judgment of current market values or project costs, which may have changed materially since the date of origination including, without limitation, as a result of the COVID-19 pandemic. LTV is updated only in connection with a partial loan paydown and/or release of collateral, material changes to expected project costs, the receipt of a new appraisal (typically in connection with financing or refinancing activity) or a change in our loan commitment. Totals represent weighted average based on loan commitment, including non-consolidated senior interests.

Portfolio Activity and Overview

The following table summarizes changes in unpaid principal balance within our portfolio, for both our loans and for our interests in loans (i.e., loans in which we have acquired an interest in a loan for which the transferor did not account for the transaction as a sale under GAAP) for the three months ended March 31, 2022 ($ in thousands):

	Loans Receivable			Interests in Loans Receivable			Total
Unpaid principal balance, beginning of period	$	6,441,238		$	161,566		$	6,602,804
Initial funding of loans		684,789			—			684,789
Advances on loans		123,486			17,080			140,566
Loan repayments		(168,581	)		(25,805	)		(194,386	)
Total net fundings	$	639,694		$	(8,725	)	$	630,969
Unpaid principal balance, end of period	$	7,080,932		$	152,841		$	7,233,773

The following table details our loan investments individually based on unpaid principal balances as of March 31, 2022 ($ in thousands):


Loan Number	Loan type	Origination Date	Loan Commitment⁽¹⁾		Unpaid Principal Balance		Carrying Value		Fully Extended Maturity⁽²⁾	Property Type	Construction⁽⁵⁾		Location	Risk Rating
1	Senior	11/1/2019		390,000		390,000		388,474	11/1/2026	Multifamily		-	NY	3
2	Senior	12/16/2021		405,000		375,465		372,235	6/16/2027	Multifamily		-	CA	3
3	Senior	7/12/2018		290,000		290,000		291,063	8/1/2023	Hospitality		-	NY	4
4	Senior	10/18/2019		321,065		281,219		280,337	10/18/2024	For Sale Condo	Y		CA	3
5	Senior	12/30/2021		257,963		257,963		256,637	12/30/2026	Multifamily		-	VA	2
6	Senior	12/27/2018		210,000		207,548		207,548	2/1/2025	Mixed-use		-	NY	4
7	Senior	7/26/2021		225,000		195,855		194,058	7/26/2026	Hospitality		-	GA	3
8⁽³⁾	Senior	8/14/2019		193,129		193,129		193,774	8/15/2022	Hospitality		-	NY	3
9	Senior	9/7/2018		192,600		192,600		192,135	10/18/2024	Land		-	NY	3
10	Senior	12/30/2021		184,500		184,500		183,552	12/30/2026	Multifamily		-	VA	2
11	Senior	10/4/2019		263,000		175,244		174,723	10/1/2025	Mixed-use	Y		DC	3
12	Senior	1/14/2022		170,000		170,000		168,422	1/14/2027	Multifamily		-	CO	3
13⁽³⁾	Senior	6/29/2018		174,923		152,841		153,278	8/9/2023	Mixed-use	Y		NY	1
14	Senior	2/28/2019		150,000		150,000		149,656	2/28/2024	Office		-	CT	3
15	Senior	9/27/2019		258,400		149,347		147,622	9/26/2026	Office		-	GA	3
16	Senior	1/9/2018		148,500		148,500		148,351	1/9/2024	Hospitality		-	VA	3
17	Senior	12/30/2021		147,500		147,500		147,001	12/30/2025	Multifamily		-	PA	3
18	Senior	2/15/2022		262,500		139,299		136,727	2/15/2027	Multifamily	Y		CA	3
19	Senior	8/8/2019		154,999		135,277		134,510	8/8/2026	Multifamily		-	CA	3
20	Senior	9/20/2019		225,000		134,725		132,904	12/31/2025	For Sale Condo	Y		FL	3
21	Senior	12/10/2021		130,000		130,000		129,002	12/10/2026	Multifamily		-	VA	3
22	Subordinate	12/9/2021		125,000		125,000		124,708	1/1/2027	Office		-	IL	3
23	Senior	9/24/2021		127,535		122,535		121,502	9/24/2027	Hospitality		-	TX	3
24	Senior	9/30/2019		122,500		122,500		122,292	2/9/2027	Office		-	NY	3
25	Senior	4/29/2019		120,000		119,377		119,351	4/29/2024	Mixed-use		-	NY	3
26	Senior	3/1/2022		122,000		118,600		117,585	2/28/2027	Multifamily		-	TX	3
27	Senior	9/2/2021		166,812		117,917		115,680	9/2/2026	Other	Y		GA	2
28⁽³⁾	Senior	9/21/2018		116,020		116,020		116,211	10/1/2021	Land		-	NY	4
29	Senior	7/20/2021		113,500		113,500		112,988	7/20/2026	Multifamily		-	IL	3
30	Senior	2/13/2020		124,810		111,604		111,038	2/13/2025	Office		-	CA	4
31⁽⁴⁾	Senior	6/8/2018		104,250		104,250		105,343	1/15/2022	Land		-	NY	4
32	Senior	12/15/2021		103,000		103,000		102,164	12/15/2026	Multifamily		-	TN	3
33	Senior	10/11/2017		97,500		97,500		97,426	10/31/2023	Hospitality		-	CA	3
34	Senior	8/2/2021		100,000		94,780		94,114	8/2/2026	Office		-	CA	3
35	Senior	1/27/2022		100,800		94,749		93,928	1/27/2027	Multifamily		-	NV	3
36	Senior	3/31/2020		87,750		87,750		87,750	2/9/2025	Office		-	TX	4
37	Senior	7/10/2018		81,380		81,380		77,530	7/10/2025	Hospitality		-	CA	4


Loan Number	Loan type	Origination Date	Loan Commitment⁽¹⁾		Unpaid Principal Balance		Carrying Value			Fully Extended Maturity⁽²⁾	Property Type	Construction⁽⁵⁾		Location	Risk Rating
38⁽⁴⁾	Subordinate	3/29/2018		76,585		76,585		77,075		1/26/2021	Land		-	NY	4
39	Senior	4/5/2019		75,500		75,500		75,500		4/5/2024	Mixed-use		-	NY	3
40	Senior	11/13/2018		75,000		75,000		75,000		4/25/2022	Office		-	NY	4
41	Senior	12/14/2018		75,000		74,380		74,264		12/14/2023	Multifamily		-	DC	2
42	Senior	12/30/2021		73,259		73,259		72,882		12/30/2025	For Sale Condo		-	VA	3
43	Senior	3/9/2018		72,270		69,697		69,518		12/31/2022	For Sale Condo	Y		NY	4
44	Senior	8/26/2021		84,810		69,361		68,643		8/27/2026	Office		-	GA	3
45⁽⁴⁾	Senior	8/2/2019		67,000		67,000		67,000		1/30/2022	Land		-	NY	4
46	Senior	4/1/2020		141,084		64,441		63,175		4/1/2026	Office	Y		TN	3
47	Senior	12/22/2021		76,350		62,376		61,660		12/22/2026	Multifamily		-	TX	3
48	Senior	8/29/2018		60,000		60,000		59,938		8/31/2023	Hospitality		-	NY	3
49	Senior	1/19/2022		73,677		50,757		50,051		1/19/2027	Hospitality		-	TN	3
50	Senior	3/15/2022		53,300		49,844		49,326		3/15/2027	Multifamily		-	AZ	3
51	Senior	6/3/2021		79,600		46,700		46,026		6/3/2026	Other		-	MI	3
52	Senior	3/22/2021		110,135		42,029		41,221		3/22/2026	Other	Y		MA	3
53	Senior	2/4/2022		44,768		37,083		36,649		2/4/2027	Multifamily		-	TX	3
54	Senior	6/13/2018		35,721		35,721		35,712		6/13/2023	Multifamily		-	PA	1
55	Senior	8/2/2019		33,013		33,013		33,171		2/2/2024	For Sale Condo		-	NY	3
56	Subordinate	12/21/2018		31,300		31,300		31,457		6/21/2022	Land		-	NY	3
57	Senior	4/18/2019		30,000		30,000		29,988		5/1/2023	Office		-	MA	3
58	Senior	11/2/2021		77,115		29,479		28,732		11/2/2026	Multifamily	Y		FL	3
59	Subordinate	7/2/2021		30,200		26,885		26,726		7/2/2024	Land		-	FL	3
60	Senior	8/7/2017		25,765		25,765		25,940		8/7/2022	For Sale Condo		-	NY	2
61	Senior	2/17/2022		28,479		23,924		23,650		2/17/2027	Multifamily		-	TX	3
62	Senior	12/30/2021		141,791		22,362		20,963		12/30/2026	Mixed-use	Y		FL	3
63	Senior	4/29/2021		17,500		17,500		17,641		4/29/2023	Land		-	PA	3
64⁽⁴⁾	Senior	7/1/2019		15,000		15,000		15,000		12/30/2020	Other		-	Other	5
65	Senior	5/5/2017		8,599		8,599		8,599		1/1/2023	Other		-	Other	5
66	Senior	2/2/2022		90,000		4,680		3,781		2/2/2027	Office	Y		WA	3
67	Senior	1/31/2022		34,641		3,132		2,787		1/31/2027	Other	Y		FL	3
68	Subordinate	8/2/2018		927		927		927		8/2/2023	Other		-	NY	2
69	Senior	1/10/2022		130,461		-		(1,305	)	1/9/2027	Other	Y		PA	3
70	Senior	11/24/2021		60,255		-		(603	)	11/24/2026	Multifamily	Y		NV	3
71	Senior	2/25/2022		53,984		-		(540	)	2/25/2027	Other	Y		GA	3
72	Senior	1/4/2022		32,795		-		(328	)	1/4/2027	Other	Y		GA	3
73	Senior	2/18/2022		32,083		-		(321	)	2/18/2027	Other	Y		FL	3
Total				8,714,903		7,233,773		7,191,524
CECL Allowance								(65,650	)
Grand Total/Weighted Average				8,714,903		7,233,773		7,125,874				27.4%

(1)	Loan commitment represents principal outstanding plus remaining unfunded loan commitments.

(2)	Fully extended maturity assumes all extension options are exercised by the borrower upon satisfaction of the applicable conditions.

(3)	Subsequent to March 31, 2022, this loan was repaid in full.

(4)	We are actively pursuing resolutions to these loans.

(5) Weighted average is based on loan commitment as of March 31, 2022.

Real Estate Owned, Net

On February 8, 2021, we acquired legal title to a portfolio of hotel properties located in New York, NY through a foreclosure. Prior to February 8, 2021, the hotel portfolio represented the collateral for the $103.9 million mezzanine loan that we held, which was in default as a result of the borrower failing to pay debt service. The hotel portfolio appears as real estate owned, net on our balance sheet and, as of March 31, 2022, was encumbered by a $290.0 million securitized senior mortgage, which is included as a liability on our balance sheet. Refer to Note 4 to our consolidated financial statements for additional details.

Asset Management

Our Manager proactively manages the loans in our portfolio from closing to final repayment and our Sponsor has dedicated asset management employees to perform asset management services. Following the closing of an investment, the asset management team rigorously monitors the loan, with an emphasis on ongoing financial, legal, market condition and quantitative analyses. Through the final repayment of a loan, the asset management team maintains regular contact with borrowers, servicers and local market experts monitoring performance of the collateral, anticipating borrower, property and market issues, and enforcing our rights and remedies when appropriate.

Due to the impact of COVID-19, some of our borrowers have experienced delays in the execution of their business plans. As a result, we have worked with borrowers to execute loan modifications which typically include additional equity contributions from borrowers, repurposing of reserves, temporary deferrals of interest or principal, and partial deferral of coupon interest as payment-in-kind interest. While we have completed a number of loan modifications to date, we also may continue to make additional modifications depending on the duration of the COVID-19 pandemic and its impact on our borrowers’ business plans and our borrowers’ financial condition, liquidity and results of operations.

Our Manager reviews our entire loan portfolio at least quarterly, undertakes an assessment of the performance of each loan, and assigns it a risk rating between “1” and “5,” from least risk to greatest risk, respectively. The weighted average risk rating of our total loan exposure was 3.0 at March 31, 2022.

Current Expected Credit Losses and Loan Risk Ratings

On January 1, 2021, we adopted ASU 2016-13, which implemented the CECL accounting model. Following adoption, we recorded a $78.3 million cumulative effect adjustment to retained earnings.

During the three months ended March 31, 2022, we recorded an increase of $2.1 million in the current expected credit loss reserve, thus increasing the total current expected credit loss reserve to $75.6 million as of March 31, 2022. The increase was primarily attributable to an increase in the size of the portfolio and unfunded loan commitments.

In December 2021, we received a partial principal repayment of $81.7 million on a senior loan with an outstanding principal balance of $95.0 million and recorded a principal charge-off of $1.8 million. Following the repayment, the maturity date of the loan was extended to January 1, 2023. As of March 31, 2022, the loan had a specific CECL reserve of $0.2 million.

We have a $6.0 million specific CECL reserve against a loan to the personal estate of a former borrower, which had an outstanding principal balance and a carrying value of $15.0 million. The loan is on cost recovery and is in maturity default. The amount of the loan loss provision is based on the difference between the net present value of the projected cash flows of the loan and its carrying value. We continue to actively pursue a resolution to this loan.

Portfolio Financing

Our portfolio financing arrangements include repurchase facilities, asset-specific financing structures, mortgages on real estate owned and Secured Term Loan borrowings.

The following table summarizes our loan portfolio financing ($ in thousands):

	March 31, 2022
	Capacity		Unpaid Principal Balance		Weighted Average Spread⁽¹⁾
Repurchase agreements	$	4,765,000	$	3,798,423		+ 2.00	%
Repurchase agreements - Side Car		271,171		221,487		+ 4.51	%
Loan participations sold		168,322		168,322		+ 3.75	%
Notes payable		277,950		146,089		+ 3.35	%
Secured Term Loan		760,810		760,810		+ 4.50	%
Debt related to real estate owned		290,000		290,000		+ 2.78	%
Total / weighted average	$	6,533,253	$	5,385,131		+ 2.59	%

(1)	Weighted average spread over the applicable benchmark is based on unpaid principal balance. One-month LIBOR as of March 31, 2022 was 0.45%. Term SOFR as of March 31, 2022 was 0.30%. Fixed rate loans are presented as a spread over the relevant floating benchmark rates.

Repurchase Agreements

We finance certain of our loans using secured revolving repurchase facilities. As of March 31, 2022, aggregate borrowings outstanding under our secured revolving repurchase facilities totaled $4.0 billion, with a weighted average coupon of one-month LIBOR or Term SOFR plus 2.14% per annum. All weighted averages are based on unpaid principal balance. As of March 31, 2022, outstanding borrowings under these facilities had a weighted average term to fully extended maturity (assuming we exercise all extension options and our counterparty agrees to such extension options) of 3.7 years.

Each of the secured revolving repurchase facilities contains “margin maintenance” provisions, which are designed to allow the lender to require additional collateral to secure borrowings against assets that are determined to have experienced a diminution in value. The amount of margin that may be required is generally determined by multiplying the assessed diminution in value of the collateral by the then-current advance rate applicable to such collateral. Since inception through March 31, 2022, we have not received any margin calls under any of our repurchase facilities.

Loan Participations Sold

We finance certain investments via the sale of a participation in loans receivable that we own, and we present the loan participation sold as a liability on our consolidated balance sheet when such arrangement does not qualify as a sale under GAAP. In instances where we have multiple loan participations with the same lender, the financings are generally not cross-collateralized. Each of our loan participations sold is generally term-matched to its corresponding loan collateral. As of March 31, 2022, we had two loans financed with separate participations sold to two counterparties.

Notes Payable

We finance certain investments on a match-term, non-recourse basis with such financings collateralized by our loans receivable, which we refer to as notes payable. Each of our notes payable is generally term-matched to its corresponding loan collateral. As of March 31, 2022, three of our loans were financed with notes payable.

Secured Term Loan

On August 9, 2019, we entered into our secured term loan of $450.0 million. Our secured term loan is collateralized by a pledge of equity in certain subsidiaries and their related assets, as well as a first priority security interest in selected assets. On December 1,

2020, our secured term loan was modified to increase the aggregate principal amount by $325.0 million, increase the interest rate, and increase the quarterly amortization payment. Our secured term loan is presented net of any original issue discount and transaction expenses which are deferred and recognized as a component of interest expense over the life of the loan using the effective interest method.

On December 2, 2021, we entered into a modification of our secured term loan which reduced the interest rate to the greater of (i) 1-month SOFR plus a 0.10% credit spread adjustment and (ii) 0.50%, plus a credit spread of 4.50%. The Secured Term matures on August 9, 2026. As of March 31, 2022, our Secured Term Loan has an unpaid principal balance of $760.8 million and a carrying value of $738.9 million.

Our Secured Term Loan includes various customary affirmative and negative covenants, including, but not limited to, reporting requirements and certain operational restrictions, including restrictions on dividends, distributions or other payments from our subsidiaries.

Debt Related to Real Estate Owned

On February 8, 2021 we assumed a $300.0 million securitized senior mortgage in connection with a Uniform Commercial Code foreclosure on a portfolio of seven limited service hotels located in New York, New York. In June 2021, we modified the securitized senior mortgage, which resulted in an extension of the contractual maturity date to February 9, 2024, a principal repayment of $10.0 million, and the payment of $7.6 million of fees and modification costs, among other items. The securitized senior mortgage is non-recourse to us. Our debt related to real estate owned as of March 31, 2022 has an outstanding principal balance of $290.0 million, a carrying value of $289.8 million and a stated rate of L+2.78%, subject to a LIBOR floor of 0.75%.

As of March 31, 2022, we were in compliance with all financial covenants under our financings.

Non-Consolidated Senior Interests Sold and Non-Consolidated Senior Interests Held by Third Parties

In certain instances, we use structural leverage through the non-recourse syndication of a match-term senior loan interest to a third party which qualifies for sale accounting under GAAP, or through the acquisition of a subordinate loan for which a non-recourse senior interest is retained by a third party. In such instances, the senior loan is not included on our balance sheet.

The following table summarizes our non-consolidated senior interests and related retained subordinate interests as of March 31, 2022 ($ in thousands):

Non-Consolidated Senior Interests	Loan Count		Loan Commitment		Unpaid Principal Balance		Carrying Value		Spread⁽¹⁾			Term to Fully Extended Maturity (in years)⁽²⁾⁽³⁾
Floating rate non-consolidated senior loans		3	$	184,500	$	177,097	N/A			L + 4.47	%		0.7
Retained floating rate subordinate loans		3		138,085		134,770		135,258		L + 10.52	%		0.5
Fixed rate non-consolidated senior loans		2	$	867,000	$	859,660	N/A			3.47	%		4.6
Retained fixed rate subordinate loans		2		125,927		125,927		125,635		8.49	%		4.7

(1)	Non-consolidated senior interests are indexed to one-month LIBOR, which was 0.45% at March 31, 2022. Weighted average is based on unpaid principal balance.

(2)	Weighted average is based on unpaid principal balance.

(3)	Term to fully extended maturity is determined based on the maximum maturity of each of the corresponding loans, assuming all extension options are exercised by the borrower; provided, however, that our loans may be repaid prior to such date.

Floating and Fixed Rate Portfolio

Our business model seeks to minimize our exposure to changing interest rates by originating floating rate loans and as much as possible, match-funding the duration of our financing of such loans and using the same benchmark indices, typically one-month LIBOR or Term SOFR. As of March 31, 2022, 97.0% of our loans based on unpaid principal balance were floating rate, and 87.0% of our floating rate loans based on unpaid principal balance had interest rate floors tied to LIBOR or SOFR, providing protection against certain decreases in prevailing interest rates, and our floating rate loans were all financed with liabilities that require interest payments based on floating rates also determined by reference to one-month LIBOR or Term SOFR plus a spread, which resulted in approximately $1.6 billion of net floating rate exposure.

The following table details our net floating rate exposure as of March 31, 2022 ($ in thousands):

	Net Floating Rate Exposure
Floating rate assets⁽¹⁾	$	7,013,340
Floating rate liabilities⁽¹⁾		(5,365,131	)
Net floating rate exposure	$	1,648,209

(1)	Our floating rate loans and related liabilities are all indexed to one-month LIBOR or Term SOFR. One-month LIBOR as of March 31, 2022 was 0.45%. Term SOFR as of March 31, 2022 was 0.30%.

In addition, certain of our loans and financings have floors associated with the benchmark indices that determine the applicable rate on such loans and financings. As of March 31, 2022, 87.0% of our floating rate loans were subject to a one-month LIBOR or Term SOFR floor, while 41.2% of our floating rate financings were subject to one-month LIBOR or Term SOFR floors. As of March 31, 2022, all of the loans held in our portfolio which are subject to a one-month LIBOR or Term SOFR floor had one-month LIBOR or Term SOFR floors greater than one-month LIBOR or Term SOFR. The weighted average one-month LIBOR or Term SOFR floor of our floating rate loans based on March 31, 2022, unpaid principal balance was 1.0%. The weighted average one-month LIBOR or Term SOFR floor of our financings based on March 31, 2022, unpaid principal balance was 0.3%.

LIBOR and certain other floating rate benchmark indices to which our floating rate loans and other loan agreements are tied to, are the subject of recent national, international and regulatory guidance and proposals for reform. On March 5, 2021, the Financial Conduct Authority of the United Kingdom, or the FCA, which regulates. LIBOR’s administrator, ICE Benchmark Administration Limited, or IBA, announced that all LIBOR tenors relevant to us will cease to be published or will no longer be representative after June 30, 2023 (and that all other LIBOR tenors will cease to be published or will no longer be representative either after December 31, 2021, or after June 30, 2023). The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, has identified the Secured Overnight Financing Rate, or SOFR, a new index calculated using short-term repurchase agreements backed by Treasury securities, as its preferred alternative rate for USD LIBOR.

Our agreements generally allow for a new interest rate index to be used if LIBOR is no longer available. We have begun and expect to continue to utilize alternative rates referenced in our agreements or negotiate a replacement reference rate for LIBOR.

As of March 31, 2022, one-month LIBOR was 0.45% and Term SOFR was 0.30% and our loan portfolio by one-month LIBOR floor or Term SOFR level, including fixed rate loans for which LIBOR or SOFR is not applicable, was as follows ($ in thousands):

	Total Loan Portfolio by LIBOR Floor Levels
One-month LIBOR/SOFR Floor Range	Unpaid Principal Balance		% of Total			Cumulative %
2.00% - 2.50%		1,197,145		17	%		17	%
1.50% - 1.99%		1,371,794		19	%		36	%
1.00% - 1.49%		896,234		12	%		48	%
0.50% - 0.99%		216,114		3	%		51	%
< 0.50%		2,418,783		33	%		84	%
No floor		913,270		13	%		97	%
Total Floating Rate Loans		7,013,340
Total Fixed Rate Loans		220,433		3	%		100	%
Total Loans	$	7,233,773

We do not employ interest rate derivatives (interest rate swaps, caps, collars or swaptions) to hedge our loan portfolio’s cash flow or fair value exposure to increases in interest rates, but we may do so in the future.

Results of Operations – Three Months Ended March 31, 2022 and December 31, 2021

As previously disclosed, beginning with our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, and for all subsequent reporting periods, we have elected to present results of operations by comparing to the immediately preceding period, as well as the same period in the prior year. Given the dynamic nature of our business and the sensitivity to the real estate and capital markets, we believe providing analysis of results of operations by comparing to the immediately preceding period is more meaningful to our stockholders in assessing the overall performance of our current business.

Operating Results

The following table sets forth information regarding our consolidated results of operations for the three months ended March 31, 2022, and December 31, 2021 ($ in thousands, except per share data):

	Three Months Ended
	March 31, 2022			December 31, 2021			$ Change			% Change
Revenue
Interest and related income	$	90,694		$	100,937		$	(10,243	)		-10	%
Less: interest and related expense		39,580			42,377			(2,797	)		-7	%
Net interest income		51,114			58,560			(7,446	)		-13	%
Revenue from real estate owned		6,813			12,364			(5,551	)		-45	%
Total revenue		57,927			70,924			(12,997	)		-18	%
Expenses
Management fees - affiliate		9,807			9,983			(176	)		-2	%
Equity compensation		-			9,188			(9,188	)		-100	%
General and administrative expenses		4,343			7,198			(2,855	)		-40	%
Operating expenses from real estate owned		7,780			8,342			(562	)		-7	%
Interest expense from debt related to real estate owned		2,584			2,667			(83	)		-3	%
Depreciation on real estate owned		1,940			1,940			-			0	%
Total expenses		26,454			39,318			(12,864	)		-33	%
(Provision) reversal of current expected credit loss reserve		(2,102	)		(8,451	)		6,349			-75	%
Realized loss on sale of investments		-			(141	)		141			-100	%
Income before income taxes		29,371			23,014			6,357			28	%
Income tax benefit (expense)		-			(6,025	)		6,025			-100	%
Net income	$	29,371		$	16,989		$	12,382			73	%
Net loss attributable to non-controlling interests	$	(41	)	$	(46	)	$	5			-11	%
Net income attributable to preferred stock	$	-		$	4		$	(4	)		-100	%
Net income attributable to common stock	$	29,412		$	17,031		$	12,381			73	%
Net income per share of common stock - basic and diluted	$	0.21		$	0.12		$	0.09			75	%

Comparison of the three months ended March 31, 2022 and December 31, 2021

Revenue

Revenue decreased $13.0 million during the three months ended March 31, 2022, compared to the three months ended December 31, 2021. The decrease is primarily due to a decrease in net interest income of $7.4 million for the comparative period, which was driven by (i) a decrease in interest income earned of $10.2 million primarily as a result of prepayment fees during the fourth quarter of 2021 and replacement of higher yielding assets with floors with lower yielding assets, offset in part by (ii) a decrease in interest expense of $2.8 million primarily due to the repricing of our secured term loan in December 2021. Additionally, the decrease in revenue was also driven by a decrease in revenue from real estate owned of $5.6 million due to seasonally lower occupancy and RevPAR levels and the impact of the Omicron variant during the first quarter of 2022, compared to the fourth quarter of 2021, at the hotel portfolio.

Expenses

Expenses are primarily comprised of base management fees payable to our Manager, equity compensation expense, general and administrative expenses, interest expense from debt related to real estate owned, and operating expenses from real estate owned. Expenses decreased by $12.9 million, during the three months ended March 31, 2022, as compared to the three months ended December 31, 2021, primarily due to:

(i) a decrease in equity compensation expense of $9.2 million during the comparative period due to RSUs becoming immediately vested upon our initial public offering in November 2021;

(ii) a decrease in general and administrative expenses of $2.9 million during the comparative period, due primarily to general and administrative expenses of $3.1 million incurred relating to the repricing of our secured term loan in December 2021; and

(iii) a decrease in operating expenses from real estate owned of $0.6 million during the comparative period, due to decreased variable operating expenses in connection with seasonally lower occupancy levels at the hotel portfolio during the comparative period.

(Provision) reversal of current expected credit loss reserve

During the three months ended March 31, 2022, the provision for current expected credit loss reserves was $6.3 million less than the provision for current expected credit loss reserves during the three months ended December 31, 2021, based upon changes in the credit profile, overall size of our loan portfolio and expected repayment dates, as of March 31, 2022, as compared to our loan portfolio as of December 31, 2021.

Income tax benefit

Income tax expense was $6.0 million lower during the comparative period. The change in the comparative periods is primarily due to recognition of a full valuation allowance on our previously recognized deferred tax asset during the three months ended December 31, 2021. The deferred tax asset remained fully reserved against at March 31, 2022.

Results of Operations – Three Months Ended March 31, 2022, and March 31, 2021

The following table sets forth information regarding our consolidated results of operations for the three months ended March 31, 2022, and March 31, 2021 ($ in thousands, except per share data):

	Three Months Ended
	March 31, 2022			March 31, 2021			$ Change			% Change
Revenue
Interest and related income	$	90,694		$	105,803		$	(15,109	)		-14	%
Less: interest and related expense		39,580			46,287			(6,707	)		-14	%
Net interest income		51,114			59,516			(8,402	)		-14	%
Revenue from real estate owned		6,813			1,051			5,762			548	%
Total revenue		57,927			60,567			(2,640	)		-4	%
Expenses
Management fees - affiliate		9,807			9,626			181			2	%
Equity compensation		-			(1,642	)		1,642			-100	%
General and administrative expenses		4,343			1,189			3,154			265	%
Operating expenses from real estate owned		7,780			1,700			6,080			358	%
Interest expense from debt related to real estate owned		2,584			1,475			1,109			75	%
Depreciation on real estate owned		1,940			1,293			647			50	%
Total expenses		26,454			13,641			12,813			94	%
Gain on foreclosure of real estate owned		-			1,430			(1,430	)		-100	%
Other Income		-			5,855			(5,855	)		-100	%
(Provision) reversal of current expected credit loss reserve		(2,102	)		185			(2,287	)		-1236	%
Income before income taxes		29,371			54,396			(25,025	)		-46	%
Income tax benefit		-			4,179			(4,179	)		-100	%
Net income	$	29,371		$	58,575		$	(29,204	)		-50	%
Net loss attributable to non-controlling interests	$	(41	)	$	(37	)	$	(4	)		11	%
Net income attributable to preferred stock	$	-		$	4		$	(4	)		-100	%
Net income attributable to common stock	$	29,412		$	58,608		$	(29,196	)		-50	%
Net income per share of common stock - basic and diluted	$	0.21		$	0.44		$	(0.23	)		-52	%

Comparison of the three months ended March 31, 2022 and March 31, 2021

Revenue

Revenue decreased $2.6 million during the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The decrease is primarily due to a decrease in net interest income of $8.4 million for the comparative period, which was driven by (i) a decrease in interest income earned of $15.1 million, primarily as a result of the replacement of higher yielding assets with floors with lower yielding assets, offset in part by (ii) a decrease in interest expense of $6.7 million, as a result of the repayment of higher cost financings in connection with the repayment of our assets and the repricing of our secured term loan in December 2021, and (iii) an increase in revenue from real estate owned of $5.8 million primarily due to improved operations at the hotel portfolio for the comparative period, as well as owning the hotel portfolio for a full period, as compared to a partial period in 2021, as we acquired legal title to the portfolio on February 8, 2021.

Expenses

Expenses are primarily comprised of base management fees payable to our Manager, equity compensation expense, general and administrative expenses, interest expense from debt related to real estate owned, operating expenses from real estate owned, and depreciation on real estate owned. Expenses increased by $12.8 million, during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, primarily due to:

(i) equity compensation expense incurred during the three months ended March 31, 2021, is related to the forfeiture of performance-based RSUs and to the estimated fair value of performance-based RSU awards granted in 2019 based on estimated vesting percentage over the three-year vesting period ending December 31, 2021. There was no equity compensation expense incurred during the three months ended March 31, 2022.

(ii) an increase in general and administrative expenses of $3.2 million during the comparative period, due primarily to an increase in general operating expenses incurred in connection with being a public company as of November 3, 2021.

(iii) an increase in operating expenses from real estate owned of $6.1 million during the comparative period, due to increased variable operating expenses in connection with higher occupancy levels at the hotel portfolio during the comparative period, as well as owning the hotel portfolio for a full period, as compared to a partial period in 2021, as we acquired legal title to the portfolio on February 8, 2021.

(iv) an increase in interest expense from real estate owned of $1.1 million during the comparative period, due to the $300.0 million securitized senior mortgage assumed by us in connection with our foreclosure of the hotel portfolio on February 8, 2021.

Gain on foreclosure of real estate owned

During the three months ended March 31, 2021, we recognized a gain of $1.4 million on the foreclosure of a portfolio of seven limited-service hotel properties located in New York, New York. This gain is based upon the estimated fair value of the hotel properties of $414.0 million as determined by a third-party appraisal, and our assumption of working capital and debt related to real estate owned, relative to our basis in the investment at the time of foreclosure. The fair value was determined using discount rates ranging from 8.50% to 8.75% and a terminal capitalization rate of 6.00% on projected net operating profits on the hotels.

Other income

During the three months ended March 31, 2021, 292,731 fully-vested time-based RSU awards were forfeited prior to their delivery pursuant to the terms of the RSU award documents, resulting in us reversing previously recognized compensation expense associated with these RSU awards.

(Provision) reversal of current expected credit loss reserve

During the three months ended March 31, 2022, we recorded a provision of current expected credit loss reserves of $2.3 million greater than during the three months ended March 31, 2021, which is primarily attributable to the increase in size of the portfolio and unfunded loan commitments as of March 31, 2022, as compared to the portfolio as of March 31, 2021.

Income tax benefit

Income tax benefit was $4.2 million lower during the comparative period. The change in the comparative periods is due to the recognition of a full valuation allowance of our deferred tax asset for the three months ended March 31, 2022.

Liquidity and Capital Resources

Capitalization

We have capitalized our business to date primarily through the issuance of shares of our common stock and borrowings under our secured financings and our Secured Term Loan. As of March 31, 2022, we had 139,653,799 shares of our common stock outstanding, representing $2.5 billion of stockholders’ equity and we also had $5.4 billion of outstanding borrowings under our secured financings, our Secured Term Loan, and our debt related to real estate owned. As of March 31, 2022, our secured financings consisted of six secured revolving repurchase facilities for loan investments with capacity of $5.0 billion and an outstanding balance of $4.0 billion, and five asset-specific financings for loan investments with an outstanding balance of $314.4 million. As of March 31, 2022, our Secured Term Loan had an outstanding balance of $760.8 million and our debt related to real estate owned had an outstanding balance of $290.0 million.

Net Debt-to-Equity Ratio and Total Leverage Ratio

Net Debt-to-Equity Ratio and Total Leverage Ratio are non-GAAP measures that we use to evaluate our financial leverage, which in the case of our Total Leverage Ratio, makes certain adjustments that we believe provide a more conservative measure of our financial condition.

Net Debt-to-Equity Ratio is calculated as the ratio of asset specific debt (repurchase agreements, loan participations sold, net, notes payable, net, and debt related to real estate owned, net) and secured term loan, less cash and cash equivalents to total equity.

Total Leverage Ratio is similar to Net Debt-to-Equity Ratio, however it includes non-consolidated senior interests sold and non-consolidated senior interests held by third parties. Non-consolidated senior interests sold and non-consolidated senior interests held by

third parties, as applicable, are secured by the same collateral as our loan and are structurally senior in repayment priority relative to our loan. We believe the inclusion of non-consolidated senior interests sold and non-consolidated senior interests held by third parties provides a meaningful measure of our financial leverage.

The following table presents our Net Debt-to-Equity and Total Leverage Ratios as of March 31, 2022 and December 31, 2021 ($ in thousands):

	March 31, 2022			December 31, 2021
Asset specific debt	$	4,621,141		$	3,995,061
Secured term loan, net		738,928			739,762
Total debt		5,360,069			4,734,823
Less: cash and cash equivalents		(444,001	)		(310,194	)
Net Debt	$	4,916,068		$	4,424,629
Total Stockholders’ Equity	$	2,579,296		$	2,604,267
Net Debt-to-Equity Ratio	1.9x			1.7x
Non-consolidated senior loans		1,036,757			1,063,939
Total Leverage	$	5,952,825		$	5,488,568
Total Leverage Ratio	2.3x			2.1x

Sources of Liquidity

Our primary sources of liquidity include cash and cash equivalents, interest income from our loans, loan repayments, available borrowings under our secured revolving repurchase facilities and identified borrowing capacity related to our notes payable and loan participations sold, borrowings under our Secured Term Loan, and proceeds from the issuance of our common stock. The following table sets forth, as of March 31, 2022 and December 31, 2021, our sources of available liquidity ($ in thousands):

	March 31, 2022		December 31, 2021
Cash and cash equivalents	$	444,001	$	310,194
Secured financing arrangements⁽¹⁾		564,649		584,311
Loan principal payments held by servicer⁽²⁾		8,350		67,100
Total sources of liquidity	$	1,017,000	$	961,605

(1)

The drawing of such amounts typically remains subject to the satisfaction of conditions set forth in the relevant financing agreement, which may be subject to pledging additional collateral that is subject to approval by our financing counterparty.

(2)

Represents loan principal payments held in lockboxes or by our third-party loan servicer as of the balance sheet date which were remitted to us during the subsequent remittance cycle, net of the related secured debt balance.

Liquidity Needs

In addition to our ongoing loan origination and acquisition activity, our primary liquidity needs include future fundings to our borrowers on our unfunded loan commitments, interest and principal payments on outstanding borrowings under our financings, operating expenses and dividend payments to our stockholders necessary to satisfy REIT dividend requirements. Additionally, our financing, repurchase and term loan agreements require us to maintain minimum levels of liquidity in order to satisfy certain financial covenants. We currently maintain, and seek to maintain, excess cash and liquidity to comply with minimum liquidity requirements under our financings, and if necessary, to reduce borrowings under our secured financings, including our repurchase agreements.

As of March 31, 2022, we had aggregate unfunded loan commitments of $1.5 billion which comprise funding for capital expenditures and construction, leasing costs, and interest and carry costs, and their funding will vary depending on the progress of capital projects, leasing, and cash flows at the properties securing our loans. Therefore, the exact timing and amounts of such future loan fundings are uncertain and will depend on the current and future performance of the underlying collateral assets. We expect to fund our loan commitments over the remaining maximum term of the related loans, which have a weighted-average future funding period of 2.6 years.

Contractual Obligations and Commitments

Our contractual obligations and commitments as of March 31, 2022 were as follows ($ in thousands):

	Payment Timing
	Total Obligations		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years
Unfunded loan commitments⁽¹⁾	$	1,481,130	$	68,196	$	1,147,947	$	264,987	$	—
Secured financings, term loan agreement, and debt related to real estate owned— principal⁽²⁾		5,385,131		1,300,356		2,714,487		1,370,288		-
Secured financings, term loan agreement, and debt related to real estate owned—interest⁽³⁾		391,008		48,104		180,040		162,864		-
Total	$	7,257,269	$	1,416,656	$	4,042,474	$	1,798,139	$	—

(1)	The allocation of our unfunded loan commitments is based on the earlier of the commitment expiration date and the initial loan maturity date, however we may be obligated to fund these commitments earlier than such date.

(2)	The allocation of our secured financings and term loan agreement is based on the current maturity date of each individual borrowing under the respective agreement and excludes the impact of any extension options.

(3)

Amounts include the related future interest payment obligations, which are estimated by assuming the amounts outstanding under our secured financing agreements and one-month LIBOR or Term SOFR in effect as of March 31, 2022 will remain constant into the future. This is only an estimate, as actual amounts borrowed and rates will vary over time. Our floating rate loans and related liabilities are indexed to one-month LIBOR or Term SOFR. Totals exclude non-consolidated senior interests.

We are required to pay our Manager, in cash, a base management fee and incentive fees (to the extent earned) on a quarterly basis in arrears. The tables above do not include the amounts payable to our Manager under the Management Agreement as they are not fixed and determinable.

As a REIT, we generally must distribute substantially all of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to stockholders in the form of dividends to comply with certain of the provisions of the Internal Revenue Code. To the extent that we satisfy this distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal income tax on our undistributed REIT taxable income. Our REIT taxable income does not necessarily equal our net income as calculated in accordance with GAAP or our Net Distributable Earnings as described previously.

Loan Maturities

The following table summarizes the future scheduled repayments of principal based on initial maturity dates for the loan portfolio as of March 31, 2022 ($ in thousands):

Year	Unpaid Principal Balance ⁽¹⁾		Loan Commitment
2022	$	1,718,356	$	1,784,100
2023		1,319,866		1,522,442
2024		2,364,819		2,932,348
2025		1,108,848		1,528,897
2026		218,029		443,261
Thereafter		125,000		125,000
Total	$	6,854,918	$	8,336,048

(1)	Excludes the principal balance for loans which are in maturity default as of March 31, 2022.

Cash Flows

The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash for the three months ended March 31, 2022 and 2021 ($ in thousands):

	Three Months Ended March 31, 2022			Three Months Ended March 31, 2021
Net cash flows provided by operating activities	$	22,620		$	32,646
Net cash flows used in investing activities		(456,588	)		(90,701	)
Net cash flows (used in) provided by financing activities		566,972			(4,165	)
Net increase (decrease) in cash and cash equivalents and restricted cash	$	133,004		$	(62,220	)

We experienced a net increase in cash and cash equivalents and restricted cash of $133.0 million during the three months ended March 31, 2022, compared to a net decrease of $62.2 million during the three months ended March 31, 2021.

During the three months ended March 31, 2022, we made initial fundings of $684.8 million of new loans and $140.6 million of advances on existing loans and made repayments on financings arrangements of $371.0 million. We received $1.0 billion of proceeds from borrowings under our financing arrangements, and $194.4 million from the loan repayments.

Income Taxes

We have elected and believe we have qualified to be taxed as a REIT for U.S. federal income tax purposes, commencing with our initial taxable year ended December 31, 2015. We generally must distribute annually at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gain, to maintain our REIT status. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal income tax on our undistributed REIT taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay (or are treated as paying) out to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. Our real estate owned is held in a TRS. Our TRS is not consolidated for U.S. federal income tax purposes and is taxed separately as a corporation. For financial reporting purposes, a provision or benefit for current and deferred taxes is established for the portion of earnings or expense recognized by us with respect to our TRS.

Our qualification as a REIT also depends on our ability to meet various other requirements imposed by the Internal Revenue Code, which relate to organizational structure, diversity of stock ownership and certain restrictions with regard to the nature of our assets and the sources of our income. Even if we qualify as a REIT, we may be subject to certain U.S. federal income and excise taxes and state and local taxes on our income and assets. If we fail to maintain our qualification as a REIT for any taxable year, we may be subject to material penalties as well as federal, state and local income tax on our REIT taxable income at regular corporate rates and we would not be able to qualify as a REIT for the subsequent four full taxable years. As of March 31, 2022, we were in compliance with all REIT requirements.

Refer to Note 12 to our consolidated financial statements for additional information about our income taxes.

Off-Balance Sheet Arrangements

As of March 31, 2022, we had no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires our Manager to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. We believe that all of the decisions and estimates are reasonable, based upon the information available to us. We believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.

Refer to Note 2 to our consolidated financial statements for a description of our significant accounting policies.

Current Expected Credit Losses (“CECL”)

The CECL reserve required under ASU 2016-13 “Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments (Topic 326)” (“ASU 2016-13”), reflects our current estimate of potential credit losses related to our loan portfolio. The initial CECL allowance recorded on January 1, 2021 is reflected as a direct charge to retained earnings on our consolidated statements of changes in redeemable common stock and stockholders’ equity.

For our loan portfolio, we, with assistance from a third-party service provider, performed a quantitative assessment of the impact of CECL using the Expected Loss, or EL, approach and the Lifetime Loss Rate, or LLR, method depending on the allocated bucket. For transitional loans, steady & improving loans and stabilized loans, we have applied an EL approach because of the consistency in assessing credit risks and estimating expected credit losses. Due to the nature of construction loans, where repayment does not depend on the operating performance of the underlying property, we have applied a LLR approach to estimate the CECL impacts. In certain circumstances we may determine that a loan is no longer suited for the model-based approach due to its unique risk characteristics, or because the repayment of the loan’s principal is collateral-dependent. We may instead elect to employ different methods to estimate loan losses that also conform to ASU 2016-13 and related guidance. If the recovery of that loan’s principal balance is entirely collateral-dependent, we may assess such an asset individually and elect to apply a practical expedient in accordance with ASU 2016-13. Our allowance for loan losses reflects our estimation of the current and future economic conditions that impact the performance of the commercial real estate assets securing our loans. These estimations include unemployment rates, interest rates, price indices for commercial property, and other macroeconomic factors that may influence the likelihood and magnitude of potential credit losses for our loans during their anticipated term. We license certain macroeconomic financial forecasts to inform our view of the potential future impact that broader economic conditions may have on its loan portfolio’s performance. The forecasts are embedded in the licensed model that we use to estimate our allowance for loan losses as discussed below. Selection of these economic forecasts require significant judgment about future events that, while based on the information available to us as of the respective balance sheet dates, are ultimately unknowable with certainty, and the actual economic conditions impacting our loan portfolio could vary significantly from the estimates we made for the periods presented. Additionally, we assess the obligation to extend credit through our unfunded loan commitments over each loan’s contractual period, which is considered in the estimation of the allowance for loan losses.

Real estate owned, net

We may assume legal title or physical possession of the underlying collateral of a defaulted loan through foreclosure. Foreclosed real estate owned, net is initially recorded at estimated fair value and is presented net of accumulated depreciation and impairment charges and the assets and liabilities are presented separately when legal title or physical possession is assumed. If the fair value of the real estate is lower than the carrying value of the loan, the difference, along with any previously recorded Specific CECL Allowances, are recorded as a realized loss on investments in the consolidated statement of operations. Conversely, if the fair value of the real estate is greater than the carrying value of the loan, the difference, along with any previously recorded Specific CECL Allowances, are recorded as a realized gain on investments in the consolidated statement of operations.

Acquisition of real estate is accounted for using the acquisition method under Accounting Standards Codification ("ASC") Topic 805, "Business Combinations." We recognize and measure identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree, if applicable, based on their relative fair values. If applicable, we recognize and measure intangible assets and expense acquisition-related costs in the periods in which the costs are incurred and the services are received.

Real estate assets that are acquired for investment are assumed at their estimated fair value at acquisition and presented net of accumulated depreciation and impairment charges, if any. Upon acquisition, we allocate the value of acquired real estate assets based on the fair value of the acquired land, building, furniture, fixtures and equipment, and intangible assets, if applicable. Real estate assets are depreciated using the straight-line method over estimated useful lives of up to 40 years for buildings and up to 8 years for furniture, fixtures and equipment. Renovations and/or replacements that improve or extend the life of the real estate asset are capitalized and depreciated over their estimated useful lives. The cost of ordinary repairs and maintenance are expensed as incurred.

Real estate assets are evaluated for indicators of impairment on a quarterly basis. Factors that we may consider in its impairment analysis include, among others: (1) significant underperformance relative to historical or anticipated operating results; (2) significant negative industry or economic trends; (3) costs necessary to extend the life or improve the real estate asset; (4) significant increase in competition; and (5) ability to hold and dispose of the real estate asset in the ordinary course of business. A real estate asset is considered impaired when the sum of estimated future undiscounted cash flows expected to be generated by the real estate asset over the estimated remaining holding period is less than the carrying amount of such real estate asset. Cash flows include operating cash flows and anticipated capital proceeds generated by the real estate asset. An impairment charge is recorded equal to the excess of the carrying value of the real estate asset over the fair value.

When determining the fair value of a real estate asset, we make certain assumptions including, but not limited to, consideration of projected operating cash flows, comparable selling prices and projected cash flows from the eventual disposition of the real estate asset based upon our estimate of a capitalization rate and discount rate.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

Generally, our business model works in a manner such that rising interest rates will generally increase our net interest income, while declining interest rates will generally decrease our net interest income. Recent and sharp increases in inflation within the United States have caused a decisive shift towards tighter monetary policy and increased current and forward domestic interest rates. In this rising rate environment, to the extent that our loans receivable have been financed with secured financings that do not have LIBOR or SOFR floors, our net income will likely be adversely impacted, until such time as LIBOR or SOFR exceeds the floors on our loans. As of March 31, 2022, all of our floating rate loans earned interest tied to one-month LIBOR or Term SOFR and were financed with floating rate liabilities that require interest payments on the unpaid principal balance tied to one-month LIBOR or Term SOFR. As of March 31, 2022, 87.0% of our floating rate loans referenced one-month LIBOR or Term SOFR floors, while 41.2% of our floating financings referenced one-month LIBOR or Term SOFR floors. The weighted average one-month LIBOR or Term SOFR floor of our floating rate loans based on unpaid principal balance was 1.0%. The weighted average one-month LIBOR or Term SOFR floor of our financings based on unpaid principal balance was 0.3%. In addition, given that our lending programs are primarily floating rate, we typically require our borrowers to acquire interest rate caps or provide a debt service guarantee from a creditworthy guarantor to mitigate the risk of rising interest rates adversely affecting our borrowers’ ability to make debt service payments when due.

The following table illustrates the impact on our interest income and interest expense for the twelve-month period following March 31, 2022, assuming an immediate decrease in LIBOR or SOFR to 0.00% or an increase of 50, 100 and 150 basis points in the applicable interest rate benchmark (based on one-month LIBOR of 0.45% and Term SOFR of 0.30% as of March 31, 2022) ($ in thousands):

Assets (Liabilities)

Subject to Interest Rate Sensitivity⁽¹⁾

Change in

LIBOR/SOFR

at 0.00%

50 Basis Points

Increase

100 Basis Points

Increase

150 Basis Points

Increase

1,648,209

Net interest income

2,047

(5,484

)

(11,390

)

(11,648

)

Net interest income per share

0.01

(0.04

)

(0.08

)

(0.08

)

(1)	Excludes fixed rate loans.

LIBOR as our Reference Rate

We are actively assessing and monitoring the risks associated with the planned or potential discontinuation or unavailability of certain reference rates, including LIBOR, and the transition to alternative reference rates. Our assessment includes communicating with industry working groups and trade associations to develop strategies for transitions from current benchmarks to alternative reference rates. We intend to update our operational processes and models to cohesively transition to an alternative reference rate. In addition, we continue to analyze and evaluate our existing loan agreements and financings to determine the impact of the discontinuation of LIBOR and to address consequential changes to those legacy contracts. LIBOR and certain other floating rate benchmark indices to which our floating rate loans and other loan agreements are tied are the subject of recent national, international and regulatory guidance and proposals for reform. As of December 31, 2021, the ICE Benchmark Association, or IBA, ceased publication of all non-USD LIBOR settings and previously announced its intention to cease publication of remaining U.S. dollar LIBOR settings immediately after June 30, 2023. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, has identified the Secured Overnight Financing Rate, or SOFR, a new index calculated using short-term repurchase agreements backed by Treasury securities, as its preferred alternative rate for USD LIBOR. Although SOFR is the ARRC’s recommended replacement rate, at this time, it is not possible to predict how markets will respond to SOFR, or other alternative reference rates as the transition away from USD LIBOR continues.

Credit Risk

Our loans and other investments are also subject to credit risk, including the risk of default. By its very nature, our investment strategy emphasizes prudent risk management and capital preservation by primarily originating senior loans utilizing underwriting techniques resulting in relatively conservative loan-to-value ratio levels to insulate us from loan losses absent a significant diminution in collateral value. In addition, we seek to manage credit risk through performance of extensive due diligence on our collateral, borrower and guarantors, as applicable, that evaluates, among other things, title, environmental and physical condition of collateral, comparable sales and leasing analysis of similar collateral, the quality of and alternative uses for the real estate collateral being underwritten, submarket trends, our borrower’s track record and the reasonableness of the borrower’s projections prior to originating a loan. Subsequent to loan origination, we also manage credit risk through proactive investment monitoring and, whenever possible, limiting

our own leverage to partial recourse or non-recourse, match-funding financing. Notwithstanding these efforts, there can be no assurance that we will be able to avoid losses in all circumstances. The performance and value of our loans and investments depend upon the borrower’s ability to improve and operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, our Sponsor’s asset management team monitors the performance of our loan portfolio and our Sponsor’s asset management and origination teams maintain regular contact with borrowers, co-lenders and local market experts to monitor the performance of the underlying loan collateral, anticipate borrower, property and market issues and, to the extent necessary or appropriate, enforce our rights as the lender.

In addition, we are exposed to the risks generally associated with the CRE market, including variances in occupancy rates, capitalization rates, absorption rates and other macroeconomic factors beyond our control. We seek to manage these risks through our underwriting, loan structuring, financing structuring and asset management processes.

In the event that we are forced to foreclose, our broader Sponsor platform includes professionals experienced in CRE development, ownership, property management and asset management which enables us to execute the workout of a troubled loan and protect investors’ capital in a way that we believe many non-traditional lenders cannot.

Prepayment Risk

Prepayment risk is the risk that principal will be repaid prior to initial maturity, which may require us to identify new investment opportunities to deploy such capital at a similar rate of return in order to avoid an overall reduction in our net interest income. We may structure our loans with spread maintenance, minimum multiples and make-whole provisions to protect against early repayment. Typically, investments are structured with the equivalent of 12 to 24 months’ spread maintenance or a minimum level of income that an investment must return. In general, an increase in prepayment rates accelerates the accretion of deferred income, including origination fees and exit fees, which increases interest income earned on the asset during the period of repayment. Conversely, if capital that is repaid is not subsequently redeployed into investment opportunities generating a similar return, future periods may experience reduced net interest income.

Extension Risk

Loans are expected to be repaid at maturity, unless the borrower repays early or meets contractual conditions to qualify for a maturity extension. We expect that the economic and market disruptions caused by the COVID-19 pandemic may lead to a decrease in prepayment rates and an increase in the number of our borrowers who exercise extension options or seek extensions outside of their existing agreements if certain conditions to exercising such extension options have not been achieved. This could have a negative impact on our results of operations and cash flows. However, in the case of a loan maturity extension, we are often entitled to extension fees, principal paydowns and/or spread increases. Our Manager computes the projected weighted average life of our assets based on the initial and fully extended scheduled maturity dates of loans in our portfolio.

Capital Markets Risks

We are exposed to risks related to the equity capital markets and our related ability to raise capital through the issuance of our common stock or other equity or equity-related instruments. We are also exposed to risks related to the debt capital markets and our related ability to finance our business through borrowings under secured and unsecured financings, secured revolving repurchase facilities or other debt instruments or facilities. As a REIT, we are required to distribute a significant portion of our REIT taxable income annually, which constrains our ability to retain and accumulate operating earnings and therefore requires us to utilize debt or equity capital to finance the growth of our business. We seek to mitigate these risks by monitoring the debt and equity capital markets, the maturity profile of our in-place loan portfolio related to secured financings, and future loan funding requirements to inform our decisions on the amount, timing and terms of capital we raise.

Each of the secured revolving repurchase facilities involves “margin maintenance” provisions, which are designed to allow the repurchase lender to maintain a certain margin of credit enhancement against the loan assets which serve as collateral. The lender’s margin amount is typically based on a percentage of the market value of the loan asset and/or mortgaged property collateral. However, certain of our repurchase facilities permit valuation adjustments solely as a result of collateral-specific credit events, while other repurchase facilities contain provisions also allowing our lenders to make margin calls or require additional collateral upon the occurrence of adverse changes in the markets or interest rate or spread fluctuations, subject to minimum thresholds, among other factors. As of March 31, 2022, we have not received any margin calls under any of our repurchase facilities.

Counterparty Risk

The nature of our business requires us to hold cash and cash equivalents and obtain financing from various financial institutions. This exposes us to the risk that these financial institutions may not fulfill their obligations to us under these various contractual arrangements. We mitigate this exposure by depositing our cash and cash equivalents and entering into financing agreements with high credit-quality institutions.

The nature of our loans and other investments also exposes us to the risk that our loan counterparties are unable to execute their business plans, and as a result do not make required interest and principal payments on scheduled due dates, as well as the impact of our borrowers’ tenants not making scheduled rent payments when contractually due. We seek to manage this risk through a comprehensive credit analysis prior to making an investment and rigorous monitoring of our borrowers’ progress in executing their business plans as well as market conditions that may affect the underlying collateral, through our asset management process. Each loan is structured with various lender protections that are designed to prevent bad acts / fraudulent behavior by borrowers, as well as require borrowers to adhere to their stated business plans while the loan is outstanding. Such protections include, without limitation: cash management accounts, “bad boy” carveout guarantees, completion guarantees, guarantor minimum net worth and liquidity requirements, approval rights over major decisions, and performance tests throughout the loan term.

Our relationships with our repurchase agreement providers subject us to counterparty risks in the event a counterparty is unable to fund its undrawn credit capacity, particularly in the event of a counterparty’s bankruptcy. We seek to manage this risk by diversifying our financing sources across counterparties and financing types, and monitoring our counterparties’ financial condition and liquidity.

Currency Risk

To date, we have made no loans and hold no assets or liabilities denominated or payable in foreign currencies, although we may do so in the future.

We may in the future hold assets denominated or payable in foreign currencies, which would expose us to foreign currency risk. As a result, a change in foreign currency exchange rates may have a positive or an adverse impact on the valuation of our assets, as well as our income and dividends. Any such changes in foreign currency exchange rates may impact the measurement of such assets or income for the purposes of our REIT tests and may affect the amounts available for payment of dividends to our stockholders.

Although not required, if applicable, we may hedge any currency exposures in a prudent manner. However, such currency hedging strategies may not eliminate all of our currency risk due to, among other things, uncertainties in the timing and/or amount of payments received on the related investments and/or unequal, inaccurate or unavailability of hedges to perfectly offset changes in future exchange rates. Additionally, we may be required under certain circumstances to collateralize our currency hedges for the benefit of the hedge counterparty, which could adversely affect our liquidity.

Real Estate Risk

The market values of loans secured directly or indirectly by CRE assets are subject to volatility and may be adversely affected by a number of factors, including, but not limited to, the impacts of the COVID-19 pandemic discussed above, national, regional, local and foreign economic conditions (which may be adversely affected by industry slowdowns and other factors); regional or local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes and regulatory requirements. In addition, decreases in property values reduce the value of the loan collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses. We seek to manage these risks through our underwriting, loan structuring, financing structuring and asset management processes.

Financing Risk

We finance our business through a variety of means, including the syndication of non-consolidated senior interests, notes payable, borrowings under our repurchase facilities, the syndication of pari passu portions of our loans, the syndication of senior participations in our originated senior loans, and our secured term loan. Over time, as market conditions change, we may use other forms of financing in addition to these methods of financing. Weakness or volatility in the debt capital markets, the CRE and mortgage markets, changes in regulatory requirements, and the economy generally, in particular as a result of the current COVID-19 pandemic, could adversely affect one or more of our lenders or potential lenders and could cause one or more of our lenders or potential lenders to be unwilling or unable to provide us with financing or to increase the costs of that financing or otherwise offer unattractive terms for that financing. In addition, we may seek to finance our business through the issuance of our common stock or other equity or equity-related instruments, though there is no assurance that such financing will be available on a timely basis with attractive terms, or at all.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act of 1934) during the three months ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As of March 31, 2022 an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2022.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of March 31, 2022, we were not involved in any material legal proceedings.

Item 1A. Risk Factors.

For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in the Prospectus. There have been no material changes to our principal risks that we believe are material to our business, results of operations, and financial condition from the risk factors disclosed in our Annual Report file on Form 10-K, which is accessible on the SEC’s website at www.sec.gov.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibit Number		Description

3.1		Articles of Amendment and Restatement of Claros Mortgage Trust, Inc. (incorporated by referenced to Exhibit 3.1 to the Current Report on Form 8-LK, dated November 5, 2021, filed by the Company, Commission File No. 001-40993)

3.2		Amended and Restated Bylaws of Claros Mortgage Trust, Inc. (incorporated by referenced to Exhibit 3.2 to the Current Report on Form 8-LK, dated November 5, 2021, filed by the Company, Commission File No. 001-40993)

4.1		Specimen Common Stock Certificate of Claros Mortgage Trust, Inc. (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

4.2		Description of Securities

10.1		Amended and Restated Management Agreement of Claros Mortgage Trust, Inc. between Claros Mortgage Trust, Inc. and Claros REIT Management LP, dated July 8, 2016 (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.2		Amendment No. 1 to Amended and Restated Management Agreement of Claros Mortgage Trust, Inc. between Claros Mortgage Trust, Inc. and Claros REIT Management LP (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.3		Claros Mortgage Trust, Inc. 2016 Incentive Award Plan (incorporated by reference to Exhibit 10.3 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.4		Form of Performance-Based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.5		Form of Time-Based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.6*		Form of Time-Based Restricted Stock Unit Award Agreement (Non-Deferral Form)

10.7*		Form of Time-Based Restricted Stock Unit Award Agreement (Deferral Form)

10.8		Claros Mortgage Trust, Inc. Non-Employee Director Compensation Program (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.9		Form of Indemnification Agreement with directors and certain officers (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.10		Registration Rights Agreement between Claros Mortgage Trust, Inc. and Claros REIT Holdings LP, dated July 8, 2016 (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.11		Amended and Restated Registration Rights Agreement between Claros Mortgage Trust, Inc. and CMTG Investor, L.P., dated July 8, 2016 (incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.12		Registration Rights Agreement between Claros Mortgage Trust, Inc. and Fuyou Investment Management Limited, dated July 8, 2016 (incorporated by reference to Exhibit 10.10 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.13		Registration Rights Agreement between Claros Mortgage Trust, Inc. and Delta Master Trust, dated January 17, 2017 (incorporated by reference to Exhibit 10.11 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.14		Registration Rights Agreement between Claros Mortgage Trust, Inc. and Beaverhead Capital, LLC, dated May 15, 2018 (incorporated by reference to Exhibit 11.12 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.15		Master Repurchase and Securities Contract Agreement, by and between Morgan Stanley Bank, N.A. and CMTG MS Finance LLC, dated as of January 26, 2017 (incorporated by reference to Exhibit 10.13 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.16		First Amendment to Master Repurchase and Securities Contract Agreement, by and between Morgan Stanley Bank, N.A. and CMTG MS Finance LLC, dated as of June 26, 2018 (incorporated by reference to Exhibit 10.14 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.17		Second Amendment to Master Repurchase and Securities Contract Agreement, by and between Morgan Stanley Bank, N.A. and CMTG MS Finance LLC, dated as of March 13, 2019 (incorporated by reference to Exhibit 10.15 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.18		Third Amendment to Master Repurchase and Securities Contract Agreement, by and between Morgan Stanley Bank, N.A. and CMTG MS Finance LLC, dated as of November 1, 2019 (incorporated by reference to Exhibit 10.16 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.19		Fourth Amendment to Master Repurchase and Securities Contract Agreement, by and between Morgan Stanley Bank, N.A. and CMTG MS Finance LLC, dated as of February 3, 2020 (incorporated by reference to Exhibit 10.17 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.20		Fifth Amendment to Master Repurchase and Securities Contract Agreement, by and between Morgan Stanley Bank, N.A. and CMTG MS Finance LLC, dated as of February 21, 2020 (incorporated by reference to Exhibit 10.18 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.21		Sixth Amendment to Master Repurchase and Securities Contract Agreement, by and between Morgan Stanley Bank, N.A. and CMTG MS Finance LLC, dated as of March 17, 2020 (incorporated by reference to Exhibit 10.19 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.22		Seventh Amendment to Master Repurchase and Securities Contract Agreement, by and between Morgan Stanley Bank, N.A. and CMTG MS Finance LLC, dated as of April 10, 2020 (incorporated by reference to Exhibit 10.20 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.23		Eighth Amendment to Master Repurchase and Securities Contract Agreement, by and between Morgan Stanley Bank, N.A. and CMTG MS Finance LLC, dated as of January 29, 2021 (incorporated by reference to Exhibit 10.21 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.24		Ninth Amendment to Master Repurchase and Securities Contract Agreement, by and between Morgan Stanley Bank, N.A. and CMTG MS Finance LLC, dated as of September 9, 2021 (incorporated by reference to Exhibit 10.22 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.25		Guaranty made by Claros Mortgage Trust, Inc. in favor of Morgan Stanley Bank, N. A., dated as of January 26, 2017 (incorporated by reference to Exhibit 10.23 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.26		Master Repurchase and Securities Contract Agreement by and between CMTG GS Finance LLC and Goldman Sachs Bank USA, dated as of May 31, 2017 (incorporated by reference to Exhibit 10.24 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.27		First Amendment to Master Repurchase and Securities Contract Agreement by and between Goldman Sachs Bank USA and CMTG GS Finance LLC, dated as of May 29, 2018 (incorporated by reference to Exhibit 10.25 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.28		Second Amendment to Master Repurchase and Securities Contract Agreement by and between Goldman Sachs Bank USA and CMTG GS Finance LLC, dated as of August 31, 2018 (incorporated by reference to Exhibit 10.26 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.29		Third Amendment to Master Repurchase and Securities Contract Agreement and First Amendment to Guarantee Agreement by and among Goldman Sachs Bank USA, CMTG GS Finance LLC and Claros Mortgage Trust, Inc., dated as of March 12, 2019 (incorporated by reference to Exhibit 10.27 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.30		Fourth Amendment to Master Repurchase and Securities Contract Agreement by and between Goldman Sachs Bank USA and CMTG GS Finance LLC, dated as of May 1, 2019 (incorporated by reference to Exhibit 10.28 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.31		Fifth Amendment to Master Repurchase and Securities Contract Agreement by and between Goldman Sachs Bank USA and CMTG GS Finance LLC, dated as of October 30, 2019 (incorporated by reference to Exhibit 10.29 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.32		Sixth Amendment to Master Repurchase and Securities Contract Agreement by and between Goldman Sachs Bank USA and CMTG GS Finance LLC, dated as of April 15, 2020 (incorporated by reference to Exhibit 10.30 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)


10.33		Forbearance Agreement and Seventh Amendment to Master Repurchase and Securities Contract Agreement, by and among CMTG GS Finance LLC, Claros Mortgage Trust, Inc. and Goldman Sachs Bank USA, dated as of June 11, 2020 (incorporated by reference to Exhibit 10.31 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.34		Eighth Amendment to Master Repurchase and Securities Contract Agreement, by and among CMTG GS Finance LLC, Claros Mortgage Trust, Inc. and Goldman Sachs Bank USA, dated as of May 27, 2021 (incorporated by reference to Exhibit 10.32 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.35		Ninth Amendment to Master Repurchase and Securities Contract Agreement and Second Amendment to Fee Letter, by and among CMTG GS Finance LLC, Claros Mortgage Trust, Inc. and Goldman Sachs Bank USA, dated as of September 2, 2021 (incorporated by reference to Exhibit 10.33 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.36		Guarantee Agreement made by Claros Mortgage Trust, Inc. in favor of Goldman Sachs Banks USA, dated as of May 31, 2017 (incorporated by reference to Exhibit 10.34 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.37		Master Repurchase Agreement by and between Barclays Bank PLC and CMTG BB Finance LLC, dated as of December 21, 2018 (incorporated by reference to Exhibit 10.35 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.38		First Amendment to Master Repurchase Agreement by and between Barclays Bank PLC and CMTG BB Finance LLC, dated as of October 31, 2019 (incorporated by reference to Exhibit 10.36 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.39		Omnibus Amendment by and between CMTG BB Finance LLC and Barclays Bank PLC, dated as of February 27, 2020 (incorporated by reference to Exhibit 10.37 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.40		Second Amendment to Master Repurchase Agreement by and between Barclays Bank PLC and CMTG BB Finance LLC, dated as of August 19, 2021 (incorporated by reference to Exhibit 10.38 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.41		Guaranty made by Claros Mortgage Trust, Inc. in favor of Barclays Bank PLC, dated as of December 21, 2018 (incorporated by reference to Exhibit 10.39 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.42		Master Repurchase Agreement and Securities Contract by and between CMTG SG Finance LLC and Société Générale, New York Branch, dated as of April 30, 2018 (incorporated by reference to Exhibit 10.40 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.43		Guaranty made by Claros Mortgage Trust, Inc. in favor of Société Générale, New York Branch, dated as of April 30, 2018 (incorporated by reference to Exhibit 10.41 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.44		Amended and Restated Uncommitted Master Repurchase Agreement between CMTG JP Finance LLC and JPMorgan Chase Bank, National Association, dated as of May 27, 2021 (incorporated by reference to Exhibit 10.42 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)
10.45		Second Amendment to Amended and Restated Master Repurchase Agreement by and between CMTG JP Finance LLC, and JPMorgan Chase Bank, National Association, dated as of January 14, 2022 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated January 21, 2022, filed by the Company, Commission File No. 001-40993

10.46		Guarantee Agreement made by Claros Mortgage Trust, Inc. in favor of JPMorgan Chase Bank, National Association, dated as of June 29, 2018 (incorporated by reference to Exhibit 10.43 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.47		Master Repurchase Agreement between CMTG DB Finance LLC and Deutsche Bank AG, Cayman Islands Branch, dated as of June 26, 2019 (incorporated by reference to Exhibit 10.44 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.48		Extension Letter to Master Repurchase Agreement between CMTG DB Finance LLC and Deutsche Bank AG, Cayman Islands Branch, dated as of May 7, 2020 (incorporated by reference to Exhibit 10.45 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.49		First Amendment to Master Repurchase Agreement between CMTG DB Finance LLC and Deutsche Bank AG, Cayman Islands Branch, dated as of September 3, 2021 (incorporated by reference to Exhibit 10.46 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.50		Omnibus Assignment, Assumption and Recognition Agreement, among Deutsche Bank AG, Cayman Islands Branch, Deutsche Bank AG, New York Branch, CMTG DB Finance LLC, CMTG DB Finance – Series I, CMTG DB Finance – Series II, Claros Mortgage Trust, Inc. and CMTG DB Finance Holdco LLC, dated as of September 3, 2021 (incorporated by reference to Exhibit 10.47 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.51		Guaranty made by Claros Mortgage Trust, Inc. in favor of Deutsche Bank AG, Cayman Islands Branch, dated as of June 26, 2019 (incorporated by reference to Exhibit 10.48 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.52		Term Loan Credit Agreement between Claros Mortgage Trust, Inc. and JPMorgan Chase Bank, N.A., dated as of August 9, 2019 (incorporated by reference to Exhibit 10.49 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.53		Loan Guaranty by and among the subsidiary guarantors named therein and JPMorgan Chase Bank, N.A., dated as of August 9, 2019 (incorporated by reference to Exhibit 10.50 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.54		Amendment No. 1 to Term Loan Credit Agreement by and among Claros Mortgage Trust, Inc., the subsidiary guarantors named therein, the lenders party thereto and JPMorgan Chase Bank, N.A., dated as of December 1, 2020 (incorporated by reference to Exhibit 10.51 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)
10.55		Amendment No. 3 to Term Loan Credit Agreement by and among the Company, the subsidiary guarantors named therein, the lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent, dated as of December 2, 2021 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated December 3, 2021, filed by the Company, Commission File No. 001-40993
10.56		Pledge and Security Agreement by and among Claros Mortgage Trust, Inc., the subsidiary guarantors named therein and JPMorgan Chase Bank, N.A., dated as of August 9, 2019 (incorporated by reference to Exhibit 10.52 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

10.57		Master Repurchase Agreement between CMTG WF Finance LLC and Wells Fargo Bank, National Association, dated as of September 29, 2021 (incorporated by reference to Exhibit 10.53 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)
10.58		Amendment No. 2 to Master Repurchase and Securities Contract by and between CMTG WF Finance LLC and Wells Fargo Bank, National Association, dated as of March 7, 2022 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, dated March 9, 2022, filed by the Company, Commission File No. 001-40993)

10.59		Guarantee Agreement made by Claros Mortgage Trust, Inc. in favor of Wells Fargo Bank, National Association, dated as of September 29, 2021 (incorporated by reference to Exhibit 10.54 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

21.1		Subsidiaries of Claros Mortgage Trust, Inc. (incorporated by reference to Exhibit 21.1 to the Registration Statement on Form S-11, dated October 28, 2021, filed by the Company, Commission File No. 333-260140)

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


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*		Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Claros Mortgage Trust, Inc.

Date: May 10, 2022	By:	/s/ Richard J. Mack
		Richard J. Mack
		Chief Executive Officer (Principal Executive Officer)

Date: May 10, 2022	By:	/s/ Jai Agarwal
		Jai Agarwal
		Chief Financial Officer (Principal Financial and Accounting Officer)