Claros Mortgage Trust, Inc. Segments Disclosure
Note 15. Segment Reporting
We have determined that we have two operating segments and two reporting segments, with activities related to investing in income-producing loans collateralized by institutional quality commercial real estate and activities related to the operations of our real estate owned assets. Our Chief Operating Decision Maker is J. Michael McGillis, our r, who primarily utilizes Distributable Earnings (Loss) as described below.
Distributable Earnings (Loss) is a non-GAAP measure used to evaluate our performance excluding the effects of certain transactions, non-cash items and GAAP adjustments. Distributable Earnings (Loss) is a non-GAAP measure, which we define as net income (loss) in accordance with GAAP, excluding (i) non-cash stock-based compensation expense, (ii) real estate owned held-for-investment depreciation and amortization, (iii) any unrealized gains or losses from mark-to-market valuation changes (other than permanent impairments) that are included in net income (loss) for the applicable period, (iv) one-time events pursuant to changes in GAAP and (v) certain non-cash items, which in the judgment of our Manager, should not be included in Distributable Earnings (Loss).
The following table provides a calculation of Distributable (Loss) Earnings for our loan and REO portfolios, as well as a reconciliation to net (loss) income, for the years ended December 31, 2025, 2024, and 2023 ($ in thousands):
|
|
Year Ended December 31, 2025 |
|
|
Year Ended December 31, 2024 |
|
|
Year Ended December 31, 2023 |
|
|||||||||||||||||||||||||||
|
|
Loan |
|
|
REO |
|
|
Total |
|
|
Loan |
|
|
REO |
|
|
Total |
|
|
Loan |
|
|
REO |
|
|
Total |
|
|||||||||
Interest and related income |
|
$ |
389,507 |
|
|
$ |
- |
|
|
$ |
389,507 |
|
|
$ |
601,409 |
|
|
$ |
- |
|
|
$ |
601,409 |
|
|
$ |
697,874 |
|
|
$ |
- |
|
|
$ |
697,874 |
|
Interest and related expense |
|
|
(304,990 |
) |
|
|
- |
|
|
|
(304,990 |
) |
|
|
(440,344 |
) |
|
|
- |
|
|
|
(440,344 |
) |
|
|
(470,512 |
) |
|
|
- |
|
|
|
(470,512 |
) |
Revenue from real estate owned |
|
|
- |
|
|
|
103,311 |
|
|
|
103,311 |
|
|
|
- |
|
|
|
87,350 |
|
|
|
87,350 |
|
|
|
- |
|
|
|
79,190 |
|
|
|
79,190 |
|
Amortization of above and below |
|
|
- |
|
|
|
1,204 |
|
|
|
1,204 |
|
|
|
- |
|
|
|
1,416 |
|
|
|
1,416 |
|
|
|
- |
|
|
|
708 |
|
|
|
708 |
|
Management fees - affiliate |
|
|
(32,101 |
) |
|
|
- |
|
|
|
(32,101 |
) |
|
|
(36,230 |
) |
|
|
- |
|
|
|
(36,230 |
) |
|
|
(38,153 |
) |
|
|
- |
|
|
|
(38,153 |
) |
Incentive fees - affiliate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,558 |
) |
|
|
- |
|
|
|
(1,558 |
) |
General and administrative expenses |
|
|
(19,987 |
) |
|
|
- |
|
|
|
(19,987 |
) |
|
|
(15,707 |
) |
|
|
- |
|
|
|
(15,707 |
) |
|
|
(16,605 |
) |
|
|
- |
|
|
|
(16,605 |
) |
Real estate owned: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating expenses |
|
|
- |
|
|
|
(68,475 |
) |
|
|
(68,475 |
) |
|
|
- |
|
|
|
(57,835 |
) |
|
|
(57,835 |
) |
|
|
- |
|
|
|
(49,502 |
) |
|
|
(49,502 |
) |
Interest expense |
|
|
- |
|
|
|
(33,160 |
) |
|
|
(33,160 |
) |
|
|
- |
|
|
|
(26,612 |
) |
|
|
(26,612 |
) |
|
|
- |
|
|
|
(23,630 |
) |
|
|
(23,630 |
) |
Proceeds from interest rate cap |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,297 |
|
|
|
1,297 |
|
|
|
- |
|
|
|
6,101 |
|
|
|
6,101 |
|
(Loss) income from equity method |
|
|
(124 |
) |
|
|
- |
|
|
|
(124 |
) |
|
|
(154 |
) |
|
|
- |
|
|
|
(154 |
) |
|
|
- |
|
|
|
594 |
|
|
|
594 |
|
Gain on sale of loan |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
575 |
|
|
|
- |
|
|
|
575 |
|
(Loss) gain on extinguishment of debt |
|
|
(1,394 |
) |
|
|
- |
|
|
|
(1,394 |
) |
|
|
(4,135 |
) |
|
|
- |
|
|
|
(4,135 |
) |
|
|
2,217 |
|
|
|
- |
|
|
|
2,217 |
|
Principal charge-offs (1) |
|
|
(312,017 |
) |
|
|
- |
|
|
|
(312,017 |
) |
|
|
(98,934 |
) |
|
|
- |
|
|
|
(98,934 |
) |
|
|
(147,361 |
) |
|
|
- |
|
|
|
(147,361 |
) |
Valuation adjustment for real estate |
|
|
- |
|
|
|
12,618 |
|
|
|
12,618 |
|
|
|
- |
|
|
|
(80,461 |
) |
|
|
(80,461 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Loss on partial sales of real estate |
|
|
- |
|
|
|
(1,016 |
) |
|
|
(1,016 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Previously recognized depreciation and |
|
|
- |
|
|
|
(2,340 |
) |
|
|
(2,340 |
) |
|
|
- |
|
|
|
(32,302 |
) |
|
|
(32,302 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Previously recognized gain on foreclosure of real estate owned held-for-sale (3) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,592 |
|
|
|
5,592 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Distributable (Loss) Earnings |
|
$ |
(281,106 |
) |
|
$ |
12,142 |
|
|
$ |
(268,964 |
) |
|
$ |
5,905 |
|
|
$ |
(101,555 |
) |
|
$ |
(95,650 |
) |
|
$ |
26,477 |
|
|
$ |
13,461 |
|
|
$ |
39,938 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Reconciliation to net (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Principal charge-offs (1) |
|
|
|
312,017 |
|
|
|
|
|
|
|
|
|
98,934 |
|
|
|
|
|
|
|
|
|
147,361 |
|
|||||||||||
Previously recognized depreciation and amortization |
|
|
|
2,340 |
|
|
|
|
|
|
|
|
|
32,302 |
|
|
|
|
|
|
|
|
|
- |
|
|||||||||||
Previously recognized gain on foreclosure of |
|
|
|
- |
|
|
|
|
|
|
|
|
|
(5,592 |
) |
|
|
|
|
|
|
|
|
- |
|
|||||||||||
Provision for current expected credit loss reserve |
|
|
|
(466,527 |
) |
|
|
|
|
|
|
|
|
(212,620 |
) |
|
|
|
|
|
|
|
|
(153,683 |
) |
|||||||||||
Valuation adjustment for loan receivable held-for-sale |
|
|
|
(41,767 |
) |
|
|
|
|
|
|
|
|
(7,227 |
) |
|
|
|
|
|
|
|
|
- |
|
|||||||||||
Depreciation and amortization |
|
|
|
(10,754 |
) |
|
|
|
|
|
|
|
|
(10,489 |
) |
|
|
|
|
|
|
|
|
(9,287 |
) |
|||||||||||
Amortization of above and below market leases, net |
|
|
|
(1,204 |
) |
|
|
|
|
|
|
|
|
(1,416 |
) |
|
|
|
|
|
|
|
|
(708 |
) |
|||||||||||
Gain on foreclosure of real estate owned |
|
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
4,162 |
|
|||||||||||
Stock-based compensation expense |
|
|
|
(14,139 |
) |
|
|
|
|
|
|
|
|
(18,101 |
) |
|
|
|
|
|
|
|
|
(16,599 |
) |
|||||||||||
Unrealized loss on interest rate cap |
|
|
|
(71 |
) |
|
|
|
|
|
|
|
|
(1,406 |
) |
|
|
|
|
|
|
|
|
(5,157 |
) |
|||||||||||
Net (loss) income |
|
|
$ |
(489,069 |
) |
|
|
|
|
|
|
|
$ |
(221,265 |
) |
|
|
|
|
|
|
|
$ |
6,027 |
|
|||||||||||
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.