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Financial report summary
?Risks
- We have a limited operating history investing in mortgage loans and have made a limited number of target investments to date.
- Our loan portfolio consists of a limited number of investments, and losses, repayments or other changes with respect to any of those investments may significantly impact us.
- Prepayment rates may adversely affect our ability to generate returns, which could negatively impact our ability to make or sustain distributions to our shareholders.
- Difficulty or delays in redeploying the proceeds from repayments of our existing loan investments may cause our financial performance and returns to shareholders to decline.
- Earning returns on the CRE loans that we originate or acquire is subject to the ability of the property owner to generate net operating income from operating the property.
- We may need to foreclose on loans that are in default, which could result in losses.
- The CRE loans that we originate or acquire expose us to risks associated with real estate investments generally.
- We are subject to various risks related to the ownership of certain real property.
- REIT distribution requirements may adversely impact our ability to carry out our business plan.
- Changes in interest rates and credit spreads may significantly reduce our revenues or impede our growth.
- We and Tremont are subject to state licensing requirements and our or Tremont’s failure to be properly licensed may have a material adverse effect on our operations.
- Changes in laws or regulations governing our operations, changes in the interpretation thereof or newly enacted laws or regulations and any failure by us to comply with these laws or regulations, could require changes to certain of our business practices, negatively impact our operations, cash flow or financial condition, impose additional costs on us or otherwise adversely affect our business.
- We may be subject to lender liability claims and, if we are held liable under such claims, we could be subject to losses.
- Insurance proceeds with respect to a property may not cover all losses, which could result in the corresponding non-performance of or loss on our investment related to such property.
- Liability relating to environmental matters may adversely impact the value of our investments.
- We may not have control over certain of our investments.
- RMR and Tremont rely on information technology and systems in their respective operations, and any material failure, inadequacy, interruption or security breach of that technology or those systems could materially and adversely affect us.
- We have debt and expect to incur additional debt, and our governing documents contain no limit on the amount of debt we may incur.
- The duration of our debt leverage and our investments may not match.
- Our Secured Financing Facilities require us to comply with restrictive covenants and any future financings may require us to comply with similar or more restrictive covenants.
- Our Secured Financing Facilities require, and the agreements governing any additional repurchase or bank credit facilities or debt arrangements that we may enter into may require, us to provide additional collateral or pay down debt.
- Any default in a repurchase agreement may cause us to experience a loss.
- We are dependent upon Tremont and its personnel. We may be unable to find suitable replacements if our management agreement is terminated.
- Our management agreement’s fee and expense structure may not create proper incentives for Tremont.
- Our management agreement is between related parties and its terms may be less favorable to us than if they had been negotiated on an arm’s length basis with an unrelated party.
- Terminating our management agreement without a cause event may be difficult and will require our payment of a substantial termination fee.
- Disputes with Tremont may be referred to binding arbitration, which follow different procedures from in-court litigation and may be more restrictive to shareholders asserting claims than in-court litigation.
- We may be at an increased risk for dissident shareholder activities and shareholder litigation due to perceived conflicts of interest arising from our management structure and relationships.
- Tremont is subject to extensive regulation as an investment adviser, which could adversely affect its ability to manage our business.
- Ownership limitations and certain provisions in our declaration of trust and bylaws, as well as certain provisions of Maryland law, may deter, delay or prevent a change in our control or unsolicited acquisition proposals.
- Our failure to remain qualified for taxation as a REIT under the IRC could have significant adverse consequences.
- Foreclosures may impact our ability to qualify as a REIT and minimize tax liabilities.
- Distributions to shareholders generally will not qualify for reduced tax rates applicable to “qualified dividends.”
- Even if we remain qualified for taxation as a REIT under the IRC, we may face other tax liabilities that reduce our cash flow.
- The failure of a mezzanine loan to qualify as a real estate asset could adversely affect our ability to remain qualified for taxation as a REIT under the IRC.
- The failure of assets subject to our secured financing agreements to qualify as real estate assets could adversely affect our ability to remain qualified for taxation as a REIT under the IRC.
- Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
- The tax on prohibited transactions limits our ability to engage in transactions, including some methods of securitizing mortgage loans that would be treated as sales for U.S. federal income tax purposes.
- We may incur adverse tax consequences as a result of our acquisition of TRMT.
- Our distributions to our shareholders may be reduced or eliminated and the form of payment could change.
- Changes in market conditions could adversely affect the market value of our securities.
- We may use debt leverage or sell assets to pay distributions to our shareholders in the future.