~~Table~~(3)each of ~~Contents~~our U.S. shareholders will increase its adjusted basis in our shares by the excess of the amount of its proportionate share of these retained net capital gains over the U.S. shareholder’s proportionate share of the tax that we pay; and

(4)both we and our corporate shareholders will make commensurate adjustments in our respective earnings and profits for federal income tax purposes.

Distributions in excess of our current or accumulated earnings and profits will not be taxable to a U.S. shareholder to the extent that they do not exceed the shareholder’s adjusted tax basis in our shares, but will reduce the shareholder’s basis in such shares. To the extent that these excess distributions exceed a U.S. shareholder’s adjusted basis in such shares, they will be included in income as capital gain, with ~~long term~~long-term gain generally taxed to noncorporate U.S. shareholders at preferential maximum rates. No U.S. shareholder may include on its federal income tax return any of our net operating losses or any of our capital losses. In addition, no portion of any of our dividends is eligible for the dividends received deduction for corporate shareholders.

If a dividend is declared in October, November or December to shareholders of record during one of those months and is paid during the following January, then for federal income tax purposes the dividend will be treated as having been both paid and received on December 31 of the prior taxable year.

A U.S. shareholder will generally recognize gain or loss equal to the difference between the amount realized and the shareholder’s adjusted basis in our shares that are sold or exchanged. This gain or loss will be capital gain or loss, and will be ~~long term~~long-term capital gain or loss if the shareholder’s holding period in our shares exceeds one year. In addition, any loss upon a sale or exchange of our shares held for six months or less will generally be treated as a ~~long term~~long-term capital loss to the extent of any ~~long term~~long-term capital gain dividends we paid on such shares during the holding period.

U.S. shareholders who are individuals, estates or trusts are generally required to pay a 3.8% Medicare tax on their net investment income (including dividends on our shares (without regard to any deduction allowed by Section 199A of the IRC) and gains from the sale or other disposition of our shares), or in the case of estates and trusts on their net investment income that is not distributed, in each case to the extent that their total adjusted income exceeds applicable thresholds. U.S. shareholders are urged to consult their tax advisors regarding the application of the 3.8% Medicare tax.

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If a U.S. shareholder recognizes a loss upon a disposition of our shares in an amount that exceeds a prescribed threshold, it is possible that the provisions of Treasury regulations involving “reportable transactions” could apply, with a resulting requirement to separately disclose the loss-generating transaction to the IRS. These Treasury regulations are written quite broadly, and apply to many routine and simple transactions. A reportable transaction currently includes, among other things, a sale or exchange of our shares resulting in a tax loss in excess of (a) $10.0 million in any single year or $20.0 million in a prescribed combination of taxable years in the case of our shares held by a C corporation or by a partnership with only C corporation partners or (b) $2.0 million in any single year or $4.0 million in a prescribed combination of taxable years in the case of our shares held by any other partnership or an S corporation, trust or individual, including losses that flow through pass through entities to individuals. A taxpayer discloses a reportable transaction by filing IRS Form 8886 with its federal income tax return and, in the first year of filing, a copy of Form 8886 must be sent to the IRS’s Office of Tax Shelter Analysis. The annual maximum penalty for failing to disclose a reportable transaction is generally $10,000 in the case of a natural person and $50,000 in any other case.

Noncorporate U.S. shareholders who borrow funds to finance their acquisition of our shares could be limited in the amount of deductions allowed for the interest paid on the indebtedness incurred. Under Section 163(d) of the IRC, interest paid or accrued on indebtedness incurred or continued to purchase or carry property held for investment is generally deductible only to the extent of the investor’s net investment income. A U.S. shareholder’s net investment income will include ordinary income dividend distributions received from us and, only if an appropriate election is made by the shareholder, capital gain dividend distributions and qualified dividends received from us; however, distributions treated as a nontaxable return of the shareholder’s basis will not enter into the computation of net investment income.

Taxation of Tax-Exempt U.S. Shareholders

The rules governing the federal income taxation of tax-exempt entities are complex, and the following discussion is intended only as a summary of material considerations of an investment in our shares relevant to such investors. If you are a tax-exempt shareholder, we urge you to consult your own tax advisor to determine the impact of federal, state, local and foreign tax laws, including any tax return filing and other reporting requirements, with respect to your acquisition of or investment in our shares.

We expect that shareholders that are tax-exempt pension plans, individual retirement accounts or other qualifying tax-exempt entities, and that receive (a) distributions from us, or (b) proceeds from the sale of our shares, will not have such amounts treated as UBTI, provided in each case (x) that the shareholder has not financed its acquisition of our shares with “acquisition indebtedness” within the meaning of the IRC, (y) that the shares are not otherwise used in an unrelated trade or business of the tax-exempt entity, and (z) that, consistent with our present intent, we do not hold a residual interest in a real estate mortgage investment conduit or otherwise hold mortgage assets or conduct mortgage securitization activities that generate “excess inclusion” income.

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Taxation of Non-U.S. Shareholders

The rules governing the U.S. federal income taxation of non-U.S. shareholders are complex, and the following discussion is intended only as a summary of material considerations of an investment in our shares relevant to such investors. If you are a non-U.S. shareholder, we urge you to consult your own tax advisor to determine the impact of U.S. federal, state, local and foreign tax laws, including any tax return filing and other reporting requirements, with respect to your acquisition of or investment in our shares.

For most non-U.S. investors, investment in a REIT that invests principally in mortgage loans and CMBS may not be the most tax efficient way to invest in such assets. That is because receiving distributions of income derived from such assets in the form of REIT dividends subjects most non-U.S. investors to withholding taxes that direct investment in those asset classes, and the direct receipt of interest and principal payments with respect to them, would not. The principal exceptions are foreign sovereigns and their agencies and instrumentalities, which may be exempt from withholding taxes on REIT dividends under the IRC, and specified foreign pension funds or similar entities able to claim an exemption from withholding taxes on REIT dividends under the terms of a bilateral income tax treaty between their country of residence and the United States.

We expect that a non-U.S. shareholder’s receipt of (a) distributions from us, and (b) proceeds from the sale of our shares, will not be treated as income effectively connected with a U.S. trade or business and a non-U.S. shareholder will therefore not be subject to the often higher federal tax and withholding rates, branch profits taxes and increased reporting and filing requirements that apply to income effectively connected with a U.S. trade or business. This expectation and a number of the determinations below are predicated on our shares being listed on a U.S. national securities exchange, such as Nasdaq. Each class of our shares has been listed on a U.S. national securities exchange; however, we cannot be sure that our shares will continue to be so listed in future taxable years or that any class of our shares that we may issue in the future will be so listed.

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~~Distributions~~Distributions. . A distribution by us to a non-U.S. shareholder that is not designated as a capital gain dividend will be treated as an ordinary income dividend to the extent that it is made out of our current or accumulated earnings and profits. A distribution of this type will generally be subject to U.S. federal income tax and withholding at the rate of 30%, or at a lower rate if the non-U.S. shareholder has in the manner prescribed by the IRS demonstrated to the applicable withholding agent its entitlement to benefits under a tax treaty. Because we cannot determine our current and accumulated earnings and profits until the end of the taxable year, withholding at the statutory rate of 30% or applicable lower treaty rate will generally be imposed on the gross amount of any distribution to a non-U.S. shareholder that we make and do not designate as a capital gain dividend. Notwithstanding this potential withholding on distributions in excess of our current and accumulated earnings and profits, these excess portions of distributions are a nontaxable return of capital to the extent that they do not exceed the non-U.S. shareholder’s adjusted basis in our shares, and the nontaxable return of capital will reduce the adjusted basis in these shares. To the extent that distributions in excess of our current and accumulated earnings and profits exceed the non-U.S. shareholder’s adjusted basis in our shares, the distributions will give rise to U.S. federal income tax liability only in the unlikely event that the non-U.S. shareholder would otherwise be subject to tax on any gain from the sale or exchange of these shares, as discussed below under the heading “—Dispositions of Our Shares.” A non-U.S. shareholder may seek a refund from the IRS of amounts withheld on distributions to it in excess of such shareholder’s allocable share of our current and accumulated earnings and profits.

For so long as a class of our shares is listed on a U.S. national securities exchange, capital gain dividends that we declare and pay to a non-U.S. shareholder on those shares, as well as dividends to such a non-U.S. shareholder on those shares attributable to our sale or exchange of “United States real property interests” within the meaning of Section 897 of the IRC, or USRPIs, will not be subject to withholding as though those amounts were effectively connected with a U.S. trade or business, and non-U.S. shareholders will not be required to file U.S. federal income tax returns or pay branch profits tax in respect of these dividends. Instead, these dividends will generally be treated as ordinary dividends and subject to withholding in the manner described above.

Tax treaties may reduce the withholding obligations on our distributions. Under some treaties, however, rates below 30% that are applicable to ordinary income dividends from U.S. corporations may not apply to ordinary income dividends from a REIT or may apply only if the REIT meets specified additional conditions. A non-U.S. shareholder must generally use an applicable IRS Form W-8, or substantially similar form, to claim tax treaty benefits. If the amount of tax withheld with respect to a distribution to a non-U.S. shareholder exceeds the shareholder’s U.S. federal income tax liability with respect to the distribution, the non-U.S. shareholder may file for a refund of the excess from the IRS. Treasury regulations also provide special rules to determine whether, for purposes of determining the applicability of a tax treaty, our distributions to a non-U.S. shareholder that is an entity should be treated as paid to the entity or to those owning an interest in that entity, and whether the entity or its owners are entitled to benefits under the tax treaty.

If, contrary to our expectation, a class of our shares was not listed on a U.S. national securities exchange and we made a distribution on those shares that was attributable to gain from the sale or exchange of a USRPI, then a non-U.S. shareholder

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holding those shares would be taxed as if the distribution was gain effectively connected with a trade or business in the United States conducted by the non-U.S. shareholder. In addition, the applicable withholding agent would be required to withhold from a distribution to such a non-U.S. shareholder, and remit to the IRS, up to 21% of the maximum amount of any distribution that was or could have been designated as a capital gain dividend. The non-U.S. shareholder also would generally be subject to the same treatment as a U.S. shareholder with respect to the distribution (subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of a nonresident alien individual), would be subject to fulsome U.S. federal income tax return reporting requirements, and, in the case of a corporate non-U.S. shareholder, may owe the up to 30% branch profits tax under Section 884 of the IRC (or lower applicable tax treaty rate) in respect of these amounts.

Although the law is not entirely clear on the matter, it appears that amounts designated by us as undistributed capital gain in respect of our shares that are held by non-U.S. shareholders generally should be treated in the same manner as actual distributions by us of capital gain dividends. Under this approach, the non-U.S. shareholder would be able to offset as a credit against its resulting U.S. federal income tax liability its proportionate share of the tax paid by us on the undistributed capital gain treated as distributed to the non-U.S. shareholder, and receive from the IRS a refund to the extent its proportionate share of the tax paid by us were to exceed the non-U.S. shareholder’s actual U.S. federal income tax liability on such deemed distribution. If we were to designate any portion of our net capital gain as undistributed capital gain, a non-U.S. shareholder should consult its tax advisors regarding taxation of such undistributed capital gain.

Dispositions of Our Shares. If as expected our shares are not USRPIs, then a non-U.S. shareholder’s gain on the sale of these shares generally will not be subject to U.S. federal income taxation or withholding.

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Our shares will not constitute USRPIs if we are not, at relevant testing dates in the preceding five years, a “United States real property holding corporation.” Whether we are a United States real property holding corporation depends upon whether the fair market value of USRPIs owned by us equals or exceeds 50% of the sum of the fair market value of these interests, any interests in real estate outside of the United States, and our other trade and business assets. Because USRPIs do not generally include mortgage loans or ~~mortgage backed~~mortgage-backed securities, we do not believe that we are a United States real property holding corporation, and we do not believe that we were a United States real property holding corporation for periods prior to our first taxable year as a REIT.

Even if we were to become a United States real property holding corporation in the future, we still expect that our shares would not be USRPIs because one or both of the following exemptions will be available at all times. First, for so long as a class of our shares is listed on a U.S. national securities exchange, a non-U.S. shareholder’s gain on the sale of those shares will not be subject to U.S. federal income taxation as a sale of a USRPI. Second, our shares will not constitute USRPIs if we are a “domestically controlled” REIT. We will be a “domestically controlled” REIT if less than 50% of the value of our shares (including any future class of shares that we may issue) is held, directly or indirectly, by non-U.S. shareholders at all times during the preceding five years, after applying specified presumptions regarding the ownership of our shares as described in Section 897(h)(4)(E) of the IRC. For these purposes, we believe that for all relevant periods the statutory ownership presumptions apply to validate our status as a “domestically controlled” REIT. Accordingly, we believe that we are and will remain a “domestically controlled” REIT.

Information Reporting, Backup Withholding, and Foreign Account Withholding

Information reporting, backup withholding, and foreign account withholding may apply to distributions or proceeds paid to our shareholders under the circumstances discussed below. If a shareholder is subject to backup or other U.S. federal income tax withholding, then the applicable withholding agent will be required to withhold the appropriate amount with respect to a deemed or constructive distribution or a distribution in kind even though there is insufficient cash from which to satisfy the withholding obligation. To satisfy this withholding obligation, the applicable withholding agent may collect the amount of U.S. federal income tax required to be withheld by reducing to cash for remittance to the IRS a sufficient portion of the property that the shareholder would otherwise receive or own, and the shareholder may bear brokerage or other costs for this withholding procedure.

Amounts withheld under backup withholding are generally not an additional tax and may be refunded by the IRS or credited against the shareholder’s federal income tax liability, provided that such shareholder timely files for a refund or credit with the IRS. A U.S. shareholder may be subject to backup withholding when it receives distributions on our shares or proceeds upon the sale, exchange, redemption, retirement or other disposition of our shares, unless the U.S. shareholder properly executes, or has previously properly executed, under penalties of perjury an IRS Form W-9 or substantially similar form that:

•provides the U.S. shareholder’s correct taxpayer identification number;

•certifies that the U.S. shareholder is exempt from backup withholding because (a) it comes within an enumerated exempt category, (b) it has not been notified by the IRS that it is subject to backup withholding, or (c) it has been notified by the IRS that it is no longer subject to backup withholding; and

•certifies that it is a U.S. citizen or other U.S. person.

If the U.S. shareholder has not provided and does not provide its correct taxpayer identification number and appropriate certifications on an IRS Form W-9 or substantially similar form, it may be subject to penalties imposed by the IRS, and the applicable withholding agent may have to withhold a portion of any distributions or proceeds paid to such U.S. shareholder. Unless the U.S. shareholder has established on a properly executed IRS Form W-9 or substantially similar form that it comes

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within an enumerated exempt category, distributions or proceeds on our shares paid to it during the calendar year, and the amount of tax withheld, if any, will be reported to it and to the IRS.

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Distributions on our shares to a non-U.S. shareholder during each calendar year and the amount of tax withheld, if any, will generally be reported to the non-U.S. shareholder and to the IRS. This information reporting requirement applies regardless of whether the non-U.S. shareholder is subject to withholding on distributions on our shares or whether the withholding was reduced or eliminated by an applicable tax treaty. Also, distributions paid to a non-U.S. shareholder on our shares will generally be subject to backup withholding, unless the non-U.S. shareholder properly certifies to the applicable withholding agent its non-U.S. shareholder status on an applicable IRS Form W-8 or substantially similar form. Information reporting and backup withholding will not apply to proceeds a non-U.S. shareholder receives upon the sale, exchange, redemption, retirement or other disposition of our shares, if the non-U.S. shareholder properly certifies to the applicable withholding agent its non-U.S. shareholder status on an applicable IRS Form W-8 or substantially similar form. Even without having executed an applicable IRS Form W-8 or substantially similar form, however, in some cases information reporting and backup withholding will not apply to proceeds that a non-U.S. shareholder receives upon the sale, exchange, redemption, retirement or other disposition of our shares if the non-U.S. shareholder receives those proceeds through a broker’s foreign office.

Non-U.S. financial institutions and other non-U.S. entities are subject to diligence and reporting requirements for purposes of identifying accounts and investments held directly or indirectly by U.S. persons. The failure to comply with these additional information reporting, certification and other requirements could result in a 30% U.S. withholding tax on applicable payments to non-U.S. persons, notwithstanding any otherwise applicable provisions of an income tax treaty. In particular, a payee that is a foreign financial institution that is subject to the diligence and reporting requirements described above must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by “specified United States persons” or “United States owned foreign entities” (each as defined in the IRC and administrative guidance thereunder), annually report information about such accounts, and withhold 30% on applicable payments to noncompliant foreign financial institutions and account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States with respect to these requirements may be subject to different rules. The foregoing withholding regime generally applies to payments of dividends on our shares. In general, to avoid withholding, any non-U.S. intermediary through which a shareholder owns our shares must establish its compliance with the foregoing regime, and a non-U.S. shareholder must provide specified documentation (usually an applicable IRS Form W-8) containing information about its identity, its status, and if required, its direct and indirect U.S. owners. Non-U.S. shareholders and shareholders who hold our shares through a non-U.S. intermediary are encouraged to consult their own tax advisors regarding foreign account tax compliance.

Other Tax Considerations

Our tax treatment and that of our shareholders may be modified by legislative, judicial or administrative actions at any time, which actions may have retroactive effect. The rules dealing with U.S. federal income taxation are constantly under review by the U.S. Congress, the IRS and the U.S. Department of the Treasury, and statutory changes, new regulations, revisions to existing regulations and revised interpretations of established concepts are issued frequently. Likewise, the rules regarding taxes other than U.S. federal income taxes may also be modified. No prediction can be made as to the likelihood of passage of new tax legislation or other provisions, or the direct or indirect effect on us and our shareholders. Revisions to tax laws and interpretations of these laws could adversely affect our ability to qualify and be taxed as a REIT, as well as the tax or other consequences of an investment in our shares. We and our shareholders may also be subject to taxation by state, local or other jurisdictions, including those in which we or our shareholders transact business or reside. These tax consequences may not be comparable to the U.S. federal income tax consequences discussed above.

ERISA PLANS, KEOGH PLANS AND INDIVIDUAL RETIREMENT ACCOUNTS

General Fiduciary Obligations

The Employee Retirement Income Security Act of 1974, as amended, or ERISA, the IRC and similar provisions to those described below under applicable foreign or state law, individually and collectively, impose certain duties on persons who are fiduciaries of any employee benefit plan subject to Title I of ERISA, or an ERISA Plan, or an individual retirement account or annuity, or an IRA, a Roth IRA, a tax-favored account (such as an Archer MSA, Coverdell education savings account or health savings account), a Keogh plan or other qualified retirement plan not subject to Title I of ERISA, each a Non-ERISA Plan. Under ERISA and the IRC, any person who exercises any discretionary authority or control over the administration of, or the management or disposition of the assets of, an ERISA Plan or Non-ERISA Plan, or who renders investment advice for a fee or other compensation to an ERISA Plan or Non-ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan or Non-ERISA Plan.

Fiduciaries of an ERISA Plan must consider whether:

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•their investment in our shares or other securities satisfies the diversification requirements of ERISA;

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•the investment is prudent in light of possible limitations on the marketability of our shares;

•they have authority to acquire our shares or other securities under the applicable governing instrument and Title I of ERISA; and

•the investment is otherwise consistent with their fiduciary responsibilities.

Fiduciaries of an ERISA Plan may incur personal liability for any loss suffered by the ERISA Plan on account of a violation of their fiduciary responsibilities. In addition, these fiduciaries may be subject to a civil penalty of up to 20% of any amount recovered by the ERISA Plan on account of a violation. Fiduciaries of any Non-ERISA Plan should consider that the Non-ERISA Plan may only make investments that are authorized by the appropriate governing instrument and applicable law.

Fiduciaries considering an investment in our securities should consult their own legal advisors if they have any concern as to whether the investment is consistent with the foregoing criteria or is otherwise appropriate. The sale of our securities to an ERISA Plan or Non-ERISA Plan is in no respect a representation by us or any underwriter of the securities that the investment meets all relevant legal requirements with respect to investments by the arrangements generally or any particular arrangement, or that the investment is appropriate for arrangements generally or any particular arrangement.

Prohibited Transactions

Fiduciaries of ERISA Plans and persons making the investment decision for Non-ERISA Plans should consider the application of the prohibited transaction provisions of ERISA and the IRC in making their investment decision. Sales and other transactions between an ERISA Plan or a Non-ERISA Plan and disqualified persons or parties in interest, as applicable, are prohibited transactions and result in adverse consequences absent an exemption. The particular facts concerning the sponsorship, operations and other investments of an ERISA Plan or Non-ERISA Plan may cause a wide range of persons to be treated as disqualified persons or parties in interest with respect to it. A non-exempt prohibited transaction, in addition to imposing potential personal liability upon ERISA Plan fiduciaries, may also result in the imposition of an excise tax under the IRC or a penalty under ERISA upon the disqualified person or party in interest. If the disqualified person who engages in the transaction is the individual on behalf of whom an IRA, Roth IRA or other tax-favored account is maintained (or ~~his~~their beneficiary), the IRA, Roth IRA or other tax-favored account may lose its tax-exempt status and its assets may be deemed to have been distributed to the individual in a taxable distribution on account of the non-exempt prohibited transaction, but no excise tax will be imposed. Fiduciaries considering an investment in our securities should consult their own legal advisors as to whether the ownership of our securities involves a non-exempt prohibited transaction.

“Plan Assets” Considerations

The U.S. Department of Labor has issued a regulation defining “plan assets.” The regulation, as subsequently modified by ERISA, generally provides that when an ERISA Plan or a Non-ERISA Plan otherwise subject to Title I of ERISA and/or Section 4975 of the IRC acquires an interest in an entity that is neither a “publicly offered security” nor a security issued by an investment company registered under the 1940 Act, the assets of the ERISA Plan or Non-ERISA Plan include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless it is established either that the entity is an operating company or that equity participation in the entity by benefit plan investors is not significant. We are not an investment company registered under the 1940 Act.

Each class of our equity (that is, our common shares and any other class of equity that we may issue) must be analyzed separately to ascertain whether it is a publicly offered security. The regulation defines a publicly offered security as a security that is “widely held,” “freely transferable” and either part of a class of securities registered under the Exchange Act, or sold under an effective registration statement under the Securities Act of 1933, as amended, or the Securities Act, provided the securities are registered under the Exchange Act within 120 days after the end of the fiscal year of the issuer during which the offering occurred. Each class of our outstanding shares has been registered under the Exchange Act within the necessary time frame to satisfy the foregoing condition.

The regulation provides that a security is “widely held” only if it is part of a class of securities that is owned by 100 or more investors independent of the issuer and of one another. However, a security will not fail to be “widely held” because the number of independent investors falls below 100 subsequent to the initial public offering as a result of events beyond the issuer’s control. Although we cannot be sure, we believe our common shares have been and will remain widely held, and we expect the same to be true of any future class of equity that we may issue.

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The regulation provides that whether a security is “freely transferable” is a factual question to be determined on the basis of all relevant facts and circumstances. The regulation further provides that, where a security is part of an offering in which the minimum investment is $10,000 or less, some restrictions on transfer ordinarily will not, alone or in combination, affect a finding that these securities are freely transferable. The restrictions on transfer enumerated in the regulation as not affecting that finding include:

•any restriction on or prohibition against any transfer or assignment that would result in a termination or reclassification for federal or state tax purposes, or would otherwise violate any state or federal law or court order;

•any requirement that advance notice of a transfer or assignment be given to the issuer and any requirement that either the transferor or transferee, or both, execute documentation setting forth representations as to compliance with any restrictions on transfer that are among those enumerated in the regulation as not affecting free transferability, including those described in the preceding clause of this sentence;

•any administrative procedure that establishes an effective date, or an event prior to which a transfer or assignment will not be effective; and

•any limitation or restriction on transfer or assignment that is not imposed by the issuer or a person acting on behalf of the issuer.

We believe that the restrictions imposed under our declaration of trust on the transfer of shares do not result in the failure of our shares to be “freely transferable.” Furthermore, we believe that no other facts or circumstances limiting the transferability of our shares exist, other than those that are enumerated under the regulation as not affecting the free transferability of shares. In addition, we do not expect or intend to impose in the future, or to permit any person to impose on our behalf, any limitations or restrictions on transfer that would not be among the enumerated permissible limitations or restrictions.

Assuming that each class of our shares will be “widely held” and that no other facts and circumstances exist that restrict transferability of these shares, our counsel, Sullivan & Worcester LLP, is of the opinion that our shares will not fail to be “freely transferable” for purposes of the regulation due to the restrictions on transfer of our shares in our declaration of trust and that under the regulation each class of our currently outstanding shares is publicly offered and our assets will not be deemed to be “plan assets” of any ERISA Plan or Non-ERISA Plan that acquires our shares in a public offering. This opinion is conditioned upon certain assumptions and representations, as discussed above under the heading “Material United States Federal Income Tax Considerations—Taxation as a REIT.”

Item 1A. Risk Factors

Summary of Risk Factors

The summary below provides an overview of many of the risks we face, and a more detailed discussion of risks is set forth in Part I, Item 1A of this Annual Report on Form 10-K under the caption “Risk Factors.” Additional risks, beyond those summarized below or discussed under the caption “Risk Factors” or described elsewhere in this Annual Report on Form 10-K, may also materially and adversely impact our business, operations or financial results. Consistent with the foregoing, the risks we face include, but are not limited to, the following:

•~~the COVID-19 pandemic and its resulting economic impact may materially adversely affect our business, operations, financial results and liquidity;~~

•we operate in a highly competitive market for investment opportunities, may not obtain sufficient additional capital, and may be adversely affected by ~~the loss of~~Tremont's diligence processes, any defaults on our loan investments, the rate of prepayments on our ~~Manager’s diligence processes, our borrowers’ prepayment rates, or~~loan investments, changes in ~~market~~ interest rates, including as a result of the expected phase out of ~~LIBOR;~~LIBOR, or changes in credit spreads due to the size of our loan portfolio;

•unfavorable market, economic, CRE and capital market conditions may have a material adverse effect on our investment returns, ability to grow our investment portfolio, results of operations, financial condition and ability to pay distributions to our shareholders;

•the lack of liquidity of our loan investments may make it difficult for us to sell our investments if the need or desire arises;

•loans secured by properties in transition or requiring significant renovation involve a greater risk of loss than loans secured by stabilized properties;

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•the CRE loans that we originate or acquire are subject to the ability of the property owner to generate net operating income from the underlying property, as well as the risks of ~~delinquency~~defaults and foreclosure, which may be impacted by current economic conditions, including inflation, ~~labor shortages and~~rising or sustained high interest rates, supply chain ~~constraints,~~challenges, labor availability, geopolitical instability and economic downturn, among other factors;

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•~~third party expectations relating to environmental, social and governance, or ESG, factors may impose additional costs on us and expose us, our borrowers and their tenants to new risks;~~

•~~any material failure, inadequacy, interruption or security breach of our, RMR LLC’s or TRC’s technology systems could materially and adversely affect us;~~

•~~we may be unable to obtain additional capital sufficient to grow our portfolio;~~

•we are subject to the covenants and conditions contained in our Master Repurchase Agreements and in our facility loan agreement and security agreement with BMO Harris Bank N.A., or BMO, or the BMO Loan Program Agreement, which may restrict our operations and ability to make investments and distributions. We may enter into one or more alternative or additional repurchase facilities in the future and expect any such facility to contain covenants and conditions that may restrict our operations and ability to make investments and distributions;

•third party expectations relating to ESG factors may impose additional costs on us and expose us, our borrowers and their tenants to new risks;

•any material failure, inadequacy, interruption or security breach of our, RMR’s or Tremont’s technology systems could materially and adversely affect us;

•our management structure and management agreement with ~~TRC~~Tremont and its relationships with related parties may create conflicts of interest;

•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 control of us or an unsolicited acquisition proposal and could limit shareholders’ ability to obtain a judicial forum they deem favorable for certain disputes;

•we may incur adverse tax consequences if we fail to remain qualified for taxation as a REIT for U.S. federal income tax purposes;

•REIT distribution requirements could adversely affect us and our shareholders;

•distributions to shareholders generally will not qualify for reduced tax rates applicable to “qualified dividends,” and we may also choose to pay distributions in shares, in which case shareholders may be required to pay income taxes in excess of the cash distributions that they receive;

•the failure of assets subject to our Master Repurchase Agreements and our BMO Loan Program Agreement to qualify as real estate assets could adversely affect our ability to qualify for taxation as a REIT under the IRC;

•REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities;

•if we own assets or conduct operations that generate “excess inclusion income” outside a TRS, doing so could adversely affect shareholders’ taxation;

•~~we may incur adverse tax consequences if TRMT failed to qualify for taxation as a REIT for U.S. federal income tax purposes prior to the Merger;~~ and

•we may change our operational, financing and investment policies without shareholder approval and may become highly leveraged.

Our business is subject to a number of risks and uncertainties. The risks described below may not be the only risks we face but are risks we believe may be material at this time. Other risks of which we are not yet aware, or that we currently believe are not material, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described below occurs, our business, financial condition, results of operations or ability to ~~make~~pay distributions to our shareholders could be adversely affected and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described below and the information contained under the caption “Warning Concerning Forward-Looking Statements” and elsewhere in this Annual Report on Form 10-K before deciding whether to invest in our securities.

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Risks Relating to our Business

The duration of the COVID-19 pandemic and the extent of its continued and ultimate impact on the economy and public health is unknown, but it may have a long term negative affect on our business, operations, financial results and liquidity.

The COVID-19 pandemic has had a substantial adverse impact on the global economy, including the U.S. economy, during various stages of the pandemic. Government requirements to stay in place and temporarily close businesses had a substantial negative impact on the economy. Government spending during the pandemic, and subsequent easing of the government restrictions, has since helped avert extended negative economic impact to the economy and is believed to have helped foster a

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return to economic growth. However, the progression of the pandemic has been unpredictable with periods of high rates of infection, followed by periods of reduced infection rates later followed again by periods of high infection rates. In addition, variants of the virus have emerged and additional variants may emerge in the future. Those variants may have negative impacts on public health, including possibly being more transmissible to persons, including persons who have been otherwise immunized due to natural immunity as a result of being previously infected with COVID-19 or vaccination. Any future variants of COVID-19 could have similar or worse impacts on the economy and public health.

The COVID-19 pandemic has caused supply chain challenges in the global economy, which has impacted the U.S. economy. The challenges have resulted, at times, in reduced availability of goods and inflation, including with respect to construction materials. In addition, as a result of the COVID-19 pandemic and restrictions implemented in response, there have been, at times during the pendency of the pandemic, construction moratoriums and decreases in available construction workers and construction activity, including required inspectors and governmental personnel for permitting and other requirements. These conditions, if they should continue or return, may prevent our borrowers from completing ongoing and planned construction projects and improving their properties that secure our loans. As a result, our borrowers may be unable to generate sufficient cash flows to make payments on or refinance our loans, and we may not recover some or all of our investment.

During the first several months of the COVID-19 pandemic in the United States, CRE transaction volume and finance activity significantly declined. If those conditions are experienced again, our ability to make and fund loan investments will be materially adversely affected.

~~The ultimate duration and severity of the COVID-19 pandemic is unknown, but it may have a long term negative affect on business, operations, financial results and liquidity.~~

We operate in a highly competitive market for investment opportunities and competition may limit our ability to originate or acquire ~~our~~ target investments on attractive terms or at ~~all and could also affect the pricing of any investment opportunities.~~all.

We operate in a highly competitive market for investment opportunities. We compete with a variety of institutional investors, including other mortgage REITs, specialty finance companies, public and private funds (including mortgage REITs, funds or investors that ~~TRC,~~Tremont, RMR ~~LLC~~ or their subsidiaries currently, or may in the future, sponsor, advise or manage), banks, and insurance companies and other financial institutions. Some of our competitors, including other mortgage REITs and alternative CRE lenders, have raised, or are expected to raise, significant amounts of capital, and may have investment objectives that overlap with our investment objectives, which may create additional competition for lending and other investment opportunities. Many of our competitors are significantly larger than we are and have considerably greater financial, technical, marketing and other resources than we have. Many of our competitors are not subject to the operating constraints associated with REIT tax or SEC reporting compliance or maintenance of an exemption from registration as an investment company under the 1940 Act. Some of our competitors may have a lower cost of capital and access to funding sources that may not be available to us, such as the U.S. Government, or are only available to us on substantially less attractive terms. In addition, some of our competitors may have higher risk tolerances or make different risk assessments than us, which could lead them to consider a wider variety of investments, offer more attractive pricing or other terms, for example, higher LTV ratios or lower interest rates than we are willing to offer or ~~accept, or establish more relationships than we do.~~accept. Furthermore, competition for our target investments may ~~lead~~result in less attractive terms for us and lower returns on our investments or our failing to ~~the return for these investments decreasing, which may further limit our ability to generate desired returns. The competitive pressures we face~~make investments.

Unfavorable market, economic, CRE and capital market conditions may have a material adverse effect on our ~~business,~~investment returns, ability to grow our investment portfolio, results of operations, financial condition and ~~results of operations, and we cannot be sure that we will be able~~ability to ~~identify and originate or acquire~~pay distributions to our ~~target investments.~~shareholders.

Our business may be adversely affected by market and economic volatility experienced by the U.S. and global economies, the CRE industry and/or the local economies in the markets in which the properties relating to our investments are located. Unfavorable market, economic and CRE industry conditions may be due to, among other things, rising or sustained high interest rates and inflation, labor market challenges, supply chain disruptions, volatility in the capital markets, pandemics (such as the COVID-19 pandemic) or other public health safety concerns, geopolitical instability (such as the war in Ukraine), and other conditions beyond our control. Current and future economic conditions in the United States may affect the demand for real estate and real estate financing, real estate values, CRE transaction and leasing activity, rents, capital market stability and liquidity and capital costs. Current economic conditions, including rising interest rates, inflation, reduced availability of financing or financing on favorable terms and increased CRE financing costs, have resulted in a reduction in CRE transaction volume and adversely impacted CRE lending, including alternative CRE lenders like us. If these conditions continue or worsen, or if other adverse market conditions arise, CRE transaction activity, capital market stability, financing availability and financing costs for CRE lending may be further negatively impacted. In addition, these conditions may result in a prolonged economic slowdown or recession, which may negatively impact our borrowers’ ability to pay their debt obligations owed to us. Further, these conditions may reduce the value of the properties relating to our investments, which may increase the likelihood that we incur losses if our borrowers default on our loans. If these risks are realized, they may have a material adverse effect on our investment returns, ability to grow our investment portfolio, results of operations, financial condition and ability to pay distributions to our shareholders.

We have a limited operating history investing in mortgage loans and have made a limited number of target investments to ~~date~~.date.

We have a limited operating history investing in mortgage loans and have made a limited number of target investments to date. Our ability to achieve our investment objectives depends on our ability to make investments that generate attractive, risk adjusted returns, as well as on our ongoing access to capital and financing on terms that permit us to realize net interest income from our investments. In general, the availability of favorable investment opportunities will be affected by the level and volatility of interest rates in the market generally, the availability of adequate short and long term real estate financing and the competition for investment opportunities. We cannot be sure that we will be successful in obtaining additional capital to enable us to make ~~new~~additional investments after we invest our existing capital, that any investments we ~~have made or may~~ make will ~~satisfy~~achieve our targeted rate of return or other investment objectives, or that we will be able to successfully operate our business, or implement our operating policies and investment strategies. If we fail to make additional investments within a reasonable time or on acceptable terms, such failure may have a material adverse effect on our business, financial condition, results of operations, ability to maintain our qualification for taxation as a REIT under the IRC, and ability to make or sustain distributions to our shareholders, and could cause the value of our securities to decline.

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~~A loss~~Our loan portfolio consists of a limited number of investments, and losses, repayments or other changes with respect to any ~~one~~ of ~~our loan~~those investments may ~~be significant due to the limited number of investments within our loan portfolio.~~

significantly impact us.

As of December 31, ~~2021,~~2022, our portfolio consisted of 2627 first mortgage loans. ~~A consequence of this limited number of investments is that~~As a result, the aggregate returns we realize may be adversely affected if any of our investments performs poorly, or we need to write down the value of any of our investments or if any of our investments is repaid prior to maturity and we are not able to ~~promptly~~timely redeploy the proceeds in a manner that provides us with comparable returns. ~~A loss with respect to any one~~The impact of these ~~loan investments~~adverse effects on our aggregate returns may be ~~significant.~~

greater than if our portfolio consisted of a larger number of loans because an impacted loan may comprise a larger proportion of our loan portfolio.

The lack of liquidity of our loan investments may adversely affect our business.

The lack of liquidity of our loan investments may make it difficult for us to sell our investments if the need or desire arises. ~~Certain~~Our investments ~~such as mortgages,~~ in ~~particular,~~CRE mortgage loans are relatively illiquid ~~investments~~ due to their short life, their potential unsuitability for securitization and the difficulty of recovery in the event of a borrower’s default. In addition, our loan investments may become less liquid as a result of ~~delinquencies~~actual or anticipated defaults by our borrowers, turbulent market conditions or the unavailability to borrowers of refinancing ~~capital, which may make it more difficult for us to dispose of our investments at advantageous prices or in a timely manner.~~capital. Moreover, the investments we make are not registered under relevant securities laws, resulting in limitations ~~or prohibitions against~~on their transfer, sale, pledge or disposition except in transactions that are exempt from registration requirements or are otherwise in accordance with such laws. As a result, our loan investments are illiquid, and if we are required to liquidate ~~all or~~ a ~~portion of our~~ loan ~~portfolio quickly,~~investment, we may realize significantly less than the ~~value at which~~amount we ~~have previously recorded those investments.~~invested or our carrying value. The risk of such a loss may be greater if we need to liquidate it quickly. As a result, our ability to adjust our loan portfolio in response to changes in economic and other conditions may be ~~relatively~~ limited, which could adversely affect our financial condition and results of operations.

Loans secured by properties in transition or requiring significant renovation involve a greater risk of loss than loans secured by stabilized properties.

We originate transitional bridge loans to borrowers who are seeking shorter term capital to be used in acquisitions, construction or repositioning of properties. In a typical transitional loan, the borrower has usually identified a property that the borrower believes has been under-managed, is located in a recovering market or requires renovation. The renovation, refurbishment or expansion of a property by a borrower involves risks of cost overruns, construction risks and ~~noncompletion~~non-completion risks, among others. Estimates of the costs of and timing for completing property improvements may be inaccurate. ~~Other risks may include rehabilitation~~For instance, during the COVID-19 pandemic, costs ~~exceeding original estimates, possibly making a project uneconomical, environmental risks, delays in legal~~of construction materials increased due to inflation relating to supply chain issues and ~~other approvals and rehabilitation and~~labor availability. In addition, subsequent leasing of the property ~~not being completed on schedule.~~may take longer to complete and cost more than expected. If the borrower ~~fails to improve the quality~~experiences any of ~~the property’s management~~these or ~~the market in which the property is located fails to improve as expected, or the renovation is not completed in a timely manner or such costs are more than expected, then~~other risks, the borrower may not generate sufficient cash flows from the property to make payments on or refinance the transitional loan, and we may not recover some or all of our investment.

In addition, borrowers often use the proceeds of a conventional mortgage loan to repay a transitional loan. Transitional loans therefore are subject to the risk of the borrowers’ inability to obtain financing to repay the loan. Losses we incur with respect to our transitional loans could be material.

~~TRC’s~~Tremont’s diligence process for investment opportunities may not reveal all facts that may be relevant for an investment, and if we incorrectly evaluate the risks of our investments, we may experience losses.

Prior to our making any investment, ~~TRC~~Tremont conducts diligence that it considers reasonable based upon the facts and circumstances of the investment. When conducting diligence on our behalf, ~~TRC~~Tremont may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the diligence process to varying degrees depending on the type of potential investment. Nonetheless, ~~TRC's~~Tremont’s diligence may not reveal all of the risks associated with our investments. We evaluate our potential investments based upon criteria ~~TRC~~Tremont deems appropriate for the relevant investment. Our underwriting assumptions and loss estimates may not prove accurate, and actual results may vary from estimates. ~~If we underestimate the risks and potential losses associated with an investment we originate or acquire, we may experience losses from the investment.~~

Moreover, investment analyses and decisions by ~~TRC~~Tremont may frequently be required to be undertaken on an expedited basis to take advantage of investment opportunities. In such cases, the information available to ~~TRC~~Tremont at the time of making an investment decision may be limited. Therefore, we cannot be sure that ~~TRC~~Tremont will have knowledge of all circumstances that may adversely affect such investment.

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~~Prepayment rates may adversely affect the value of certain of our investments which could negatively impact our ability to make or sustain distributions to our shareholders.~~

The rates at which our borrowers prepay our investments, where contractually permitted, will be influenced by changes in current interest rates, significant changes in the performance of underlying real estate assets and a variety of economic and other factors beyond our control. Prepayment rates cannot be predicted with certainty and no strategy can completely insulate us from increases in such rates. In periods of declining interest rates, prepayments on investments generally increase and the proceeds of prepayments received during these periods are likely to be reinvested by us in comparable assets at reduced yields. Conversely, in periods of rising interest rates, prepayments on investments, where contractually permitted, generally decrease, in which case we would not have the prepayment proceeds available to invest in comparable assets at higher yields. We may invest in loans and other assets secured or supported by transitional real estate assets; significant improvement in the performance of such assets may result in prepayments as other financing alternatives become available to the borrower. In addition, it may take an extended period for us to reinvest any repayments we may receive, and any reinvestments we may be able to make may not provide us with similar returns or comparable risks as those of our current investments. We expect to be entitled to fees upon the prepayment of our investments, although we cannot be sure that such fees will adequately compensate us as the functional equivalent of a “make whole” payment. Furthermore, we may not be able to structure future investments to impose a make whole obligation upon a borrower in the case of an early prepayment. As a result, our income will be reduced, which will have a negative impact on 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.~~

As our loan investments are repaid, we intend to redeploy the proceeds we receive into new loan investments, repay borrowings under our repurchase and credit facilities and pay distributions to our shareholders. It is possible that we will fail to identify and complete reinvestments that would provide returns or a risk profile that is comparable to the loan investment that was repaid. If we fail to redeploy, or experience any delays in redeploying, the proceeds we receive from repayment of a loan investment in equivalent or better alternatives, our financial performance and returns to shareholders could decline.

~~A prolonged economic slowdown, a recession or declining real estate values could materially and adversely affect us.~~

~~We believe that~~underestimate the risks and potential losses associated with our investments will be more severe during periods of economic slowdown or recession, especially if these periods are accompanied by declining real estate values. Significant portions of the CRE markets in the United States were significantly negatively impacted during the recession that occurred during the early stages of the COVID-19 pandemic, and certain aspects of that market continue to be challenged by the pandemic and the changes to market and workplace practices in response to the pandemic, such as remote work for many office based workers and a reduction in travel. Ouran investment strategy may be adversely affected by prolonged economic downturns or recessions where declining real estate values would likely reduce the level of new mortgage and other real estate related loan originations since borrowers often use the appreciation in the value of their existing properties to support the purchase or investment in additional properties. Borrowers may also be less able to pay principal and interest on our loans if the value of their real estate declines. Further, declining real estate values significantly increase the likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our cost on the loan. Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect our ability to originate or acquire loans, which would materially and adversely affect our results of operations, financial condition, liquidity and business and our ability to make or sustain distributions to our shareholders.

~~The CRE loans that~~ we originate or acquire, ~~are subject to the ability of the property owner to generate net operating income from operating the property, as well as the risks of delinquency and foreclosure.~~

~~CRE loans that~~ we ~~originate or acquire are subject to the ability of the property owner to generate net operating income from operating the property. The impact~~may experience losses from the COVID-19 pandemic has negatively impacted some of our borrowers’ business operations or tenants, particularly in the cases of our retail and hospitality collateral, which are some of the types of properties that have been most negatively impacted by the pandemic. The ability of a borrower to repay a loan secured by an income producing property typically is dependent primarily upon the successful operation of the property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the loan may be impaired and the risks of delinquency and foreclosure may increase. Net operating income of an income producing property can be affected by, among other things:

~~• tenant mix and tenant bankruptcies;~~

~~• success of tenant businesses;~~

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~~• property management decisions, including with respect to capital improvements, particularly in older building structures;~~

~~• property location, condition and design;~~

~~• competition from comparable properties;~~

• changes in national, regional or local economic conditions and/or specific industry segments, including current and future economic conditions caused by the COVID-19 pandemic and its aftermath;

~~• rising inflationary pressures and effects of inflation on borrower and tenant businesses;~~

~~• supply chain constraints, commodity pricing and other inflation;~~

~~• borrowers’ and tenants’ ability to attract, retain and motivate sufficient qualified personnel in a challenging labor market and to effectively manage their labor costs;~~

~~• declines in regional or local real estate values;~~

~~• declines in regional or local rental or occupancy rates;~~

~~• changes in interest rates, and in the state of the debt and equity capital markets, including diminished availability or lack of CRE debt financing;~~

~~• changes in real estate tax rates, tax credits and other operating expenses;~~

~~• costs of remediation and liabilities associated with environmental conditions;~~

~~• adverse impacts to properties from short term and long term effects of global climate change;~~

~~• the potential for uninsured or underinsured property losses;~~

~~• changes in laws and regulations, including fiscal policies, zoning ordinances and environmental legislation and the related costs of compliance; and~~

• acts of God, earthquakes, hurricanes, health epidemics, pandemics and similar outbreaks, such as the COVID-19 pandemic, and other natural disasters, or acts of war, terrorism, social unrest or civil disturbances, in each case which may result in uninsured or underinsured losses.

In the event of any default under any CRE loan held by us, we will bear a risk of loss of principal to the extent of any deficiency between the value of the collateral (net of our costs to enforce our rights with respect to that collateral) and the principal and accrued interest of the loan or investment, which could have a material adverse effect on our cash flow from operations and limit amounts available for distribution to our shareholders. Further, if borrowers do not repay our loans or we realize amounts that are less than the amount of the investment plus our costs, our loan portfolio will reduce in size. In addition, if a borrower defaults on our loan and we take actions related to the collateral securing that loan, we may be delayed for an extended period of time on converting that collateral to investable cash, which would impair our ability to redeploy that capital and grow our portfolio. In the event of the bankruptcy of a mortgage loan borrower, the mortgage loan to such borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under applicable law. Foreclosure of a mortgage loan can be an expensive and lengthy process, which could have a substantial negative effect on our anticipated return on the foreclosed mortgage loan.

~~We may need to foreclose on loans that are in default, which could result in losses.~~

We may find it necessary to foreclose on loans that are in default. Foreclosure processes are often lengthy and expensive. Results of foreclosure processes may be uncertain, as claims may be asserted by borrowers or by other lenders or investors in the borrowers that interfere with enforcement of our rights, such as claims that challenge the validity or enforceability of our loan or the priority or perfection of our mortgage or other security interests. Borrowers may resist foreclosure actions by asserting numerous claims, counterclaims and defenses against us, including, without limitation, lender liability claims and defenses, even when the assertions may have no merit, in an effort to prolong the foreclosure action and seek to force us into a modification of the loan or a buy-out of the loan for less than we are owed. At any time prior to or during the foreclosureinvestment.

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proceedings, the borrower may file for bankruptcy, which would have the effect of staying the foreclosure actions and delaying the foreclosure processes and potentially result in reductions or discharges of borrower’s debt. Foreclosure may create a negative public perception of the collateral property, resulting in a diminution of its value. Even if we are successful in foreclosing on a mortgage loan, the liquidation proceeds upon sale of the underlying real estate may not be sufficient to recover our investment. Any costs or delays involved in the foreclosure of the loan or a liquidation of the underlying property will reduce the net proceeds realized and increase the time it may take to collect such proceeds, and, thus, increase the potential for loss.

~~The CRE loans that we originate or acquire expose us to risks associated with real estate investments generally.~~

~~In addition to the other risks discussed herein, the CRE loans that we originate or acquire expose us to risks associated with real estate investments, generally, including:~~

~~• economic and market fluctuations;~~

~~• political instability or changes;~~

~~• changes in environmental, zoning and other laws;~~

~~• casualty or condemnation losses;~~

~~• cost of remediation and removal of hazardous substances and liabilities associated with environmental conditions;~~

~~• regulatory limitations on rents;~~

~~• decreases in property values;~~

~~• changes in the appeal of properties to tenants;~~

~~• changes in supply and demand for CRE properties and debt;~~

~~• changes in valuation of collateral underlying CRE properties and CRE loans, resulting from inherently subjective and uncertain valuations;~~

~~• energy supply shortages;~~

~~• various uninsured or uninsurable risks;~~

~~• adverse weather, natural disasters and adverse impacts from climate change;~~

• acts of God, earthquakes, hurricanes, pandemics, such as the COVID-19 pandemic, and other natural disasters, climate change, or acts of war, terrorism, social unrest and civil disturbances, in each case which may result in uninsured or underinsured losses;

~~• changes in government regulations, such as rent control;~~

~~• changes in the availability of debt financing and/or mortgage funds, which may render the sale or refinancing of properties difficult or impracticable; and~~

~~• increases in mortgage defaults.~~

We cannot predict the degree to which economic conditions generally, and the conditions for CRE debt financing in particular, will improve or decline, particularly as a result of the COVID-19 pandemic and its aftermath. Any declines in the performance of the U.S. or global economies or in real estate debt markets could have a material adverse effect on us.

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~~REIT distribution requirements may adversely impact our ability to carry out our business plan.~~

~~Changes in market interest rates may significantly reduce our revenues or impede our growth.~~

Changes in market interest rates may be sudden and may significantly reduce our revenues or impede our growth. Interest rates have remained at relatively low levels on a historical basis, but the U.S. Federal Reserve recently indicated that, in light of the economic recovery and higher than anticipated inflation, it expects to raise interest rates as early as March 2022. However, the timing, number and amount of any such future interest rate increases are uncertain. If market interest rates increase, those increases may materially and negatively affect us in various ways, including:

•changes in interest rates may affect our net interest income from our investments, which is the difference between the interest income we earn on our interest earning investments and the interest expense we incur in financing our investments;

•changes in interest rates may affect our ability to make investments as well as borrower default rates. In a period of rising interest rates, our interest expense could increase, while the interest we earn on any fixed rate debt investments would not change, adversely affecting our profitability. Our operating results depend in large part on differences between the income from our investments, net of credit losses and its financing costs. Even when our investments and borrowings are match funded, the income from our investments may respond more slowly to interest rate fluctuations than the cost of our borrowings;

•amounts outstanding under our repurchase and credit facilities will require interest to be paid by us at floating interest rates. When interest rates increase, our interest costs will increase. Additionally, if we choose to hedge our interest rate risk, we cannot be sure that the hedge will be effective or that our hedging counterparty will meet its obligations to us; and

•investors may consider whether to buy or sell our common shares based upon the then distribution rate on our common shares relative to the then prevailing market interest rates. If market interest rates go up, investors may expect a higher distribution rate than we are able to pay, which may increase our cost of capital, or they may sell our common shares, if any, and seek alternative investments that offer higher distribution rates. Sales of our common shares may cause a decline in the value of our common shares.

~~The phase out or transitioning of LIBOR may negatively impact our business, financial results and cash flows.~~

Our loan agreements entered into prior to January 1, 2022 require the borrowers to pay us interest at floating rates based upon LIBOR. In addition, the agreements governing our master repurchase facility with UBS, or our UBS Master Repurchase Facility, and our master repurchase facility with Citibank, or our Citibank Master Repurchase Facility, or collectively, our Master Repurchase Facilities, require us to pay interest on amounts borrowed under those facilities at floating rates based upon LIBOR plus a premium. LIBOR was phased out for new contracts as of December 31, 2021 and is expected to be phased out for pre-existing contracts by June 30, 2023. Our Master Repurchase Facilities provide that at such time as LIBOR shall no longer be made available or used for determining the interest rate of amounts outstanding under those facilities, the replacement base rate shall be an alternative benchmark rate (including any mathematical or other adjustments to the benchmark rate (if any) incorporated therein so that the resulting rate approximates LIBOR as close as reasonably possible) as determined by UBS and Citibank under similar facilities for the financing of similar assets and is consistent with the pricing index of similarly situated counterparties. Our loan agreements with our borrowers generally provide that if LIBOR is not able to be determined, the interest rates under our loan agreements with borrowers would be amended to replace LIBOR with an alternative benchmark rate (which may include SOFR or another rate based on SOFR) that will approximate the existing interest rate as calculated in accordance with LIBOR. Certain of TRMT’s loan agreements with its borrowers that we assumed upon consummation of the Merger generally provide that if LIBOR is not able to be determined, interest will be calculated using a floating base rate equal to the greater of the Federal Funds Rate plus 50 basis points or the Prime Rate. We expect that for then existing loan agreements that we entered into prior to January 1, 2022, we and our borrowers will amend our loan agreements by the time LIBOR is no longer available to replace LIBOR with an alternative benchmark rate (which may include SOFR or another rate based on SOFR) that will approximate the existing interest rate as calculated in accordance with LIBOR.

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Despite our current expectations, we cannot be sure that the changes to the determination of interest under our agreements would approximate LIBOR. On July 29, 2021, the Alternative Reference Rates Committee, or the ARRC, a committee of private market participants convened by the U.S. Federal Reserve Board and the Federal Reserve Bank of New York, formally recommended the SOFR as an alternative to LIBOR. There are significant differences between LIBOR and SOFR, such as LIBOR being an unsecured lending rate while SOFR is a secured lending rate, and SOFR is an overnight rate while LIBOR reflects term rates at different maturities. If our LIBOR-based borrowings are converted to SOFR, the differences between LIBOR and SOFR, plus the recommended spread adjustment, could result in higher interest costs for us, which could have a material adverse effect on our operating results. Although SOFR is the ARRC’s recommended replacement rate, it is also possible that lenders may instead choose alternative replacement rates that may differ from LIBOR in ways similar to SOFR or in other ways that would result in higher interest costs for us. In addition, the elimination of LIBOR and/or changes to another index could result in mismatches with the interest rate of investments that we are financing, and the overall financial markets may be disrupted as a result of the phase-out or replacement of LIBOR; however, we cannot reasonably estimate the impact of the transition at this time.

If the determination of interest does not, or if we cannot forecast with sufficient confidence that it will, approximate the current calculation in accordance with LIBOR, we may incur additional costs, our investment income, net of interest expense, may decline, we may lose investment opportunities or make unsuccessful investments because we are not able to accurately price our proposed investments and our cash flows may be negatively affected.

We may be unable to obtain additional capital sufficient to enable us to grow our loan portfolio.

As of December 31, 2022, our primary sources of capital were the facilities governed by our Master Repurchase Agreements, including our master repurchase facility with Wells Fargo, or the Wells Fargo Master Repurchase Facility; our master repurchase facility with Citibank, or the Citibank Master Repurchase Facility and our master repurchase facility with UBS, or the UBS Master Repurchase Facility; and our facility loan program with BMO, or the BMO Facility. We refer to the Wells Fargo Master Repurchase Facility, Citibank Master Repurchase Facility and UBS Master Repurchase Facility, collectively, as our Master Repurchase Facilities. We refer to the Master Repurchase Facilities and the BMO Facility, collectively, as our Secured Financing Facilities.

As of December 31, ~~2021,~~2022, we had ~~$173.7~~$255.8 million of available liquidity from cash and amounts available under ~~our Master Repurchase Facilities and the facility under our BMO Loan Program Agreement, or our BMO Facility, or~~ our Secured Financing Facilities to fund future loan originations and advances. After we invest these sources, we may not be able to obtain additional capital to make investments that we determine are attractive. If so, this could limit our ability to grow our loan portfolio in the future, including by pursuing opportunities that may ~~from time to time~~ be available in our loan origination pipeline, and adversely affect our ability to make or sustain distributions to our shareholders. Our ability to further grow our loan portfolio over time will depend, to a significant degree, upon our ability to obtain additional capital. Our access to additional capital depends upon a number of factors, some of which we have little or no control over, including:

•

• general economic, market or industry conditions;

•the market’s view of the quality of our assets;

•the market’s perception of our growth potential;

•our current and potential future earnings and distributions to our shareholders; and

•the market value of our securities.

If regulatory capital requirements imposed on our lenders change, they may be required to limit, or increase the cost of, financing they provide to us. This could potentially increase our financing costs and reduce our liquidity or require us to sell assets at an inopportune time or price.

If we cannot obtain additional capital after we invest our current available cash and borrowing availability under our Secured Financing Facilities, our future investable funds may be limited to proceeds we receive from repayments of our loan investments, and from interest payments we receive, from borrowers or from other investments we may make. Therefore, in order to grow our business, we may have to rely on additional equity issuances, which may be dilutive to our shareholders, or on debt financings which may require us to use a large portion of our cash flow from operations to fund our debt service obligations, thereby reducing funds available for our operations, future business opportunities, distributions to our shareholders or other purposes. We cannot be sure that we will have access to such debt or equity capital on favorable terms at the desired times, or at all, which may cause us to reduce or suspend our investment activities or dispose of assets at an inopportune time or price, which could negatively affect our financial condition, results of operations and ability to make or sustain ~~its~~our distributions to our shareholders.

If the market value of our common shares does not increase or declines, our cost of equity capital will remain high or further increase, and we may not be able to practically or otherwise raise equity capital by issuing additional equity securities.

Prepayment rates may adversely affect our ability to generate returns, which could negatively impact our ability to make or sustain distributions to our shareholders.

The rates at which our borrowers prepay our investments, where contractually permitted, will be influenced by changes in the then-current level of interest rates, significant changes in the performance or possible sale of underlying real estate assets and a variety of economic factors, availability of alternative financing the borrower desires and other factors beyond our control. In addition, it may take an extended period for us to reinvest the proceeds from any repayments we may receive, and any reinvestments we may be able to make may not provide us with similar returns or comparable risks as those of our current investments. We expect to be entitled to fees upon the prepayment of our investments, although we cannot be sure that such fees will adequately compensate us as the functional equivalent of a “make whole” payment. Furthermore, we may not be able to structure future investments to impose a make whole obligation upon a borrower in the case of an early prepayment. As a result, our income may decline as a result of borrower prepayments, which would have a negative impact on our ability to make or sustain distributions to our shareholders.

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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.

As our loan investments are repaid, we intend to redeploy the proceeds we receive into new loan investments and repay borrowings under our repurchase and credit facilities. It is possible that we will fail to identify and complete reinvestments that would provide returns or a risk profile that are comparable to the loan investment that was repaid. If we fail to redeploy, or experience any delays in redeploying, the proceeds we receive from repayment of a loan investment in equivalent or better investments, our financial performance and returns to shareholders could 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.

Our ability to earn positive returns on 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. The ability of a borrower to repay a loan secured by an income producing property typically is dependent primarily upon the successful operation of the property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is below amounts expected when we made our loan investment, the borrower’s ability to repay the loan may be impaired and the risks of default and foreclosure may increase. Net operating income of an income producing property can be affected by, among other things:

•tenant mix and tenant bankruptcies;

•success of tenant businesses;

•property management decisions, including with respect to capital improvements, particularly in older building structures;

•property location, condition and design;

•competition from comparable properties;

•changes in market practice, such as those that arose or were intensified in response to the COVID-19 pandemic;

•changes in national, regional or local economic conditions and/or specific industry segments, including current and future economic conditions caused by pandemics, such as the COVID-19 pandemic;

•rising inflationary pressures and effects of inflation on borrower and tenant businesses;

•supply chain constraints, commodity pricing and other inflation;

•borrowers’ and tenants’ ability to attract, retain and motivate sufficient qualified personnel in a challenging labor market and to effectively manage their labor costs;

•declines in regional or local real estate values;

•declines in regional or local rental or occupancy rates;

•changes in interest rates, and in the state of the debt and equity capital markets, including diminished availability or lack of CRE debt financing;

•changes in real estate tax rates, tax credits and other operating expenses;

•costs of remediation and liabilities associated with environmental conditions;

•adverse impacts to properties from short term and long term effects of global climate change;

•the potential for uninsured or underinsured property losses;

•changes in laws and regulations, including fiscal policies, zoning ordinances and environmental legislation and the related costs of compliance; and

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•acts of God, earthquakes, hurricanes, health epidemics, pandemics and other public health safety events or concerns, such as the COVID-19 pandemic, and other natural disasters, or acts of war, terrorism, social unrest or civil disturbances, in each case which may result in uninsured or underinsured losses.

We may need to foreclose on loans that are in default, which could result in losses.

Foreclosure may create a negative public perception of the collateral property, resulting in a diminution of its value. Even if we are successful in foreclosing on a mortgage loan, the liquidation proceeds upon sale of the underlying real estate may not be sufficient to recover our investment. Any costs or delays involved in the foreclosure of the loan or a liquidation of the underlying property will reduce the net proceeds realized and increase the time it may take to collect such proceeds, and, thus, increase the potential for loss.

The CRE loans that we originate or acquire expose us to risks associated with real estate investments generally.

In addition to the other risks discussed herein, the CRE loans that we originate or acquire expose us to risks associated with real estate investments, generally, including:

•economic and market fluctuations;

•political instability or changes;

•changes in environmental, zoning and other laws;

•casualty or condemnation losses;

•cost of remediation and removal of hazardous substances and liabilities associated with environmental conditions;

•regulatory limitations on rents;

•decreases in property values;

•changes in the appeal of properties to tenants;

•changes in supply and demand for CRE properties and debt;

•changes in valuation of collateral underlying CRE properties and CRE loans, resulting from inherently subjective and uncertain valuations;

•energy supply shortages;

•various uninsured or uninsurable risks;

•adverse weather, natural disasters and adverse impacts from climate change;

•acts of God, earthquakes, hurricanes, pandemics or other public health safety events or concerns, such as the COVID-19 pandemic, and other natural disasters, climate change, or acts of war, terrorism, social unrest and civil disturbances, in each case which may result in uninsured or underinsured losses;

•changes in government regulations, such as rent control; and

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•changes in the availability of debt financing and/or mortgage funds, which may render the sale or refinancing of properties difficult or impracticable.

We cannot predict the degree to which economic conditions generally, and the conditions for CRE and CRE debt financing in particular, will improve or decline. Current economic conditions, including inflation, rising interest rates, supply chain challenges, labor availability, geopolitical instability and economic downturn, have materially adversely impacted CRE transaction activity and valuations and have caused disruptions in the CRE lending market. If these conditions continue or worsen, or if further declines in the performance of the U.S. or global economies or in real estate debt markets are realized, we may experience a material adverse effect on us and our business, results of operations and financial condition.

REIT distribution requirements may adversely impact our ability to carry out our business plan.

To maintain our qualification for taxation as a REIT under the IRC, we are required to satisfy distribution requirements imposed by the IRC. See “Material United States Federal Income Tax Considerations—REIT Qualification Requirements—Annual Distribution Requirements” included in Part I, Item 1 of this Annual Report on Form 10-K. Accordingly, we may not be able to retain sufficient cash to fund our operations, repay our debts or make investments. We may be unable to raise reasonably priced capital because of reasons related to our business, market perceptions of our prospects, the terms of our debt, the extent of our leverage or for reasons beyond our control, such as capital market volatility, rising interest rates and other market conditions. Because the earnings we are permitted to retain are limited by the rules governing REIT qualification and taxation, if we are unable to raise reasonably priced capital, we may not be able to carry out our business plan.

Changes in interest rates and credit spreads may significantly reduce our revenues or impede our growth.

Changes in interest rates may be sudden and may significantly reduce our revenues or impede our growth. In efforts to combat rising inflation, the Federal Open Market Committee of the U.S. Federal Reserve (the “FOMC”) has raised interest rates multiple times since March 2022 and has indicated an expectation that it will continue to raise interest rates in 2023. Changes in interest rates may materially and negatively affect us in several ways, including:

•Changes in interest rates and credit spreads will affect our net interest income from our investments, which is the difference between the interest income we earn on our interest earning investments and the interest expense we incur in financing our investments;

•Changes in interest rates may affect our ability to make investments as well as borrower default rates. In a period of rising interest rates, our interest income on our loan investments will increase; however, defaults on our loan investments may also increase. Our loan agreements typically require our borrowers to obtain interest rate caps to mitigate the risk of default caused by rising financing costs; however, there can be no assurance that these interest rate caps will prevent us from experiencing losses nor that such mechanisms will continue to be employed. Also, as interest rates increase, the cost of interest rate caps could also increase, which may limit borrowers’ ability to afford the loan or increase the risk of default. Additionally, rising interest rates may reduce our ability to make investments, as fixed rate financing may be more attractive to potential borrowers or they may forgo or delay obtaining financing. Our operating results depend in large part on differences between the income from our investments, net of credit losses and financing costs. Even when our investments and borrowings are match funded, the income from our investments may respond more slowly to interest rate fluctuations than the cost of our borrowings;

•Amounts outstanding under our Secured Financing Facilities will require interest to be paid by us at floating interest rates. When interest rates increase, our interest costs will increase. In a period of decreasing interest rates, our interest income on our loan investments may decrease. We typically structure our loan investments with benchmark interest rate floors to mitigate this risk; however, there can be no assurance that such floors will be sufficient to prevent material declines in interest income or that we will continue to structure our loan agreements with such floors;

•Changes in credit spreads may negatively impact our net interest income from investments. Even when our investments and borrowings are match funded, our net interest income may decline if we are not able to price new investments and borrowings with terms that result in the same or more favorable differences between the credit spreads we charge to our borrowers and the credit spreads we are charged by our lenders; and

•Investors may consider whether to buy or sell our common shares based upon the then distribution rate on our common shares relative to the then prevailing interest rates. If interest rates go up, investors may expect a higher distribution rate than we are able to pay, which may increase our cost of capital, or they may sell our common shares and seek alternative investments that offer higher distribution rates. Sales of our common shares may cause a decline in the market value of our common shares.

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The phase out or transitioning of LIBOR may negatively impact our business, financial results and cash flows.

Certain of our loan agreements entered into prior to January 1, 2022 require the borrowers to pay us interest at floating rates based upon LIBOR. LIBOR was phased out for new contracts as of December 31, 2021. Our pre-existing contracts have been or are expected to be amended to replace LIBOR with SOFR prior to June 30, 2023, the date LIBOR is expected to no longer be available. Our loan agreements entered into with our borrowers prior to January 1, 2022 generally provide that if LIBOR is not able to be determined, the interest rates under our loan agreements with borrowers would be amended to replace LIBOR with an alternative benchmark rate (which may include SOFR or another rate based on SOFR) that will approximate the existing interest rate as calculated in accordance with LIBOR. Certain of TRMT’s loan agreements with its borrowers that we assumed upon consummation of the Merger generally provide that if LIBOR is not able to be determined, interest will be calculated using a floating base rate equal to the greater of the Federal Funds Rate plus 50 basis points or the Prime Rate. We expect that for then existing loan agreements that we entered into prior to January 1, 2022, we and our borrowers will amend our loan agreements by the time LIBOR is no longer available to replace LIBOR with an alternative benchmark rate (which may include SOFR or another rate based on SOFR) that will approximate the existing interest rate as calculated in accordance with LIBOR. Our Citibank Master Repurchase Agreement and UBS Master Repurchase Agreement were amended and restated effective March 2022 to, among other things, replace LIBOR with SOFR for interest rate calculations on new advances. Interest rates on advances under our BMO Facility and Wells Fargo Master Repurchase Facility have been based on SOFR since we entered into the agreements governing these facilities.

Despite our current expectations, we cannot be sure that the changes to the determination of interest under our agreements would approximate LIBOR. On July 29, 2021, the Alternative Reference Rates Committee, or the ARRC, a committee of private market participants convened by the U.S. Federal Reserve Board and the Federal Reserve Bank of New York, formally recommended the SOFR as an alternative to LIBOR. There are significant differences between LIBOR and SOFR, such as LIBOR being an unsecured lending rate while SOFR is a secured lending rate, and SOFR is an overnight rate while LIBOR reflects term rates at different maturities. If our LIBOR-based borrowings are converted to SOFR, the differences between LIBOR and SOFR, plus the recommended spread adjustment, could result in higher interest costs for us, which may have a negative impact on our operating results. Although SOFR is the ARRC’s recommended replacement rate, it is also possible that lenders may instead choose alternative replacement rates that may differ from LIBOR in ways similar to SOFR or in other ways that would result in higher interest costs for us. In addition, the elimination of LIBOR and/or changes to another index could result in mismatches with the interest rate of investments that we are financing, and the overall financial markets may be disrupted as a result of the phase-out or replacement of LIBOR.

Third party expectations relating to ESG factors may impose additional costs and expose us to new risks.

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There is an increasing focus from ~~certain~~ investors, borrowers, tenants, and their customers, employees, ~~and~~ other stakeholders and regulators concerning corporate ~~responsibility,~~sustainability, specifically related to ESG factors. Some investors may use these factors to guide their investment strategies and, in some cases, may choose not to invest in us and/or potential borrowers ~~tenants and their customers~~ may choose not to do business with us ~~our borrowers or their tenants,~~ if they believe our ~~or their~~ policies relating to corporate ~~responsibility~~sustainability are inadequate. Third party providers of corporate ~~responsibility~~sustainability ratings and reports on companies have increased in number, resulting in varied and in some cases inconsistent standards. In addition, the criteria by which ~~companies'~~companies’ corporate ~~responsibility~~sustainability practices are assessed are evolving, which could result in greater expectations of us, our borrowers and their tenants and cause us, our borrowers and their tenants to undertake costly initiatives to satisfy such new criteria. Alternatively, if we, our borrowers or their tenants elect not to or are unable to satisfy such new criteria or do not meet the criteria of a specific third party provider, some investors may conclude that our or their policies with respect to corporate ~~responsibility~~sustainability are inadequate. We and our borrowers and their tenants may face reputational damage in the event that our or their corporate ~~responsibility~~sustainability procedures or standards do not meet the goals we or they have set or the standards set by various constituencies. If we fail to satisfy the expectations of investors or if our borrowers or their tenants fail to satisfy expectations of their customers, employees and other stakeholders or ~~our borrowers'~~if any goals or ~~their tenants’~~ initiatives we or they announce are not executed as planned, our and their reputations and financial results could be adversely affected, net operating income from operations of our borrowers’ and their tenants’ businesses may decrease, our borrowers’ ability to repay our loans may be impaired, risks of ~~delinquency~~default and foreclosure may increase and our results of operations, financial condition, liquidity ~~and business~~ and our ability to make or sustain distribution to our shareholders may be materially adversely impacted.

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We, our borrowers and their tenants are subject to risks from adverse weather, natural disasters and climate events, and costs associated with future legislation designed to address climate change could increase our, our borrowers’ and their tenants’ costs.

We, our borrowers and their tenants are subject to risks and could be exposed to additional costs from adverse weather, natural disasters and climate events. For example, our borrowers’ properties could be severely damaged or destroyed by physical climate risks that could materialize as either singular extreme weather events ~~(for example,~~(such as floods, storms and wildfires) or through long term impacts of climatic conditions (such as precipitation frequency, weather instability and rise of sea levels). Such events could also adversely impact our borrowers and their tenants and cause significant losses if the businesses at our collateral properties cannot be operated due to damage resulting from such events. Further, legislation to address climate change could increase utility costs and other costs of operating properties which, if not offset by rising rental income, could reduce the net operating income at our borrowers’ properties and impact their ability to repay our loans. If we, our borrowers or their tenants fail to adequately prepare for adverse weather, natural disasters and climate events, or costs at our borrowers’ properties increase as a result of future legislation designed to address climate change, net operating income from operations of our borrowers’ properties’ businesses may decrease, our borrowers’ ability to repay our loans may be impaired, risks of ~~delinquency~~default and foreclosure may increase and our results of operations and financial condition may be materially adversely impacted.

We and ~~TRC~~Tremont are subject to state licensing requirements and our or ~~TRC's~~Tremont’s failure to be properly licensed may have a material adverse effect on our operations.

We or ~~TRC~~Tremont are required to hold licenses in certain U.S. states to conduct lending activities, and we or ~~TRC~~Tremont may be required to hold licenses from additional U.S. states in the future. State licensing statutes vary from state to state and may prescribe or impose, among other things:

•

• various recordkeeping requirements;

•restrictions on loan origination and servicing practices, including limits on finance charges and the type, amount and manner of charging fees;

•disclosure requirements;

•requirements that licensees submit to periodic examination;

•surety bond and minimum specified net worth requirements;

•periodic financial reporting requirements;

•notification requirements for changes in principal officers, share ownership or corporate control;

•restrictions on advertising; and

•requirements that loan forms be submitted for review.

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There is no guarantee that we or ~~TRC~~Tremont will be able to obtain these licenses, and efforts to obtain and maintain such licenses may cause us to incur significant expenses. Any failure to be properly licensed under state law or otherwise may have a material adverse effect on us and 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 are subject to laws and regulations at the local, state and federal levels. These laws and regulations, as well as their interpretation, may change from time to time, and new laws and regulations may be enacted. Changes in these laws or regulations or their interpretation, or newly enacted laws or regulations, could require us to change our business practices or introduce us to new or increased competition, which may impose additional costs on us or otherwise adversely affect our business.

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For example, various laws and regulations currently exist that restrict the investment activities of banks and certain other financial institutions but do not apply to us. We believe this regulatory difference may create opportunities for us to successfully grow our business. There has been increasing commentary amongst regulators and intergovernmental institutions on the role of nonbank institutions in providing credit and, particularly, so-called “shadow banking,” a term generally referring to credit intermediation involving entities and activities outside the regulated banking system and increased oversight and regulation of such entities. In the United States, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 established the Financial Stability Oversight Council, or the FSOC, which is comprised of representatives of all the major U.S. financial regulators, to act as the financial system’s systemic risk regulator. Since December 2019, FSOC has focused its systemically important designation approach for nonbank financial companies on an activities-based approach under which an individual firm would only be so designated if it determined that efforts to address the financial stability risks of that firm’s activities by its primary federal and state regulators have been insufficient. FSOC and a number of other regulators and international organizations are continuing to study the shadow banking system. Compliance with any increased regulation of nonbank credit extensions could adversely impact the implementation of our investment strategy and our returns. In an extreme eventuality, it is possible that such regulations could cause us to cease operations. In addition, the Biden Administration ~~along with the Democratic Congress,~~ is taking a more active approach to economic and financial regulation than the Trump Administration, particularly to promote policy goals involving climate change, racial equity, ESG matters, cybersecurity, consumer financial protection and infrastructure. We cannot predict the ultimate content, timing or effect of legislative and/or regulatory action under the Biden Administration nor the impact of such changes on our business and operations.

Further, loans that we originate or acquire may be subject to U.S. federal, state or local laws. Real estate lenders and borrowers may be responsible for compliance with a wide range of laws intended to protect the public interest, including, without limitation, the Americans with Disabilities Act and local zoning laws.

If we or ~~TRC~~Tremont fail to comply with such laws in relation to a loan that we have originated or acquired, legal penalties may be imposed, which could materially and adversely affect us. Jurisdictions with “one action,” “security first” and/or ~~“antideficiency~~“anti-deficiency rules” may limit our ability to foreclose on a collateral property or to realize on obligations secured by a collateral property. In the future, new laws may be enacted or imposed by U.S. federal, state or local governmental entities, and such laws could have a material adverse effect on us and our operations.

Additionally, legislative or other actions relating to taxes could have a negative effect on us. The rules dealing with U.S. federal, state and local taxation are constantly under review by persons involved in the legislative process and by the IRS, the U.S. Department of the Treasury, or the Treasury, and other taxation authorities. We cannot predict with certainty how any changes in the tax laws might affect us, our shareholders, or our borrowers. New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to remain qualified for taxation as a REIT or the tax consequences of such qualification to us and our shareholders.

In the future, 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 have a materially adverse effect on 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.

A number of judicial decisions have recognized the rights of borrowers to sue lending institutions on the basis of various evolving legal theories, collectively termed “lender liability”. Generally, lender liability is founded on the premise that a lender has either violated a duty, whether implied or contractual, of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or

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shareholders. We cannot be sure that such claims will not arise or that we will not be subject to significant liability and losses if claims of this type arise.

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Insurance proceeds onwith 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.

~~Losses~~We generally require that each of the borrowers under our CRE debt investments obtain comprehensive insurance covering the collateral, including liability, fire and extended coverage. We also generally obtain insurance directly on any property we acquire. However, there are certain types of losses, generally losses of a catastrophic nature, such as those caused by hurricanes, flooding, climate change, volcanic eruptions and earthquakes, among other things, losses as a result of outbreaks of pandemics, ~~including the COVID-19 pandemic,~~ or losses from terrorism or acts of war, that may be uninsurable or not commercially insurable. We may not obtain, or require borrowers to obtain, certain types of insurance if it is deemed commercially unreasonable. Inflation, changes in zoning and building codes and ordinances, environmental considerations and other factors also might result in insurance proceeds being inadequate to restore an affected property to its condition prior to a loss or to compensate for related losses. The insurance proceeds we receive as a result of losses to the properties that are collateral for our ~~collateral properties~~loan investments may not be adequate to restore our economic position after losses affecting our investments. Any uninsured or underinsured loss could result in the loss of cash flow from, and reduce the value of, our investments related to such properties and the ability of the borrowers under such investments to satisfy their obligations to us.

Liability relating to environmental matters may adversely impact the value of our investments.

Under various U.S. federal, state and local laws, an owner or operator of real property may be liable for environmental hazards at, or migrating from, its properties, including those created by prior owners or occupants, existing tenants, abutters or other persons. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances. The presence of hazardous substances may adversely affect our borrowers’ ability to refinance or sell, and the value of, our collateral. If an owner of property underlying one of our investments becomes liable for costs of removal of hazardous substances, the ability of the owner to make payments to us may be reduced. If we foreclose on a property underlying our investments, the presence of hazardous substances on the property may adversely affect our ability to sell the property and we may incur substantial remediation costs, causing us to experience losses.

We may not have control over certain of our investments.

Our ability to manage our investments may be limited by the form in which they are made. In certain situations, we may:

•

• acquire or retain investments subject to rights of senior classes and servicers under intercreditor or servicing agreements;

•acquire or retain only a minority and/or a non-controlling participation in an underlying investment;

•pledge our investments as collateral for financing arrangements;

•co-invest with others through partnerships, joint ventures or other entities, thereby acquiring non-controlling interests; or

•rely on independent third party management or servicing with respect to the management of a particular investment.

We may not be able to exercise control over all aspects of our investments. For example, our rights to control the process following a borrower default may be subject to the rights of senior or junior creditors or servicers whose interests may not be aligned with ours. A partner or co-venturer may have economic or business interests or goals that are inconsistent with ours or may be in a position to take action contrary to our investment objectives. In addition, in certain circumstances we may be liable for the actions of our partners or co-venturers.

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RMR ~~LLC~~ and ~~our Manager, TRC,~~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.

RMR ~~LLC~~ and ~~TRC~~Tremont rely on information technology and systems, including the Internet and cloud-based infrastructures, commercially available software and their internally developed applications, to process, transmit, store and safeguard information and to manage or support a variety of their business processes, including financial transactions and maintenance of records, which may include personal identifying information of employees and borrower, guarantor, sponsor and investment data. If ~~these systems~~we, RMR, Tremont or our or their third party vendors experience material security or other ~~breaches,~~failures, inadequacies or interruptions ofin our or their information technology systems, we could incur material costs and losses and our operations could be ~~disrupted as a result. Further, third party vendors could experience similar events with respect to their information technology and systems that impact the products and services they provide to~~disrupted. RMR LLC, TRC or us. RMR LLC and TRC rely on commercially available systems, software, tools and monitoring, as well as their internally developed applications and internal procedures and personnel, to provide security for

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processing, transmitting, storing and safeguarding confidential borrower, guarantor, sponsor and vendor information, such as personally identifiable information related to our borrowers, tenants and others and information regarding their and our financial accounts. RMR LLC and TRC taketakes various actions, and ~~incur~~incurs significant costs, to maintain and protect the operation and security of ~~their~~its information technology and systems, including the data maintained in those ~~systems and to continuously monitor cybersecurity protections and disclosure controls.~~systems. However, ~~it is possible that~~ these measures ~~will~~may not prevent the systems’ improper functioning or a compromise in security, such as in the event of a cyberattack or the improper disclosure of personally identifiable information.

Security breaches, computer viruses, attacks by hackers, online fraud schemes and similar breaches have created and can create significant system disruptions, shutdowns, fraudulent transfer of assets or unauthorized disclosure of confidential information. The risk of a security breach or disruption, particularly through cyberattack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the ~~number,~~ intensity and sophistication of attempted attacks and intrusions from around the world have increased. ~~Our~~The cybersecurity risks to us, RMR, Tremont and third party vendors are heightened by, among other things, the evolving nature of the threats faced, advances in computer capabilities, new discoveries in the field of cryptography and new and increasingly sophisticated methods used to perpetrate illegal or fraudulent activities, ~~against RMR LLC or TRC,~~ including cyberattacks, email or wire fraud and other attacks exploiting security vulnerabilities in ~~RMR LLC’s, TRC’s~~RMR’s, Tremont’s or other third parties’ information technology networks and systems or operations. ~~Any failure~~Although much of RMR’s and Tremont’s staff returned to RMR’s offices during the COVID-19 pandemic, flexible working arrangements have resulted in a higher extent of remote working than they experienced prior to the pandemic. This and other possible changing work practices have adversely impacted, and may in the future adversely impact, RMR’s and Tremont’s ability to maintain the security, proper function and availability of ~~RMR LLC’s or TRC’s~~RMR’s and Tremont’s information technology and systems since remote working by their employees could strain RMR’s and Tremont’s technology resources and introduce operational risk, including heightened cybersecurity risk. Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that have sought, and may seek, to exploit remote working environments. In addition, RMR’s or ~~certain~~Tremont’s data security, data privacy, investor reporting and business continuity processes could be impacted by a third party’s inability to perform in a remote work environment or by the failure of, or attack on, its information systems and technology. Any failure by RMR, Tremont or other third party ~~vendors’ failure~~vendors to ~~similarly protect~~maintain the security, proper function and availability of their information technology and systems ~~that are relevant to RMR LLC’s, TRC’s or our operations, or to safeguard RMR LLC’s, TRC or our business processes, assets and information~~ could result in financial losses, interrupt our operations, damage our reputation, cause us to be in default of material contracts and subject us to liability claims or regulatory penalties, any of which could materially and adversely affect our business and the market value of our securities.

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~~We may be unable to realize the anticipated benefits or expected expense savings from the Merger.~~

We may be unable to realize the anticipated benefits or expected expense savings from the Merger as well as other efficiencies related to the integration of TRMT following the Merger. If we fail to effectively integrate the TRMT business, manage our expanded portfolio and obtain additional cost-effective capital to make additional investments, we may not realize the expected benefits to our business, financial condition and results of operations. In addition, we currently expect to realize annual general and administrative expense savings compared to what we and TRMT incurred in the aggregate prior to the Merger or would have incurred if the Merger had not occurred resulting from reduced corporate and administrative costs, reduced SEC filing requirements and other cost savings due to maintaining one public company rather than two public companies. In fact, we may realize less or no savings and any annual general and administrative expenses incurred may be higher than the aggregate amounts we and TRMT incurred prior to the Merger or would have incurred if the Merger had not occurred. Our failure to realize the anticipated benefits and expected expense savings from the Merger could materially adversely affect our business, financial results and stock price.

Risks Relating to our Financing

We have ~~significant~~ debt and expect to incur additional debt, and our governing documents contain no limit on the amount of debt we may incur.

As of December 31, ~~2021,~~2022, our debt under our Secured Financing Facilities represented ~~56.6%~~63.1% of our total assets. Subject to market conditions and availability, we expect to incur additional debt through our Secured Financing Facilities or other repurchase or credit facilities (including term loans and revolving facilities), public and private debt issuances or financing arrangements that we may enter into in the future. The amount of leverage we use will vary depending on our available investment opportunities, our available capital, our ability to obtain and access financing arrangements with lenders and the lenders’ and our estimate of the stability of our loan portfolio’s cash flow. Our governing documents contain no limit on the amount of debt we may incur, and we may significantly increase the amount of leverage we utilize at any time without approval of our shareholders. The amount of leverage on individual assets may vary, with leverage on some assets substantially higher than others. Leverage can enhance our potential returns but can also exacerbate our losses.

Incurring substantial debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that:

•

• our cash flow from operations may be insufficient to make required payments of principal and interest on the debt or we may fail to comply with covenants contained in our Secured Financing Facilities, which would likely result in: (1) acceleration of such debt (and any other debt arrangements containing a cross default or cross acceleration provision) that we may be unable to repay from internal funds or to refinance on favorable terms, or at all; (2) our inability to borrow unused or undrawn amounts under our Secured Financing Facilities, even if we are current in

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payments on borrowings under those arrangements; and/or (3) the loss of some or all of our assets to foreclosures or forced sales;

•our debt may increase our vulnerability to adverse economic, market and industry conditions with no assurance that our investment yields will increase to match our higher financing costs;

•we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, distributions to our shareholders or other purposes; and

•we may not be able to refinance maturing debts.

We cannot be sure that our leverage strategies will be successful.

The duration of our debt leverage and our investments may not match.

We generally intend to structure our debt leverage so that we minimize the difference between the term of our investments and the term of the leverage we use to finance them; however, we may not succeed in doing so. In the event that our leverage is for a shorter term than our investments, we may not be able to extend or find appropriate replacement leverage, which could require us to sell certain investments before we otherwise might. In the event that our leverage is for a longer term than our investments, we may not be able to replace our investments as they mature with new investments or at all, which could negatively impact our earnings.

We intend to structure our leverage so that we minimize the difference between the index of our investments and the index of our debt leverage, by financing floating rate investments with floating rate leverage and fixed rate investments with fixed rate leverage. If such a floating rate or fixed rate product is not available to us on reasonable terms, we may use hedging instruments to create such a match. Our attempts to mitigate the risk of a mismatch with the duration or index of our investments and leverage will be subject to factors outside of our control, such as the availability to us of favorable financing and hedging options, and we may not be successful.

The risks of duration mismatches are magnified by the potential for the extension of loans in order to maximize the likelihood and magnitude of their recovery value in the event the loans experience credit or performance challenges; use of these asset management practices would effectively extend the duration of our investments, while our liabilities may have set maturity dates.

~~A failure~~We intend to structure our leverage so that we minimize the difference between the index of our investments and the index of our debt leverage, by financing floating rate investments with floating rate leverage. Our attempts to mitigate the risk of a mismatch with the duration or index of our investments and leverage will be subject to factors outside of our control, such as the availability to us of favorable financing and hedging options, and we may not be successful.

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Our Secured Financing Facilities require us to comply with restrictive covenants ~~in our Secured Financing Facilities would have a material adverse effect on us,~~ and any future financings may require us to ~~provide additional collateral~~comply with similar or ~~pay down debt.~~

more restrictive covenants.

We are subject to various restrictive covenants contained in our Secured Financing Facilities and we may be subject to similar or additional covenants in connection with future financing arrangements. Our Secured Financing Facilities require us to maintain compliance with various financial covenants, including a minimum tangible net worth and cash liquidity, and specified financial ratios, such as total debt to tangible net worth and a minimum interest coverage ratio. Financing arrangements that we may enter into in the future may contain similar or more restrictive covenants. These covenants may limit our flexibility to pursue certain investments or incur additional debt. If we fail to meet or satisfy any of these covenants, we may be in default under the agreements governing the applicable arrangements, and our lenders could elect to accelerate our obligation to repurchase certain assets, declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral or enforce their rights against existing collateral.

We may also be subject to cross default and acceleration rights and, with respect to collateralized debt, the posting of additional collateral or foreclosure upon default. These covenants and restrictions could also make it difficult for us to satisfy the requirements necessary to maintain our qualification for taxation as a REIT under the IRC.

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.

Our Secured Financing Facilities and any additional repurchase or bank credit facilities or debt arrangements that we may enter into to finance future investments may involve the risk that the value of the investments sold by us or pledged to the provider of such repurchase or bank credit facilities or debt arrangements may decline, and, in such circumstances, we would likely be required to provide additional collateral or to repay all or a portion of the funds advanced thereunder. With respect to our Master Repurchase Facilities, UBS, Citibank and ~~Citibank, respectively,~~Wells Fargo have sole discretion to determine the market value of the

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investments that serve as collateral under these facilities for purposes of determining whether we are required to pay margin to UBS, Citibank and ~~Citibank, respectively.~~Wells Fargo. Where a decline in the value of collateral ~~including as a result of the impact of the COVID-19 pandemic and its aftermath,~~ results in a margin deficit, UBS, Citibank and ~~Citibank, respectively,~~Wells Fargo may require us to eliminate that margin deficit through a combination of purchased asset repurchases and cash transfers to UBS, Citibank and ~~Citibank,~~Wells Fargo, respectively, subject to UBS’s, Citibank’s or ~~Citibank’s~~Wells Fargo’s respective approval. We may not have funds available to eliminate any such margin deficit and may be unable to raise funds from alternative sources on favorable terms or at all, which would likely result in a default under any such master repurchase agreement. In the event of any such default, UBS, Citibank and ~~Citibank~~Wells Fargo could accelerate our outstanding debts and terminate our ability to obtain additional advancements under the applicable master repurchase facility, and our financial condition and prospects would be materially and adversely affected. Any ~~debt~~repurchase facility arrangements that we may enter into in the future would likely contain similar provisions. In addition, if any of our current or future lenders file for bankruptcy or become insolvent, our investments that serve as collateral under the applicable repurchase or bank credit facility or debt arrangement may become subject to bankruptcy or insolvency proceedings, thus depriving us, at least temporarily, of the benefit of those assets. Such an event could restrict our access to additional debt arrangements and, therefore, increase our cost of capital. Lenders under any future repurchase or bank credit facilities or debt arrangements may also require us to maintain a certain amount of cash or set aside assets sufficient to maintain a specified liquidity position that would allow us to satisfy our collateral obligations. ~~As a result, we may not be able to leverage our assets to maximum capacity, which could reduce our return on assets.~~ If we are unable to meet any such collateral obligations, our financial condition and prospects could deteriorate rapidly.

Any default in a repurchase agreement may cause us to experience a loss.

If any counterparty to a repurchase transaction under a repurchase agreement or the counterparty to any other repurchase financing arrangement we may enter defaults on its obligation to resell the underlying asset back to us at the end of the transaction term, or if the value of the underlying asset has declined as of the end of that term, or if we default on our obligations under such repurchase agreement, we may incur a loss on such repurchase ~~transactions.~~transaction.

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Risks Relating to our Relationships with ~~TRC~~Tremont and RMR ~~LLC~~

We are dependent upon ~~our Manager, TRC,~~Tremont and its personnel. We may be unable to find suitable replacements if our management agreement is terminated.

We do not have an office separate from ~~TRC~~Tremont and do not have any employees. Our executive officers also serve as officers of ~~TRC~~Tremont and of ~~RMR LLC. TRC~~RMR. Tremont itself has limited resources and is dependent upon facilities and services available to ~~TRC~~Tremont under its shared services agreement with ~~RMR LLC. TRC~~RMR. Tremont is not obligated to dedicate any specific personnel exclusively to us, and RMR ~~LLC~~ is not obligated to dedicate any specific personnel to ~~TRC~~Tremont for services for us or otherwise. Although ~~TRC~~Tremont is not currently providing management services to any other mortgage REIT, it may in the future provide management services to other mortgage REITs or to other clients that compete with us. Our officers are not obligated to dedicate any specific portion of their time to our business.

Our officers have responsibilities for other companies to which RMR ~~LLC~~ provides management services and may in the future have responsibilities for other companies to which ~~TRC~~Tremont may provide management services. As a result, our officers may not always be able to devote sufficient time to the management of our business, and we may not receive the level of support and assistance that we would receive if we were internally managed or if we had different management arrangements. The term of our management agreement renews for successive one-year periods, subject to non-renewal in accordance with the agreement. If our management agreement or ~~TRC’s~~Tremont’s shared services agreement with RMR ~~LLC~~ is terminated and no suitable replacement is found, we may not be able to continue in our business.

~~TRC~~Tremont has broad discretion in operating our day to day business.

~~TRC~~Tremont is authorized to follow broad operating and investment guidelines and, therefore, has discretion in identifying investments that will be appropriate for us, as well as our individual operating and investment decisions. Our Board of Trustees periodically reviews our operating and investment guidelines and our operating activities, investments and financing arrangements, but our Board of Trustees does not review or approve each decision made by ~~TRC~~Tremont on our behalf. In addition, in conducting periodic reviews, our Board of Trustees relies primarily on information provided to it by ~~TRC. TRC~~Tremont. Tremont may exercise its discretion in a manner that results in investment returns that are substantially below expectations or that results in losses.

Our management structure and agreements and relationships with ~~TRC~~Tremont and RMR ~~LLC~~ and ~~RMR LLC’s~~RMR’s and its controlling shareholder’s relationships with others may create conflicts of interest, or the perception of such conflicts, and may restrict our investment activities.

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We are subject to conflicts of interest arising out of our relationship with ~~TRC,~~Tremont, RMR, ~~LLC,~~ their affiliates and entities to which they provide management services. ~~TRC~~Tremont is a subsidiary of RMR, ~~LLC,~~ which is the majority owned operating subsidiary of RMR Inc. One of our Managing Trustees and Chair of our Board of Trustees, Adam D. Portnoy, asis the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., and he is also a director of Tremont, the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc., and an officer and employee of ~~RMR LLC and a director of TRC.~~RMR. He is also a managing director or managing trustee of all the other public companies to which RMR ~~LLC~~ or its subsidiaries provide management services, including us.

Matthew P. Jordan, our other Managing Trustee, is a director and the president and chief executive officer of ~~TRC~~Tremont and an officer of RMR ~~LLC~~Inc. and ~~RMR Inc.~~RMR. Thomas J. Lorenzini, our President, is an officer of RMR and ~~G. Douglas Lanois,~~an officer and employee of Tremont. Tiffany R. Sy, our Chief Financial Officer and Treasurer, ~~are each an officer of RMR LLC and~~is an officer and employee of ~~TRC. Prior to the Merger, Messrs. Portnoy~~RMR and ~~Jordan were also TRMT’s managing trustees, and Messrs. Lorenzini and Lanois also served as president and chief financial~~an officer ~~and treasurer, respectively,~~ of ~~TRMT.~~ Tremont.Messrs. Portnoy, Jordan and Lorenzini and ~~Lanois~~Ms. Sy have duties to RMR ~~LLC~~ and to ~~TRC,~~Tremont, as well as to us, and we do not have their undivided attention. They and other RMR ~~LLC~~ personnel may have conflicts in allocating their time and resources between us and RMR ~~LLC~~ and other companies to which RMR ~~LLC~~ or its subsidiaries provide services. Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR ~~LLC~~ or its subsidiaries provide management services. Joseph L. Morea and Jeffrey P. Somers, two of our Independent Trustees, previously served as independent trustees of TRMT. In addition, John L. Harrington, who resigned from our Board of Trustees at the Effective Time of the Merger, previously served as an independent trustee of TRMT.

~~TRC,~~

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Tremont, RMR, ~~LLC,~~ their affiliates and the entities to which they provide management services are generally not prohibited from competing with us. In addition, ~~TRC,~~Tremont, RMR ~~LLC~~ and their subsidiaries may sponsor or manage other funds, REITs or other entities, including entities that make investments similar to the investments we make, and including entities in which ~~TRC~~Tremont or its affiliates or personnel may have a controlling, sole or substantial economic interest. ~~TRC regularly provides mortgage brokerage services, originating and arranging CRE loans between borrowers and other lenders.~~ As a result, conflicts of interests may exist for ~~TRC,~~Tremont, RMR ~~LLC~~ and their affiliates with respect to the allocation of investment opportunities. In our management agreement, we specifically acknowledge these conflicts of interest and agree that ~~TRC,~~Tremont, RMR ~~LLC~~ and their affiliates may resolve such conflicts in good faith and in their fair and reasonable discretion and may allocate investments, including those within our investment objectives, to RMR ~~LLC~~ and its other clients, including clients in which ~~TRC,~~Tremont, its affiliates or their personnel may have a controlling, substantial economic or other interest. Accordingly, we may lose investment opportunities to, and may compete for investment opportunities with, other businesses managed by ~~TRC,~~Tremont, RMR ~~LLC~~ or their subsidiaries. In addition to the fees payable to ~~TRC~~Tremont under our management agreement, ~~TRC~~Tremont and its affiliates may benefit from other fees paid to it in respect of our investments. For example, if we securitize some of our CRE loans, ~~TRC~~Tremont or its affiliates may act as the collateral manager for such ~~securitizations.~~securitization. In any of these or other capacities, ~~TRC~~Tremont and its affiliates may receive fees for their services if approved by a majority of our Independent Trustees. In the case of a conflict involving the allocation of investment opportunities among advisory clients of ~~TRC, TRC~~Tremont, Tremont will endeavor to allocate such investment opportunities in a fair and equitable manner, consistent with ~~TRC’s~~Tremont’s allocation policies, taking into account such factors as it deems appropriate. With respect to mortgage loan investments, which are the only types of investment opportunity that may be appropriate for more than one advisory client of ~~TRC, TRC~~Tremont, Tremont has established an investment committee that is responsible for evaluating mortgage loan origination opportunities and making determinations as to whether to move forward with funding a loan, taking into account advisory clients’ investment considerations. In circumstances in which an investment opportunity, after taking into account advisory clients’ investment considerations, is deemed appropriate for more than one advisory client, ~~TRC~~Tremont will generally allocate such opportunity on a rotational basis. ~~Prior to the Merger, TRC provided management services to TRMT. Since the consummation of the Merger, we~~We are currently the only mortgage REIT to which ~~TRC~~Tremont is providing management services, but ~~TRC~~Tremont may provide management services to other mortgage REITs in the future.

In addition, we may in the future enter into additional transactions with ~~TRC,~~Tremont, RMR, ~~LLC,~~ their affiliates or entities managed by them or their subsidiaries. In particular, we may provide financing to entities managed by ~~TRC,~~Tremont, RMR ~~LLC~~ or their subsidiaries, or co-invest with, purchase assets from, sell assets to or arrange financing from any such entities. In addition to his investments in RMR Inc. and RMR, ~~LLC,~~ Adam D. Portnoy holds equity investments in other companies to which RMR ~~LLC~~ or its subsidiaries provide management services and some of these companies have significant cross ownership interests, including, for example: as of December 31, ~~2021,~~2022, Mr. Portnoy beneficially owned, in aggregate, ~~6.9%~~13.4% of our outstanding common shares (including through ~~our Manager)~~Tremont and ABP Trust), ~~6.2%~~6.1% of AlerisLife Inc.~~'s (formerly known as Five Star Senior Living Inc.)~~’s outstanding common stock (including through ABP Trust), 1.1% of Diversified Healthcare Trust’s outstanding common shares, 1.2% of Industrial Logistics Properties Trust’s outstanding common shares, 1.5% of Office Properties Income ~~Trust’s outstanding common shares, 1.1% of Diversified Healthcare~~ Trust’s outstanding common shares, 1.1% of Service Properties Trust’s outstanding common shares and 4.4% of TravelCenters of America Inc.’s outstanding common shares (including through ~~RMR LLC)~~RMR). Our executive officers may also own equity investments in other companies to which ~~TRC,~~Tremont, RMR ~~LLC~~ or their subsidiaries provide management services. These multiple responsibilities, relationships and cross ownerships may give rise to conflicts of interest or the perception of such conflicts of interest with respect to matters involving us, RMR Inc., RMR, ~~LLC,~~ our Managing Trustees, the other companies to which

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RMR ~~LLC~~ or its subsidiaries provide management services and their related parties. Conflicts of interest or the perception of conflicts of interest could have a material adverse impact on our reputation, business and the market ~~price~~value of our common shares and other securities and we may be subject to increased risk of litigation as a result.

We cannot be sure that our Code of Conduct, governance guidelines, investment allocation policy or other procedural protections we adopt will be sufficient to enable us to identify, adequately address or mitigate actual or alleged conflicts of interest or ensure that our transactions with related persons are made on terms that are at least as favorable to us as those that would have been obtained with an unrelated person.

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Our management agreement’s fee and expense structure may not create proper incentives for ~~TRC, our Manager.~~

Tremont.

We are required to pay ~~TRC~~Tremont base management fees regardless of the performance of our loan portfolio. ~~TRC’s~~Tremont’s entitlement to a base management fee ~~that~~ is ~~not~~ based only in part upon our performance or results, which might reduce its incentive to devote its time and effort to seeking investments that provide attractive, risk adjusted returns for us. Because the base management fees are also based in part on our outstanding equity, ~~TRC~~Tremont may be incentivized to advance strategies that increase our equity capital. Increasing our equity capital through the sale of our common shares will likely be dilutive to our existing shareholders and may not improve returns for those shareholders or the market price of our common shares. In addition, ~~TRC~~Tremont may earn incentive fees each quarter based on our Distributable Earnings in a specified period in excess of a specified return. This may create an incentive for ~~TRC~~Tremont to invest in assets with higher yield potential, which are generally riskier or more speculative, or to sell assets prematurely for a gain in an effort to increase our near term net income and thereby increase the incentive fees to which ~~TRC~~Tremont is entitled. This incentive fee formula may encourage ~~TRC~~Tremont to recommend investments or take other actions which result in losses to us. In addition, we are required to pay or to reimburse ~~TRC~~Tremont for all costs and expenses of our operations (other than the costs of ~~TRC’s~~Tremont’s employees who provide services to us), including, but not limited to, the costs of rent, utilities, office furniture, equipment, machinery, facilities and other overhead type expenses, the costs of legal, accounting, auditing, tax planning and tax return preparation, consulting services, diligence costs related to our investments, investor relations expenses and other professional services, personnel and support shared by ~~TRC~~Tremont and other costs and expenses not specifically required under our management agreement to be borne by ~~TRC,~~Tremont, and other costs our Independent Trustees may agree to. Some of these overhead, professional and other services are provided by RMR ~~LLC~~ pursuant to a shared services agreement between ~~TRC~~Tremont and ~~RMR LLC.~~RMR. We are also obligated to pay our pro rata share of ~~RMR LLC’s~~RMR’s costs for providing our internal audit function. Our obligation to reimburse ~~TRC~~Tremont for certain shared services costs may reduce ~~TRC’s~~Tremont’s incentive to efficiently manage those costs, which may increase our costs.

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.

Our management agreement is between related parties and its terms, including the fees payable to ~~TRC,~~Tremont, may be less favorable to us than if they had been negotiated on an arm’s length basis with an unrelated party. Pursuant to the terms of our management agreement, we are required to reimburse ~~TRC~~Tremont for the fees and other costs it pays to RMR ~~LLC~~ for shared services RMR ~~LLC~~ provides with respect to us. Because of the relationships among ~~TRC~~Tremont and RMR ~~LLC~~ and us, the terms of our management agreement were not negotiated on an arm’s length basis, and we cannot be sure that these terms are as favorable to us as they would have been 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.

Termination of our management agreement without a cause event will be difficult and costly. We may not terminate our management agreement without a cause event during its initial term through December 31, 2023. Our Independent Trustees will review ~~TRC's~~Tremont’s performance and the management fees annually and, following the initial term ending December 31, 2023, our management agreement may be terminated annually without a cause event upon the affirmative vote of at least two-thirds of our Independent Trustees based upon a determination that: (1) ~~TRC’s~~Tremont’s performance is unsatisfactory and materially detrimental to us; or (2) the base management fee and incentive fee, taken as a whole, payable to ~~TRC~~Tremont are not fair to us (in the case of (2), provided that ~~TRC~~Tremont will be afforded the opportunity to renegotiate the base management fee and incentive fee prior to termination). We will be required to provide ~~TRC~~Tremont with ~~180 days’~~ prior written notice of any such ~~termination.~~

termination by not later than 180 days prior to the expiration of the term of the agreement.

Additionally, in the event our management agreement is terminated by us without a cause event or by ~~TRC~~Tremont for a material breach, we will be required to pay ~~TRC~~Tremont a termination fee equal to (i) three times the sum of (a) the average annual base management fee and (b) the average annual incentive fee, in each case paid or payable to ~~TRC~~Tremont during the twenty-four (24) month period immediately preceding the most recently completed calendar quarter prior to the date of termination or, if such termination occurs ~~within 24 months of its initial commencement,~~prior to December 31, 2023, the base management fee and the incentive fee will be

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annualized for such two year period based on such fees earned by ~~TRC during such period,~~Tremont from January 5, 2021 through the most recently completed calendar quarter prior to the termination date, plus (ii) $1.6 million. Additionally, in connection with the Merger and the termination of TRMT’s management agreement with ~~TRC,~~Tremont, we agreed that certain of the expenses ~~TRC~~Tremont had paid pursuant to such management agreement will be included in the “Termination Fee” under and as defined in our existing management agreement with ~~TRC.~~Tremont. These provisions increase the cost to us of terminating our management agreement and adversely affect our ability to terminate ~~TRC~~Tremont or not renew our management agreement without a cause event. These terms of our management agreement may discourage a change ~~in our~~of control of us, including a change of control ~~of us,~~ which might result in payment of a premium for our common shares.

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~~TRC~~Tremont does not guaranty our performance; moreover, we could experience poor performance or losses for which ~~TRC~~Tremont would not be liable. ~~TRC’s~~Tremont’s liability is limited under our management agreement, and we have agreed to indemnify ~~TRC~~Tremont against certain liabilities.

~~TRC~~Tremont maintains a contractual as opposed to a fiduciary relationship with us. ~~TRC~~Tremont does not guaranty our performance. Pursuant to our management agreement, ~~TRC~~Tremont does not assume any responsibility other than to render the services called for thereunder in good faith and is not responsible for any action of our Board of Trustees in following or declining to follow its advice or recommendations. We could experience poor performance or losses for which ~~TRC~~Tremont would not be liable. Under the terms of our management agreement, ~~TRC~~Tremont and its affiliates, including RMR, ~~LLC,~~ and their respective directors, trustees, officers, shareholders, owners, members, managers, employees and personnel will not be liable to us or any of our Trustees, shareholders or subsidiaries for any acts or omissions related to the provision of services to us under our management agreement, except by reason of acts or omissions that are proved to constitute bad faith, fraud, intentional misconduct, gross negligence or reckless disregard of the duties of ~~TRC~~Tremont under our management agreement. In addition, under the terms of our management agreement, we agree to indemnify, hold harmless and advance expenses to ~~TRC~~Tremont and its affiliates, including RMR, ~~LLC,~~ and their respective directors, trustees, officers, shareholders, owners, members, managers, employees and personnel from and against all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever, including all reasonable attorneys’, accountants’, and experts’ fees and expenses, arising from acts or omissions related to the provision of services to us or the performance of any matter pursuant to an instruction by our Board of Trustees, except to the extent it is proved that such acts or omissions constituted bad faith, fraud, intentional misconduct, gross negligence or reckless disregard of the duties of ~~TRC~~Tremont under our management agreement. Such persons will also not be liable for trade errors that may result from ordinary negligence, including errors in the investment decision making or trade process.

~~TRC~~Tremont may change its processes for identifying, evaluating and managing investments and the personnel performing those functions for us without our or our shareholders’ consent at any time.

~~TRC~~Tremont may change its personnel and processes for identifying, evaluating and managing investments for us without our or our shareholders’ consent at any time. In addition, we cannot be sure that ~~TRC~~Tremont will follow its processes. Changes in ~~TRC’s~~Tremont’s personnel and processes may result in fewer investment opportunities for us, inferior diligence and underwriting standards or adversely affect the collection of payments on, and the preservation of our rights with respect to, our investments, any of which may adversely affect our operating results.

Our management agreement permits our Trustees and officers, ~~TRC~~Tremont and its affiliates, including RMR, ~~LLC,~~ and their respective directors, trustees, officers, agents and employees to retain business opportunities for their own benefit and to compete with us.

In recognition of the fact that our Trustees and officers, ~~TRC~~Tremont and its affiliates, including RMR, ~~LLC,~~ and their respective directors, trustees, officers, agents and employees may engage in other activities or lines of business similar to those in which we engage, our management agreement provides that if such a person acquires knowledge of a potential business opportunity, we renounce, on our behalf and on behalf of our subsidiaries, any potential interest or expectation in, or right to be offered or to participate in, such business opportunity to the maximum extent permitted by Maryland law. Accordingly, to the maximum extent permitted by Maryland law: (1) no such person is required to present, communicate or offer any business opportunity to us or any subsidiaries; and (2) such persons, on their own behalf and on behalf of ~~TRC,~~Tremont, any affiliate of such person or ~~TRC~~Tremont and any other person to which such person, RMR ~~LLC~~ or any of their subsidiaries provide management services, will have the right to hold and exploit any business opportunity, or to direct, recommend, offer, sell, assign or otherwise transfer such business opportunity to any person other than us. Consequently, our management agreement permits our Trustees and officers and ~~TRC~~Tremont and its affiliates, including RMR, ~~LLC,~~ to engage in activities that compete with us.

Disputes with ~~TRC~~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.

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Our management agreement with ~~TRC~~Tremont provides that any dispute arising thereunder will be referred to mandatory, binding and final arbitration proceedings if we, or any other party to such dispute, unilaterally so demands. As a result, we and our shareholders would not be able to pursue litigation in state or federal court against ~~TRC,~~Tremont, if we or any other parties against whom the claim is made unilaterally demand the matter be resolved by arbitration. In addition, the ability to collect attorneys’ fees or other damages may be limited in the arbitration proceedings, which may discourage attorneys from agreeing to represent parties wishing to bring such litigation.

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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.

Companies with business dealings with related persons and entities may more often be the target of dissident shareholder trustee nominations, dissident shareholder proposals and shareholder litigation alleging conflicts of interest in their business dealings. Our relationships with ~~TRC,~~Tremont, RMR, ~~LLC,~~ their affiliates and entities to which they provide management services, Adam D. Portnoy and other related persons of RMR ~~LLC~~ may precipitate such activities. Shareholder litigation and dissident shareholder activities, if instituted against us, could result in substantial costs, and diversion of our management’s attention and could have a material adverse impact on our reputation and business.

~~TRC~~Tremont is subject to extensive regulation as an investment adviser, which could adversely affect its ability to manage our business.

~~TRC~~Tremont is subject to regulation as an investment adviser by various regulatory authorities that are charged with protecting the interests of its clients, including us. ~~TRC~~Tremont could be subject to civil liability, criminal liability or sanction, including revocation of its registration as an investment adviser, censures, fines or temporary suspension or permanent bar from conducting business, if it is found to have violated any of the laws or regulations governing investment advisers. Any such liability or sanction could adversely affect ~~TRC’s~~Tremont’s ability to manage our business. ~~TRC~~Tremont must continually address conflicts between its interests and those of its clients, including us. In addition, the SEC and other regulators have increased their scrutiny of conflicts of interest. ~~TRC~~Tremont has procedures and controls that are reasonably designed to address these issues. However, appropriately dealing with conflicts of interest is complex and difficult and if ~~TRC~~Tremont fails, or appears to fail, to deal appropriately with conflicts of interest, it could face litigation or regulatory proceedings or penalties, any of which could adversely affect its ability to manage our business.

Risks Relating to our Organization and Structure

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 declaration of trust prohibits any shareholder, other than ~~TRC,~~Tremont, RMR ~~LLC~~ and their respective affiliates (as defined) and certain persons who have been exempted by our Board of Trustees, from owning, directly and by attribution, more than 9.8% (in value or number of shares, whichever is more restrictive) of any class or series of our outstanding shares of beneficial interest, including our common shares. This provision of our declaration of trust is intended to, among other purposes, assist with our REIT compliance under the IRC and otherwise promote our orderly governance. However, this provision may also inhibit acquisitions of a significant stake in us and may deter, delay or prevent a change of control of us or unsolicited acquisition proposals that a shareholder may consider favorable. Additionally, provisions contained in our declaration of trust and bylaws or under Maryland law may have a similar impact, including, for example, provisions relating to:

•

• the division of our Trustees into three classes, with the term of one class expiring each year;

•limitations on shareholder voting rights with respect to certain actions that are not approved by our Board of Trustees;

•the authority of our Board of Trustees, and not our shareholders, to adopt, amend or repeal our bylaws and to fill vacancies on our Board of Trustees;

•shareholder voting standards which require a supermajority of shares for approval of certain actions;

•the fact that only our Board of Trustees, or, if there are no Trustees, our officers, may call shareholder meetings and that shareholders are not entitled to act without a meeting;

•required qualifications for an individual to serve as a Trustee and a requirement that certain of our Trustees be “managing trustees” and other Trustees be “independent trustees,” as defined in our governing documents;

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• limitations on the ability of our shareholders to propose nominees for election as Trustees and propose other business to be considered at a meeting of our shareholders;

•limitations on the ability of our shareholders to remove our Trustees;

•the authority of our Board of Trustees to create and issue new classes or series of shares (including shares with voting rights and other rights and privileges that may deter a change of control of us) and issue additional common shares;

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•restrictions on business combinations between us and an interested shareholder that have not first been approved by our Board of Trustees (including a majority of Trustees not related to the interested shareholder); and

•the authority of our Board of Trustees, without shareholder approval, to implement certain takeover defenses.

As changes occur in the marketplace for corporate governance policies, the above provisions may change, be removed, or new ones may be added.

Our rights and the rights of our shareholders to take action against our Trustees and officers are limited.

Our declaration of trust limits the liability of our Trustees and officers to us and our shareholders for money damages to the maximum extent permitted under Maryland law. Under current Maryland law, our Trustees and officers will not have any liability to us and our shareholders for money damages other than liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty by the Trustee or officer that was established by a final judgment as being material to the cause of action adjudicated.

Our declaration of trust and indemnification agreements require us to indemnify, to the maximum extent permitted by Maryland law, any present or former Trustee or officer who is made or threatened to be made a party to a proceeding by reason of his or her service in these and certain other capacities. In addition, we may be obligated to pay or reimburse the expenses incurred by our present and former Trustees and officers without requiring a preliminary determination of their ultimate entitlement to indemnification.

As a result of these limitations on liability and indemnification, we and our shareholders may have more limited rights against our present and former Trustees and officers than might ~~otherwise exist absent the provisions in our declaration of trust and indemnification agreements or that might~~ exist with other companies, which could limit ~~our shareholders’~~shareholder recourse in the event of actions that some shareholders may believe are not in ~~their~~our best interest.

Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum ~~they deem favorable~~ for disputes with us or our Trustees, officers, manager ~~agents~~ or ~~employees.~~agents.

Our bylaws currently provide that, unless the dispute has been referred to binding arbitration, the Circuit Court for Baltimore City, Maryland will be the sole and exclusive forum for: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim for breach of a fiduciary duty owed by any ~~Trustee, officer,~~of our Trustees, officers, manager ~~agent~~ or ~~employee of ours~~other agents to us or our shareholders; (3) any action asserting a claim against us or any ~~Trustee, officer,~~of our Trustees, officers, manager ~~agent~~ or ~~employee of ours~~other agents arising pursuant to Maryland law, our declaration of trust or bylaws brought by or on behalf of a shareholder, either on his, her or its own behalf, on our behalf or on behalf of any series or class of our shareholders or shareholders against us or any ~~Trustee, officer,~~of our Trustees, officers, manager ~~agent~~ or ~~employee of ours,~~other agents, including any claims relating to the meaning, interpretation, effect, validity, performance or enforcement of our declaration of trust or bylaws; or (4) any action asserting a claim against us or any ~~Trustee, officer,~~of our Trustees, officers, manager ~~agent~~ or ~~employee of ours~~other agents that is governed by the internal affairs ~~doctrine.~~doctrine of the State of Maryland. The exclusive forum provision of our bylaws does not apply to any action for which the Circuit Court for Baltimore City, Maryland does not have jurisdiction. The exclusive forum provision of our bylaws does not establish exclusive jurisdiction in the Circuit Court for Baltimore City, Maryland for claims that arise under the Securities Act, the Exchange Act or other federal securities laws if there is exclusive or concurrent jurisdiction in the federal courts. Any person or entity purchasing or otherwise acquiring or holding any interest in our common shares shall be deemed to have notice of and to have consented to these provisions of our bylaws, as they may be amended from time to time. The exclusive forum provision of our bylaws may limit a shareholder’s ability to bring a claim in a judicial forum that the shareholder believes is favorable for disputes with us or our Trustees, officers, manager, agents or employees, which may discourage lawsuits against us and our Trustees, officers, manager, agents or employees.

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We may change our operational, financing and investment policies without shareholder approval and we may become more highly leveraged, which may increase our risk of default under our debt obligations.

Our Board of Trustees determines our operational, financing and investment policies and may amend or revise our policies, including our policies with respect to our intention to maintain our qualification for taxation as a REIT, investments, growth, operations, indebtedness, capitalization and distributions, or approve transactions that deviate from these policies, without a vote of, or notice to, our shareholders. Policy changes could adversely affect the market ~~price~~value of our common shares and our ability to ~~make~~pay distributions to our shareholders. Further, our organizational documents do not limit the amount or percentage of indebtedness, funded or otherwise, that we may incur. Our Board of Trustees may alter or eliminate our current policy on borrowing at any time without shareholder approval. If this policy changes, we could become more highly leveraged, which could result in an increase in our debt service costs. Higher leverage also increases the risk of default on our obligations. In addition, a change in our investment policies, including the manner in which we allocate our resources across our portfolio or the types of investments which we seek to make, may increase our exposure to interest rate risk, CRE lending market fluctuations and liquidity risk.

Our intention to remain exempt from registration under the 1940 Act imposes limits on our operations.

We conduct our operations so that neither we nor any of our subsidiaries is required to register as an investment company under the 1940 Act. We believe we will not be considered an investment company under Section 3(a)(1)(A) of the 1940 Act because we will not engage primarily, or hold ourselves out as being engaged primarily, in the business of investing, reinvesting or trading in securities. We may conduct our business, in whole or in part, through wholly or majority owned subsidiaries. Under Section 3(a)(1)(C) of the 1940 Act, the securities issued by our subsidiaries that are excepted from the definition of “investment company” under Section 3(c)(1) or Section 3(c)(7) of the 1940 Act, together with any other investment securities we may own, may not have a combined value in excess of 40% of the value of our total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis. This requirement limits the types of businesses in which we may engage through subsidiaries. In addition, the assets we may originate or acquire are limited by the provisions of the 1940 Act and the rules and regulations promulgated under the 1940 Act, which may adversely affect our business.

If the value of securities issued by our subsidiaries that are excepted from the definition of “investment company” under Section 3(c)(1) or 3(c)(7) of the 1940 Act, together with any other investment securities we own, exceeds 40% of the value of our total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis, or if one or more of our subsidiaries fails to maintain an exception or exemption from the 1940 Act, we could, among other things, be required to either: (1) substantially change the manner in which we conduct our operations to avoid being required to register as an investment company under the 1940 Act; or (2) register as an investment company under the 1940 Act, either of which could have an adverse effect on us and the market ~~price~~value of our common shares. If we or any of our subsidiaries were required to register as an investment company under the 1940 Act, the registered entity would become subject to substantial regulation with respect to capital structure (including the ability to use leverage), management, operations, transactions with affiliated persons (as defined in the 1940 Act), portfolio composition, including restrictions with respect to diversification and industry concentration and compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly change our operations.

Failure to maintain our exemption from registration under the 1940 Act also would require us to significantly restructure our investment strategy. For example, because affiliate transactions are generally prohibited under the 1940 Act, we would not be able to enter into transactions with any of our affiliates if we were required to register as an investment company under the 1940 Act, and we might be required to terminate our management agreement with ~~TRC~~Tremont and any other agreements with affiliates, which could have a material adverse effect on our ability to operate our business and pay distributions. If we were required to register as an investment company but failed to do so, we would be prohibited from engaging in our business, and criminal and civil actions could be brought against us. In addition, our contracts might be unenforceable unless a court required enforcement, and a court could appoint a receiver to take control of us and liquidate our business.

We expect that we and certain of our subsidiaries that we may form in the future will rely upon the exemption from registration as an investment company under the 1940 Act pursuant to Section 3(c)(5)(C) of the 1940 Act, which is available for entities “primarily engaged” in the business of “purchasing or otherwise acquiring mortgages and other liens on and interests in real estate”. This exemption generally requires that at least 55% of our or each of our applicable subsidiaries’ assets must be comprised of qualifying real estate assets and at least 80% of our or each of our applicable subsidiaries’ portfolios must be comprised of qualifying real estate assets and real estate related assets under the 1940 Act. To the extent that we or any of our subsidiaries rely on Section 3(c)(5)(C) of the 1940 Act, we expect to rely on guidance published by the SEC staff or on our analyses of such guidance to determine which assets are qualifying real estate assets and real estate related assets. However, the SEC’s guidance is more than 30 years old and was issued in accordance with factual situations that may be different from ours.

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We cannot be sure that the SEC staff will concur with our classification of our assets. In addition, the SEC staff may, in the future, issue further guidance that may require us to re-classify our assets for purposes of qualifying for an exemption from registration under the 1940 Act. If we are required to re-classify our assets we may no longer be in compliance with the exclusion from the definition of an “investment company” provided by Section 3(c)(5)(C) of the 1940 Act. To the extent that the SEC staff publishes new or different guidance with respect to any assets we have determined to be qualifying real estate assets, we may be required to adjust our strategy accordingly. In addition, we may be limited in our ability to make certain investments, and these limitations could result in one of our subsidiaries holding assets we might wish to sell or selling assets we might wish to hold.

The SEC has not published guidance with respect to the treatment of CMBS for purposes of the Section 3(c)(5)(C) exemption. Unless we receive further guidance from the SEC or its staff with respect to CMBS, we intend to treat CMBS as a real estate related asset.

We or certain of our subsidiaries may also rely on the exemption provided by Section 3(c)(6) of the 1940 Act. The SEC staff has issued little interpretive guidance with respect to Section 3(c)(6) of the 1940 Act and any future guidance published by the staff may require us to adjust our strategy and our assets accordingly. While we refer generally to “exemption” in this discussion of Section 3(a) and ~~Section(c)~~Section 3(c) of the 1940 Act, each of the above referenced provisions technically provides companies with an exclusion from the definition of “investment company” under the 1940 Act, allowing companies to avoid registration as an investment company under the 1940 Act. We intend to structure and conduct our business in a manner that does not require our or our subsidiaries’ registration under the 1940 Act and, in so structuring and conducting our business, we may rely on any available exemption from registration, or exclusion from the definition of “investment company,” under the 1940 Act.

We determine whether an entity is one of our majority owned subsidiaries. The 1940 Act defines a majority owned subsidiary of a person as a company 50% or more of the outstanding voting securities of which are owned by such person, or by another company which is a majority owned subsidiary of such person. The 1940 Act further defines voting securities as any security presently entitling the owner or holder thereof to vote for the election of directors of a company. We treat companies in which we own a majority of the outstanding voting securities as majority owned subsidiaries for purposes of the 40% test described above. We have not requested the SEC to approve our treatment of any of our subsidiaries as a majority owned subsidiary and the SEC has not done so. If the SEC were to disagree with our treatment of one or more of our subsidiaries as majority owned subsidiaries, we might need to adjust our strategy and our assets in order to continue to pass the 40% test. Any such adjustment in our strategy or assets could have a material adverse effect on us.

We cannot be sure that the laws and regulations governing the 1940 Act status of REITs, including the SEC or its staff providing new or more specific or different guidance regarding these exemptions, will not change in a manner that adversely affects our operations. If we or our subsidiaries fail to maintain an exception or exemption from the 1940 Act, we could, among other things, be required either to: (1) change the manner in which we conduct our operations to avoid being required to register as an investment company under the 1940 Act; (2) sell our assets in a manner that, or at a time when, we would not otherwise choose to do so; or (3) register as an investment company, any of which could negatively affect the ~~value of our common shares, the~~ sustainability of our business and our ability to ~~make~~pay distributions, which could have an adverse effect on our business and the market ~~price~~value for our common shares.

Risks Relating to Taxation

Our failure to remain qualified for taxation as a REIT under the IRC could have significant adverse consequences.

As a REIT, we generally do not pay federal or most state income taxes as long as we distribute all of our REIT taxable income and meet other qualifications set forth in the IRC. However, actual qualification for taxation as a REIT under the IRC depends on our satisfying complex statutory requirements, for which there are only limited judicial and administrative interpretations. We believe that we have been organized and have operated, and will continue to be organized and to operate, in a manner that qualified and will continue to qualify us to be taxed as a REIT under the IRC. However, we cannot be sure that the IRS, upon review or audit, will agree with this conclusion. Furthermore, we cannot be sure that the federal government, or any state or other taxation authority, will continue to afford favorable income tax treatment to REITs and their shareholders.

Maintaining our qualification for taxation as a REIT under the IRC will require us to continue to satisfy tests concerning, among other things, the nature of our assets, the sources of our income and the amounts we distribute to our shareholders. In order to meet these requirements, it may be necessary for us to sell or forgo attractive investments.

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If we cease to qualify for taxation as a REIT under the IRC, then our ability to raise capital might be adversely affected, we may be subject to material amounts of federal and state income taxes, our cash available for distribution to our shareholders

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could be reduced, and the market ~~price~~value of our common shares could decline. In addition, if we lose or revoke our qualification for taxation as a REIT under the IRC for a taxable year, we will generally be prevented from requalifying for taxation as a REIT for the next four taxable years.

REIT distribution requirements could adversely affect us and our shareholders.

We generally must distribute annually at least 90% of our REIT taxable income, subject to specified adjustments and excluding any net capital gain, in order to maintain our qualification for taxation as a REIT under the IRC. To the extent that we satisfy this distribution requirement, federal corporate income tax will not apply to the earnings that we distribute, but if we distribute less than 100% of our REIT taxable income, then we will be subject to federal corporate income tax on our undistributed taxable income. We intend to ~~make~~pay distributions to our shareholders to comply with the REIT requirements of the IRC. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we ~~pay out~~distribute to our shareholders in a calendar year is less than a minimum amount specified under federal tax laws.

From time to time, we may experience timing and other differences, for example on account of income and expense accrual principles under U.S. federal income tax laws, or on account of repaying outstanding indebtedness, whereby our available cash is less than, or does not otherwise correspond to, our taxable income. In addition, the IRC requires that income be taken into account no later than when it is taken into account on applicable financial statements, even if financial statements take such income into account before it would accrue under the original issue discount rules, market discount rules or other rules in the IRC. As a result, from time to time we may not have sufficient cash to meet our REIT distribution requirements. If we do not have other funds available in these situations, among other things, we may borrow funds on unfavorable terms, sell investments at disadvantageous prices or distribute amounts that would otherwise be invested in future acquisitions in order to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our shareholders’ equity. Thus, compliance with the REIT distribution requirements may hinder our ability to grow, which could cause the market ~~price~~value of our common shares to decline.

We may in the future choose to pay dividends in our common shares, in which case shareholders may be required to pay income taxes in excess of the cash dividends that they receive.

We may in the future distribute taxable dividends that are payable in part in shares. Taxable shareholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, shareholders may be required to pay income taxes with respect to these dividends in excess of the cash dividends received. If a shareholder sells our common shares that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market ~~price~~value of our common shares at the time of the sale. Furthermore, with respect to some non-U.S. shareholders, we may be required to withhold U.S. federal income tax with respect to these dividends, including in respect of all or a part of the dividend that is payable in our common shares. In addition, if a significant number of our shareholders determine to sell our common shares in order to pay taxes owed on dividends paid in our common shares, then that may put downward pressure on the trading price of our common shares.

Distributions to shareholders generally will not qualify for reduced tax rates applicable to “qualified dividends.”

Dividends payable by U.S. corporations to noncorporate shareholders, such as individuals, trusts and estates, are generally eligible for reduced U.S. federal income tax rates applicable to “qualified dividends.” Distributions paid by REITs generally are not treated as “qualified dividends” under the IRC and the reduced rates applicable to such dividends do not generally apply. However, for tax years beginning before 2026, REIT dividends paid to noncorporate shareholders are generally taxed at an effective tax rate lower than applicable ordinary income tax rates due to the availability of a deduction under the IRC for specified forms of income from passthrough entities. More favorable rates will nevertheless continue to apply to regular corporate “qualified” dividends, which may cause some investors to perceive that an investment in a REIT is less attractive than an investment in a non-REIT entity that pays dividends, thereby reducing the demand and market ~~price~~value of our common shares.

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Even if we remain qualified for taxation as a REIT under the IRC, we may face other tax liabilities that reduce our cash flow.

Even if we remain qualified for taxation as a REIT under the IRC, we may be subject to federal, state and local taxes on our income and assets, including taxes on any undistributed income, excise taxes, state or local income, property and transfer taxes, such as mortgage recording taxes, and other taxes. Also, some jurisdictions may in the future limit or eliminate favorable income tax deductions, including the dividends paid deduction, which could increase our income tax expense. In addition, in

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order to meet the requirements for qualification and taxation as a REIT under the IRC, prevent the recognition of particular types of non-cash income, or avert the imposition of a 100% tax that applies to specified gains derived by a REIT from dealer property or inventory, we may hold or dispose of some of our assets and conduct some of our operations through our TRSs or other subsidiary corporations that will be subject to corporate level income tax at regular rates. In addition, while we intend that our transactions with our TRSs will be conducted on arm’s length bases, we may be subject to a 100% excise tax on a transaction that the IRS or a court determines was not conducted at arm’s length. Any of these taxes would decrease cash available for distribution to our shareholders.

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.

We may originate or acquire mezzanine loans, for which the IRS has provided a safe harbor but not rules of substantive law. Pursuant to the safe harbor, if a mezzanine loan meets specified requirements, it will be treated by the IRS as a real estate asset for purposes of the REIT asset tests, and interest derived from the mezzanine loan will be treated as qualifying mortgage interest for purposes of the 75% gross income test applicable to REITs. We may originate or acquire mezzanine loans that do not meet all of the requirements of this safe harbor. In the event we own a mezzanine loan that does not meet the safe harbor requirements and the IRS successfully challenges the loan’s treatment as a real estate asset for purposes of the REIT asset and income tests, then we could fail to remain qualified for taxation as a REIT under the IRC.

We may fail to remain qualified for taxation as a REIT under the IRC if the IRS successfully challenges the treatment of our mezzanine loans as debt for federal income tax purposes or successfully challenges the treatment of our preferred equity investments as equity for federal income tax purposes.

There is limited case law or administrative guidance addressing the treatment of mezzanine loans and preferred equity investments as debt or equity for federal income tax purposes. We expect that any mezzanine loans that we may originate or acquire generally will be treated as debt for federal income tax purposes, and preferred equity investments that we may make generally will be treated as equity for federal income tax purposes, but we do not anticipate obtaining private letter rulings from the IRS or opinions of counsel on the characterization of those investments for federal income tax purposes. If a mezzanine loan is treated as equity for federal income tax purposes, we will be treated as owning the assets held by the partnership or limited liability company that issued the mezzanine loan and we will be treated as receiving our proportionate share of the income of that entity. If that partnership or limited liability company owns nonqualifying assets or earns nonqualifying income, we may not be able to satisfy all of the REIT gross income and asset tests. Alternatively, if the IRS successfully asserts athat any preferred equity investment that we may make is debt for federal income tax purposes, then that investment may be treated as a nonqualifying asset for purposes of the 75% asset test and as producing nonqualifying income for the 75% gross income test. In addition, such an investment may be subject to the 10% value test and the 5% asset test, and it is possible that a preferred equity investment that is treated as debt for federal income tax purposes could cause us to fail one or more of the foregoing tests. Accordingly, we could fail to remain qualified for taxation as a REIT under the IRC if the IRS does not respect our classification of our mezzanine loans or preferred equity for federal income tax purposes.

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.

We have entered into secured financing arrangements that are structured as sale and repurchase agreements pursuant to which we nominally sell assets to the counterparty and simultaneously enter into agreements to repurchase these assets at a later date in exchange for a purchase price. Economically, these agreements are financings that are secured by the assets sold pursuant to the agreement. We believe that we will be treated for REIT asset and income test purposes as the owner of the assets that are the subject of sale and repurchase agreements, notwithstanding that we may transfer record ownership of the assets to the counterparty during the term of an agreement. It is possible, however, that the IRS may assert that we did not own the assets during the term of the applicable sale and repurchase agreement, in which case our qualification for taxation as a REIT may be jeopardized.

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Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.

The REIT provisions of the IRC substantially limit our ability to hedge our assets and liabilities. Any income from a qualifying hedging transaction that we enter into to manage risk of interest rate changes with respect to borrowings made or to be made to acquire or carry real estate assets does not constitute “gross income” for purposes of the 75% or 95% gross income tests that we must satisfy in order to maintain our qualification for taxation as a REIT under the IRC. As a result, a qualifying hedge transaction will neither assist nor hinder our compliance with the 75% and 95% gross income tests. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as nonqualifying income for

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purposes of both of these gross income tests. As a result of these rules, we may limit our use of advantageous hedging techniques or implement some hedges through a TRS. This could increase the cost of our hedging activities because our TRS would be subject to tax on gains or expose us to greater risks associated with changes in the hedged items than we might otherwise want to bear. In addition, losses in our TRS will generally not provide any tax benefit, except for being carried forward against future taxable income in the TRS.

We may be required to report taxable income from particular investments in excess of the economic income we ultimately realize from them.

We may acquire debt instruments in the secondary market for less than their face amount. Though the discount at which such debt instruments are acquired may reflect doubts about their ultimate collectability rather than current ~~market~~ interest rates, the amount of such discount will nevertheless generally be treated as “market discount” for U.S. federal income tax purposes. Accrued market discount is generally reported as income when, and to the extent that, any payment of principal of the debt instrument is made. Payments on commercial mortgage loans are ordinarily made monthly, and consequently accrued market discount may have to be included in income each month as if the debt instrument were assured of ultimately being collected in full. If we collect less on the debt instrument than our purchase price plus the market discount we had previously reported as income, we may not be able to benefit from any offsetting loss deductions.

Moreover, some of the CMBS that we might acquire may have been issued with original issue discount. We will be required to report such original issue discount based on a constant yield method and will be taxed based on the assumption that all future projected payments due on such CMBS will be made. If such CMBS turns out not to be fully collectable, an offsetting loss deduction will become available only in the later year that uncollectability is provable.

Finally, in the event that any debt instruments or CMBS acquired by us are delinquent as to mandatory principal and interest payments, or in the event payments with respect to a particular debt instrument are not made when due, we may nonetheless be required to continue to recognize the unpaid interest as taxable income as it accrues, despite doubt as to its ultimate collectability. Similarly, we may be required to accrue interest income with respect to subordinate CMBS at its stated rate regardless of whether corresponding cash payments are received or are ultimately collectable. In each case, while we would in general ultimately have an offsetting loss deduction available to us when such interest was determined to be uncollectable, and the utility of that deduction could depend on our having taxable income in that later year or thereafter.

If we own assets or conduct operations that generate “excess inclusion income” outside of a TRS, doing so could adversely affect shareholders’ taxation and could cause our common shares to become ineligible for inclusion in leading market indexes.

Some leading market indexes exclude companies whose dividends to shareholders constitute UBTI. For purposes of the IRC, shareholder dividends attributable to a REIT’s “excess inclusion income” are treated as UBTI to specified investors, and thus REITs that generate excess inclusion income are generally not eligible for inclusion in these market indexes. Furthermore, REIT dividends attributable to excess inclusion income cause both the REIT and its shareholders to experience a range of disruptive and adverse U.S. federal income tax consequences, including the recognition of UBTI by specified tax-exempt shareholders, the unavailability of treaty benefits to non-U.S. shareholders and the unavailability of net operating losses to offset such income with respect to U.S. taxable shareholders. We do not intend to acquire assets or enter into financing or other arrangements that will produce excess inclusion income for our shareholders. As a result, we may forgo investment or financing opportunities that we would otherwise have considered attractive or implement these arrangements through a TRS, which would increase the cost of these activities because TRSs are subject to U.S. federal income tax. Furthermore, our analysis regarding our investments’ or activities’ potential for generating excess inclusion income could be subject to challenge or we could affirmatively modify our position regarding the generation of excess inclusion income in the future. In either case, our shareholders could suffer adverse tax consequences through the recognition of UBTI or the other adverse consequences that flow from excess inclusion income. Furthermore, in such an event, our common shares could become ineligible for inclusion in those market indexes that exclude UBTI-generating stock, which could adversely affect demand for our common shares and ~~their~~the market ~~price.~~value of our common shares.

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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.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions at a gain of property, other than foreclosure property but including mortgage loans, held primarily for sale to customers in the ordinary course of business. If we were to dispose of or securitize loans in a manner that was treated as a sale of the loans for U.S. federal income tax purposes, those sales could be viewed as sales to customers in the ordinary course of

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business and to that extent subject to the 100% tax. Therefore, in order to avoid the prohibited transactions tax, we may choose not to engage in particular sales of loans or we may limit the structures used for dispositions or securitization transactions, even though the sales or structures might otherwise be beneficial to us.

We may incur adverse tax consequences ~~if TRMT failed to qualify for taxation as a REIT under the IRC prior to the Merger.~~

We received an opinion from TRMT’s counsel that TRMT was organized and operated in conformity with the requirements for qualification and taxation as a REIT under the IRC prior to the Merger. If, contrary to that opinion, TRMT failed to qualify for taxation as a REIT under the IRC, then we may inherit significant tax liabilities as a result of ~~the Merger because, as the~~our acquisition of TRMT.

As a successor ~~by merger~~ to TRMT, we ~~would generally inherit any corporate income tax liabilities of TRMT, including penalties and interest.~~

If it is determined that TRMT failed to satisfy one or more of the REIT qualification requirements prior to the Merger, the IRS might allow us, as successor, to utilize remedial provisions under the IRC to remediate the REIT compliance failure. However, if and to the extent remedial provisions are available to us to address any REIT qualification mattermay face liability stemming from the ~~periods prior to the Merger, we may have to expend significant resources in connection with such remediation, including, among other things: (a) required distribution payments to shareholders~~tax liabilities (including penalties and ~~associated interest payments to the IRS;~~interest) of TRMT and ~~(b) tax and interest payments to the IRS and state and local tax authorities.~~

~~TRMT’s failure to qualify for taxation as a REIT under the IRC for the period prior to or including the Merger~~its subsidiaries. These liabilities and our efforts to remedy any ~~such failure~~tax dispute relating to these acquired entities could have a material adverse effect on our financial condition and results of operations.

Risks Relating to our Securities

Our distributions to our shareholders may be reduced or eliminated and the form of payment could change.

~~In January 2022, our Board of Trustees declared a quarterly distribution of $0.25 per common share.~~ We intend to continue to make regular quarterly distributions to our shareholders, but we may not be able to increase or maintain such a distribution rate for various reasons, including:

•

• our ability to sustain or increase the rate of distributions may be adversely affected if any of the risks described in our Annual Report on Form 10-K ~~occur, including the negative impact of the COVID-19 pandemic and its aftermath on our business, results of operations and liquidity;~~occur;

•we may not have enough cash to pay such distributions as a result of changes in our cash requirements, cash flow or financial position;

•our ~~making~~payment of distributions is subject to restrictions contained in the agreements governing our debt and may be subject to restrictions in future debt obligations we may incur; during the continuance of any event of default under the agreements governing our debt, we may be limited or in some cases prohibited from ~~making~~paying distributions to our shareholders; and

•the timing, amount and form of any distributions will be determined at the discretion of our Board of Trustees and will depend on various factors that our Board of Trustees deems relevant, including, but not limited to our historical and projected income, our Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share, our expectations of future capital requirements and operating performance and our expected needs for cash to pay our obligations and fund our investments, requirements to maintain our qualification for taxation as a REIT and limitations in our Secured Financing Facilities.

For these reasons, among others, our distribution rate may decline, or we may cease ~~making~~paying distributions to our shareholders.

Further, in order to preserve liquidity, we may elect to pay distributions to our shareholders in part in a form other than cash, such as issuing additional common shares to our shareholders, as permitted by the applicable tax rules.

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Changes in market conditions could adversely affect the market value of our securities.

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As with other publicly traded equity securities and REIT securities, the market value of our common shares and other securities depends on various market conditions that are subject to change from time to time. We believe that one of the factors that investors consider important in deciding whether to buy or sell equity securities of a REIT is the distribution rate, considered as a percentage of the market price of the equity securities, relative to ~~market~~ interest rates. ~~Interest rates have been at historically low levels for an extended period of time.~~ There is a general market perception that REIT shares outperform in low interest rate environments and underperform in rising interest rate environments when compared to the broader market. ~~The U.S. Federal Reserve had~~In efforts to combat rising inflation, the FOMC raised interest rates multiple times since March 2022 and has indicated an expectation that it ~~did not expect~~will continue to raise interest rates in ~~response to the COVID-19 pandemic and current market conditions until at least the end of~~ 2023. ~~However,~~In addition, the U.S. ~~Federal Reserve has indicated that, in light of~~and global economies have been experiencing high inflation, constrained labor availability, supply chain challenges, global instability and economic downturn. These conditions have negatively impacted REIT share prices and, if they continue or worsen, may have further adverse impacts on the economic recovery and higher than anticipated inflation, it expects to raise interest rates as early as March 2022. The timing, number and amount of any future interest rate increases are uncertain. If the U.S. Federal Reserve increases interest rates or if there is a market expectation of such increases, prospective purchasers of REIT equity securities may want to achieve a higher distribution rate. Thus, higher market interest rates, or the expectation of higher interest rates, could cause the value of our ~~securities to decline.~~

securities.

We may use ~~future~~ debt leverage or sell assets to pay distributions to our ~~shareholders.~~

shareholders in the future.

If our earnings are at any time insufficient to fund distributions to our shareholders at the level ~~which~~that may in the future be established by our Board of Trustees, we may pay distributions to our shareholders with the proceeds of borrowings or other leverage or from sales of our assets. ~~The use of borrowings or sale proceeds for distributions may dilute our shareholders’ ownership interests in us. In addition, funding~~Funding distributions to our shareholders from our future borrowings or asset sales may constitute a return of capital to our investors, which would have the effect of reducing our shareholders’ bases in our common shares.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

~~We lease our~~Our principal executive and administrative offices ~~which~~ are located in leased space at Two Newton Place, 255 Washington Street, Newton, MA 02458-1634. We do not own any real property.

Item 3. Legal Proceedings

From time to time, we may become involved in litigation matters incidental to the ordinary course of our business. Although we are unable to predict with certainty the eventual outcome of any litigation, we are currently not a party to any litigation that we expect to have a material adverse effect on our business.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common shares are traded on Nasdaq (symbol: SEVN).

As of February ~~14, 2022,~~9, 2023, there were 7276 shareholders of record of our common shares.

Issuer purchases of equity securities. The table below provides information about our purchases of our equity securities during the ~~year~~quarter ended December 31, ~~2021.~~2022.

Calendar Month
Number of Shares Purchased (1)
Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
October 2021 5,349 $ 10.32 — $ —
November 2021 181 10.43 — —
Total/Average 5,530 $ 10.32 — $ —


Calendar Month	Number of Shares Purchased (1)	Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
October 2022	4,197	$	9.19	—	$	—
December 2022	261	$	9.09	—		—
Total/weighted average	4,458	$	9.18	—	$	—

(1)These common share withholdings and purchases were made to satisfy tax withholding and payment obligations of certain ~~former~~of our current and ~~current~~former officers and employees of Tremont and/or RMR ~~LLC~~ in connection with the vesting of awards of our common shares. We withheld and purchased these shares at their fair market values based upon the ~~closing~~trading prices of our common shares at the close of trading on Nasdaq on ~~those~~the purchase dates.

Item 6. ~~Reserved~~

~~Not applicable.~~[Reserved]

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and accompanying notes included elsewhere in this Annual Report on Form ~~10-K~~ ~~(dollars~~10-K.

OVERVIEW (dollars in thousands, except per share data).

~~OVERVIEW~~

~~On January 5, 2021, the SEC issued the Deregistration Order granting our request to deregister as an investment company under the 1940 Act. As~~We are a ~~result, we changed our SEC registration to a reporting company under the Exchange Act. The issuance of the Deregistration Order enabled us to proceed with full implementation of our new~~Maryland REIT. Our business ~~mandate to operate as a REIT that focuses primarily~~strategy is focused on originating and investing in floating rate first mortgage loans ~~secured by middle market and transitional CRE. As a result of these changes~~in the $15,000 to our business, we have not provided a comparison of our financial condition, any changes to financial conditions and results of operations to prior periods in which we were operating as a registered investment company because it would not be useful to our shareholders. The discussion herein is principally limited to our operations during the period following the SEC’s issuance of the Deregistration Order on January 5, 2021 to December 31, 2021. The results of operations from January 1, 2021 through January 4, 2021 were not material to our consolidated financial statements and have not been presented or discussed separately, but they are included in our results of operations for the year ended December 31, 2021.

~~Under our new business mandate of originating and investing in first mortgage loans~~$75,000 range, secured by middle market and transitional CRE ~~we define middle market CRE as commercial~~ properties that have values up to ~~$100,000 and~~$100,000. We define transitional CRE as commercial properties subject to redevelopment or repositioning activities that are expected to increase the value of the properties. These ~~assets~~mortgage loans are classified as loans held for investment in our consolidated balance ~~sheet.~~sheets. Loans held for investment are reported at cost, net of any unamortized loan fees, origination costs, premiums, discounts or ~~discounts,~~reserves for loan losses, as ~~applicable, unless the assets are deemed impaired.~~applicable.

~~Our Manager~~Tremont is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended. We believe that ~~our Manager~~Tremont provides us with significant experience and expertise in investing in middle market and transitional CRE.

~~Table~~ ~~of Contents~~

We operate our business in a manner that is consistent with our qualification for taxation as a REIT under the IRC. As such, we generally are not subject to U.S. federal income tax, provided that we meet certain distribution and other requirements. We also operate our business in a manner that permits us to maintain our exemption from registration under the 1940 Act.

Merger with Tremont Mortgage Trust

On ~~April 26,~~September 30, 2021, we ~~and TRMT entered into~~completed the Merger ~~Agreement, pursuant to~~with TRMT, at which time TRMT merged with and into us, with us continuing as the surviving entity. The purchase price ~~based on the per share closing price of our common shares on September 30, 2021 of $10.31 per share,~~ was $169,150, including the assumption of $128,962 of outstanding ~~under the Citibank Master Repurchase Facility and~~debt, closing costs of $6,160 and assumed working capital of $10,146. ~~Pursuant to the terms of the Merger Agreement and the Letter Agreement, TRMT shareholders received 0.516 of our newly issued common shares, with cash paid in lieu of fractional shares.~~

For further information regarding the Merger, see Part I, Item 1, "Business" in our Annual Report on Form 10-K for the year ended December 31, 2021and ~~the Notes 1, 5, 6, 7, 10 and 11~~Note 4 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

~~COVID-19 Pandemic~~Table of Contents

The COVID-19 pandemic and the various governmental and market responses intended to contain and mitigate the spread of the virus and its detrimental public health impact have had a significant impact on the global economy, including the U.S. economy. Many of the restrictions that had been imposed in the United States during the pandemic have been lifted and commercial activity in the United States has increasingly returned to pre-pandemic practices and operations. To date, the COVID-19 pandemic has not had a significant impact on our business.

There remains uncertainty as to the ultimate duration and severity of the COVID-19 pandemic, including risks that may arise from mutations or related strains of the virus, the ability to successfully administer vaccinations to a sufficient number of persons or attain immunity to the virus by natural or other means to achieve herd immunity or otherwise render the virus reasonably manageable, and the impact on the U.S. economy that may result from the inability of other countries to administer vaccinations to their citizens or their citizens’ ability to otherwise achieve immunity to the virus. As a result, we are unable to determine what the ultimate impact will be on our borrowers’ and other stakeholders’ businesses, operations, financial results and financial position. For further information and risks relating to the COVID-19 pandemic on us and our business, see elsewhere in this Annual Report on Form 10-K, including "Warning Concerning Forward-Looking Statements" and Part I, Item 1A, “Risk Factors”.

Non-GAAP Financial Measures

We present Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings, Adjusted Distributable Earnings per common share and Adjusted Book Value per common share, which are considered “non-GAAP financial measures” within the meaning of the applicable SEC rules. ~~Distributable Earnings and Adjusted Distributable Earnings~~These non-GAAP financial measures do not represent net income, net income per common share or cash generated from operating activities and should not be considered as alternatives to net income or net income per common share determined in accordance with U.S. generally accepted accounting principles, or GAAP, or ~~indications~~as an indication of our cash flows from operations determined in accordance with GAAP, ~~measures~~a measure of our liquidity or operating performance or ~~indications~~an indication of funds available for our cash needs. In addition, our methodologies for calculating ~~Distributable Earnings and Adjusted Distributable Earnings~~these non-GAAP financial measures may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures; therefore, our reported Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share may not be comparable to ~~the~~distributable earnings, distributable earnings per common share, adjusted distributable earnings and adjusted distributable earnings per common share as reported by other companies.

We believe that Adjusted Book Value per common share is a meaningful measure of our capital adequacy because it excludes the unaccreted purchase discount resulting from the excess of the fair value of the loans TRMT then held for investment and ~~which~~that we acquired as a result of the Merger over the consideration we paid in the Merger. Adjusted Book Value per common share does not represent book value per common share or alternative measures determined in accordance with GAAP. Our methodology for calculating Adjusted Book Value per common share may differ from the methodologies employed by other companies to calculate the same or similar supplemental capital adequacy measures; therefore, our Adjusted Book Value per common share may not be comparable to the adjusted book value per common share reported by other companies.

~~We elected to be taxed as a REIT under the IRC effective for our 2020 taxable year.~~ In order to maintain our qualification for taxation as a REIT, we are generally required to distribute substantially all of our taxable income, subject to certain adjustments, to our shareholders. We believe that one of the factors that investors consider important in deciding whether to buy or sell securities of a REIT is its distribution rate. Over time, Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share may be useful indicators of distributions to our shareholders and are measures that are considered by our Board of Trustees when determining the amount of distributions. We believe that Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share provide meaningful information to consider in addition to net income, net income per common share and cash flows from operating activities determined in accordance

~~Table~~ ~~of Contents~~

with GAAP. These measures help us to evaluate our performance excluding the effects of certain transactions, the variability of any management incentive fees that may be paid or payable and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations. In addition, Distributable Earnings is used in determining the amount of base management and management incentive fees payable by us to ~~our Manager~~Tremont under our management agreement.

Distributable Earnings and Adjusted Distributable Earnings

We calculate Distributable Earnings and Distributable Earnings per common share as net income and net income per common share, respectively, computed in accordance with GAAP, including realized losses not otherwise included in net income determined in accordance with GAAP, and excluding: (a) the management incentive fees earned by ~~our Manager,~~Tremont, if any; (b) depreciation and amortization, if any; (c) non-cash equity compensation expense; (d) unrealized gains, losses and other similar non-cash items that are included in net income for the period of the calculation (regardless of whether such items are included in or deducted from net income or in other comprehensive income under GAAP), if any; and (e) one-time events pursuant to changes in GAAP and certain non-cash items, if any. Distributable Earnings are reduced for realized losses on loan investments when amounts are deemed uncollectable.

We define Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share as Distributable Earnings and Distributable Earnings per common share, respectively, excluding the effects of certain non-recurring transactions.

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Reconciliation of Book Value per Common Share to Adjusted Book Value per Common Share

The table below calculates our book value per common share and demonstrates how we calculate Adjusted Book Value per common share:


	~~December 31, 2021~~
~~Shareholders' equity~~	$	~~257,694~~
~~Total outstanding common shares~~	~~14,597~~
~~Book value per common share~~	$	~~17.65~~
~~Unaccreted purchase discount per common share~~	~~1.20~~
~~Adjusted Book Value per common share~~ ~~(1)~~	$	~~18.85~~


	As of December 31,
	2022		2021
Shareholders' equity	$	271,579	$	257,694
Total outstanding common shares	14,709		14,597
Book value per common share	18.46		17.65
Unaccreted purchase discount per common share	0.46		1.20
Adjusted Book Value per common share (1)	$	18.92	$	18.85

(1)Adjusted Book Value per common share is a non-GAAP financial measure that excludes the impact of the unaccreted purchase discount resulting from the excess of the fair value of the loans TRMT then held for investment and ~~which~~that we acquired as a result of the Merger over the consideration we paid in the Merger. The purchase discount of $36,443 was allocated to each acquired loan and is being accreted into income over the remaining term of the respective loan. As of December 31, 2022 and 2021, the unaccreted purchase discount was ~~$17,391.~~$6,703 and $17,391, respectively.

~~Table~~ ~~of Contents~~

Our Loan Portfolio

The table below details overall statistics for our loan portfolio as of December 31, ~~2021~~2022 and ~~2020:~~2021:


		As of December 31,							As of December 31,
		2021			2020				2022			2021
Number of loans	Number of loans	26			5			Number of loans	27			26
Total loan commitments	Total loan commitments	$	648,266		$	111,720		Total loan commitments	$	727,562		$	648,266
Unfunded loan commitments ~~(2)~~(1)	Unfunded loan commitments ~~(2)~~(1)	$	57,772		$	18,857		Unfunded loan commitments ~~(2)~~(1)	$	49,007		$	57,772
Principal balance ~~(2)~~	Principal balance ~~(2)~~	$	590,590		$	92,863		Principal balance ~~(2)~~	$	678,555		$	590,590

Carrying value	Carrying value	$	570,780		$	91,879		Carrying value	$	669,929		$	570,780
Weighted average coupon rate	Weighted average coupon rate	4.54		%	5.08		%	Weighted average coupon rate	8.07		%	4.54		%
Weighted average all in yield ~~(3)~~(2)	Weighted average all in yield ~~(3)~~(2)	5.08		%	5.71		%	Weighted average all in yield ~~(3)~~(2)	8.57		%	5.08		%
Weighted average LIBOR floor		0.68		%	0.78		%
Weighted average floor								Weighted average floor	0.62		%	0.68		%
Weighted average maximum maturity (years) ~~(4)~~(3)	Weighted average maximum maturity (years) ~~(4)~~(3)	3.8			4.2			Weighted average maximum maturity (years) ~~(4)~~(3)	3.3			3.8
Weighted average risk rating	Weighted average risk rating	2.9			3.0			Weighted average risk rating	2.9			2.9
Weighted average LTV ~~(5)~~(4)	Weighted average LTV ~~(5)~~(4)	68		%	68		%	Weighted average LTV ~~(5)~~(4)	68		%	68		%

(1)Unfunded loan commitments are primarily used to finance property and building improvements and leasing capital and are generally funded over the term of the loan.

(2) ~~The principal balance at December 31, 2021 includes $96 of capitalized interest that does not reduce the amount of unfunded loan commitments.~~

~~(3)~~ All in yield represents the yield on a loan, including amortization of deferred fees over the initial term of the loan and excluding any purchase discount accretion.

~~(4)~~ (3)Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions.

~~(5)~~ (4)LTV represents the initial loan amount divided by the underwritten in-place value of the underlying collateral at closing.

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Loan Portfolio Details

The table below details our loan portfolio as of December 31, ~~2021:~~2022:

Location Property Type Origination Date Committed Principal Amount Principal
Balance Coupon Rate
All in
Yield (1)
Maximum Maturity(2)
(date)
LTV(3)
Risk Rating
St. Louis, MO (4) Office 12/19/2018 $ 29,500 $ 28,421 L + 3.25% L + 3.74% 12/19/2023 72 % 2
Coppell, TX (4) Retail 02/05/2019 19,615 19,615 L + 3.50% L + 4.24% 02/12/2022 73 % 3
Yardley, PA (4) Office 12/19/2019 14,900 14,265 L + 3.75% L + 4.47% 01/24/2025 75 % 4
Allentown, PA (4) Industrial 01/24/2020 10,350 10,350 L + 3.50% L + 3.89% 01/24/2025 67 % 3
Dublin, OH (4) Office 02/18/2020 22,820 21,735 L + 3.75% L + 4.82% 02/18/2023 33 % 2
Downers Grove, IL Office 09/25/2020 30,000 29,500 L + 4.25% L + 4.69% 11/25/2024 67 % 3
Durham, NC Lab 12/17/2020 21,500 13,500 L + 4.35% L + 5.06% 12/17/2025 57 % 3
Los Angeles, CA Retail 12/17/2020 24,600 18,374 L + 4.25% L + 5.06% 12/17/2024 67 % 3
Aurora, IL Office / Industrial 12/18/2020 16,500 14,710 L + 4.35% L + 5.04% 12/18/2024 73 % 3
Miami, FL Office 01/19/2021 10,900 10,900 L + 4.50% L + 5.47% 01/19/2025 68 % 2
Olmstead Falls, OH Multifamily 01/28/2021 54,575 45,820 L + 4.00% L + 4.64% 01/28/2026 63 % 3
Colorado Springs, CO Office / Industrial 04/06/2021 34,275 29,642 L + 4.50% L + 5.03% 04/06/2025 73 % 3
Londonderry, NH Industrial 04/06/2021 39,240 34,391 L + 4.00% L + 4.62% 04/06/2026 73 % 3
Westminster, CO (4) Office 05/25/2021 15,250 13,506 L + 3.75% L + 4.25% 05/25/2026 66 % 3
Plano, TX Office 07/01/2021 27,385 24,935 L + 4.75% L + 5.18% 07/01/2026 78 % 3
Portland, OR Multifamily 07/09/2021 19,688 19,688 L + 3.57% L + 3.97% 07/09/2026 75 % 3
Portland, OR (4) Multifamily 07/30/2021 13,400 13,400 L + 3.57% L + 4.01% 07/30/2026 71 % 3
Seattle, WA Multifamily 08/16/2021 12,500 12,229 L + 3.55% L + 3.89% 08/16/2026 70 % 3
Dallas, TX (4) Office 08/25/2021 50,000 43,450 L + 3.25% L + 3.64% 08/25/2026 72 % 3
Sandy Springs, GA Retail 09/23/2021 16,488 14,821 L + 3.75% L + 4.11% 09/23/2026 72 % 3
Carlsbad, CA Office 10/27/2021 24,750 23,740 L + 3.25% L + 3.59% 10/27/2026 78 % 3
Bellevue, WA Office 11/05/2021 21,000 20,000 L + 3.85% L + 4.19% 11/05/2026 68 % 3
Ames, IA Multifamily 11/15/2021 18,000 17,680 L + 3.80% L + 4.13% 11/15/2026 71 % 3
Downers Grove, IL Office 12/09/2021 23,530 23,530 L + 4.25% L + 4.57% 12/09/2026 72 % 3
West Bloomfield, MI Retail 12/16/2021 42,500 37,388 L + 3.85% L + 4.66% 12/16/2024 59 % 3
Summerville, SC Industrial 12/20/2021 35,000 35,000 L + 3.50% L + 3.82% 12/20/2026 70 % 2
Total/weighted average $ 648,266 $ 590,590 L + 3.86% L + 4.39% 68 % 2.9


#	Location	Property Type	Origination Date	Committed Principal Amount		Principal Balance		Coupon Rate	All in Yield(1)	Maximum Maturity(2) (date)	LTV(3)		Risk Rating
1	Olmsted Falls, OH	Multifamily	01/28/2021	$	54,575	$	46,083	L + 4.00%	L + 4.64%	01/28/2026	63	%	3
2	Dallas, TX	Office	08/25/2021	50,000		43,450		L + 3.25%	L + 3.61%	08/25/2026	72	%	4
3	Passaic, NJ	Industrial	09/08/2022	47,000		38,440		S + 3.85%	S + 4.22%	09/08/2027	69	%	3
4	Brandywine, MD	Retail	03/29/2022	42,500		42,200		S + 3.85%	S + 4.25%	03/29/2027	62	%	3
5	West Bloomfield, MI	Retail	12/16/2021	42,500		37,453		L + 3.85%	L + 4.66%	12/16/2024	59	%	3
6	Starkville, MS	Multifamily	03/22/2022	37,250		36,787		S + 4.00%	S + 4.32%	03/22/2027	70	%	4
7	Summerville, SC	Industrial	12/20/2021	35,000		35,000		L + 3.50%	L + 3.82%	12/20/2026	70	%	2
8	Farmington Hills, MI	Multifamily	05/24/2022	31,520		28,691		S + 3.15%	S + 3.50%	05/24/2027	75	%	3
9	Downers Grove, IL	Office	09/25/2020	30,000		29,500		L + 4.25%	L + 4.69%	11/25/2024	67	%	2
10	Las Vegas, NV	Multifamily	06/10/2022	28,950		24,223		S + 3.30%	S + 4.05%	06/10/2027	60	%	3
11	St. Louis, MO	Office	12/19/2018	28,866		28,866		L + 3.25%	L + 3.74%	06/20/2023	72	%	3
12	Plano, TX	Office	07/01/2021	27,385		26,152		L + 4.75%	L + 5.16%	07/01/2026	78	%	3
13	Carlsbad, CA	Office	10/27/2021	24,750		23,825		L + 3.25%	L + 3.58%	10/27/2026	78	%	3
14	Fontana, CA	Industrial	11/18/2022	24,355		22,000		S + 3.75%	S + 4.28%	11/18/2026	72	%	3
15	Downers Grove, IL	Office	12/09/2021	23,530		23,530		L + 4.25%	L + 4.57%	12/09/2026	72	%	3
16	Dublin, OH	Office	02/18/2020	22,820		22,507		S + 3.75%	S + 4.95%	02/18/2023	33	%	2
17	Bellevue, WA	Office	11/05/2021	21,000		20,000		L + 3.85%	L + 4.19%	11/05/2026	68	%	3
18	Portland, OR	Multifamily	07/09/2021	19,687		19,687		L + 3.57%	L + 3.97%	07/09/2026	75	%	3
19	Ames, IA	Multifamily	11/15/2021	18,000		17,820		L + 3.80%	L + 4.13%	11/15/2026	71	%	2
20	Aurora, IL	Office / Industrial	12/18/2020	17,460		16,429		L + 4.35%	L + 5.01%	12/18/2024	73	%	2
21	Yardley, PA	Office	12/19/2019	16,500		15,583		L + 4.58%	L + 5.97%	12/19/2024	75	%	4
22	Sandy Springs, GA	Retail	09/23/2021	16,489		15,017		L + 3.75%	L + 4.11%	09/23/2026	72	%	3
23	Delray Beach, FL	Retail	03/18/2022	16,000		15,149		S + 4.25%	S + 4.91%	03/18/2026	56	%	3
24	Westminster, CO	Office	05/25/2021	15,750		14,634		L + 3.75%	L + 4.25%	05/25/2026	66	%	2
25	Portland, OR	Multifamily	07/30/2021	13,400		13,400		L + 3.57%	L + 3.98%	07/30/2026	71	%	3
26	Seattle, WA	Multifamily	08/16/2021	12,500		12,354		L + 3.55%	L + 3.89%	08/16/2026	70	%	3
27	Allentown, PA	Industrial	01/24/2020	9,775		9,775		S + 3.50%	S + 4.03%	01/24/2025	67	%	1


	Total/weighted average			$	727,562	$	678,555	+ 3.78%	+ 4.28%		68	%	2.9

(1)All in yield represents the yield on a loan, including amortization of deferred fees over the initial term of the loan and excluding any purchase discount accretion.

(2)Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions.

(3)LTV represents the initial loan amount divided by the underwritten in-place value of the underlying collateral at closing.

~~(4) These first mortgage loans were acquired in the Merger.~~

As of December 31, ~~2021,~~2022, we had ~~$648,266~~$727,562 in aggregate loan commitments, consisting of a diverse portfolio, geographically and by property type, of 2627 first mortgage loans. The impact from the COVID-19 pandemic has negatively impacted some of our borrowers’ business operations or tenants, particularly in the cases of our retail and hospitality collateral, which are some of the types of properties that have been most negatively impacted by the pandemic. We expect that those negative impacts may continue and may apply to other borrowers and/or their tenants. Further, although economic activity in the United States has improved significantly from the low points during the pandemic to date, certain industries have not recovered to their pre-pandemic positions. Therefore, certain of our borrowers’ business plans will likely take longer to execute than initially expected and certain of our borrowers may be unable to pay their debt service obligation owed and due to us as currently scheduled. As of December 31, ~~2021,~~2022, we had ~~one loan~~three loans representing approximately 2%14% of the carrying value of our loan portfolio with a loan risk rating of “4” or “higher risk”.

In January 2023, we received $16,429 of early repayment proceeds on a loan secured by an office/industrial property in Aurora, IL.

All of the loans in our portfolio are structured with risk mitigation mechanisms, such as cash flow sweeps or interest reserves, to help protect us against investment losses. In addition, we continue to actively engage with our borrowers regarding their execution of the business plans for the underlying collateral, among other things.

We may enter into loan modifications that include among other changes, extensions of maturity dates, repurposing or required replenishment of reserves, increases or decreases in loan commitments and required pay downs of principal amounts outstanding. Modifications that represent concessions to a borrower that is experiencing financial difficulties are classified as troubled debt restructurings and considered impaired.

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In February 2022, we amended the agreement governing our loan secured by an office property located in Yardley, PA. As part of this amendment, the loan commitment was increased by $1,600, or the Additional Advance, and is available to be used to finance debt service costs and operating costs of the borrower. Additionally, the initial maturity date was extended by one year to December 19, 2023. For purposes of calculating interest due to us for this loan, the Additional Advance is deemed to be outstanding as of the date of the amendment, regardless of whether such amounts have been advanced, at LIBOR, or a replacement base rate determined by us if LIBOR is no longer available, plus 12.0%. As of December 31, 2022, this loan had a risk rating of “4” and an outstanding principal balance of $15,583. The borrower’s interest rate cap on the loan expired in December 2022. We have agreed to forbear enforcement of the event of default per the terms of the loan agreement related to the termination of an interest rate cap without replacement, subject to certain terms and conditions. As of February 9, 2023, we believe the borrower was in compliance with the other terms of the loan agreement.

There were no other material modifications to our loan portfolio during the year ended December 31, 2022.

As of December 31, 2022 and February ~~14, 2022, all of~~9, 2023, our borrowers had paid ~~all of~~ their debt service obligations owed and due to us and none of the loans included in our investment portfolio were in ~~default.~~

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default, except for the interest rate cap forbearance described above.

We did not have any impaired loans or non-accrual loans ~~or loans in default~~ as of December 31, ~~2021;~~2022; thus, we did not record a reserve for loan loss as of that date. However, ~~depending on the duration and severity of the COVID-19 pandemic and any resulting economic downturn,~~ our borrowers' businesses, operations and liquidity may be materially adversely ~~impacted.~~impacted by inflationary pressures, rising interest rates, supply chain issues and any recession or economic downturn. As a result, they may become unable to pay their debt service obligations owed and due to us, which may result in ~~the~~ impairment, ~~of those loans, and our recording~~increased loan loss reserves and/or recognition of income on a nonaccrual basis with respect to those ~~loans~~loans. For further information regarding our loan portfolio and ~~recording~~risk rating policy, see Notes 2 and 5 to our Consolidated Financial Statements included in Part IV, Item 15 of ~~any income~~this Annual Report on Form 10-K.

Financing Activities

Our secured financing agreements at December 31, 2022 consisted of agreements that govern our Wells Fargo Master Repurchase Facility, our Citibank Master Repurchase Facility, our BMO Facility and our UBS Master Repurchase Facility.

On March 11, 2022, one of our wholly owned subsidiaries entered into our Wells Fargo Master Repurchase Agreement for the Wells Fargo Master Repurchase Facility. The Wells Fargo Master Repurchase Facility provides up to $125,000 in advances, with ~~respect~~an option to ~~those loans~~increase the maximum facility to $250,000, subject to certain terms and conditions. We expect to use the Wells Fargo Master Repurchase Facility to finance the acquisition or origination of floating rate commercial mortgage loans. The expiration date of the Wells Fargo Master Repurchase Agreement is March 11, 2025, unless extended or earlier terminated in accordance with the terms of the Wells Fargo Master Repurchase Agreement.

On March 15, 2022, we amended and restated our Citibank Master Repurchase Agreement, which governs the Citibank Master Repurchase Facility. The amended and restated Citibank Master Repurchase Agreement increased the maximum amount of available advancements under our Citibank Master Repurchase Facility to $215,000, extended the stated maturity date of the Citibank Master Repurchase Facility to March 15, 2025, and made certain other changes to the agreement and related fee letter, including replacing LIBOR with SOFR for interest rate calculations on ~~a nonaccrual basis.~~advancements under the Citibank Master Repurchase Facility and modifying certain pricing terms.

On April 25, 2022, we amended and restated our facility loan program agreement and the security agreement with BMO Harris Bank N.A, or the BMO Loan Program Agreement, which increased the maximum facility amount from $100,000 to $150,000.

On May 4, 2022, we amended and restated our UBS Master Repurchase Agreement. The amended and restated UBS Master Repurchase Agreement, which was effective March 9, 2022, made certain changes to the agreement and related fee letter, including replacing LIBOR with SOFR for interest rate calculations on advancements under the UBS Master Repurchase Facility and modifying certain pricing terms.

For further information regarding our ~~risk rating policy,~~Secured Financing Facilities, see ~~Notes 3 and~~Note 6 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. ~~For further information regarding the risks associated with our loan portfolio, see Part I, Item 1A, “Risk Factors”~~

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Contents

~~Financing Activities~~

On February 18, 2021, one of our wholly owned subsidiaries entered into the UBS Master Repurchase Agreement and on September 30, 2021, in conjunction with the Merger, we assumed the Citibank Master Repurchase Facility, which was pursuant to the Citibank Master Repurchase Agreement, and was amended to, among other things, change the guarantor under the Citibank Master Repurchase Facility from TRMT to us.

On November 9, 2021, one of our wholly owned subsidiaries entered into the BMO Loan Program Agreement with BMO as administrative agent for the lenders for the BMO Facility, an uncommitted credit facility in the maximum principal amount of $100 million. Loans issued under the BMO Facility may be used to fund new mortgage loan originations and/or fund future funding obligations under existing and new mortgage loans pursuant to separate facility loan agreements, or the BMO Facility Loan Agreements. Loans issued under the BMO Facility will be coterminous with the pledged mortgage loan investments, are not subject to margin calls and allow for up to an 80% advance rate, subject to certain loan to cost and loan to value limits. Interest on advancements under the BMO Facility will be calculated at SOFR plus a premium. Loans issued under the BMO Facility are secured by a security interest and collateral assignment of the underlying loans to our borrowers which are secured by real property underlying such loans. Pursuant to the BMO Loan Program Agreement, one of our wholly owned subsidiaries will pay an upfront fee equal to a percentage of the aggregate amount of the facility loan, such percentage to be determined at the time of lenders’ approval of the BMO Facility Loan Agreement. Interest on advancements under the BMO Facility is calculated at SOFR plus a premium. For further information regarding our Secured Financing Facilities, see Note 7 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

The table below is an overview of our Secured Financing Facilities as of December 31, ~~2021:~~2022:


Facility										Facility	Maturity Date	Principal Balance		Unused Capacity		Maximum Facility Size		Collateral Principal Balance
Citibank Master Repurchase Facility										Citibank Master Repurchase Facility	03/15/2025	$	150,647	$	64,353	$	215,000	$	205,234
UBS Master Repurchase Facility										UBS Master Repurchase Facility	02/18/2024	144,437		47,563		192,000		198,254
BMO Facility										BMO Facility	Various	111,105		38,895		150,000		148,476
Wells Fargo Master Repurchase Facility										Wells Fargo Master Repurchase Facility	03/11/2025	67,426		57,574		125,000		89,008
Total										Total		$	473,615	$	208,385	$	682,000	$	640,972

	Maturity Date	Principal Balance		Unused Capacity		Maximum Facility Size		Collateral Principal Balance
Master Repurchase Facilities
UBS Master Repurchase Facility	02/18/2024	$	167,928	$	24,072	$	192,000	$	225,868
Citibank Master Repurchase Facility	11/06/2022	161,825		51,657		213,482		222,129
Asset Specific Financing
BMO Facility	Various	11,116		88,884		100,000		14,821
Total		$	340,869	$	164,613	$	505,482	$	462,818

The table below details our Secured Financing Facilities activities during the year ended December 31, ~~2021:~~2022:

Carrying Value

Balance ~~as of~~at December 31, ~~2020~~2021

—339,627

Borrowings

~~249,804~~284,867

Repayments

~~(37,897)~~(152,121)

Deferred fees

~~(1,453)~~(1,885)

Amortization of deferred fees

~~211~~1,033

~~Assumed in Merger~~

~~128,962~~

Balance ~~as of~~at December 31, ~~2021~~2022

~~339,627~~471,521

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As of December 31, ~~2021,~~2022, outstanding advancements under our Secured Financing Facilities had a weighted average interest rate of ~~2.06%~~6.34% per annum, excluding associated fees and expenses. As of December 31, ~~2021~~2022 and February ~~14, 2022,~~9, 2023, we had a ~~$340,869~~$473,615 and ~~a $278,782,~~$462,286, respectively, aggregate outstanding principal balance under our Secured Financing Facilities.

As of December 31, ~~2021,~~2022, we were in compliance with all covenants and other terms under our Secured Financing Facilities.

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RESULTS OF OPERATIONS (amounts in thousands, except per share data)

Year ended December 31, 2022 Compared to Year Ended December 31, 2021:


	Year Ended December 31,
	2022		2021		Change		% Change
INCOME FROM INVESTMENTS:
Interest income from investments	$	45,303	$	16,775	$	28,528	170.1	%
Purchase discount accretion	10,689		18,932		(8,243)		(43.5	%)
Less: interest and related expenses	(17,630)		(2,253)		(15,377)		n/m
Income from investments, net	38,362		33,454		4,908		14.7	%

OTHER EXPENSES:
Base management fees	4,260		3,221		1,039		32.3	%
General and administrative expenses	4,080		3,091		989		32.0	%
Reimbursement of shared services expenses	2,232		1,565		667		42.6	%
Other transaction related costs	37		589		(552)		(93.7	%)
Total other expenses	10,609		8,466		2,143		25.3	%

Income before income taxes	27,753		24,988		2,765		11.1	%
Income tax expense	(113)		(338)		225		(66.6	%)
Net income	$	27,640	$	24,650	$	2,990	12.1	%

Weighted average common shares outstanding - basic and diluted	14,540		11,304		3,236		28.6	%


Net income per common share - basic and diluted	$	1.89	$	2.18	$	(0.29)	(13.3	%)

n/m - not meaningful

Interest income from investments. The increase in interest income from investments was primarily the result of interest income generated from our origination activities, including 17 loans originated since January 1, 2021, interest income from loans acquired in the Merger and higher benchmark interest rates, partially offset by nine loans repaid since January 1, 2021. The weighted average benchmark rate was 4.29% as of December 31, 2022 as compared to 0.68% as of December 31, 2021.

Purchase discount accretion. The fair value of the loans acquired in the Merger on September 30, 2021 exceeded the purchase price of the loans. In accordance with GAAP, a purchase discount was recorded for the difference between the fair value and purchase price of the loans acquired. The purchase discount was allocated to each acquired TRMT loan on a relative fair value basis and is being accreted into income over the remaining term of the respective loan as of the effective date of the Merger. The decrease in purchase discount accretion was primarily the result of less amounts outstanding on the acquired TRMT loans during the year ended December 31, 2022 as compared to the year ended December 31, 2021.

Interest and related expenses. The increase in interest and related expenses was primarily the result of an increase in advances made to us under our Secured Financing Facilities since January 1, 2021 and higher benchmark interest rates in 2022. The weighted average benchmark rate was 4.33% as of December 31, 2022 as compared to 0.10% as of December 31, 2021.

Base management fees. The increase in base management fees was primarily due to the Merger. As a result of the ~~changes~~Merger, the net book value of TRMT, as of September 30, 2021, was included as "Equity" for purposes of determining the base management fee and incentive fee, if any, under the management agreement.

General and administrative expenses. The increase in general and administrative expenses was primarily due to increases in share based compensation, professional fees, internal audit services, fees paid to our ~~business, we have not provided a comparison of our financial statements~~Trustees for their services and insurance expense for the year ended December 31, 2022 as compared to the ~~prior~~ year ended December 31, 2021.

Reimbursement of shared services expenses. Reimbursement of shared services expenses represents reimbursement of the costs for the services that Tremont arranges on our behalf from RMR. The increase in ~~which we were operating as a registered investment company because it would not be useful~~reimbursement of shared services expenses was primarily the result of increased usage of shared services after the Merger on September 30, 2021.

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Other transaction related costs. Other transaction related costs incurred during the year ended December 31, 2022 primarily consisted of audit fees related to ~~our shareholders.~~

~~For~~the Merger. Other transaction costs incurred during the year ended December 31, 2021 consisted of expenses related to our conversion from a Maryland statutory trust to a Maryland REIT and legal costs in connection with the Merger.

Income tax expense. Income tax expense represents income taxes paid or payable by us in certain jurisdictions where we are subject to state income taxes. The decrease in income tax expense is due to income tax expense incurred during the year ended December 31, 2021 on realized gains on the disposition of our securities portfolio in connection with our conversion from a registered investment company under the 1940 Act to a mortgage REIT in January 2021.

Net income. The increase in net income was ~~$24,650, or $2.18 per common share.~~

due to the changes noted above.

Reconciliation of Net Income to Distributable Earnings and Adjusted Distributable Earnings

The table below demonstrates how we calculate Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share, which are non-GAAP measures, and provides a reconciliation of these non-GAAP measures to net income:


	~~Year Ended~~
	~~December 31, 2021~~
~~Reconciliation of net income to Distributable Earnings and Adjusted Distributable Earnings:~~
~~Net income~~	$	~~24,650~~
~~Non-cash equity compensation expense~~	~~627~~
~~Non-cash accretion of purchase discount~~	~~(18,932)~~
~~Distributable Earnings~~	~~6,345~~
~~Other transaction related costs~~ ~~(1)~~	~~589~~
~~Income tax expense~~ ~~(2)~~	~~282~~
~~Adjusted Distributable Earnings~~	$	~~7,216~~

~~Weighted average common shares outstanding - basic and diluted~~	~~11,304~~


~~Distributable Earnings per common share - basic and diluted~~	$	~~0.56~~
~~Adjusted Distributable Earnings per common share - basic and diluted~~	$	~~0.64~~


	Year Ended December 31,
	2022		2021
Net income	$	27,640	$	24,650



Non-cash equity compensation expense	1,018		627
Non-cash accretion of purchase discount	(10,689)		(18,932)
Exit fees collected on loans acquired in Merger (1)	104		—
Distributable Earnings	18,073		6,345
Other transaction related costs (2)	37		589
Income tax expense (3)	—		282
Adjusted Distributable Earnings	$	18,110	$	7,216

Weighted average common shares outstanding - basic and diluted	14,540		11,304


Net income per common share - basic and diluted	$	1.89	$	2.18
Distributable Earnings per common share - basic and diluted	$	1.24	$	0.56
Adjusted Distributable Earnings per common share - basic and diluted	$	1.25	$	0.64

(1)Exit fees collected for loans acquired in the Merger represent fees collected upon repayment of loans for which no income relating to those exit fees has previously been recognized in Distributable Earnings. In accordance with GAAP, exit fees payable with respect to loans acquired in the Merger were accreted as a component of the purchase discount and were excluded from Distributable Earnings as a non-cash item. Accordingly, these exit fees have been recognized in Distributable Earnings upon collection.

~~(1)~~(2)Other transaction related costs ~~primarily~~ include expenses related to ~~our conversion from a Maryland statutory trust to a Maryland REIT and the final settlement of legal complaints filed in connection with~~ the Merger. ~~For further information regarding such legal complaints, see Note 15 to the Notes to the Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.~~

~~(2)~~(3)Income tax expense for the year ended December 31, 2021 represents the portion of our income tax expense incurred on realized gains on the disposition of our securities portfolio asin connection with our conversion from a ~~result of the Business Change.~~registered investment company to a mortgage REIT in January 2021.

Factors Affecting Operating Results

Our results of operations are impacted by a number of factors and primarily depend on the interest income from our investments and the financing and other costs associated with our business. Our operating results are also impacted by general CRE market conditions and unanticipated defaults by our borrowers. For further information regarding the risks associated with our loan portfolio, see the risk factors identified in Part I, Item 1A, "Risk Factors", of this Annual Report on Form 10-K.

Credit Risk. We are subject to the credit risk of our borrowers in connection with our investments. We seek to mitigate this risk by utilizing a comprehensive underwriting, diligence and investment selection process and by ongoing monitoring of our investments. Nevertheless, unanticipated credit losses could occur that ~~could~~may adversely impact our operating results.

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Changes in Fair Value of our Assets. We generally intend to hold our investments for their contractual terms, unless repaid earlier by the borrowers. We evaluate our investments for impairment at least quarterly. Impairments occur when it is probable that we will not be able to collect all amounts due according to the applicable contractual terms. If we determine that a loan is impaired, we will record ~~an allowance~~a reserve to reduce the carrying value of the loan to an amount that takes into account both the

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present value of expected future cash flows discounted at the loan's contractual effective interest rate and the fair value of any available collateral, net of any costs we expect to incur to realize that value.

Although we intend to generally hold our investments for their contractual terms or until repaid earlier by the borrowers, we may occasionally classify some of our investments as held for sale. Investments held for sale will be carried at the lower of their amortized cost or fair value less costs to sell within loans held for sale on our consolidated balance sheet, with changes in fair value recorded through earnings. Fees received from our borrowers on any loans held for sale will be recognized as part of the gain or loss on sale. Currently, we do not expect to hold any of our investments for trading purposes.

Availability of Leverage and Equity. We use leverage to make additional investments that may increase our returns. We may not be able to obtain the expected amount of leverage we desire or its cost may exceed our expectation and, consequently, the returns generated from our investments may be reduced. Our ability to further grow our loan portfolio over time will depend, to a significant degree, upon our ability to obtain additional capital. However, our access to additional capital depends on many factors including the price at which our common shares trade relative to their book value and market lending conditions. See "—Market Conditions" below.

Market Conditions. ~~After~~Inflationary pressures and geopolitical concerns have caused widespread macroeconomic uncertainty and volatility. In response to inflationary pressures, the ~~initial market disruption resulting from~~FOMC increased the ~~COVID-19 pandemic,~~federal funds rate by 425 basis points during 2022 and has signaled that further increases are likely to occur throughout 2023. The FOMC's actions have caused increased borrowing costs and volatility in the CRE debt markets, while concerns of an existing or possible economic recession have ~~since stabilized. Increased vaccination rates, strong consumer demand, along with accommodating fiscal and monetary policies,~~caused increased credit spreads. Combined, these factors have resulted in ~~strong economic growth through much of 2021. This strong economic growth coupled with pent up demand leftover from 2020 resulted in record~~tighter underwriting standards and negatively impacted overall CRE transaction ~~volume. CRE transaction total~~ volume for ~~2021 exceeded total 2019 volume,~~2022, particularly in the ~~previous annual high for~~second half of the year.

The CRE ~~transaction volume.~~industry is traditionally a lagging indicator of economic conditions and CRE ~~values~~assets have ~~also risen considerably, not only compared~~historically tended to ~~2020, but also~~perform well in ~~relation to values from 2019. This~~periods of inflation. Despite the recent increase in borrowing costs and macroeconomic and geopolitical uncertainties, we believe that CRE investors continue to see strength in the fundamentals of the U.S. CRE markets; however, transaction activity and property values, combined with historically low interest rates has resulted in significant demand for CRE debt. CRE mortgage borrowings in 2021 reached an all-time annual high, fueled by increased investor demand for the relative risk adjusted returns offered by CRE debt investments. In particular, issuance of CRE debt securities for floating rate CLOs during 2021 exceeded record volume set in 2019 by approximately double and we expect strong investor demand to continue into 2022.

~~Although debt and equity transaction volume has increased across all property types, the multifamily and industrial sectors remain the most coveted amongst both lenders and investors. Multifamily~~ is expected to ~~continue~~remain curtailed until there is further clarity on when, and at what level, the FOMC will stop increasing the federal funds rate. Once interest rate volatility subsides, we believe CRE investors will be able to be a preferred asset class due to the stability of cash flows, strong performance throughout the pandemic and the abundance of liquidity offered by debt capital available from government sponsored enterprises, such as Fannie Mae and Freddie Mac as well as alternative lenders, like debt funds and mortgage REITs who finance debt investments by issuing CRE CLO bonds. Today, multifamily properties comprise the majority of collateral for these floating rate CRE CLO bond offerings and, as a result, the competition among alternative lenders, like us, for loans secured by multifamily properties with transitional or value add business plans has resulted in low borrowing costs for owners of these properties. Industrial properties continue to benefit from shifts in consumer behavior to increased e-commerce and supply chain issues hastened by the COVID-19 pandemic. The increased demand for industrial real estate, and particularly warehouse, distribution and “last-mile” properties has made this property type the fastest growing in terms of valuation among all major property types.

~~The hospitality, office and retail sectors are among those that have been most negatively impacted by the economic downturn~~recalibrate their expectations related to ~~the pandemic. However, with the easing of government mandated restrictions, increased vaccination rates~~asset values, lenders will be able to price and structure risk accordingly in ~~the U.S.,~~a higher, but more stable, interest rate environment and strong household balance sheets, retail sales and leisure travel have experienced overall improvement throughout 2021, although business travel remains muted and the long term impacts to certain sub-sectors of the hotel industry remain. Lenders have been more willing to lend against certain types of retail, like grocery anchored and service-oriented neighborhood shopping centers, which has helped to support value increases throughout 2021, but continue to be cautious when evaluating loans secured by big box retailers, regional malls or lifestyle centers. CRE transaction activity will improve.

As it relates to the ~~office sector, capital remains readily available~~CRE debt markets, many CRE debt providers have become less willing, or able, to ~~lend for~~extend credit to borrowers, and those ~~buildings~~ that are ~~well leased~~extending credit are doing so at lower leverage levels and ~~fully amenitized and, in particular, for properties~~ with higher credit quality tenants and longer term leases. However, lenders will continue to face underwriting challenges, in part due to the shift to flexible work-from-home schedules, with respect to assumptions related to new leasing, tenant renewal probabilities and office occupancy rates, especially for older assets or those with significant near-term lease roll over and in particular those located in urban core or central business district markets.

~~Despite the strong performance of the debt capital markets in 2021, we believe challenges remain. The longer term impact of the COVID-19 pandemic~~spreads. Market volatility and the risk of future variants of the virus is still uncertain. Supply chain issues remain and inflation has started to impact the broader markets in 2022. The U.S. Federal Reserve recently indicated that, in light of the economic recovery and higher than anticipated inflation, it expects to raise interest rates as early as March 2022, which will impact short term index rates such as LIBOR and SOFR. Any increasesincrease in interest rates has not affected all lenders equally. Banks and life insurance companies have reduced their leverage ratios and increased credit spreads, but continue to originate new loans, while lenders that rely on secondary markets to finance their lending activities have experienced challenges. Credit spreads in the secondary market for commercial mortgage-backed securities, or CMBS, and CRE collateralized loan obligations, or CLO, bonds have widened substantially due to competing demand for alternative fixed income investments. As a result, some lenders who originate and sell loans into the CRE CLO market as a means of financing have chosen to wait to issue bonds until market volatility subsides and credit spreads stabilize, causing a slowdown in loan originations.

In addition to increased overall borrowing costs, lenders may ~~have an impact~~experience certain challenges from increasing interest rates on debt coverage ratios for certain property types, particularly those with long term leases, such as office and industrial, or in multifamily where capitalization rates are at record lows and financed with short term, floating rate ~~debt. Lastly, it is unclear how the transition~~

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~~away from LIBOR as the preferred index for pricing~~loan portfolios. While increasing interest rates generally cause interest income on floating rate ~~debt will affect liquidity and performance of the~~portfolios to increase, floating rate loans are often used to finance transitional properties with a business plan to increase cash flows, allowing for increasing debt ~~markets. Despite~~costs to be serviced. Lenders are impacted by the ability of their borrowers to service their debt while implementing their business plans and, as a result, lenders' underwriting criteria may become more conservative. Additionally, floating rate lenders typically limit interest rate risk by requiring borrowers to obtain interest rate caps or swaps to limit the impact of rising rates on a borrower’s ability to service its debt. While interest rate caps and swaps on existing loans protect lenders in periods of rising interest rates, the cost to the borrower to obtain interest rate caps or swaps on new loans may result in decreased loan amounts. These challenges could result in reduced floating rate portfolio amounts overall and, as a result, could offset the increase in interest income generated from higher benchmark rates.

We believe the CRE lending industry is well positioned to face these ~~challenges, we believe that as~~challenges. Unlike in the ~~U.S. economy~~years leading up to the financial crisis of 2008, underwriting standards have not eased and liquidity, both in the form of debt and equity capital, continues to ~~grow,~~exist for the CRE sector. We believe there will continue to be significant opportunities for alternative lenders like us to provide creative, flexible debt capital for a wide array of circumstances and business plans.

Changes in ~~Market~~ Interest Rates. With respect to our business operations, increases in interest rates, in general, may cause: (a) the ~~interest expense associated with our variable rate borrowings, if any, to increase; (b) the value of our fixed rate investments, if any, to decline; (c) the~~ coupon rates on our variable rate investments ~~if any,~~ to reset, perhaps on a delayed basis, to higher rates; ~~and (d)~~(b) it to become more difficult and costly for our borrowers, which may negatively impact their ability to repay our ~~investments.~~investments; and (c) the interest expense associated with our variable rate borrowings to increase. See "—Market Conditions" above for a discussion of the current market including interest rates.

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Conversely, decreases in interest rates, in general, may cause: (a) the ~~interest expense associated with our variable rate borrowings, if any, to decrease; (b) the value of our fixed rate investments, if any, to increase; (c) the~~ coupon rates on our variable rate investments ~~if any,~~ to reset, perhaps on a delayed basis, to lower rates; ~~and (d)~~(b) it to become easier and more affordable for our borrowers to refinance, and as a result, repay our loans, but may negatively impact our future returns if any such repayment proceeds were to be reinvested in lower yielding ~~investments.~~investments; and (c) the interest expense associated with our variable rate borrowings to decrease.

The interest income on our loans and interest expense on our borrowings float with benchmark rates, such as LIBOR and SOFR. Because we generally intend to leverage approximately 75% of the amount of our investments, as benchmark rates increase above the floors of our loans, our income from investments, net of interest and related expenses, will increase. Decreases in benchmark rates are mitigated by interest rate floor provisions in all but one of our loan agreements with borrowers; therefore, changes to income from investments, net, may not move proportionately with the increase or decrease in benchmark rates. Based on our loan portfolio as of December 31, 2021, LIBOR was 0.10% and would have to exceed the floor established by any of our loans, which currently range from 0.00% to2.32%, for us to realize an increase in interest income.

As of December 31, ~~2021,~~2022, LIBOR ~~is phased out for new contracts~~ and ~~is expected to be phased out for pre-existing contracts~~SOFR were 4.39% and 4.36%, respectively, both of which exceed the floors established by ~~June 30, 2023. Our Master Repurchase Facilities provide that at such time as LIBOR shall no longer be made available or used for determining the interest rate~~all of ~~advances under~~ our Master Repurchase Facilities, the replacement base rate shall be an alternative benchmark rate (including any mathematical or other adjustments to the benchmark rate (if any) incorporated therein so that the resulting rate approximates LIBOR as close as reasonably possible) as determined by UBSloans, and Citibank under similar facilities for the financing of similar assets and is consistent with the pricing index of similarly situated counterparties. As of January 1, 2022, interest rates on new advances under our Master Repurchase Facilities are based on SOFR. We expect that, as a result none of ~~the phase out of LIBOR, the interest rates under~~ our loan investments currently have active interest rate floors.

Certain of our loan agreements ~~with borrowers~~ entered into prior to January 1, 2022 ~~would~~require the borrowers to pay us interest at floating rates based upon LIBOR. LIBOR was phased out for new contracts as of December 31, 2021. Our pre-existing contracts have been or are expected to be amended to replace LIBOR with ~~an alternative benchmark rate (which may include SOFR) that will approximate~~SOFR prior to June 30, 2023, the ~~existing interest rate as calculated in accordance with LIBOR. As of~~date LIBOR is expected to no longer be available. Since January 1, 2022, interest rates under ~~our~~ new loan agreements with our borrowers are based on SOFR. Our Citibank Master Repurchase Agreement and UBS Master Repurchase Agreement were amended and restated effective March 2022 to, among other things, replace LIBOR with SOFR for interest rate calculations on new advances. Interest rates on advances under our BMO Facility and Wells Fargo Master Repurchase Facility have been based on SOFR since we entered into the agreements governing these facilities.

Size of Portfolio. The size of our loan portfolio, as measured both by the aggregate principal balance and the number of our CRE loans and our other investments, is also an important factor in determining our operating results. Generally, if the size of our loan portfolio grows, the amount of interest income we receive would increase and we may achieve certain economies of scale and diversify risk within our loan portfolio. A larger portfolio, however, may result in increased expenses; for example, we may incur additional interest expense or other costs to finance our investments. Also, if the aggregate principal balance of our loan portfolio grows but the number of our loans or the number of our borrowers does not grow, we could face increased risk by reason of the concentration of our investments.

Prepayment Risk. We are subject to risk that our loan investments will be repaid at an earlier date than anticipated, which may reduce the returns realized on those loans as less interest income may be received over time. Additionally, we may not be able to reinvest the principal repaid at a similar or higher yield of the original loan investment. We seek to limit this risk by structuring our loan agreements with fees required to be paid to us upon prepayment of a loan within a specified period of time before the loan’s maturity; however, unanticipated prepayments could negatively impact our operating results.

LIQUIDITY AND CAPITAL RESOURCES (dollars in thousands, except per share data)

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to fund our lending commitments, repay or meet margin calls resulting from our borrowings, if any, fund and maintain our assets and operations, make distributions to our shareholders and fund other business operating requirements. Our sources of cash flows include cash on hand, payments of principal, interest and fees we receive on our investments, other cash we may generate from our business and operations and any unused borrowing capacity, including under our Secured Financing Facilities or other repurchase agreements or financing arrangements ~~and~~we may obtain, which may also include bank loans or public or private issuances of debt or equity securities. We believe that these sources of funds will be sufficient to meet our operating and capital expenses, pay our debt service obligations owed and make any distributions to our shareholders for the next 12 months and for the foreseeable ~~future, subject to the duration and severity of the COVID-19 pandemic and economic impact on our borrowers and their ability to fund their debt service obligations owed to us.~~future. For further information regarding the risks associated with our loan portfolio, see Part I, Item 1A, "Risk Factors" of this Annual Report on Form 10-K.

Pursuant to the terms of our UBS Master Repurchase ~~Facilities,~~Facility and our Citibank Master Repurchase Facility, we may sell to, and later repurchase from, UBS and Citibank, the purchased ~~assets.~~assets related to the applicable facility. The initial purchase price paid by UBS or Citibank of each purchased asset is up to 75% of the lesser of the market value of

~~Table~~ ~~of Contents~~

the purchased asset or the unpaid principal balance of such purchased asset, subject to UBS’s or Citibank's approval. Upon the repurchase of a purchased asset, we are required to pay UBS or Citibank, as applicable, the outstanding purchase price of the purchased asset, accrued interest and all accrued and unpaid expenses of UBS or Citibank, as applicable, relating to such purchased asset.

The interest ~~rate relating~~rates related to aour Citibank and UBS purchased ~~asset is equal~~assets were amended during 2022 as part of the amendments to ~~one month~~the Citibank Master Repurchase Agreement and UBS Master Repurchase Agreement to replace LIBOR with SOFR plus a ~~customary~~ premium within a fixed range, determined by the debt yield and property type of the purchased asset’s real estate collateral. UBS and Citibank each has the discretion ~~under our respective Master Repurchase Agreements~~ to make advancements at margins higher than 75%. ~~On November 9, 2021, one~~

Table of ~~our wholly owned subsidiaries entered into the BMO Loan Program Agreement for the BMO Facility.~~ Contents

Loans issued under the BMO Facility may be used to fund new mortgage loan originations and/or fund future funding obligations under existing and new mortgage loans pursuant to separate facility loan agreements, or the BMO Facility Loan Agreements. Loans issued under the BMO Facility will beare coterminous with the corresponding pledged mortgage loan investments, are not subject to margin calls and allow for up to an 80% advance rate, subject to certain loan to cost and LTV limits. Interest on advancements under the BMO Facility ~~will be~~are calculated at SOFR plus a premium. Loans issued under the BMO Facility are secured by a security interest and collateral assignment of the underlying loans to our borrowers which are secured by real property underlying such loans. ~~Pursuant~~We are required to ~~the BMO Loan Program Agreement, one of our wholly owned subsidiaries will~~ pay an upfront fee equal to a percentage of the aggregate amount of the facility loan, such percentage to be determined at the time of ~~lenders’~~ approval of the separate facility loan agreements with BMO, or the BMO Facility Loan ~~Agreement.~~ Agreements. At the facility loan maturity date applicable to each facility loan, we are required to pay BMO the outstanding principal balance of the applicable facility loan and all accrued and unpaid interest and all other amounts due under the BMO Facility Loan Agreements with respect to such facility loan.

On March 11, 2022, one of our wholly owned subsidiaries entered into the Wells Fargo Master Repurchase Agreement for the Wells Fargo Master Repurchase Facility, pursuant to which we may sell to, and later repurchase from Wells Fargo, the purchased assets related to the facility. The initial purchase price paid by Wells Fargo for each purchased asset is up to 75% or 80%, depending on the property type of the purchased asset’s real estate collateral, of the lesser of the market value of the purchased asset or the unpaid principal balance of such purchased asset, and subject to Wells Fargo’s approval. Upon the repurchase of a purchased asset, we are required to pay Wells Fargo the outstanding purchase price of the purchased asset, accrued interest and all accrued and unpaid expenses of Wells Fargo relating to such purchased asset. Interest on advancements under the Wells Fargo Master Repurchase Facility is calculated at SOFR plus a premium.

For further information regarding our Secured Financing Facilities, see Note 76 to ~~the Notes to the~~our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K and "—Overview-Financing Activities" above.

The following is a summary of our sources and uses of cash flows for the period presented:


	~~Year Ended December 31, 2021~~
~~Cash, cash equivalents and restricted cash at beginning of period~~	$	~~103,564~~
~~Net cash provided by (used in):~~
~~Operating activities~~	~~792~~
~~Investing activities~~	~~(283,863)~~
~~Financing activities~~	~~205,802~~
~~Cash, cash equivalents and restricted cash at end of period~~	$	~~26,295~~


	Year Ended December 31,
	2022		2021
Cash, cash equivalents and restricted cash at beginning of period	$	26,295	$	103,564
Net cash provided by (used in):
Operating activities	12,751		792
Investing activities	(84,067)		(283,863)
Financing activities	116,088		205,802
Cash, cash equivalents and restricted cash at end of period	$	71,067	$	26,295

~~During the year ended December 31, 2021, our~~The increase in cash provided by operating activities ~~consisted of our net income, excluding~~for 2022 compared to 2021 was primarily the ~~impact of accretion of the purchase discount as a~~ result of interest income generated from our origination activities in 2021 and 2022 and loans acquired in the ~~Merger, and unfavorable changes~~Merger. The decrease in ~~working capital. During the year ended December 31, 2021, our~~ cash used in investing activities ~~consisted of~~is primarily due to lower loan originations ~~additional fundings on our loans held for investment~~ and higher loan repayments in 2022, as well as payment of transaction costs related to the Merger in 2021, partially offset by ~~loan repayments and~~ cash assumed in the Merger. ~~During the year ended December 31, 2021, our~~The decrease in cash provided by financing activities ~~consisted of~~is primarily due to higher repayments on our Secured Financing Facilities during 2022 and an increase in distributions to common shareholders in 2022, partially offset by increased proceeds received from our Secured Financing Facilities ~~partially offset by deferred financing cost payments related to our Secured Financing Facilities and distributions to our common shareholders.~~

during 2022.

Distributions

During the year ended December 31, ~~2021,~~2022, we declared and paid distributions totaling ~~$4,595,~~$14,636, or ~~$0.45~~$1.00 per common share, using cash on hand.

On January ~~13, 2022,~~12, 2023, we declared a regular quarterly distribution of ~~$0.25~~$0.35 per common share, or ~~$3,649,~~$5,148, to shareholders of record on January ~~24, 2022.~~23, 2023. We expect to pay this distribution to our common shareholders on February ~~17, 2022~~16, 2023 using cash on hand.

For further information regarding distributions, see Note 98 to ~~the Notes to~~our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.

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Contractual Obligations and Commitments

Our contractual obligations and commitments as of December 31, ~~2021~~2022 were as follows:


		Payment Due by Period											Payment Due by Period
		Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 years			Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
Unfunded loan commitments (1)	Unfunded loan commitments (1)	$	57,772	$	9,120	$	48,652	$	—	$	—	Unfunded loan commitments (1)	$	49,007	$	7,808	$	41,199	$	—	$	—
Principal payments on Secured Financing Facilities (2)	Principal payments on Secured Financing Facilities (2)	340,869		161,825		179,044		—		—		Principal payments on Secured Financing Facilities (2)	473,615		99,112		374,503		—		—
Interest payments (3)		10,545		6,344		4,201		—		—
Interest payments on Secured Financing Facilities (3)												Interest payments on Secured Financing Facilities (3)	46,590		28,448		18,142		—		—
		$	409,186	$	177,289	$	231,897	$	—	$	—		$	569,212	$	135,368	$	433,844	$	—	$	—

(1)The allocation of our unfunded loan commitments is based on the current loan maturity date to which the individual commitments relate.

(2)The allocation of outstanding advancements under our Secured Financing Facilities is based on the earlier of the current maturity date of each loan investment with respect to which the individual borrowing relates or the maturity date of the respective ~~Master Repurchase~~Secured Financing Facilities.

(3)Projected interest payments are attributable only to our debt service obligations at existing rates as of December 31, ~~2021~~2022 and are not intended to estimate future interest costs which may result from debt prepayments, additional borrowings, new debt issuances or changes in interest rates.

Debt Covenants

Our principal debt obligations as of December 31, ~~2021~~2022 were the outstanding balances under our Secured Financing Facilities. Our Master Repurchase Agreements provide for acceleration of the date of repurchase of any then purchased assets and the liquidation of the purchased assets by UBS, Citibank or ~~Citibank~~Wells Fargo, as applicable, upon the occurrence and continuation of certain events of default, including a change of control of us, which includes ~~our Manager~~Tremont ceasing to act as our sole manager or to be a wholly owned subsidiary of ~~RMR LLC.~~RMR. Our Master Repurchase Agreements also provide that upon the repurchase of any then purchased asset, we are required to pay UBS, Citibank or ~~Citibank~~Wells Fargo the outstanding purchase price of such purchased asset and accrued interest and any and all accrued and unpaid expenses of UBS, Citibank or ~~Citibank~~Wells Fargo, as applicable, relating to such purchased asset.

In connection with our Master Repurchase Agreements, we entered into our guarantees, or the Master Repurchase Guarantees, which require us to guarantee 25% of the aggregate repurchase price, and 100% of losses in the event of certain bad acts, as well as any costs and expenses of UBS, Citibank and ~~Citibank~~Wells Fargo, as applicable, related to our Master Repurchase Agreements. The Master Repurchase Guarantees ~~also~~contain financial covenants, which require us to ~~comply with customary financial covenants, which include the maintenance of~~maintain a minimum tangible net worth, a minimum ~~cash~~ liquidity and a minimum interest coverage ratio and to satisfy a total indebtedness to stockholders' equity ~~ratio and a minimum interest coverage~~ ratio.

In connection with the BMO Loan Program Agreement, we have agreed to guarantee certain of the obligations under the BMO Loan Program Agreement and the BMO Facility Loan Agreements pursuant to a limited guaranty from us to and for the benefit of the administrative agent for itself and such other lenders, or the BMO Guaranty. Specifically, the BMO Guaranty requires us to guarantee 25% of the then current outstanding principal balance of the facility loans and 100% of losses or the entire indebtedness in the event of certain bad acts as well as any costs and expenses of the administrative agent or lenders related to the BMO Loan Program Agreement. In addition, the BMO Guaranty contains ~~customary~~ financial covenants that require us to maintain a minimum tangible net worth and a minimum ~~cash~~ liquidity and to satisfy a total indebtedness to stockholders’ equity ratio. The BMO Loan Program Agreement and the BMO Guaranty contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types.

As of December 31, ~~2021,~~2022, we had a ~~$329,753~~$362,510 aggregate outstanding principal balance under our Master Repurchase Facilities. Our Master Repurchase Agreements are structured with risk mitigation mechanisms, including a cash flow sweep, which would allow UBS, or Citibank and Wells Fargo, as applicable, to control interest payments from our borrowers under our loans that are financed under our respective Master Repurchase Facilities, and the ability to accelerate dates of repurchase and institute margin calls, which may require us to pay down balances associated with one or more of our loans that are financed under our Master Repurchase Facilities.

As of December 31, ~~2021,~~2022, we had a ~~$11,116~~$111,105 aggregate outstanding principal balance under the BMO Facility.

As of December 31, ~~2021,~~2022, we were in compliance with all covenants and other terms under our Secured Financing Facilities.

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Related Person Transactions

We have relationships and historical and continuing transactions with ~~our Manager,~~Tremont, RMR, ~~LLC,~~ RMR Inc. and others related to them. For further information about these and other such relationships and related person transactions, see Notes 10

~~Table~~ ~~of Contents~~

9 and 1110 to ~~the Notes to~~our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K and our other filings with the SEC, which are incorporated herein by reference, including our definitive Proxy Statement for our ~~2022~~2023 Annual Meeting of Shareholders, or our ~~2022~~2023 Proxy Statement, to be filed with the SEC within 120 days after the fiscal year ended December 31, ~~2021.~~2022. For further information about the risks that may arise as a result of these and other related person transactions and relationships, see elsewhere in this Annual Report on Form 10-K, including “Warning Concerning Forward-Looking Statements,” Part I, Item 1, “Business” and Part I, Item 1A, “Risk Factors.” We may engage in additional transactions with related persons, including businesses to which RMR ~~LLC~~ or its subsidiaries provide management services.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with GAAP, which requires the use of estimates and assumptions that involve the exercise of judgment regarding future events and other uncertainties. In accordance with SEC guidance, the following discussion addresses the accounting policies that apply to our operations. Our most critical accounting policies involve decisions and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. We believe that our decisions and assessments upon which our consolidated financial statements are based are reasonable, based upon information available to us. Our critical accounting policies and accounting estimates may be changed over time as our strategies change or as we expand our business. Those accounting policies and estimates that are most critical to an investor’s understanding of our financial results and condition and require complex management judgment are discussed below.

Revenue Recognition. Interest income related to our CRE mortgage loans is generally accrued based on the coupon rates applied to the outstanding principal balance of such loans. Fees, premiums and discounts, if any, are amortized or accreted into interest income over the remaining lives of the loans using the effective interest method, as adjusted for any prepayments.

If a loan’s interest or principal payments are not paid when due and there is uncertainty that such payments will be collected, the loan may be categorized as non-accrual and no interest will be recorded ~~unless~~until it is collected. When all overdue payments are collected and, in our judgment, a loan is likely to remain current, it may be re-categorized as accrual.

For loans purchased at a discount, GAAP limits the yield that may be accreted (accretable yield) to the excess of the investor’s estimate of undiscounted expected principal, interest and other cash flows (cash flows expected at acquisition to be collected) over the investor’s initial investment in the loan. GAAP also requires that the excess of contractual cash flows over cash flows expected to be collected (non-accretable difference) not be recognized as an adjustment of yield, loss accrual or valuation allowance. Subsequent increases in cash flows expected to be collected from such loans generally will be recognized prospectively through adjustment of the loan’s yield over its remaining life. Decreases in cash flows expected to be collected will be recorded as impairment.

Loans Held For Investment. Generally, our loans are classified as held for investment based upon our intent and ability to hold them until maturity. Loans that are held for investment are carried at cost, net of unamortized loan origination fees, accreted exit fees, unamortized premiums and unaccreted discounts, as applicable, that are required to be recognized in the carrying value of the loans in accordance with GAAP, unless the loans are deemed to be impaired. Loans that we have a plan to sell or liquidate are held at the lower of cost or fair value less cost to sell.

We evaluate each of our loans for impairment at least quarterly by assessing a variety of risk factors in relation to each loan and assigning a risk rating to each loan based on those factors. Factors considered in these evaluations include, but are not limited to, property type, geographic and local market dynamics, physical condition, leasing and tenant profile, projected cash flow, risk of loss, current LTV, debt yield, collateral performance, structure, exit plan and sponsorship. Loans are rated “1” (less risk) through “5” (greater risk) as defined below:

~~"1"~~“1” lower risk—Criteria reflects a sponsor having a strong financial condition and low credit risk and our evaluation of management's experience; collateral performance exceeding performance metrics included in the business plan or credit underwriting; and the property demonstrating stabilized occupancy and/or market rates, resulting in strong current cash flow and net operating income and/or having a very low LTV.

~~"2"~~

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“2” average risk—Criteria reflects a sponsor having a stable financial condition and our evaluation of management's experience; collateral performance meeting or exceeding substantially all performance metrics included in the business plan or credit underwriting; and the property demonstrating improved occupancy at market rents, resulting in sufficient current cash flow and/or having a low LTV.

~~Table~~ ~~of Contents~~

~~"3"~~“3” acceptable risk—Criteria reflects a sponsor having a history of repaying loans at maturity and meeting its credit obligations and our evaluation of management's experience; collateral performance expected to meet performance metrics included in the business plan or credit underwriting; and the property having a moderate LTV. New loans and loans with a limited history will typically be assigned this rating and will be adjusted to other levels from time to time as appropriate.

~~"4"~~“4” higher risk—Criteria reflects a sponsor having a history of unresolved missed or late payments, maturity extensions and difficulty timely fulfilling its credit obligations and our evaluation of management's experience; collateral performance failing to meet the business plan or credit underwriting; the existence of a risk of default possibly leading to a loss and/or potential weaknesses that deserve management’s attention; ~~and~~and/or the property having a high LTV.

~~"5"~~“5” impaired/loss likely—Criteria reflects a very high risk of realizing a principal loss or having incurred a principal loss; a sponsor having a history of default payments, trouble fulfilling its credit obligations, deeds in lieu of foreclosures, and/or bankruptcies; collateral performance is significantly worse than performance metrics included in the business plan; loan covenants or performance milestones having been breached or not attained; timely exit via sale or refinancing being uncertain; ~~and~~and/or the property having a very high LTV.

Impairment occurs when it is deemed probable that we will not be able to collect all amounts due under a loan according to its contractual terms. Impairment will then be measured based on the present value of expected future cash flows discounted at the loan’s contractual effective rate and the fair value of any available collateral, net of any costs we expect to incur to realize that value. The determination of whether loans are impaired involves judgments and assumptions based on objective and subjective factors. Consideration will be given to various factors, such as business plans, property occupancies, tenant profiles, rental rates, operating expenses and borrowers’ repayment plans, among others, and will require significant judgments, including assumptions regarding the values of loans, the values of underlying collateral and other circumstances, such as guarantees, if any. Upon measurement of an impairment, we will record ~~an allowance~~a reserve to reduce the carrying value of the loan accordingly and record a corresponding charge to net income in our consolidated ~~statement~~statements of operations.

~~Impact of Inflation~~

During the past several years there has been low inflation in the U.S. economy. As inflation increases, we believe it may have both positive and negative impacts upon our business. A positive impact of inflation on our business may be to increase the value of collateral for any existing loans, making the refinancing and repayment of principal easier for borrowers and reducing our risk of borrower defaults. A negative impact of inflation on our business may be to cause interest rates to rise, reducing the market value of any fixed rate loans we hold. A rise in interest rates may also make it more difficult for our borrowers to refinance loans in order to pay their obligations to us. Because all of our investments require interest at floating rates, we do not expect inflation to have a material impact upon our business for the reasonably foreseeable future.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 8. Financial Statements and Supplementary Data

The information required by this Item is included in Item 15 of this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, our management carried out an evaluation, under the supervision and with the participation of our Managing Trustees, our President and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Exchange Act. Based upon that evaluation, our Managing Trustees, our President and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended December 31, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table~~ ~~of Contents~~

Management Report on Assessment of Internal Control Over Financial Reporting

We are responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is designed to provide reasonable assurance to our management and Board of Trustees regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

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Our management assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2021.~~2022. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) in Internal Control - Integrated Framework. Based on our assessment, we believe that, as of December 31, ~~2021,~~2022, our internal control over financial reporting is effective.

This Annual Report on Form 10-K does not include an attestation report from our registered public accounting firm on our internal control over financial reporting due to the exemption for non-accelerated filers.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

We have a Code of Conduct that applies to our officers and Trustees, ~~our Manager,~~Tremont, RMR, ~~Inc.~~members of the board of directors of Tremont and RMR ~~LLC, senior level officers~~Inc., employees of ~~RMR LLC, senior level officers and directors of RMR Inc. and certain other officers~~Tremont and employees of ~~our Manager or~~ RMR ~~LLC.~~who provide significant services to us. Our Code of Conduct is posted on our website, www.sevnreit.com. A printed copy of our Code of Conduct is also available free of charge to any person who requests a copy by writing to our Secretary, Seven Hills Realty Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458-1634. We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of any amendments to, or waivers from, our Code of Conduct that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website.

The remainder of the information required by Item 10 will be included in our ~~2022~~2023 Proxy Statement, and is incorporated herein by reference.

Item 11. Executive Compensation

The information required by Item 11 will be included in our ~~2022~~2023 Proxy Statement and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information. We may grant common shares to our officers and other employees of ~~our Manager~~Tremont and of RMR ~~LLC~~ under our Amended and Restated 2021 Equity Compensation Plan, or the 2021 Plan. In addition, each of our Trustees receives common shares as part of his or her annual compensation for serving as a Trustee and such shares are awarded under the 2021 Plan. The terms of awards made under the 2021 Plan are determined by the Compensation Committee of our Board of Trustees at the time of the awards. The table below is as of December 31, ~~2021:~~2022:

Number of Number of securities
securities remaining available for
to be issued upon Weighted-average future issuance under equity
exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities
Plan category warrants and rights warrants and rights reflected in column (a))
(a) (b) (c)
Equity compensation plans approved by security holders - 2021 Plan None None 363,160 (1)
Equity compensation plans not approved by security holders None None None
Total None None 363,160 (1)

Plan category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

(a)

(b)

(c)

Equity compensation plans approved by security holders - 2021 Plan

None

251,074 (1)

Equity compensation plans not approved by security holders

None

Total

None

251,074 (1)

(1)Consists of common shares available for issuance pursuant to the terms of the 2021 Plan. Share awards that are repurchased or forfeited will be added to the common shares available for issuance under the 2021 Plan.

Payments by us to RMR ~~LLC~~ and RMR ~~LLC~~ employees are described in Notes 98 and 1110 to ~~the Notes to~~our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. The remainder of the information required by Item 12 will be included in our ~~2022~~2023 Proxy Statement and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 will be included in our ~~2022~~2023 Proxy Statement and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information required by Item 14 will be included in our ~~2022~~2023 Proxy Statement and is incorporated herein by reference.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) Index to Financial Statements and Financial Statement Schedules

The following consolidated financial statements of Seven Hills Realty Trust are included on the pages indicated:


			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)			F-1
~~Report of Independent Registered Public Accounting Firm(PCAOB ID No. 49)~~			~~F-2~~
Consolidated Balance ~~Sheet~~Sheets as of December 31, 2022 and 2021			F-3
Consolidated ~~Statement~~Statements of ~~Assets and Liabilities as of~~Operations for the years ended December 31, ~~2020~~2022 and 2021			F-4
Consolidated ~~Statement~~Statements of ~~Operations~~Shareholders' Equity for the ~~year~~years ended December 31, 2022 and 2021			F-5
Consolidated ~~Statement of Operations for the year ended December 31, 2020~~			~~F-6~~
~~Consolidated Statement of Shareholders' Equity for the year ended~~ ~~December 31, 2021~~			~~F-7~~
~~Consolidated Statement of Changes in Net Assets for the year ended~~ ~~December 31, 2020~~			~~F-8~~
~~Consolidated Statement~~Statements of Cash Flows for the ~~year~~years ended December 31, 2022 and 2021			~~F-9~~
~~Consolidated Statement of Cash Flows for the year ended December 31, 2020~~			~~F-11~~
~~Consolidated Portfolio of Investments as of December 31, 2020~~			~~F-12~~F-6
Notes to Consolidated Financial Statements			~~F-13~~F-8
Schedule IV - Mortgage Loans on Real Estate			S-1

All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions, or are inapplicable, and therefore have been omitted.

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(b) Exhibits

Exhibit
Number

Description

~~2.1~~

Agreement and Plan of Merger, dated as of April 26, 2021, between the Company and Tremont Mortgage Trust. (Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed by the Company on April 27, 2021.)

~~2.2~~

Plan of Conversion of Seven Hills Realty Trust, a Maryland statutory trust, into the Company, dated December 21, 2021. (Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed by the Company on December 22, 2021.)

~~2.3~~

Articles of Conversion of Seven Hills Realty Trust, a Maryland statutory trust, into the Company, dated December 21, 2021. (Incorporated by reference to Exhibit 2.2 of the Current Report on Form 8-K filed by the Company on December 22, 2021.)

3.1

Declaration of Trust of the Company, dated December 21, 2021. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed by the Company on December 22, 2021.)

3.2

Bylaws of the Company, dated December 22, 2021. (Incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K filed by the Company on December 22, 2021.)

4.1

Form of Common Share Certificate. ~~(Filed herewith.~~(Incorporated by reference to Exhibit 4.1 of the Company’s Annual Report for the year ended December 31, 2021.)

4.2

Description of Securities. ~~(Incorporated by reference to Exhibit 99.1 of the Current Report on Form 8-K filed by the Company on December 22, 2021.~~ (Filed herewith.)

8.1

Opinion of Sullivan & Worcester LLP as to certain tax matters. (Filed herewith.)

10.1

Management Agreement, dated January 5, 2021, by and between the Company and Tremont Realty Capital LLC, and, solely in respect to Section 29 thereof, The RMR Group Inc.(+) (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by the Company on January 6, 2021.)

10.2

Letter Agreement, dated as of April 26, 2021, among the Company, Tremont Mortgage Trust and Tremont Realty Capital LLC.(+) (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by the Company on April 27, 2021.)

10.3

Amended and Restated Seven Hills Realty Trust 2021 Equity Compensation Plan.(+) (Incorporated by reference to the Company's Registration Statement on Form S-8 filed by the Company on December 23, 2021.)

10.4

Form of Share Award Agreement.(+) ~~(Filed herewith.~~(Incorporated by reference to Exhibit 10.4 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.)

10.5

Form of Indemnification Agreement.(+) ~~(Filed herewith.~~(Incorporated by reference to Exhibit 10.5 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.)

10.6

Summary of Trustee Compensation.(+) (Incorporated by reference to Exhibit ~~10.7~~10.1 of the Current Report on Form 8-K filed by the Company on ~~October 4, 2021.~~May 27, 2022.)

10.7

Master Repurchase Agreement, dated February 18, 2021, by and between RMTG Lender LLC and UBS AG. (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by the Company on February 22, 2021.)

10.8

Limited Guaranty, dated February 18, 2021, by the Company, in favor of UBS AG. (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed by the Company on February 22, 2021.)

10.9

Amendment No. 2 to Master Repurchase Agreement, dated asMarch 9, 2022, by and between RMTG Lender LLC and UBS AG. (Incorporated by reference to Exhibit 10.3 of ~~February 9, 2018,~~the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.)

10.10

Amended and Restated Master Repurchase Agreement, dated March 15, 2022, by and between TRMT CB Lender LLC and Citibank, N.A. (Incorporated by reference to Exhibit ~~10.1 of the Current Report on Form 8-K filed by Tremont Mortgage Trust on February 12, 2018.)~~

~~10.10~~

First Amendment to Master Repurchase Agreement, dated as of November 6, 2018, among TRMT CB Lender LLC, Citibank, N.A. and, for certain specified purposes, Tremont Mortgage Trust. (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by Tremont Mortgage Trust on November 7, 2018.)

~~10.11~~

~~Second Amendment to Master Repurchase Agreement, dated October 30, 2020, among Citibank, N.A., TRMT CB Lender LLC and, for certain specified purposes, Tremont Mortgage Trust.~~ ~~(Incorporated by reference to Tremont Mortgage Trust's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.)~~

~~10.12~~

Third Amendment to Master Repurchase Agreement and Fifth Amendment to Fee Agreement, dated as of September 30, 2021, between TRMT CB Lender LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.510.3 of the Current Report on Form 8-K filed by the Company on ~~October 4, 2021.~~March 16, 2022.)

~~10.13~~10.11

Amended and Restated Guaranty, dated as of September 30, 2021, by the Company in favor of Citibank, N.A.~~† (Filed herewith.~~ (Incorporated by reference to Exhibit 10.13 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.)

~~10.14~~10.12

Facility Loan Program Agreement and Security Agreement, dated November 9, 2021, by and between Seven Hills BH Lender LLC and BMO Harris Bank N.A. ~~(Incorporated~~(Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by the Company on November 12, 2021.)

~~10.15~~10.13

First Amendment to Facility Loan Program Agreement and Security Agreement, dated April 25, 2022, by and between Seven Hills BH Lender, LLC and BMO Harris Bank N.A. (Incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.)

10.14

Guaranty, dated November 9, 2021, by the Company, to and for the benefit of BMO Harris Bank N.A. (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed by the Company on November 12, 2021.)

10.15

First Amendment to Guaranty, dated April 25, 2022, by the Company, to and for the benefit of BMO Harris Bank N.A. (Incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.)

10.16

Master Repurchase and Securities Contract, dated March 11, 2022, by and between Seven Hills WF Lender LLC and Wells Fargo Bank, National Association. (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by the Company on March 16, 2022.)

10.17

Guarantee Agreement, dated March 11, 2022, by the Company, in favor of Wells Fargo Bank, National Association. (Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed by the Company on March 16, 2022.)

7478

Table of Contents

10.18

Amendment No. 2 to Master Repurchase Agreement, dated March 9, 2022, by and between RMTG Lender LLC and UBS AG. (Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.)

21.1

Subsidiaries of the Company. (Filed herewith.)

23.1

Consent of Deloitte & Touche LLP. (Filed herewith.)

23.2

~~Consent of RSM LLP. (Filed herewith.)~~

~~23.3~~

Consent of Sullivan & Worcester LLP. (Contained in Exhibit 8.1)

31.1

Rule 13a-14(a) Certification. (Filed herewith.)

31.2

Rule 13a-14(a) Certification. (Filed herewith.)

31.3

Rule 13a-14(a) Certification. (Filed herewith.)

31.4

Rule 13a-14(a) Certification. (Filed herewith.)

32.1

Section 1350 Certification of Chief Executive Officer and Chief Financial Officer. (Furnished herewith.)

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema Document. (Filed herewith.)

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)

101.LAB

XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)

104

Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101.)

(+) Contract with management or compensatory plan or arrangement.

~~† This document was previously filed as Exhibit 10.6 to our Current Report on Form 8-K, filed with the SEC on October 4, 2021, and is being refiled to correct a scrivener’s error.~~

Item 16. Form 10-K Summary

None.

7579

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Trustees and Shareholders of Seven Hills Realty Trust

Opinion on the Financial Statements

We have audited the accompanying consolidated balance ~~sheet~~sheets of Seven Hills Realty Trust and subsidiaries (the "Company") as of December ~~31,~~3, 2022 and 2021, the related consolidated statements of operations, shareholders' equity, and cash flows, for each of the ~~year~~two years in the period ended December 31, ~~2021,~~2022, and the related notes and the ~~financial statement~~ schedule listed in the Index at Item 15(a) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the ~~year~~two years in the period ended December 31, ~~2021,~~2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the ~~Company's~~Company’s management. Our responsibility is to express an opinion on the ~~Company's~~Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our ~~audit~~audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our ~~audit,~~audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our ~~audit~~audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our ~~audit~~audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our ~~audit provides~~audits provide a reasonable basis for our opinion.

Critical Audit ~~Matters~~Matter

The critical audit ~~matters~~matter communicated below ~~are matters~~is a matter arising from the current-period audit of the financial statements that ~~were~~was communicated or required to be communicated to the audit committee and that (1) ~~relate~~relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Loans Held for Investment, Net – Identification of Impairment Indicators – Refer to Notes 32 and 65 to the financial statements

Critical Audit Matter Description

The Company evaluates loans held for investments on a loan by loan basis for possible indicators of impairment on at least a quarterly basis in order to determine whether events or changes in circumstances exist that may indicate that the carrying amounts of loans held for investment, net are no longer recoverable. The loans are typically collateralized by commercial real estate property, and as a result, the Company regularly evaluates the extent and impact of any deterioration associated with the financial health and/or sale value of the underlying property, as well as the financial and operating capability of the borrower/sponsor for each individual loan investment.

F-1

Table of Contents

Factors considered in the impairment evaluation include, but are not limited to, property type, geographic and local market dynamics, physical condition, leasing and tenant profile, projected cash flow, risk of loss, current loan to value ratio, or LTV,

~~F-1~~

~~Table of Contents~~

debt yield, collateral performance, structure, exit plan and sponsorship. The Company’s evaluation involves a certain level of judgment and/or estimation related to whether the financial performance of the collateral or the existing market conditions results in an impairment indicator. The determination of whether loans are impaired involves judgments and assumptions based on objective and subjective factors. Changes in these judgements and/or estimates could have a significant impact on the loans identified for further analysis. For each of the ~~year~~two years in the period ended December 31, ~~2021,~~2022, no impairment loss has been recognized on the Company’s loans held for investment, net balance.

We identified the determination of impairment indicators for loans held for investment, net as a critical audit matter because of the level of judgment and significant assumptions involved in management’s assessment of whether events or changes in circumstances have occurred indicating that the carrying amounts of ~~mortgage~~ loans held for investment may not be recoverable. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate whether management appropriately identified impairment indicators.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the determination of impairment indicators for loans held for investment included the following, among others:

•We evaluated a sample of loans for potential impairment by:

◦Evaluating the accuracy and determining the relevance of the factors utilized during the Company’s evaluation.

◦Analyzing period over period changes on items such as ~~physical conditions of the underlying property,~~ net operating income, debt service coverage ratio, debt yield ratio, occupancy, loan structure and modifications, leasing and tenant profiles, remaining loan term and exit plan, progress of redevelopment plans, and risk ratings to determine impact on loan performance.

◦

◦Reviewing any updates (or lack thereof) to each loan’s risk rating period over period.

◦Evaluating the financial performance of the collateral associated with each loan.

◦~~Reviewing the changes in budgets/timelines and the summaries of third-party reports, where applicable, for loans on projects involving construction.~~

◦Evaluating the impact of macroeconomic and microeconomic events on the borrower, sponsor, or asset type.

•We reviewed the payment history for all loans in the Company’s portfolio to ensure that the borrowers are making contractual payments in accordance with the loan agreements.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

February ~~17, 2022~~13, 2023

We have served as the Company’s auditor since 2021.

F-2

Table of Contents

SEVEN HILLS REALTY TRUST

CONSOLIDATED BALANCE SHEETS

~~Report of Independent Registered Public Accounting Firm~~(dollars in thousands, except per share data)

~~To the Trustees and Shareholders of RMR Mortgage Trust~~

~~Opinion on the Financial Statements~~

We have audited the accompanying consolidated statement of statement of assets and liabilities of RMR Mortgage Trust and its subsidiaries (the Trust), including the consolidated schedule of investments, as of December 31, 2020, the related consolidated statements of operations and cash flows for the year then ended, the consolidated statement of changes in net assets for each of the year in the period then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Trust as of December 31, 2020, the results of its operations and its cash flows for the year then ended and the changes in net assets for the year in the period then ended, in conformity with accounting principles generally accepted in the United States of America.


	December 31,
	2022		2021
ASSETS
Cash and cash equivalents	$	71,057	$	26,197
Restricted cash	10		98
Loans held for investment, net	669,929		570,780

Prepaid expenses and other assets	5,851		2,918
Total assets	$	746,847	$	599,993

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, accrued liabilities and deposits	$	1,903	$	1,561
Secured financing facilities, net	471,521		339,627

Due to related persons	1,844		1,111
Total liabilities	475,268		342,299

Commitments and contingencies

Shareholders' equity:
Common shares of beneficial interest, $0.001 par value per share; 25,000,000 shares authorized; 14,709,165 and 14,597,079 shares issued and outstanding, respectively	15		15
Additional paid in capital	238,505		237,624
Cumulative net income	52,290		24,650
Cumulative distributions	(19,231)		(4,595)
Total shareholders' equity	271,579		257,694
Total liabilities and shareholders' equity	$	746,847	$	599,993

~~Basis for Opinion~~

These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Trust’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Trust in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities and investments owned as of December 31, 2020, by correspondence with the custodian and borrowers. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~/s/ RSM US LLP~~

~~We served as the auditor of one or more RMR investment companies since 2018.~~

~~Boston, Massachusetts~~

~~February 24, 2021~~See accompanying notes.

F-3

Table of Contents

SEVEN HILLS REALTY TRUST

CONSOLIDATED ~~BALANCE SHEET~~STATEMENTS OF OPERATIONS

(~~dollars~~amounts in thousands, except per share data)


	~~December 31, 2021~~
~~ASSETS~~
~~Cash and cash equivalents~~	$	~~26,197~~
~~Restricted cash~~	98
~~Loans held for investment, net~~	~~570,780~~
~~Accrued interest receivable~~	~~1,433~~

~~Prepaid expenses and other assets~~	~~1,485~~
~~Total assets~~	$	~~599,993~~

~~LIABILITIES AND SHAREHOLDERS' EQUITY~~
~~Accounts payable, accrued liabilities and deposits~~	$	~~1,561~~
~~Secured financing facilities, net~~	~~339,627~~

~~Due to related persons~~	~~1,111~~
~~Total liabilities~~	~~342,299~~

~~Commitments and contingencies~~	0

~~Shareholders' equity:~~
~~Common shares of beneficial interest, $0.001 par value per share; 25,000,000 shares authorized; 14,597,079 shares issued and outstanding~~	15
~~Additional paid in capital~~	~~237,624~~
~~Cumulative net income~~	~~24,650~~
~~Cumulative distributions~~	~~(4,595)~~
~~Total shareholders' equity~~	~~257,694~~
~~Total liabilities and shareholders' equity~~	$	~~599,993~~


	Year Ended December 31,
	2022		2021
INCOME FROM INVESTMENTS:
Interest income from investments	$	45,303	$	16,775
Purchase discount accretion	10,689		18,932
Less: interest and related expenses	(17,630)		(2,253)
Income from investments, net	38,362		33,454

OTHER EXPENSES:
Base management fees	4,260		3,221
General and administrative expenses	4,080		3,091
Reimbursement of shared services expenses	2,232		1,565
Other transaction related costs	37		589
Total other expenses	10,609		8,466
Income before income taxes	27,753		24,988
Income tax expense	(113)		(338)
Net income	$	27,640	$	24,650

Weighted average common shares outstanding - basic and diluted	14,540		11,304


Net income per common share - basic and diluted	$	1.89	$	2.18

See accompanying notes.

F-4

Table of Contents

SEVEN HILLS REALTY TRUST

CONSOLIDATED ~~STATEMENT OF ASSETS AND LIABILITIES (Predecessor Basis)~~

~~(amounts in thousands, except per share data)~~


	~~December 31, 2020~~
~~ASSETS~~
~~Cash and cash equivalents~~	$	~~103,314~~
~~Loans held for investment (cost $91,879)~~	~~91,879~~
~~Restricted cash~~	~~250~~
~~Dividends and interest receivable~~	~~139~~
~~Prepaid expenses~~	~~345~~
~~Other assets~~	~~128~~
~~Total assets~~	~~196,055~~
~~LIABILITIES~~
~~Accrued income taxes~~	~~2,386~~
~~Accrued expenses and other liabilities~~	~~491~~
~~Advisory fee payable~~	~~141~~
~~Deferred revenue~~	82
~~Compliance and internal audit costs payable~~	31
~~Administrative fee payable~~	30
~~Total liabilities~~	~~3,161~~
~~Net assets attributable to common shares~~	$	~~192,894~~
~~Composition of net assets attributable to common shares~~
~~Common shares, $0.001 par value per share; unlimited number of shares authorized~~	$	10
~~Additional paid in capital~~	~~192,884~~
~~Net assets attributable to common shares~~	$	~~192,894~~
~~Common shares outstanding~~	~~10,202~~
~~Net asset value per share attributable to common shares~~	$	~~18.91~~

~~See accompanying notes.~~

~~F-5~~

~~Table of Contents~~

~~SEVEN HILLS REALTY TRUST~~

~~CONSOLIDATED STATEMENT OF OPERATIONS~~

~~(amounts in thousands, except per share data)~~


	~~Year Ended December 31, 2021~~
~~INCOME FROM INVESTMENTS:~~
~~Interest income from investments~~	$	~~16,775~~
~~Purchase discount accretion~~	~~18,932~~
~~Less: interest and related expenses~~	~~(2,253)~~
~~Income from investments, net~~	~~33,454~~

~~OTHER EXPENSES:~~
~~Base management fees~~	~~3,221~~
~~General and administrative expenses~~	~~3,091~~
~~Reimbursement of shared services expenses~~	~~1,565~~
~~Other transaction related costs~~	~~589~~
~~Total other expenses~~	~~8,466~~

~~Income before income tax expense~~	~~24,988~~
~~Income tax expense~~	~~(338)~~
~~Net income~~	$	~~24,650~~

~~Weighted average common shares outstanding - basic and diluted~~	~~11,304~~


~~Net income per common share - basic and diluted~~	$	~~2.18~~

~~See accompanying notes.~~

~~F-6~~

~~Table of Contents~~

~~SEVEN HILLS REALTY TRUST~~

~~CONSOLIDATED STATEMENT OF OPERATIONS (Predecessor Basis)~~

~~(dollars in thousands)~~

Year Ended December 31, 2020
Investment Income
Dividend income $ 6,804
Interest income from mortgage loan investments 563
Other income 353
Total investment income 7,720
Expenses
Advisory 2,364
Legal 362
Compliance and internal audit 145
Shareholder reporting 110
Custodian 86
Administrative 77
Preferred share remarketing and auction fees 65
Trustees' fees and expenses 55
Audit 49
Other 424
Total expenses before interest expense 3,737
Interest expense 1,208
Total expenses 4,945
Net investment income 2,775
Realized and change in unrealized gains (losses) on investments
Net realized gain on investments before taxes 13,208
Income tax expense (2,386)
Net realized gains on investments after taxes 10,822
Net change in unrealized loss on investments (69,278)
Net realized and change in unrealized loss on investments after taxes (58,456)
Net decrease in net assets before preferred distributions resulting from operations (55,681)
Distributions to preferred shareholders from net investment income (323)
Net decrease in net assets attributable to common shares resulting from operations $ (56,004)

~~See accompanying notes.~~

~~F-7~~

~~Table of Contents~~

~~SEVEN HILLS REALTY TRUST~~

~~CONSOLIDATED STATEMENT~~STATEMENTS OF SHAREHOLDERS’ EQUITY

(amounts in thousands)


		Number of			Additional
		Common	Common		Paid In		Cumulative		Cumulative					Number of Common Shares	Common Shares		Additional Paid in Capital		Cumulative Net Income		Cumulative Distributions		Total
		Shares	Shares		Capital		Net Income		Distributions		Total
Balance at December 31, 2020	Balance at December 31, 2020	10,202	$	10	$	192,884	$	—	$	—	$	192,894	Balance at December 31, 2020	10,202	$	10	$	192,884	$	—	$	—	$	192,894
Issuance of shares	Issuance of shares	4,285	5		44,170		—		—		44,175		Issuance of shares	4,285	5		44,170		—		—		44,175
Share grants	Share grants	116	—		627		—		—		627		Share grants	116	—		627		—		—		627
Share repurchases	Share repurchases	(6)	—		(57)		—		—		(57)		Share repurchases	(6)	—		(57)		—		—		(57)
Net income	Net income	—	—		—		24,650		—		24,650		Net income	—	—		—		24,650		—		24,650
Distributions	Distributions	—	—		—		—		(4,595)		(4,595)		Distributions	—	—		—		—		(4,595)		(4,595)

Balance at December 31, 2021	Balance at December 31, 2021	14,597	$	15	$	237,624	$	24,650	$	(4,595)	$	257,694	Balance at December 31, 2021	14,597	15		237,624		24,650		(4,595)		257,694
Share grants													Share grants	127	—		1,019		—		—		1,019
Share repurchases													Share repurchases	(14)	—		(137)		—		—		(137)
Share forfeitures													Share forfeitures	(1)	—		(1)		—		—		(1)
Net income													Net income	—	—		—		27,640		—		27,640
Distributions													Distributions	—	—		—		—		(14,636)		(14,636)
Balance at December 31, 2022													Balance at December 31, 2022	14,709	$	15	$	238,505	$	52,290	$	(19,231)	$	271,579


Maryland			20-4649929
(State of Organization)			(IRS Employer Identification No.)


	Year Ended December 31, 2020

Decrease in net assets resulting from operations
Net investment income	$	2,775
Net realized gain on investments after taxes	10,822
Net change in unrealized loss on investments	(69,278)
Distributions to preferred shareholders from net investment income	(323)
Net decrease in net assets attributable to common shares resulting from operations	(56,004)
Distributions to common shareholders from:
Distributable earnings	(6,427)

Total distributions to common shareholders	(6,427)
Capital shares transactions
Redemption of auction rate preferred shares	(16,675)

Net decrease in capital share transactions	(16,675)

Liquidation preference of preferred shares repurchased	16,675

Total decrease in net assets attributable to common shares	(62,431)
Net assets attributable to common shares
Beginning of year	255,325
End of year	$	192,894
Common shares issued and repurchased
Shares outstanding, beginning of year	10,202

Shares outstanding, end of year	10,202


	Year Ended December 31,
	2022		2021
SUPPLEMENTAL DISCLOSURES:
Interest paid	$	15,710	$	1,718
Income taxes paid	$	134	$	2,681

NON-CASH INVESTING ACTIVITIES
Loans held for investment acquired by issuance of common shares	$	—	$	162,990
Working capital net liabilities assumed	$	—	$	924
NON-CASH FINANCING ACTIVITIES
Assumption of master repurchase facility	$	—	$	128,962
Issuance of common shares	$	—	$	44,175


	Year Ended
	December 31, 2020

CASH FLOWS FROM OPERATING ACTIVITIES:
Net decrease in net assets before preferred distributions resulting from operations	$	(55,681)
Adjustments to reconcile net decrease in net assets before preferred distributions resulting from operations to cash provided by operating activities:
Origination of loans held for investment	(91,879)
Purchases of long term investments	(10,078)
Proceeds from sales of long term investments	302,797
Net sales of short term investments	4,477
Decrease in payable for securities purchased	(10)
Changes in assets and liabilities:
Decrease in dividends and interest receivable and other assets	2,436
Increase in accrued income taxes	2,386
Increase in accrued expenses and other liabilities	430
Increase in prepaid expenses	(296)
Decrease in advisory fee payable	(118)
Decrease in interest payable	(212)
Decrease in compliance and internal audit costs payable	(6)
Increase in administrative fee payable	3
Net change in unrealized loss on investments	69,278
Net realized gain on investments and foreign currency transactions	(13,208)
Cash provided by operating activities	210,319

CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid to preferred shareholders	(323)
Distributions paid to common shareholders	(6,427)
Repayment of revolving credit facility	(88,000)
Redemption of auction preferred shares	(16,675)
Cash used in financing activities	(111,425)

Increase in cash and cash equivalents	98,894
Cash and cash equivalents at beginning of year	4,670
Cash and cash equivalents and restricted cash at end of year	$	103,564

Cash and cash equivalents and restricted cash at end of year
Cash and cash equivalents	$	103,314
Restricted cash	250
Cash and cash equivalents and restricted cash at end of year	$	103,564

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest and fees on borrowings	$	1,420


TRMT Common Shares outstanding	8,303,629
Multiplied by the exchange ratio	0.516
	4,284,673
TRMT fractional shares adjustment	(73)
SEVN common shares issued	4,284,600
Closing price of SEVN common shares on September 30, 2021	$	10.31
Value of consideration transferred	$	44,174
Assumed working capital	(10,146)
Assumed Citibank Master Repurchase Facility, principal balance	128,962
Merger related costs	6,160
Consideration transferred and liabilities assumed	$	169,150


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Page
	PART I
Item 1.	Business	78
Item 1A.	Risk Factors	3133
Item 1B.	Unresolved Staff Comments	5760
Item 2.	Properties	5760
Item 3.	Legal Proceedings	5760
Item 4.	Mine Safety Disclosures	5760
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	5861
Item 6.	~~Reserved~~[Reserved]	5861
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	5861
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	7074
Item 8.	Financial Statements and Supplementary Data	7074
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	7074
Item 9A.	Controls and Procedures	7074
Item 9B.	Other Information	7175
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	7175
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	7276
Item 11.	Executive Compensation	7276
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	7276
Item 13.	Certain Relationships and Related Transactions, and Director Independence	7276
Item 14.	Principal Accountant Fees and Services	7276
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	7377
Item 16.	Form 10-K Summary	7579
	Signatures


	Year Ended December 31, 2020

Investment Income
Dividend income	$	6,804
Interest income from mortgage loan investments	563
Other income	353
Total investment income	7,720
Expenses
Advisory	2,364
Legal	362
Compliance and internal audit	145
Shareholder reporting	110
Custodian	86
Administrative	77
Preferred share remarketing and auction fees	65
Trustees' fees and expenses	55
Audit	49
Other	424
Total expenses before interest expense	3,737
Interest expense	1,208
Total expenses	4,945
Net investment income	2,775
Realized and change in unrealized gains (losses) on investments
Net realized gain on investments before taxes	13,208
Income tax expense	(2,386)
Net realized gains on investments after taxes	10,822
Net change in unrealized loss on investments	(69,278)
Net realized and change in unrealized loss on investments after taxes	(58,456)

Net decrease in net assets before preferred distributions resulting from operations	(55,681)
Distributions to preferred shareholders from net investment income	(323)
Net decrease in net assets attributable to common shares resulting from operations	$	(56,004)


SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
The table below provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows:
	As of December 31,
	2022		2021

Cash and cash equivalents	$	71,057	$	26,197
Restricted cash	10		98
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	71,067	$	26,295


Cash and cash equivalents	$	11,070
Loans held for investment, net	169,150
Accrued interest receivable	603
Prepaid expenses and other assets	31
Total assets	180,854
Accounts payable and other liabilities	(901)
Citibank Master Repurchase Facility	(128,962)
Due to related persons	(657)
Net assets acquired	50,334
Assumed working capital	(10,146)
Assumed Citibank Master Repurchase Facility, principal balance	128,962
Consideration transferred and liabilities assumed	$	169,150


		As of December 31,							As of December 31,
		2021 (Successor Basis)			2020 (Predecessor Basis)				2022			2021
Number of loans	Number of loans	26			5			Number of loans	27			26
Total loan commitments	Total loan commitments	$	648,266		$	111,720		Total loan commitments	$	727,562		$	648,266
Unfunded loan commitments ~~(2)~~(1)	Unfunded loan commitments ~~(2)~~(1)	$	57,772		$	18,857		Unfunded loan commitments ~~(2)~~(1)	$	49,007		$	57,772
Principal balance (2)	Principal balance (2)	$	590,590		$	92,863		Principal balance (2)	$	678,555		$	590,590

Carrying value	Carrying value	$	570,780		$	91,879		Carrying value	$	669,929		$	570,780
Weighted average coupon rate	Weighted average coupon rate	4.54		%	5.08		%	Weighted average coupon rate	8.07		%	4.54		%
Weighted average all in yield ~~(3)~~(2)	Weighted average all in yield ~~(3)~~(2)	5.08		%	5.71		%	Weighted average all in yield ~~(3)~~(2)	8.57		%	5.08		%
Weighted average LIBOR floor		0.68		%	0.78		%
Weighted average floor								Weighted average floor	0.62		%	0.68		%
Weighted average maximum maturity (years) ~~(4)~~(3)	Weighted average maximum maturity (years) ~~(4)~~(3)	3.8			4.2			Weighted average maximum maturity (years) ~~(4)~~(3)	3.3			3.8
Weighted average risk rating	Weighted average risk rating	2.9			3.0			Weighted average risk rating	2.9			2.9


		Principal Balance		Deferred Fees and Other Items		Carrying Value			Principal Balance		Deferred Fees and Other Items		Carrying Value
Balance at December 31, 2020 (Predecessor Basis)		$	92,863	$	(984)	$	91,879
Balance at December 31, 2020								Balance at December 31, 2020	$	92,863	$	(984)	$	91,879
Additional funding	Additional funding	4,710		—		4,710		Additional funding	4,710		—		4,710
Originations	Originations	347,366		(3,895)		343,471		Originations	347,366		(3,895)		343,471
Repayments	Repayments	(59,041)		(156)		(59,197)		Repayments	(59,041)		(156)		(59,197)
Net amortization of deferred fees	Net amortization of deferred fees	—		1,835		1,835		Net amortization of deferred fees	—		1,835		1,835
Loans acquired in Merger (1)	Loans acquired in Merger (1)	204,692		901		205,593		Loans acquired in Merger (1)	204,692		901		205,593
Purchase discount on loans acquired in Merger	Purchase discount on loans acquired in Merger	—		(36,443)		(36,443)		Purchase discount on loans acquired in Merger	—		(36,443)		(36,443)
Purchase discount accretion (2)	Purchase discount accretion (2)	—		18,932		18,932		Purchase discount accretion (2)	—		18,932		18,932
Balance at December 31, 2021 (Successor Basis)		$	590,590	$	(19,810)	$	570,780
Balance at December 31, 2021								Balance at December 31, 2021	590,590		(19,810)		570,780
Additional funding								Additional funding	17,310		—		17,310
Originations								Originations	203,244		(2,306)		200,938
Repayments								Repayments	(132,589)		(979)		(133,568)
Net amortization of deferred fees								Net amortization of deferred fees	—		3,780		3,780
Purchase discount accretion								Purchase discount accretion	—		10,689		10,689
Balance at December 31, 2022								Balance at December 31, 2022	$	678,555	$	(8,626)	$	669,929


	As of December 31,
	2021 (Successor Basis)			2020 (Predecessor Basis)
Risk Rating	Number of Loans	Carrying Value		Number of Loans	Carrying Value
1	—	$	—	—	$	—
2	4	94,743		—	—
3	21	463,600		5	91,879
4	1	12,437		—	—
5	—	—		—	—
	26	$	570,780	5	$	91,879


	Debt Obligation
							Weighted Average			Collateral
	Maximum Facility Size		Principal Balance		Carrying Value		Coupon Rate (1)		Remaining Maturity (years) (2)	Principal Balance
December 31, 2022:

Citibank Master Repurchase Facility	$	215,000	$	150,647	$	150,360	6.34	%	1.1	$	205,234
UBS Master Repurchase Facility	192,000		144,437		143,887		6.48	%	1.1	198,254
BMO Facility	150,000		111,105		110,473		6.22	%	2.2	148,476

Wells Fargo Master Repurchase Facility	125,000		67,426		66,801		6.23	%	2.1	89,008
Total/weighted average	$	682,000	$	473,615	$	471,521	6.34	%	1.5	$	640,972


December 31, 2021:												December 31, 2021:
		Debt Obligation
Citibank Master Repurchase Facility												Citibank Master Repurchase Facility	$	213,482	$	161,825	$	161,724	2.03	%	0.7	$	222,129
UBS Master Repurchase Facility												UBS Master Repurchase Facility	192,000		167,928		167,024		2.09	%	2.0	225,868
								Weighted Average		Collateral
		Maximum Facility Size		Principal Balance		Carrying Value		Coupon Rate	Remaining Maturity (1) (years)	Principal Balance

Master Repurchase Agreements
UBS Master Repurchase Facility		$	192,000	$	167,928	$	167,024	L + 1.99%	2.0	$	225,868
Citibank Master Repurchase Facility		213,482		161,825		161,724		L + 1.92%	0.7	222,129
Asset Specific Financing
BMO Facility	BMO Facility	100,000		11,116		10,879		S + 1.96%	2.7	14,821		BMO Facility	100,000		11,116		10,879		2.01	%	2.7	14,821
Total/Weighted Average		$	505,482	$	340,869	$	339,627		1.4	$	462,818
Total/weighted average												Total/weighted average	$	505,482	$	340,869	$	339,627	2.06	%	1.4	$	462,818


	Principal Payments on Secured Financing Facilities
2022	$	161,825
2023	50,483
2024	128,561
2025	—
2026	—
	$	340,869


Maturity Year	Principal Payments Due Upon Maturity
2023	$	99,112
2024	264,246
2025	110,257
2026 and thereafter	—

	$	473,615


Record Date	Payment Date	Distribution per Share		Total Distribution
April 26, 2021	May 20, 2021	$	0.15	$	1,530
July 26, 2021	August 19, 2021	0.15		1,532
September 7, 2021	September 29, 2021	0.15		1,533
		$	0.45	$	4,595


					Characterization of Distributions
Year	Annual Per Share Distribution		Total Distribution		Return of Capital		Ordinary Income		Qualified Dividend
2022	$	1.00	$	14,636	—	%	100	%	—	%
2021	$	0.45	$	4,595	21	%	79	%	—	%


#	Property Type/Location	Interest Rate	Maturity Date	Maximum Maturity Date (1)	Payment Terms (2)	Prior Liens (3)	Principal		Carrying Value
	First Mortgage Loans (4)
1	Multifamily, Olmsted Falls, OH	L + 4.00%	01/28/2024	01/28/2026	I/O	—	$	46,083	$	46,164
2	Office, Dallas, TX	L + 3.25%	08/25/2024	08/25/2026	I/O	—	43,450		39,314
3	Industrial, Passaic, NJ	S + 3.85%	09/08/2025	09/08/2027	I/O	—	38,440		38,010
4	Retail, Brandywine, MD	S + 3.85%	03/29/2025	03/29/2027	I/O	—	42,200		41,906
5	Retail, West Bloomfield, MI	L + 3.85%	12/16/2023	12/16/2024	I/O	—	37,453		37,363
6	Multifamily, Starkville, MS	S + 4.00%	03/22/2025	03/22/2027	I/O	—	36,787		36,506
7	Industrial, Summerville, SC	L + 3.50%	12/20/2024	12/20/2026	I/O	—	35,000		34,769
8	Multifamily, Farmington Hills, MI	S + 3.15%	05/24/2025	05/24/2027	I/O	—	28,691		28,746
9	Office, Downers Grove, IL	L + 4.25%	11/25/2023	11/25/2024	I/O	—	29,500		29,528
10	Multifamily, Las Vegas, NV	S + 3.30%	06/10/2025	06/10/2027	I/O	—	24,223		24,035
11	Office, St. Louis, MO	L + 3.25%	03/20/2023	06/20/2023	I/O	—	28,866		28,998
12	Office, Plano, TX	L + 4.75%	07/01/2024	07/01/2026	I/O	—	26,152		26,048
13	Office, Carlsbad, CA	L + 3.25%	10/27/2024	10/27/2026	I/O	—	23,825		23,672
14	Industrial, Fontana, CA	S + 3.75%	11/18/2024	11/18/2026	I/O	—	22,000		21,758
15	Office, Downers Grove, IL	L + 4.25%	12/09/2024	12/09/2026	I/O	—	23,530		23,493
16	Office, Dublin, OH	S + 3.75%	02/18/2023	02/18/2023	I/O	—	22,507		22,728
17	Office, Bellevue, WA	L + 3.85%	11/05/2024	11/05/2026	I/O	—	20,000		19,868
18	Multifamily, Portland, OR	L + 3.57%	07/09/2024	07/09/2026	I/O	—	19,687		19,611
19	Multifamily, Ames, IA	L + 3.80%	11/15/2024	11/15/2026	I/O	—	17,820		17,704
20	Office / Industrial, Aurora, IL	L + 4.35%	12/18/2023	12/18/2024	I/O	—	16,429		16,485
21	Office, Yardley, PA	L + 4.58%	12/19/2023	12/19/2024	I/O	—	15,583		15,643
22	Retail, Sandy Springs, GA	L + 3.75%	09/23/2024	09/23/2026	I/O	—	15,017		14,918
23	Retail, Delray Beach, FL	S + 4.25%	03/18/2024	03/18/2026	I/O	—	15,149		15,061
24	Office, Westminster, CO	L + 3.75%	05/25/2024	05/25/2026	I/O	—	14,634		13,428
25	Multifamily, Portland, OR	L + 3.57%	07/30/2024	07/30/2026	I/O	—	13,400		12,183
26	Multifamily, Seattle, WA	L + 3.55%	08/16/2024	08/16/2026	I/O	—	12,354		12,282
27	Industrial, Allentown, PA	S + 3.50%	01/24/2024	01/24/2025	I/O	—	9,775		9,708


	Total						$	678,555	$	669,929


Reconciliation of Mortgage Loans on Real Estate:	Carrying Value
Balance as of January 1, 2021	$	91,879
Additions during the year:
Originations	347,366
Loans acquired in the Merger	205,593
Additional funding	4,710
Purchase discount accretion	18,932
Net amortization of deferred fees	1,835
Deductions during the year:
Repayment of mortgage loans	(59,197)
Deferred fees	(3,895)
Purchase discount on loans acquired in the Merger	(36,443)
Balance as of December 31, 2021	570,780
Additions during the year:
Originations	203,244
Additional funding	17,310
Purchase discount accretion	10,689
Net amortization of deferred fees	3,780
Deductions during the year:
Repayments	(133,568)
Deferred fees	(2,306)
Balance as of December 31, 2022	$	~~570,780~~669,929


			SEVEN HILLS REALTY TRUST


			By:			/s/ Thomas J. Lorenzini
						Thomas J. Lorenzini President
						Dated: February ~~17, 2022~~13, 2023