The accompanying condensed consolidated financial statements of Tremont Mortgage Trust and its subsidiaries, or TRMT, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2017, or our Annual Report.

In the opinion of our management, all adjustments which include only(consisting of normal recurring adjustmentsaccruals) considered necessary for a fair presentation,statement of results for the interim period have been included. Our operatingAll intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

The preparation of these financial statements in conformity with U.S. generally accepted accounting principles, or GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include the fair value of financial instruments.

We were organized as a real estate investment trust, or REIT, under Maryland law on June 1, 2017. On September 18, 2017, we sold 2,500,000 of our common shares of beneficial interest, par value $0.01 per share, or our common shares, at a price of $20.00 per share in our initial public offering, or our IPO. Concurrently with our IPO, we sold an additional 600,000 of our common shares at a price of $20.00 per share to Tremont Realty Advisors LLC, or our Manager, in a private placement. The aggregate proceeds from these sales were $62,000.

On September 18, 2017,March 9, 2018, in accordance with our Trustee compensation arrangements, and in connection with the election of one of our Managing Trustees, we sold 2,500,000granted 1,500 of our common shares, valued at a price of $20.00$13.31 per share, in our IPO. Concurrently with our IPO, we sold an additional 600,000the closing price of our common shares aton The Nasdaq Stock Market LLC, or Nasdaq, on that day, to the Managing Trustee who was elected as a priceManaging Trustee that day.

On April 25, 2018, in accordance with our Trustee compensation arrangements, we granted 3,000 of $20.00 per share to our Manager in a private placement. The aggregate proceeds from these sales were $62,000. We did not declare or pay any cash dividends on our common shares, duringvalued at $12.61 per share, the periodclosing price of our common shares on Nasdaq on that day, to each of our five Trustees as part of their annual compensation.

On September 24, 2018, we purchased an aggregate of 2,121 of our common shares, valued at $11.89 per common share, the closing price of our common shares on Nasdaq on that day, from certain of our inception (June 1, 2017) through September 30, 2017.officers and other employees of our Manager and of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

We have no employees. The personnel and various services we require to operate our business are provided to us by our Manager. In connection with our IPO, we entered intoManager pursuant to a management agreement, with our Manager, which provides for the day to day management of our operations by our Manager, subject to the oversight and direction of our Board of Trustees.

Our Manager, and not us, is responsible for the costs of its employees who provide services to us, including the cost of our Manager’s personnel who originate our loans, unless any such payment or reimbursement is specifically approved by a majority of our Independent Trustees, is a shared services cost or relates to awards made under any equity compensation plan adopted by us. We are generally required to pay or to reimburse our Manager and its affiliates for all other costs and expenses of our operations. Some of these overhead, professional and other services are provided by The RMR Group LLC, or RMR LLC pursuant to a shared services agreement between our Manager and RMR LLC. We will reimburse our Manager for shared services costs our Manager pays to RMR LLC and its affiliates, and these reimbursements may include an allocation of the cost of personnel employed by RMR LLC, with such shared services costs subject to approval by a majority of our Independent Trustees at least annually. We incurred shared services costs of $375 and $1,125 for the three and nine months ended September 30, 2018, respectively, and $53 for the period beginning on September 18, 2017 through September 30, 2017, payable to our Manager as reimbursement for shared services costs it paid to RMR LLC. These amounts are included in shared services agreement reimbursement in our condensed consolidated statements of operations. In addition, we will also pay our pro rata portion of internal audit costs incurred by RMR LLC on behalf of us and other public companies to which RMR LLC or its affiliatessubsidiaries provide management services. ForWe incurred internal audit costs of $25 and $87 for the three and nine months ended September 30, 2018, respectively, and $0 for the period beginning on September 18, 2017 the date we entered into our management agreement, through September 30, 2017, we incurred shared service costs of $53 payable to our Manager as reimbursement for shared service costs it paid to RMR LLC, whichLLC. These amounts are included in general and administrative expenses in our condensed consolidated statements of operations.

We have relationships and historical and continuing transactions with our Manager, RMR LLC, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR LLC providesor its subsidiaries provide management services and which have trustees, directors and officers who are also our Trustees or officers.

We were formerly a 100% owned subsidiary of our Manager. Our Manager is our largest shareholder and, our Manager entered into a private placement purchase agreement concurrent with our IPO, pursuant to which our Manager acquired 600,000as of September 30, 2018, owned 600,100 of our common shares, at a priceor approximately 18.9% of $20.00 per share, which wasour outstanding common shares. Our Manager paid the same price at which we soldinitial organizational costs related to our common shares information and the other costs of our IPO. Under theIPO and concurrent private placement, purchase agreement, we granted toincluding underwriting discounts and commissions, totaling $6,823. Each of our Managing Trustees and executive officers is also a director or officer of our Manager certain demand and piggyback registration rights, subject to certain limitations, covering our common shares owned by our Manager.of RMR LLC.

For further information about these and other such relationships and certain other related person relationships and transactions, please refer to our IPO Prospectus, including the sections captioned “Our Manager and our Management Agreement” and “Certain relationships and related person transactions - Our relationship with our Manager, RMR and other entities managed by RMR”.Annual Report.

We intendhave elected to elect and qualify for taxationbe taxed as a REIT for U.S. federal income tax purposes, commencing with our taxable year ending December 31, 2017,under the Internal Revenue Code of 1986, as amended, or the IRC. Accordingly, we generally are not, and to maintain that qualification thereafter. We therefore expect to generallywill not be, subject to U.S. federal and most state income taxation on our operating incometaxes provided that we distribute our taxable income to our shareholders and meet certain other requirements to qualify for taxation as a REIT for U.S. federal income tax purposes. However, we expect to beREIT. We are subject to income tax in certain statesstate and local jurisdictions despitetaxes, certain of which amounts are reported as income taxes in our qualificationcondensed consolidated statements of income. We do not currently expect recent amendments to the IRC to have a significant impact on us; however, we will monitor future interpretations of such amendments as they develop, and accordingly, our estimates and disclosures may change.

We calculated earnings per share, or EPS, for taxation as a REIT for U.S. federal income tax purposes.the period ended September 30, 2018 using the weighted average number of common shares outstanding during the period. When applicable, diluted EPS reflects the more dilutive earnings per common share amount calculated using the two class method or the treasury stock method. For the three and nine months ended September 30, 2018, 2,204 and 1,071, respectively, restricted unvested common shares were not included in the calculation of diluted EPS because to do so would have been antidilutive.

We expect that theOur results of our operations will be affectedare impacted by a number of factors and will primarily depend on the interest income from our investments and the financing and other costs associated with our business. Our operating results may also be impacted by general CRE market conditions and unanticipated defaults by our borrowers.

Although a largeA significant amount of capital has beencontinues to be raised recently by alternative lenders. As new alternative CRE debt providers mostenter the marketplace, borrowers are becoming more familiar with the alternative CRE debt product and are choosing to utilize alternative CRE debt in a wider array of circumstances. However, increased supply of alternative CRE debt capital has resulted in more competition for loans and applied downward pressure on loan premiums. Although LIBOR, the index rate upon which bridge loans are priced, has increased over 100 basis points since October 2017, there has been a net reduction in overall borrowing costs including loan fees and decreased loan premiums. To offset the reduction in loan premiums, some alternative CRE debt providers are considering construction and higher LTV loans to meet their investors’ return expectations. Because of this capital has been raised by a small number of firms. We believe that firms raising large amounts of capital generally target large loan investments in order to deploy the capital efficiently, and that most of the capital recently raised forpremium compression, borrowers are more frequently seeking alternative CRE debt financing including capital raisedfor stabilized or near stabilized properties to take advantage of the flexibility offered by many other commercial mortgage REITs, will be used forthese loan investments of greater than $50.0 million. We also believe that, since the 2008 global financial crisis, financial institutions and other historical CRE debt providers, such as banks and insurance companies, have increased their focus on investments in lower loan to value, or LTV, loans and in stabilized properties.structures. We believe a significant portion of alternative lenders are targeting loan amounts in excess of $50,000 in primary markets. We expect that this market dynamic has contributedour primary focus will continue to the current supplybe originating and demand imbalance for middle market and transitional CRE debt financing.investing in floating rate first mortgage loans of less than $50,000.

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) coupons on our variable rate

AsLiquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay or meet margin calls resulting from our borrowings, fund and maintain our assets and operations, make distributions to our shareholders and fund other business operating requirements. We will use a significant amount of cash to originate, purchase and invest in our target investments, repay principal and interest on our borrowings, make distributions to our shareholders and fund other business operating requirements. We expect that our sources of cash flows will include payments of principal, interest and fees we receive on our investments, cash generated from our operating results, unused borrowing capacity, including under our master repurchase facility or other repurchase agreements or financing arrangements, bank loans or public or private issuances of debt or equity securities.

Our cash used in operating activities of $48 from our inception on June 1, 2017 through September 30, 2017 consisted of a net loss of $238, partially offset by changes in the amounts due to related persons of $115 and duringaccounts payable and other liabilities of $75.

As of September 30, 2017,2018, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

For quantitative and qualitative disclosures about market risk affecting us, see "Quantitative and Qualitative Disclosures About Market Risk" in our IPO Prospectus.Annual Report. Our exposure to market risks has not changed materially from those set forth in our IPO Prospectus.Annual Report.

THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, “WILL”, “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. FORWARD LOOKING STATEMENTS IN THIS REPORT RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING:

OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FACTORS THAT COULD HAVE A

CURRENTLY UNEXPECTED RESULTS COULD OCCUR DUE TO MANY DIFFERENT CIRCUMSTANCES, SOME OF WHICH ARE BEYOND OUR CONTROL, SUCH AS CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY, ACTS OF TERRORISM OR NATURAL DISASTERS.

THE INFORMATION CONTAINED ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q OR IN OUR OTHER FILINGS WITH THE SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS”, OR INCORPORATED HEREIN OR THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.