The accompanying financial statements of Tremont Mortgage Trust, or, TRMT,collectively with its consolidated subsidiaries, we, us or our, are unaudited. We believe the disclosures made are adequate to make the information presented not misleading. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

On September 18, 2017, we issued and 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 issued and 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, at the public offering price in a private placement. The aggregate proceeds from these sales were $62,000.

We have no0 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.

We payIn June 2018, our Manager an annualagreed to waive any base management fee that is equalfees otherwise due and payable pursuant to 1.5% of our “equity,” as defined. We pay this business management fee in cash quarterly in arrears. In addition, beginning in the fourth quarter of 2018, we may pay our Manager an incentive fee if it is earned under our management agreement. The incentive fee, if any, will be payable in cash quarterly in arrears. We also will be obligated to pay our Manager a termination fee in the event our management agreement is terminatedfor the period beginning July 1, 2018 until June 30, 2020. In addition, our Manager also agreed that no incentive fee will be paid or payable by us without causefor the 2018 or by2019 calendar years. As a result, we did not recognize any base management fees or incentive fees for the three or nine months ended September 30, 2019 and the three months ended September 30, 2018. If our Manager had not agreed to waive these fees, we would have recognized $322 and $812 of base management fees for a material breach by us.the three and nine months ended September 30, 2019, respectively, and no incentive fees for the three and nine months ended September 30, 2019. Pursuant to our management agreement, we recognized $0 and $447 of base management fees of $32 for the period beginning on September 18, 2017, the date on which we entered into the agreement, throughthree and nine months ended September 30, 2017. Our2018, respectively, and no incentive fees for the three or nine months ended September 30, 2018. If our Manager had not agreed to waive these fees, we would have recognized $222 of base management fees are includedfor the three months ended September 30, 2018, which would have resulted in generalus recognizing $669 of total base management fees for the nine months ended September 30, 2018 (including the $447 of business management fees actually recognized) and administrative expenses in our statements of operations.no incentive fees for the three and nine months ended September 30, 2018.

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 and our share of RMR LLC’s costs for providing our internal audit function, with such shared services costs subject to approval by a majority of our Independent Trustees at least annually. 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 affiliates provide management services. For the period beginning on September 18, 2017, the date we entered into our management agreement, through September 30, 2017, weWe incurred shared serviceservices costs of $53$370 and $375 payable to our Manager as reimbursement for shared serviceservices costs it paid to RMR LLC whichfor the three months ended September 30, 2019 and 2018, respectively, and $1,110 and $1,125 for the nine months ended September 30, 2019 and 2018, respectively. We include these amounts are included in reimbursement of shared services expenses or general and administrative expenses, as applicable, 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, as of September 30, 2017,2019, owned 600,1001,600,100 of our common shares, or approximately 19.4% of our outstanding common shares. Our Manager has agreed to payIncluded in those shares are the initial organizational costs related to our formation and the other costs1,000,000 of our IPO, including the underwriting discounts and commissions; as of September 30, 2017,common shares that our Manager has incurred approximately $6,823purchased in such costs. the Offering. See Note 7 for further information regarding the Offering.

Each of our Managing Trustees and officers is also a director or officer of our Manager and 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”.2018 Annual Report.

We intendhave elected to elect and qualify for taxationbe taxed as a REIT forunder the Internal Revenue Code of 1986, as amended, or the IRC. Accordingly, we generally are not, and will not be, subject to U.S. federal income tax, purposes, commencing with our taxable year ending December 31, 2017,provided that we meet certain distribution and to maintain that qualification thereafter.other requirements. We therefore expect to generally not beare subject to federalcertain state and most statelocal taxes, certain of which amounts are or will be reported as income taxationtaxes in our condensed consolidated statements of operations.

As of September 30, 2019, we distribute our taxable incomehad unfunded commitments of $18,813 related to our shareholdersloans held for investment. Unfunded commitments will generally be funded to finance property and meet certain requirementsbuilding improvements and leasing capital over the term of the applicable loan. Unfunded commitments are not reflected in our condensed consolidated balance sheets. Loans held for investment related to qualifyour unfunded commitments had a weighted average initial maturity of 2 years. See Note 4 for taxation asfurther information regarding loans held for investment.

As of September 30, 2019, we had an aggregate of $131,253 in principal amount outstanding under our Master Repurchase Facility with a REITweighted average life to maturity of 1.8 years. See Note 5 for U.S. federal income tax purposes. However, we expect to be subject to income tax in certain states and local jurisdictions despitefurther information regarding our qualification for taxation as a REIT for U.S. federal income tax purposes.secured debt agreements.

Our Manager is registered 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,the Securities and Exchange Commission, or our Manager, pursuant to a private placement purchase agreement. The aggregate proceeds from these sales were $62,000.

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 mayare 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 most 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 investmentsenter the marketplace and as existing alternative CRE debt providers increase their presence in orderthe marketplace, borrowers are becoming more familiar with alternative CRE debt products and are choosing to deploy the capital efficiently, and that most of the capital recently raised forutilize alternative CRE debt financing includingin a wider array of circumstances. However, increased supply of alternative CRE debt capital raised by many other commercial mortgage REITs,has resulted in more competition for loans and applied downward pressure on loan credit spreads. In addition, the LIBOR, the index rate upon which bridge loans are priced, has decreased during the last quarter and we expect that it will be used forcontinue to decrease in the future, further reducing borrowing costs. To offset the reduction in loan investments of greater than $50.0 million. We also believe that, since the 2008 global financial crisis, financial institutions and other historicalcredit spreads, some alternative CRE debt providers such as banksare considering construction and insurance companies, have increased their focus on investments in lower loan to value, orhigher LTV loans and in stabilized properties. We believe thatto meet their investors’ return expectations. Because of this market dynamic has contributed to the current supply and demand imbalance for middle market and transitionalcredit spread compression, borrowers are more frequently seeking alternative CRE debt financing.financing for stabilized or near stabilized properties to take advantage of the flexibility offered by these loan structures. However, we believe many alternative lenders are targeting loan amounts in excess of $50,000 in major markets. We expect that our primary focus will continue to be originating and investing in floating rate first mortgage whole 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 investments, if any, to reset, perhaps on a delayed basis, to lower interest rates; and (d) our borrowers' ability to refinance to become easier and more affordable, positively impacting our borrowers' ability to repay our investments.

Liquidity 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 expected future distributions to our shareholders and fund other business operating requirements. We will userequire a significant amount of cash to originate, purchase and invest in our target investments, make additional unfunded loan commitment payments, repay principal and interest on our borrowings, make expected future distributions to our shareholders and fund other business operating requirements. We expect that ourOur sources of cash flows willmay include payments of principal, interest and fees we receive on our investments, cash generated from our operating results and unused borrowing capacity, including under our Master Repurchase Facility or other repurchase agreements with banks that acquire senior interests in our investments which we are obligated to repurchase,or financing arrangements, and may also include bank loans or public or private issuances of debt or equity securities.

The timing and Deflationamount of future distributions will be determined at the discretion of our Board of Trustees and will depend upon various factors that our Board of Trustees deems relevant, including our historical and projected income, our Core

As of September 30, 2019, we had no off-balance sheet arrangements that have had or that we expect that a majority of our investments will require interest at variable rates and because we do not currently anticipate that there

Our principal debt obligations at September 30, 2019 were the outstanding balances under our Master Repurchase Facility. Our Master Repurchase Agreement provides for acceleration of the date of repurchase of any then purchased assets and Citibank’s liquidation of the purchased assets upon the occurrence and continuation of certain events of default, including a change of control of us, which includes our business forManager ceasing to act as our sole manager or to be a wholly owned subsidiary of RMR LLC. Our Master Repurchase Facility also provides that upon the reasonably foreseeable future thereafter.

In connection with our Master Repurchase Agreement, we entered into a guaranty which requires us to pay the reasonably foreseeable future.purchase price, purchase price differential and any costs and expenses of Citibank related to our Master Repurchase Agreement. This guaranty also requires us to comply with customary financial covenants, which include the maintenance of a minimum tangible net worth, minimum cash liquidity, a total indebtedness to tangible net worth ratio and a minimum interest coverage ratio.

As of September 30, 2019, our loans held for investment had an aggregate principal balance of $208,344 and the weighted average maximum maturity of our loan portfolio was 3.6, assuming full term extensions of all loans. All of our loans held for investment were made in U.S. dollars and earn interest at LIBOR plus a premium. Accordingly, we are exposed to interest rate risk affecting us, see "Quantitative and Qualitative Disclosures About Market Risk"for changes in U.S. dollar based short term rates, specifically LIBOR. As LIBOR decreases, our risk is partially mitigated by interest rate floor provisions in our IPO Prospectus. Our exposureloan agreements with borrowers. In addition, upon repayment from our borrowers we are vulnerable to decreases in interest rate premiums due to market risks has not changed materiallyconditions on any reinvestment of the proceeds from those set forththe repayment.

At September 30, 2019, our floating rate debt obligations consisted of $131,253 in outstanding borrowings under our Master Repurchase Facility. Our Master Repurchase Facility matures in November 2021, subject to early termination as provided for in our IPO Prospectus.Master Repurchase Agreement.

THIS QUARTERLY REPORT ON FORMThis Quarterly Report on Form 10-Q CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OFcontains 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”and other securities laws. Also, whenever we use words such as “believe”, “EXPECT”“expect”, “ANTICIPATE”“anticipate”, “INTEND”“intend”, “PLAN”“plan”, “ESTIMATE”“estimate”, “WILL”“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:“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 Quarterly Report on Form 10-Q relate to various aspects of our business, including: