The accompanying condensed consolidated financial statements of Tremont Mortgage Trust, andor, collectively with its consolidated subsidiaries, or 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.

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.

Restricted cash primarily consists of deposit proceeds from potential borrowers when originating loans, which may be returned to the applicable borrower upon the closing of the loan, after deducting any transaction costs paid by us for the benefit of such borrower.

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 loan-to-valueloan to value ratio, or LTV, debt yield, collateral performance, structure, exit plan and sponsorship. Loans will beare rated “1” (less risk) through “5” (greater risk) as defined below:

"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" 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.

"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" 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 the property having a high LTV.

"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-lieudeeds 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 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 will involveinvolves 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 to reduce the carrying value of the loan accordingly, and record a corresponding charge to net income in our condensed consolidated statementstatements of operations.

As of June 30, 2018,2019, we have not recorded any allowance for losses as we believe it is probable that we will be able to collect all amounts due pursuant to the contractual terms of our loans.

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 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.

We originate first mortgage whole loans secured by middle market and transitional CRE and related instruments which are generally to be held as long term investments. To fund our loan originations to date, we used cash on hand, advancements under our master repurchase facility with Citibank, N.A., or Citibank, or our Master Repurchase Facility, and borrowings under a term loan facility, in the form of a note payable, with Texas Capital Bank, National Association, or Texas Capital Bank, or the TCB note payable. See Note 5 for further information regarding our debt agreements.

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.

During the quarter endedAt June 30, 2018,2019, we originated twohad 12 first mortgage bridgewhole loans with an aggregate net bookcarrying value of $28,456.$258,957. Based on our internal risk rating policy, each of these loans was assigned ana "3" acceptable risk rating.rating at June 30, 2019. We did not have any impaired loans, nonaccrualnon-accrual loans or loans in maturity default as of June 30, 2018,2019; thus, we did not record a reserve for loan loss.

On February 9, 2018, one of our wholly owned subsidiaries entered into a master repurchase agreement,agreements to govern our Master Repurchase Facility, or collectively, as amended, our master repurchase agreement, with Citibank, N.A., or Citibank, for a $100,000 master repurchase facility, or our master repurchase facility,Master Repurchase Agreement, pursuant to which we may sell to, Citibank, and later repurchase from, Citibank, floating rate mortgage loans and other related assets, or purchased assets. Our master repurchase agreement expiresAt that time, our Master Repurchase Facility provided up to $100,000 for advancements. On November 6, 2018, we amended our Master Repurchase Agreement to increase the maximum amount available for advancement under the facility from $100,000 to $135,000 and to change its stated expiration date from February 9, 2021 unless terminatedto November 6, 2021, subject to earlier accordingtermination as provided for in our Master Repurchase Agreement.

On February 4, 2019, we amended our Master Repurchase Agreement to its terms.increase the maximum amount available for advancement under the facility from $135,000 to $210,000 and on May 1, 2019, in connection with an increase in commitment under the RMR Credit Agreement, we further amended our Master Repurchase Agreement to increase the maximum amount available for advancement under the facility from $210,000 to $250,000, in each case with the additional advancements being available for borrowing under the facility if and as we borrowed under the RMR Credit Agreement or if and as we received proceeds from any public offering of our common shares or preferred equity, as further provided in our Master Repurchase Agreement. In connection with the February 2019 amendment, certain other provisions of our Master Repurchase Agreement were amended to accommodate the RMR Credit Agreement. In May 2019, we completed an underwritten public offering, or the Offering, as further described in Note 7, and the RMR Credit Agreement was terminated. As of June 30, 2019, we had $59,816 available for advancement under our Master Repurchase Facility, which amount is subject to our identifying suitable first mortgage whole loans for investment and obtaining sufficient capital for immediate reinvestment.

Under our master repurchase facility,Master Repurchase Agreement, the initial purchase price paid by Citibank for each purchased asset is up to 75% of the lesser of the market value of the purchased asset or the unpaid principal balance of such purchased asset, subject to Citibank’s approval. Upon the repurchase of a purchased asset, we are required to pay Citibank the outstanding purchase price of the purchased asset, accrued interest and all accrued and unpaid expenses of Citibank relating to such purchased asset. The price differential (or interest rate) relating to a purchased asset is equal to one monthLondon Inter-bank Offered Rate, or LIBOR, plus a premium of 200 to 250 basis points, determined by the yield of the purchased asset and the property type of the purchased asset’s real estate collateral. Citibank has the discretion under our Master Repurchase Agreement to advance at higher margins than 75% and at premiums of less than 200 basis points. As of June 30, 2019, outstanding borrowings under our Master Repurchase Facility had a weighted average interest rate of LIBOR plus 202 basis points per annum, excluding associated fees and expenses.

In connection with our master repurchase facility,Master Repurchase Agreement, we entered into a guaranty which requires us to pay the purchase price, purchase price differential and any costs and expenses of Citibank related to the facility.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.

Our master repurchase agreementMaster Repurchase Agreement also provides for acceleration of the date of repurchase of the purchased assets and Citibank’s liquidation of the purchased assets upon the occurrence and continuation of certain events of default, including a change of

In July 2019, we received a repayment notice with respect to our loan held for investment associated with an office building located in Scarsdale, NY. Pursuant to the notice, the borrower stated that it will repay the loan in August 2019. At the time of notice, there was approximately $13,997 of principal amount outstanding balancesunder this loan, which the borrower is required to pay, together with accrued interest, an exit fee and any expenses incurred by us with respect to this loan. When this loan is repaid, we will be required to repay the associated outstanding balance under our master repurchase facility. Master Repurchase Facility.

In July 2018, we soldclosed a $40,363 loan, of which $39,613 was funded by us at closing to finance the acquisition of the Hampton Inn JFK, a 216 key, 13 story hotel located adjacent to the John F. Kennedy International Airport in Queens, NY, or the JFK loan, and committedin connection therewith, one of our wholly owned subsidiaries entered into the TCB note payable. The TCB note payable advances up to later repurchase80% of the JFK loan amount from Citibank,time to time. The TCB note payable matures in July 2021. Subject to our payment of extension fees and meeting other conditions, we have the option to extend the stated maturity date of the TCB note payable for two, one year periods. Interest on amounts advanced under the TCB note payable is calculated at a floating rate based on LIBOR plus a premium of 215 basis points. We may be required to repay a portion of the amount outstanding under the TCB note payable to maintain a 10.5% debt yield on the net operating income of the hotel that secures the TCB note payable. The TCB note payable is prepayable in whole at any time without premium or penalty, and provides for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of customary events of default. In connection with the TCB note payable, we entered into a guaranty with Texas Capital Bank pursuant to which we have guaranteed 25% of the TCB note payable amount plus all related interest and costs. This guaranty also requires us to comply with customary financial covenants, which include the maintenance of a minimum net worth, minimum liquid assets, a maximum leverage ratio and a required debt yield. On March 26, 2019, we amended the TCB note payable covenants to accommodate entering into the RMR Credit Agreement. As of June 30, 2019, we believe we were in compliance with the terms and conditions of the covenants of the TCB note payable and the related guaranty.

As of June 30, 2019 and December 31, 2018, the carrying values of certain of our financial instruments, which include cash and cash equivalents, restricted cash prepaid expenses, due to related parties,and accounts payable accrued expenses and deposits, approximated their fair values due to the short term nature of these financial instruments.

We estimate the fair value of our loans held-for-investment was $28,778, which we estimatedheld for investment using Level III inputs. We estimatedestimate the fair values of our loans held-for-investmentheld for investment by using discounted cash flow analysisanalyses and currently prevailing market terms as of the measurement date, determined by significant unobservable market inputs, which include holding periods, discount rates based on LTV, property types and loan pricing expectations which are corroborated by a comparison with other market participants to determine the appropriate market spread to add to the one month LIBOR (Level III inputs as defined in the fair value hierarchy under GAAP).

We have no employees. The personnel and various services we require to operate our business are provided to us by our Manager pursuant to a management agreement, 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 RMR LLC pursuant to a shared services agreement between our Manager and RMR LLC. We 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. We incurred shared services costs of $375$370 and $750 for the three and six months ended June 30, 2018, respectively,$375 payable to our Manager as reimbursement for shared services costs it paid to RMR LLC. These amounts are included in shared services

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 or 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 June 30, 2018,2019, owned 600,1001,600,100 of our common shares, or approximately 19.1%19.5% of our outstanding common shares. Our Manager paid the initial organizational costs related to our formation and the other costs of our IPO and concurrent private placement, including underwriting discounts and commissions, totaling $6,823. 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 transactions, refer to our 2018 Annual Report.

We intendhave elected to elect and qualify for taxationbe taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the IRC, for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2017, and to maintain such qualification thereafter.IRC. Accordingly, we generally are not, and will not be, subject to U.S. federal income taxestax, provided that we distribute our taxable income and meet certain distribution and other requirements to qualify for taxation as a REIT.requirements. We are subject to certain state and local taxes, certain of which amounts are or will be reported as income taxes in our condensed consolidated statementstatements 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.operations.

As of June 30, 2018,2019, we had unfunded commitments of $4,524$21,879 related to our loans held-for-investment. Theseheld for investment. Unfunded commitments will generally be funded to finance property and building 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 our unfunded commitments had a weighted average initial maturity of 2.2 years. See Note 4 for further information regarding loans held for investment.

In July 2018,2019, we closedreceived a $40,363 first mortgage bridgerepayment notice with respect to the JFK loan. Pursuant to the notice, the borrower stated that it will repay the loan in August 2019. At the time of notice, there was approximately $39,613 of principal amount outstanding under the JFK loan, which $39,613 was fundedthe borrower is required to pay, together with accrued interest, an exit fee and any expenses incurred by us at closing,with respect to finance the acquisition of the Hampton Inn JFK, a 216-key, 13-story hotel located adjacent to the John F. Kennedy International Airport in Queens, NY, orthis loan. When the JFK Loan. This loan bears interest at a variable rate of one month LIBOR plus a premium of 350 basis points payable monthly and an as-is LTV of approximately 71%. This loan also includes a future funding allowance of upis repaid, we will be required to $750 for a property improvement plan and has a three year initial term and two one year borrower extension options.repay the outstanding balance under the TCB note payable.

In July 2018,2019, we closedreceived a $14,847 first mortgage bridgerepayment notice with respect to our loan of which $13,680 was funded by us at closing, to refinance a 62,000 square foot, propertyheld for investment associated with an office building located in Scarsdale, NY. ThisPursuant to the notice, the borrower stated that it will repay the loan bearsin August 2019. At the time of notice, there was approximately $13,997 of principal amount outstanding under this loan, which the borrower is required to pay, together with accrued interest, at a variable rate of one month LIBOR plus a premium of 400 basis points payable monthlyan exit fee and an as-is LTV of approximately 78%. This loan also includes a future funding allowance of upany expenses incurred by us with respect to $1,167 for tenant improvements, leasing commissions, and capital expenditures and has a three year initial term and two one year borrower extension options.

We are a REIT that was organized under Maryland law in 2017. We focus on originating and investing in first mortgage whole loans secured by middle market and transitional CRE. We define middle market CRE as commercial properties that have values up to $75,000 and transitional CRE as commercial properties subject to redevelopment or repositioning activities that are expected to increase the value of the properties.

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

We intend to operate our business in a manner consistent with our intention to elect and qualifyqualification for taxation as a REIT under the IRC forIRC. As such, we generally are not subject to U.S. federal income tax, purposes,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 Investment Company Act of 1940, as amended, or the Investment Company Act.

OurAs of June 30, 2019, our portfolio of investments had an aggregate net book valueconsisted of $28,456 as of June 30, 2018. During the quarter ended June 30, 2018, we funded $28,778 of loans in aggregate.

In April 2018,On May 21, 2019, we closed a $18,102 first mortgage bridge loan,issued and sold 5,000,000 of which $15,949 was funded by us at closing, to finance the acquisition of a 184,000 square foot, 14-story office tower located in Metairie, LA. This loan bears interestour common shares at a variable rateprice of one month LIBOR plus a premium$5.65 per share in the Offering for total net proceeds of 500 basis points payable monthly$26,074, after deducting the underwriting discounts and an as-is LTVcommissions and other expenses. Our Manager purchased 1,000,000 of our common shares in the Offering at the public offering price, without the payment of any underwriting discounts. We used the net proceeds of the Offering to repay the approximate $14,220 balance then outstanding under the RMR Credit Agreement and to reduce borrowings under our Master Repurchase Facility by approximately 80%. This loan also includes a future funding allowance$11,900. After repayment of up to $2,153 for tenant improvements, leasing commissions, marketing and capital expenditures and has a three year initial term and two one year borrower extension options.the outstanding balance under the RMR Credit Agreement, the RMR Credit Agreement was terminated. As of June 30, 2018,2019, we had advanced an additional $104$59,816 available for advancement under this loan and there was a remaining future funding allowance of upour Master Repurchase Facility, which amount is subject to $2,049.

During the three and leasing capital and has a three year initial term and two one year borrower extension options.

The table below is an overview of our debt agreements that provide financing for our loans held for investment as of June 30, 2019 and December 31, 2018:

As of June 30, 2019, outstanding borrowings under our Master Repurchase Facility and the aggregate outstanding balanceTCB note payable had weighted average interest rates of those loans, or $21,583.

On July 27, 2018, oneWe could experience a loss on repurchase transactions under our Master Repurchase Facility if a counterparty to these transactions defaults on its obligation to resell the underlying assets back to us at the end of the transaction term, or if the value of the underlying assets has declined as of the end of that term, or if we default on our wholly owned subsidiaries entered into the TCB loan, pursuant to which that subsidiary may borrow up to $32,290. As of July 27, 2018, Texas Capital Bank had advanced to our subsidiary $31,690obligations under the TCB loan. For more information regarding the TCB loan, see Note 14 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.applicable agreement governing any such arrangement.

Our results of operations for the three and six months ended June 30, 20182019 are not indicative of those expected in future periods. In general, we expect that our income and expenses related to our investment portfolio will increase as a result of our existing and future investment activities.

Our results of our 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 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. Although LIBOR, the index rate upon which bridge loans are priced, has increased over 100 basis points during the last several years, there has been a net reduction in total borrowing costs as a result of reductions in loan fees and decreased loan credit spreads. We expect that the reductions in total borrowing costs will be used forcontinue as it is widely expected that LIBOR will decrease in the future. To offset the reduction in loan investments of greater than $50,000. 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 lowerhigher 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 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 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 facilityMaster Repurchase Facility, the TCB note payable or other repurchase agreements or financing arrangements, and may also include bank loans or public or private issuances of debt or equity securities.

Net cash used in operating activities of $1,663 during the six months ended June 30, 2018 was due to our first distributionnet loss for the period and payments made to common shareholders after successfully deploying theour Manager under our management agreement, partially offset by favorable changes in working capital raised in our IPO and concurrent private placement consistent with our leverage strategy.primarily due to amounts accrued but not yet paid.

As of June 30, 2018,2019, we had no off balanceoff-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.

In connection with our Master Repurchase Agreement, we entered into a guaranty which requires us to pay the 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. 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 Manager ceasing to act as our sole manager or to be a wholly owned subsidiariessubsidiary of RMR LLC. In connection with the TCB note payable, we entered into our $100,000 master repurchase agreementa guaranty with Citibank.Texas Capital Bank pursuant to which we have guaranteed 25% of the TCB note payable amount plus all related interest and costs. This guaranty also requires us to comply with customary financial covenants, which include the maintenance of a minimum net worth, minimum liquid assets, a maximum leverage ratio and a required debt yield. The TCB note payable provides for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of customary events of default. As of June 30, 2018,2019, we had no outstanding balances under, and believe we were in compliance with the terms and conditions of the covenants of our master repurchase facility. Master Repurchase Agreement and the TCB note payable and the related guarantees.

In July 2018,2019, we soldreceived repayment notices with respect to and committed to later repurchase from, Citibank, two first mortgage bridgeof our loans with anheld for investment stating that the loans would be repaid in August 2019. At the time of notice, there was approximately $53,600 of aggregate principal balance of $28,778,amount outstanding under these loans which the borrowers are required to pay, together with the applicable accrued interest, an exit fee and as a result, Citibank advancedany expenses incurred by us with respect to us 75% of the aggregateapplicable loan. When these loans are repaid, we will be required to repay the associated outstanding balance of those loans, or $21,583. For more information regarding our master repurchase facility, see Notes 6 and 14 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

We have relationships and historical and continuing transactions with our Manager, RMR LLC, RMR Inc. and others related to them. For example,example: we have no employees and the personnel and various services we require to operate our business are provided to us by our Manager pursuant to our management agreement with our Manager; our Manager is a subsidiary of RMR LLC and certain of the services provided to us by our Manager are provided by RMR LLC pursuant to a shared services agreement between our Manager and RMR LLC pursuant to which we expect, during the first year of our operations, to reimburse our Manager approximately $1,500 for shared services costs;LLC; our Manager is our largest shareholder and, at June 30, 2018,2019, owned approximately 19.1%19.5% of our outstanding common shares; RMR Inc. is the managing member of RMR LLC; and Adam D. Portnoy, one of our Managing Trustees, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc. Other, and he is also a director of our Manager, a managing director and the president and an executive officer of RMR Inc., and an executive officer and employee of RMR LLC; David M. Blackman, our other Managing Trustee and our President and Chief Executive Officer, also serves as the president, chief executive officer and a director of our Manager and is an executive officer and employee of RMR LLC; and each of our other officers is also an officer and/or employee of our Manager or RMR LLC. In addition, other companies to which RMR LLC or its subsidiaries provide management services have trustees, directors and officers whosome of whom are also trustees, directors or officers of us, our Manager, RMR LLC or RMR Inc. For further information about these and other such relationships and related person transactions, see Notes 8 and 9 and 10 to our condensed consolidated financial statementsthe Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2018 Annual Report, our definitive Proxy Statement for our 20182019 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” of our 2018 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. Our filings with the SEC and copies of certain of our agreements with these related persons, including our management agreement with our Manager, are available as exhibits to our filings with the SEC and accessible at the SEC’s website, www.sec.gov. We may engage in additional transactions with related persons, including businesses to which RMR LLC or its subsidiaries provide management services.

As of June 30, 2019, our loans held for investment had an aggregate principal balance of $260,488 and the weighted average maximum maturity of our investment portfolio was 3.9 years, 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 Annual Report. 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.

Our Master Repurchase Facility matures in November 2021, subject to early termination as provided for in our Annual Report.Master Repurchase Agreement. In July 2019, we received a repayment notice with respect to one of our loans held for investment associated with an office building located in Scarsdale, NY. When this loan is repaid, we will be required to repay the associated outstanding balance under our Master Repurchase Facility.

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:

THE INFORMATION CONTAINED ELSEWHERE IN THIS QUARTERLY REPORT ON FORMThe information contained elsewhere in this Quarterly Report on Form 10-Q OR IN OUR OTHER FILINGS WITH THEand in our 2018 Annual Report 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 THEincluding under the caption “Risk Factors” herein or therein, 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.are available on the SEC's website at www.sec.gov.

There have been noOur business faces many risks, a number of which are described under the caption “Risk Factors” in our 2018 Annual Report. The risks described in our 2018 Annual Report and below may not be the only risks we face. Other risks of which we are not yet aware, or that we currently believe are not material, changes tomay also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors from those we previously disclosedcontained in our 2018 Annual Report.Report or described below occurs, our business, financial condition or results of operations could be adversely impacted and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described in our 2018 Annual Report and below, and the information contained under the caption “Warning Concerning Forward Looking Statements” and elsewhere in this Quarterly Report before deciding whether to invest in our securities.