Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2022 | Jul. 25, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-34383 | |
Entity Registrant Name | Seven Hills Realty Trust | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 20-4649929 | |
Entity Address, Address Line One | Two Newton Place | |
Entity Address, Address Line Two | 255 Washington Street | |
Entity Address, Address Line Three | Suite 300 | |
Entity Address, City or Town | Newton | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02458-1634 | |
City Area Code | 617 | |
Local Phone Number | 332-9530 | |
Title of 12(b) Security | Common Shares of Beneficial Interest | |
Trading Symbol | SEVN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,638,063 | |
Entity Central Index Key | 0001452477 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
ASSETS | ||
Cash and cash equivalents | $ 48,230 | $ 26,197 |
Restricted cash | 166 | 98 |
Loans held for investment, net | 670,185 | 570,780 |
Prepaid expenses and other assets | 3,108 | 2,918 |
Total assets | 721,689 | 599,993 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Accounts payable, accrued liabilities and deposits | 1,191 | 1,561 |
Secured financing facilities, net | 452,705 | 339,627 |
Due to related persons | 1,063 | 1,111 |
Total liabilities | 454,959 | 342,299 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common shares of beneficial interest, $0.001 par value, 25,000,000 shares authorized; 14,638,063 and 14,597,079 shares issued and outstanding, respectively | 15 | 15 |
Additional paid in capital | 238,254 | 237,624 |
Cumulative net income | 40,354 | 24,650 |
Cumulative distributions | (11,893) | (4,595) |
Total shareholders' equity | 266,730 | 257,694 |
Total liabilities and shareholders' equity | $ 721,689 | $ 599,993 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common shares, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common shares issued (in shares) | 14,638,063 | 14,597,079 |
Common shares outstanding (in shares) | 14,638,063 | 14,597,079 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
INCOME FROM INVESTMENTS: | ||||
Interest income from investments | $ 8,869 | $ 3,055 | $ 18,448 | $ 5,056 |
Purchase discount accretion | 1,636 | 0 | 7,571 | 0 |
Less: interest and related expenses | (3,007) | (192) | (4,744) | (192) |
Income from investments, net | 7,498 | 2,863 | 21,275 | 4,864 |
OTHER EXPENSES: | ||||
Base management fees | 1,063 | 721 | 2,126 | 1,436 |
General and administrative expenses | 1,378 | 714 | 2,324 | 1,306 |
Reimbursement of shared services expenses | 440 | 275 | 1,000 | 601 |
Other transaction related costs | 0 | 0 | 37 | 0 |
Total other expenses | 2,881 | 1,710 | 5,487 | 3,343 |
Income before income taxes | 4,617 | 1,153 | 15,788 | 1,521 |
Income tax (expense) benefit | (39) | 7 | (84) | (11) |
Net income | $ 4,578 | $ 1,160 | $ 15,704 | $ 1,510 |
Weighted average common shares outstanding - basic (in shares) | 14,521 | 10,208 | 14,514 | 10,205 |
Weighted average common shares outstanding - diluted (in shares) | 14,521 | 10,208 | 14,514 | 10,205 |
Net income per common share - basic (in dollars per share) | $ 0.31 | $ 0.11 | $ 1.08 | $ 0.15 |
Net income per common share - diluted (in dollars per share) | $ 0.31 | $ 0.11 | $ 1.08 | $ 0.15 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Common Shares | Additional Paid In Capital | Cumulative Net Income | Cumulative Distributions |
Beginning balance (in shares) at Dec. 31, 2020 | 10,202,000 | ||||
Beginning balance at Dec. 31, 2020 | $ 192,894 | $ 10 | $ 192,884 | $ 0 | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 350 | 350 | |||
Ending balance (in shares) at Mar. 31, 2021 | 10,202,000 | ||||
Ending balance at Mar. 31, 2021 | 193,244 | $ 10 | 192,884 | 350 | 0 |
Beginning balance (in shares) at Dec. 31, 2020 | 10,202,000 | ||||
Beginning balance at Dec. 31, 2020 | 192,894 | $ 10 | 192,884 | 0 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 1,510 | ||||
Ending balance (in shares) at Jun. 30, 2021 | 10,217,000 | ||||
Ending balance at Jun. 30, 2021 | 193,055 | $ 10 | 193,065 | 1,510 | (1,530) |
Beginning balance (in shares) at Mar. 31, 2021 | 10,202,000 | ||||
Beginning balance at Mar. 31, 2021 | 193,244 | $ 10 | 192,884 | 350 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share grants (in shares) | 15,000 | ||||
Share grants | 181 | 181 | |||
Net income | 1,160 | 1,160 | |||
Distributions | (1,530) | (1,530) | |||
Ending balance (in shares) at Jun. 30, 2021 | 10,217,000 | ||||
Ending balance at Jun. 30, 2021 | $ 193,055 | $ 10 | 193,065 | 1,510 | (1,530) |
Beginning balance (in shares) at Dec. 31, 2021 | 14,597,079 | 14,597,000 | |||
Beginning balance at Dec. 31, 2021 | $ 257,694 | $ 15 | 237,624 | 24,650 | (4,595) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share grants | 82 | 82 | |||
Net income | 11,126 | 11,126 | |||
Distributions | (3,649) | (3,649) | |||
Ending balance (in shares) at Mar. 31, 2022 | 14,597,000 | ||||
Ending balance at Mar. 31, 2022 | $ 265,253 | $ 15 | 237,706 | 35,776 | (8,244) |
Beginning balance (in shares) at Dec. 31, 2021 | 14,597,079 | 14,597,000 | |||
Beginning balance at Dec. 31, 2021 | $ 257,694 | $ 15 | 237,624 | 24,650 | (4,595) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 15,704 | ||||
Distributions | $ (7,298) | ||||
Ending balance (in shares) at Jun. 30, 2022 | 14,638,063 | 14,638,000 | |||
Ending balance at Jun. 30, 2022 | $ 266,730 | $ 15 | 238,254 | 40,354 | (11,893) |
Beginning balance (in shares) at Mar. 31, 2022 | 14,597,000 | ||||
Beginning balance at Mar. 31, 2022 | 265,253 | $ 15 | 237,706 | 35,776 | (8,244) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share grants (in shares) | 42,000 | ||||
Share grants | 548 | 548 | |||
Share forfeitures (in shares) | (1,000) | ||||
Net income | 4,578 | 4,578 | |||
Distributions | $ (3,649) | (3,649) | |||
Ending balance (in shares) at Jun. 30, 2022 | 14,638,063 | 14,638,000 | |||
Ending balance at Jun. 30, 2022 | $ 266,730 | $ 15 | $ 238,254 | $ 40,354 | $ (11,893) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income | $ 4,578 | $ 1,160 | $ 15,704 | $ 1,510 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||
Accretion of purchase discount | (1,636) | 0 | (7,571) | 0 |
Share based compensation | 630 | 181 | ||
Amortization of deferred financing costs | 474 | 34 | ||
Amortization of loan origination and exit fees | (2,112) | (641) | ||
Changes in operating assets and liabilities: | ||||
Prepaid expenses and other assets | (400) | (2,660) | ||
Accounts payable, accrued liabilities and deposits | (370) | (1,369) | ||
Due to related persons | (48) | 852 | ||
Net cash provided by (used in) operating activities | 6,307 | (2,093) | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Origination of loans held for investment | (141,335) | (117,255) | ||
Additional funding of loans held for investment | (8,020) | (820) | ||
Repayment of loans held for investment | 59,843 | 0 | ||
Net cash used in investing activities | (89,512) | (118,075) | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Proceeds from secured financing facilities | 223,948 | 49,172 | ||
Repayments under secured financing facilities | (109,773) | 0 | ||
Payments of deferred financing costs | (1,571) | (431) | ||
Distributions | (7,298) | (1,530) | ||
Net cash provided by financing activities | 105,306 | 47,211 | ||
Increase (decrease) in cash, cash equivalents and restricted cash | 22,101 | (72,957) | ||
Cash, cash equivalents and restricted cash at beginning of period | 26,295 | 103,564 | ||
Cash, cash equivalents and restricted cash at end of period | 48,396 | 30,607 | 48,396 | 30,607 |
SUPPLEMENTAL DISCLOSURES: | ||||
Interest paid | 4,074 | 120 | ||
Income taxes paid | 92 | 2,477 | ||
Cash and cash equivalents | 48,230 | 30,402 | 48,230 | 30,402 |
Restricted cash | 166 | 205 | 166 | 205 |
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows | $ 48,396 | $ 30,607 | $ 48,396 | $ 30,607 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements 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, 2021, or our 2021 Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim periods have been included. All 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 financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the accompanying condensed consolidated financial statements include the fair value of financial instruments. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, No. 2016-13, Financial Instruments - Credit Losses (Topic 326) : Measurement of Credit Losses on Financial Instruments , which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. As a smaller reporting company, we will adopt ASU No. 2016-13 on January 1, 2023. The amount of the allowance for credit losses established as a result of the adoption, will be presented as a cumulative-effect adjustment to reduce equity as of the date of adoption. We are currently assessing the amount of the allowance for credit losses that will be established as a result of the adoption of ASU No. 2016-13. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures , which eliminated the guidance for and recognitions of troubled debt restructurings for all entities that have adopted ASU No. 2016-13. Instead, an entity must apply the loan refinancing and restructure guidance in Accounting Standards Codification, or ASC, Topic 310, Receivables (Topic 310), to determine whether a modification results in a new loan or continuation of an existing loan. If a borrower is experiencing financial difficulty, enhanced disclosures are required. ASU No. 2022-02 also amended the guidance on vintage disclosures to require disclosure of current period gross write-offs by year of origination. We will adopt ASU No. 2022-02 prospectively on January 1, 2023, concurrently with the adoption of ASU No. 2016-13. As of June 30, 2022, we have not recognized any troubled debt restructurings and do not expect the adoption of ASU No. 2022-02 to have a material impact on our condensed consolidated financial statements. |
Loans Held for Investment
Loans Held for Investment | 6 Months Ended |
Jun. 30, 2022 | |
Receivables [Abstract] | |
Loans Held for Investment | Loans Held for Investment We originate first mortgage loans secured by middle market and transitional commercial real estate, or CRE, which are generally to be held as long term investments. We funded our loan portfolio using cash on hand and advancements under our Secured Financing Facilities, as defined in Note 4. Additionally, we acquired the loan portfolio of Tremont Mortgage Trust, or TRMT, in the merger of TRMT with and into us on September 30, 2021, or the Merger. See Note 4 for further information regarding our secured financing agreements. The table below provides overall statistics for our loan portfolio as of June 30, 2022 and December 31, 2021: As of June 30, 2022 As of December 31, 2021 Number of loans 28 26 Total loan commitments $ 734,883 $ 648,266 Unfunded loan commitments (1) $ 52,694 $ 57,772 Principal balance $ 682,285 $ 590,590 Carrying value $ 670,185 $ 570,780 Weighted average coupon rate 5.14 % 4.54 % Weighted average all in yield (2) 5.64 % 5.08 % Weighted average floor 0.61 % 0.68 % Weighted average maximum maturity (years) (3) 3.6 3.8 Weighted average risk rating 2.7 2.9 (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) 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. (3) Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions. The tables below represent our loan activities during the three months ended June 30, 2022 and 2021: Principal Balance Deferred Fees and Other Items Carrying Value Balance at March 31, 2022 $ 636,831 $ (14,121) $ 622,710 Additional funding 4,926 — 4,926 Originations 51,620 (321) 51,299 Repayments (11,092) (108) (11,200) Net amortization of deferred fees — 814 814 Net purchase discount accretion — 1,636 1,636 Balance at June 30, 2022 $ 682,285 $ (12,100) $ 670,185 Principal Balance Deferred Fees and Other Items Carrying Value Balance at March 31, 2021 $ 148,652 $ (1,405) $ 147,247 Additional funding 693 — 693 Originations 63,170 (755) 62,415 Net amortization of deferred fees — 387 387 Balance at June 30, 2021 $ 212,515 $ (1,773) $ 210,742 The tables below represent our loan activities during the six months ended June 30, 2022 and 2021: Principal Balance Deferred Fees and Other Items Carrying Value Balance at December 31, 2021 $ 590,590 $ (19,810) $ 570,780 Additional funding 8,230 — 8,230 Originations 142,804 (1,469) 141,335 Repayments (59,339) (504) (59,843) Net amortization of deferred fees — 2,112 2,112 Net purchase discount accretion — 7,571 7,571 Balance at June 30, 2022 $ 682,285 $ (12,100) $ 670,185 Principal Balance Deferred Fees and Other Items Carrying Value Balance at December 31, 2020 $ 92,863 $ (984) $ 91,879 Additional funding 967 — 967 Originations 118,685 (1,430) 117,255 Net amortization of deferred fees — 641 641 Balance at June 30, 2021 $ 212,515 $ (1,773) $ 210,742 The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of June 30, 2022 and December 31, 2021: June 30, 2022 December 31, 2021 Property Type Number of Loans Carrying Value Percentage of Value Number of Loans Carrying Value Percentage of Value Office (1) 12 $ 267,803 40 % 13 $ 269,865 47 % Multifamily 8 194,387 29 % 5 106,002 19 % Lab — — — % 1 13,398 2 % Retail 6 148,255 22 % 4 88,724 16 % Industrial (1) 2 59,740 9 % 3 92,791 16 % 28 $ 670,185 100 % 26 $ 570,780 100 % (1) Two loan investments secured by mixed use properties consisting of office space and an industrial warehouse in Aurora, IL and Colorado Springs, CO are classified as office for the purpose of counting the number of loans in our portfolio because the majority of the square footage of each of the properties consists of office space. The carrying value of these loan investments is reflected in office and industrial based on the fair value of the buildings at the time of origination relative to the total fair value of the properties. June 30, 2022 December 31, 2021 Geographic Location Number of Loans Carrying Value Percentage of Value Number of Loans Carrying Value Percentage of Value East 3 $ 66,120 10 % 3 $ 55,132 10 % South 7 181,890 27 % 7 153,495 27 % West 9 173,245 26 % 8 145,453 25 % Midwest 9 248,930 37 % 8 216,700 38 % 28 $ 670,185 100 % 26 $ 570,780 100 % Loan Credit Quality 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. The higher the number, the greater the risk level. See our 2021 Annual Report for more information regarding our loan risk ratings. The following table allocates the carrying value of our loan portfolio at June 30, 2022 and December 31, 2021 based on our internal risk rating policy: June 30, 2022 December 31, 2021 Risk Rating Number of Loans Carrying Value Number of Loans Carrying Value 1 — $ — — $ — 2 10 225,169 4 94,743 3 16 418,153 21 463,600 4 2 26,863 1 12,437 5 — — — — 28 $ 670,185 26 $ 570,780 The weighted average risk rating of our loans by carrying value was 2.7 and 2.9 as of June 30, 2022 and December 31, 2021, respectively. The COVID-19 pandemic has negatively impacted some of our borrowers’ business operations or tenants, particularly in the cases of certain of our office and retail collateral, some of which are 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 U.S. has improved significantly from the low points during the pandemic to date, certain industries have not recovered to their pre-pandemic positions, and current inflationary pressures and the possibility that the U.S. economy may now be in, or will soon enter into, a recession or downturn may amplify those, or introduce additional, negative impacts. 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 obligations owed and due to us as currently scheduled or at all. As of June 30, 2022, we had two loans representing approximately 4% of the carrying value of our loan portfolio with a loan risk rating of “4” or “higher risk". 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. 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 may be used to finance debt service costs and operating costs of the borrower and 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 the London Interbank Offered Rate, or LIBOR, or a replacement base rate determined by us if LIBOR is no longer available, plus 12.0%. As of June 30, 2022, this loan had a risk rating of 4 and an outstanding principal balance of $14,972. The modification of this loan resulting from the amendment was determined not to be a troubled debt restructuring. However, we accounted for this modification as an extinguishment in accordance with ASC Topic 310, Receivables , because the changes to the terms were determined to be more than minor. As such, we recognized the related unaccreted purchase discount of $1,748 as interest income from investments in our condensed consolidated statements of income during the first quarter of 2022. There were no other material modifications to our loan portfolio during the six months ended June 30, 2022. |
Secured Financing Agreements
Secured Financing Agreements | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Secured Financing Agreements | Secured Financing Agreements Our secured financing agreements at June 30, 2022 consisted of agreements that govern: our master repurchase facility with Wells Fargo, National Association, or Wells Fargo, or the Wells Fargo Master Repurchase Facility; our master repurchase facility with Citibank, N.A., or Citibank, or the Citibank Master Repurchase Facility; our facility loan program with BMO Harris Bank N.A., or BMO, or the BMO Facility, and our master repurchase facility with UBS AG, or UBS, or the UBS Master Repurchase 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. See our 2021 Annual Report for more information regarding our Secured Financing Facilities. Wells Fargo Master Repurchase Facility On March 11, 2022, one of our wholly owned subsidiaries entered into a master repurchase and securities agreement with Wells Fargo, or the 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 an option to increase the maximum facility amount 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. We refer to our loan investments that secure advances we receive under any of our Secured Financing Facilities as the purchased assets. 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. Under the Wells Fargo Master Repurchase 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 will be calculated at the Secured Overnight Financing Rate, or SOFR, plus a premium. In connection with our Wells Fargo Master Repurchase Agreement, we entered into a guaranty, or the Wells Fargo Guaranty, which requires 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 Wells Fargo related to our Wells Fargo Master Repurchase Agreement. The Wells Fargo Guaranty also contains financial covenants, which require us to maintain a minimum tangible net worth, a minimum liquidity and a minimum interest coverage ratio and to satisfy a total indebtedness to stockholders’ equity ratio. Our Wells Fargo Master Repurchase Facility also contains margin maintenance provisions that provide Wells Fargo with the right, in certain circumstances related to a credit event, as defined in the Wells Fargo Master Repurchase Agreement, to redetermine the value of purchased assets. Where a decline in the value of such purchased assets has resulted in a margin deficit, Wells Fargo may require us to eliminate any margin deficit through a combination of purchased asset repurchases and cash transfers to Wells Fargo subject to Wells Fargo’s approval. In addition, our Wells Fargo Master Repurchase Agreement provides for acceleration of the date of repurchase of the purchased assets by us and Wells Fargo’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 Tremont Realty Capital LLC, or Tremont, ceasing to act as our sole manager or to be a wholly owned subsidiary of The RMR Group LLC, or RMR. Citibank Master Repurchase Facility On March 15, 2022, we amended and restated our master repurchase agreement with Citibank, or the Citibank Master Repurchase Agreement. 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 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 advancements under the Citibank Master Repurchase Facility and modifying certain pricing terms. BMO Facility On April 25, 2022, we amended our facility loan program agreement and the security agreement with BMO, or the BMO Loan Program Agreement, to increase the maximum principal amount available under our BMO Facility, from $100,000 to $150,000. UBS Master Repurchase Facility On May 4, 2022, we amended and restated our master repurchase agreement with UBS, or the 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. As of June 30, 2022, we were in compliance with the covenants and other terms of the agreements that govern our Secured Financing Facilities. As of June 30, 2022 and July 25, 2022, we had a $455,044 and a $469,810, respectively, aggregate outstanding principal balance under our Secured Financing Facilities. As of June 30, 2022, our outstanding borrowings under our Secured Financing Facilities had the following remaining maturities: Principal Payments on 2022 $ 31,448 2023 94,117 2024 248,050 2025 81,429 2026 and thereafter — $ 455,044 The table below summarizes our Secured Financing Facilities as of June 30, 2022 and December 31, 2021: Debt Obligation Weighted Average Collateral Maximum Facility Size Principal Balance Carrying Value Coupon Rate (1) Remaining Maturity (2) (years) Principal Balance June 30, 2022: Citibank Master Repurchase Facility $ 215,000 $ 170,338 $ 170,013 3.32 % 1.4 $ 237,917 UBS Master Repurchase Facility 192,000 135,003 134,300 3.57 % 1.6 182,198 Wells Fargo Master Repurchase Facility 125,000 67,427 66,694 3.34 % 2.7 88,446 BMO Facility 150,000 82,276 81,698 3.14 % 2.5 109,897 Total/Weighted Average $ 682,000 $ 455,044 $ 452,705 3.36 % 1.9 $ 618,458 December 31, 2021: UBS Master Repurchase Facility $ 192,000 $ 167,928 $ 167,024 2.09 % 2.0 $ 225,868 Citibank Master Repurchase Facility 213,482 161,825 161,724 2.03 % 0.7 222,129 BMO Facility 100,000 11,116 10,879 2.01 % 2.7 14,821 Total/weighted average $ 505,482 $ 340,869 $ 339,627 2.06 % 1.4 $ 462,818 (1) The weighted average coupon rate is determined using LIBOR or SOFR plus a spread ranging from 1.80% to 2.30%, as applicable, for the respective borrowings under our Secured Financing Facilities as of the applicable date. (2) The weighted average remaining maturity is determined using the current maturity date of the corresponding loans, assuming no borrower loan extension options have been exercised. As of June 30, 2022, our Citibank Master Repurchase Facility, UBS Master Repurchase Facility and Wells Fargo Master Repurchase Facility mature on March 15, 2025, February 18, 2024 and March 11, 2025, respectively. Our BMO Facility matures at various dates based on the respective underlying loans held for investment. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurement , establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level I) and the lowest priority to unobservable inputs (Level III). A financial asset’s or financial liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The carrying values of cash and cash equivalents, restricted cash and accounts payable approximate their fair values due to the short term nature of these financial instruments. We estimate the fair values of our loans held for investment and outstanding principal balances under our Secured Financing Facilities by using Level III inputs, including discounted cash flow analyses and currently prevailing market terms as of the measurement date, determined by significant unobservable market inputs, which include holding periods, discount rates based on loan to value ratio, or 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 current base interest. The table below provides information regarding financial assets and liabilities not carried at fair value on a recurring basis in our condensed consolidated balance sheets: June 30, 2022 December 31, 2021 Carrying Value Fair Value Carrying Value Fair Value Financial assets Loans held for investment $ 670,185 $ 680,658 $ 570,780 $ 597,669 Financial liabilities Secured Financing Facilities $ 452,705 $ 452,585 $ 339,627 $ 341,679 |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders' Equity Common Share Awards We have common shares available for issuance under the terms of our 2021 Equity Compensation Plan, or the 2021 Plan. The values of the share awards are based upon the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the date of award. The common shares that we have awarded to our Trustees vested immediately. The awards of common shares that we award to our officers and other employees of Tremont and of RMR vest in five equal annual installments beginning on the date of award. We recognize the value of awarded shares in general and administrative expenses ratably over the vesting period. We recognize any share forfeitures as they occur. On May 26, 2022, in accordance with our Trustee compensation arrangements, we awarded to each of our seven Trustees 6,000 of our common shares, valued at $10.66 per common share, the closing price of our common shares on the Nasdaq that day. Distributions For the six months ended June 30, 2022, we declared and paid a distribution to common shareholders, using cash on hand, as follows: Record Date Payment Date Distribution per Share Total Distribution January 24, 2022 February 17, 2022 $ 0.25 $ 3,649 April 25, 2022 May 19, 2022 0.25 3,649 $ 0.50 $ 7,298 On July 14, 2022, we declared a quarterly distribution of $0.25 per common share, or $3,660, to shareholders of record on July 25, 2022. We expect to pay this distribution on August 18, 2022, using cash on hand. |
Management Agreement with Tremo
Management Agreement with Tremont | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |
Management Agreement with Tremont | Management Agreement with Tremont We have no employees. The personnel and various services we require to operate our business are provided to us by Tremont, pursuant to a management agreement, which provides for the day to day management of our operations by Tremont, subject to the oversight and direction of our Board of Trustees. We pay Tremont an annual base management fee payable quarterly (0.375% per quarter) in arrears equal to 1.5% of our “Equity,” as defined under our management agreement. We recognized base management fees of $1,063 and $721 for the three months ended June 30, 2022 and 2021, respectively, and $2,126 and $1,414 for the six months ended June 30, 2022 and 2021, respectively. Pursuant to the terms of our management agreement, management incentive fees became payable by us beginning with the quarter ended June 30, 2021, subject to Tremont earning those fees in accordance with the management agreement. We did not incur any management incentive fees for the three and six months ended June 30, 2022 and 2021. Tremont, and not us, is responsible for the costs of its employees who provide services to us, 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 required to pay or to reimburse Tremont and its affiliates for all other costs and expenses of our operations. Some of these overhead, professional and other services are provided by RMR, pursuant to a shared services agreement between Tremont and RMR. These reimbursements include an allocation of the cost of personnel employed by RMR and our share of RMR's costs for providing our internal audit function. These shared services costs are subject to approval by a majority of our Independent Trustees at least annually. We incurred shared services costs of $514 and $312 payable to Tremont for the three months ended June 30, 2022 and 2021, respectively, and $1,148 and $664 for the six months ended June 30, 2022 and 2021, respectively. We include these amounts in reimbursement of shared services expenses or general and administrative expenses, as applicable, in our condensed consolidated statements of operations. In connection with the Merger, TRMT terminated its management agreement with Tremont, and Tremont waived its right to receive payment of the termination fees that would have otherwise resulted due to the Merger. In consideration of this waiver, we agreed that, effective upon consummation of the Merger and the termination of TRMT's management agreement with Tremont, certain of the expenses Tremont had paid pursuant to its management agreement with TRMT will be included in the “Termination Fee” under and as defined in our existing management agreement with Tremont. See our 2021 Annual Report for further information regarding this waiver and change to the "Termination Fee" and the Merger. |
Related Person Transactions
Related Person Transactions | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Person Transactions | Related Person Transactions We have relationships and historical and continuing transactions with Tremont, RMR, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. Tremont is a subsidiary of RMR, which is a majority owned subsidiary of RMR Inc., and RMR Inc. is the managing member of RMR. RMR provides certain shared services to Tremont that are applicable to us, and we reimburse Tremont or pay RMR for the amounts Tremont or RMR pays for those services. One of our Managing Trustees and Chair of our Board of Trustees, Adam D. Portnoy, is 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, the president and chief executive officer of RMR Inc., and an officer and employee of RMR. Our other Managing Trustee, Matthew P. Jordan is an officer of RMR Inc. and an officer and employee of RMR, and our executive officers are officers of RMR and officers and employees of Tremont and/or RMR. Some of our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR or its subsidiaries provide management services. Adam D. Portnoy serves as the chair of the boards and as a managing director or managing trustee of those companies. Other officers of RMR and Tremont, serve as managing trustees, managing directors or officers of certain of these companies. Our Manager, Tremont Realty Capital LLC. We have a management agreement with Tremont to provide management services to us. See Note 7 for further information regarding our management agreement with Tremont. Tremont also provided management services to TRMT until the Merger. On May 11, 2022, Tremont purchased 882,407 of our common shares from Diane Portnoy, the mother of Adam D. Portnoy. Tremont paid an aggregate purchase price of $9,469 for these shares, which represents a per share price based upon the average of the 90 day volume weighted average closing price per share and the 90 day straight average closing price per share of our common shares. As of June 30, 2022, Tremont owned 1,708,058 of our common shares, and Mr. Portnoy beneficially owned (including through Tremont) 13.5% of our outstanding common shares. Tremont Mortgage Trust. TRMT merged with and into us on September 30, 2021. Prior to the Merger, Adam D. Portnoy and Matthew P. Jordan, our Managing Trustees, were also TRMT’s managing trustees. Thomas J. Lorenzini, our President, also served as president of TRMT, and G. Douglas Lanois, our Chief Financial Officer and Treasurer, also served as chief financial officer and treasurer of TRMT. Three of our Independent Trustees, William A. Lamkin, Joseph L. Morea and Jeffrey P. Somers, previously served as independent trustees of TRMT. In addition, our former Independent Trustee, John L. Harrington, also previously served as an independent trustee of TRMT and he resigned both trusteeships effective as of the effective time of the Merger. See our 2021 Annual Report for further information regarding the Merger and the other Transactions. For further information about these and other such relationships and certain other related person transactions, refer to our definitive Proxy Statement for our 2022 Annual Meeting of Shareholders and to our 2021 Annual Report. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesWe have elected to be taxed as a real estate investment trust, or REIT, under 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, provided that we meet certain distribution and other 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 statements of operations. |
Weighted Average Common Shares
Weighted Average Common Shares | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share [Abstract] | |
Weighted Average Common Shares | Weighted Average Common SharesWe calculate net income per common share - basic using the two class method. We calculate net income per common share - diluted using the more dilutive of the two class or treasury stock method. Unvested share awards and the related impact on earnings are considered when calculating net income per common share - basic and net income per common share - diluted. For both the three and six months ended June 30, 2022 and 2021, the weighted averages shares - diluted was equal to the weighted average shares - basic. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies As of June 30, 2022, we had unfunded loan commitments of $52,694 related to our loans held for investment that are not reflected in our condensed consolidated balance sheets. These unfunded loan commitments had a weighted average initial maturity of 1.9 years as of June 30, 2022. See Note 3 for further information related to our loans held for investment. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying condensed consolidated financial statements 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, 2021, or our 2021 Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim periods have been included. All 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 financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the accompanying condensed consolidated financial statements include the fair value of financial instruments. |
Recent Accounting Pronouncements | In June 2016, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, No. 2016-13, Financial Instruments - Credit Losses (Topic 326) : Measurement of Credit Losses on Financial Instruments , which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. As a smaller reporting company, we will adopt ASU No. 2016-13 on January 1, 2023. The amount of the allowance for credit losses established as a result of the adoption, will be presented as a cumulative-effect adjustment to reduce equity as of the date of adoption. We are currently assessing the amount of the allowance for credit losses that will be established as a result of the adoption of ASU No. 2016-13. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures , which eliminated the guidance for and recognitions of troubled debt restructurings for all entities that have adopted ASU No. 2016-13. Instead, an entity must apply the loan refinancing and restructure guidance in Accounting Standards Codification, or ASC, Topic 310, Receivables (Topic 310), to determine whether a modification results in a new loan or continuation of an existing loan. If a borrower is experiencing financial difficulty, enhanced disclosures are required. ASU No. 2022-02 also amended the guidance on vintage disclosures to require disclosure of current period gross write-offs by year of origination. We will adopt ASU No. 2022-02 prospectively on January 1, 2023, concurrently with the adoption of ASU No. 2016-13. As of June 30, 2022, we have not recognized any troubled debt restructurings and do not expect the adoption of ASU No. 2022-02 to have a material impact on our condensed consolidated financial statements. |
Loans Held for Investment (Tabl
Loans Held for Investment (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Receivables [Abstract] | |
Schedule of Loans | The table below provides overall statistics for our loan portfolio as of June 30, 2022 and December 31, 2021: As of June 30, 2022 As of December 31, 2021 Number of loans 28 26 Total loan commitments $ 734,883 $ 648,266 Unfunded loan commitments (1) $ 52,694 $ 57,772 Principal balance $ 682,285 $ 590,590 Carrying value $ 670,185 $ 570,780 Weighted average coupon rate 5.14 % 4.54 % Weighted average all in yield (2) 5.64 % 5.08 % Weighted average floor 0.61 % 0.68 % Weighted average maximum maturity (years) (3) 3.6 3.8 Weighted average risk rating 2.7 2.9 (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) 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. (3) Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions. The tables below represent our loan activities during the three months ended June 30, 2022 and 2021: Principal Balance Deferred Fees and Other Items Carrying Value Balance at March 31, 2022 $ 636,831 $ (14,121) $ 622,710 Additional funding 4,926 — 4,926 Originations 51,620 (321) 51,299 Repayments (11,092) (108) (11,200) Net amortization of deferred fees — 814 814 Net purchase discount accretion — 1,636 1,636 Balance at June 30, 2022 $ 682,285 $ (12,100) $ 670,185 Principal Balance Deferred Fees and Other Items Carrying Value Balance at March 31, 2021 $ 148,652 $ (1,405) $ 147,247 Additional funding 693 — 693 Originations 63,170 (755) 62,415 Net amortization of deferred fees — 387 387 Balance at June 30, 2021 $ 212,515 $ (1,773) $ 210,742 The tables below represent our loan activities during the six months ended June 30, 2022 and 2021: Principal Balance Deferred Fees and Other Items Carrying Value Balance at December 31, 2021 $ 590,590 $ (19,810) $ 570,780 Additional funding 8,230 — 8,230 Originations 142,804 (1,469) 141,335 Repayments (59,339) (504) (59,843) Net amortization of deferred fees — 2,112 2,112 Net purchase discount accretion — 7,571 7,571 Balance at June 30, 2022 $ 682,285 $ (12,100) $ 670,185 Principal Balance Deferred Fees and Other Items Carrying Value Balance at December 31, 2020 $ 92,863 $ (984) $ 91,879 Additional funding 967 — 967 Originations 118,685 (1,430) 117,255 Net amortization of deferred fees — 641 641 Balance at June 30, 2021 $ 212,515 $ (1,773) $ 210,742 The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of June 30, 2022 and December 31, 2021: June 30, 2022 December 31, 2021 Property Type Number of Loans Carrying Value Percentage of Value Number of Loans Carrying Value Percentage of Value Office (1) 12 $ 267,803 40 % 13 $ 269,865 47 % Multifamily 8 194,387 29 % 5 106,002 19 % Lab — — — % 1 13,398 2 % Retail 6 148,255 22 % 4 88,724 16 % Industrial (1) 2 59,740 9 % 3 92,791 16 % 28 $ 670,185 100 % 26 $ 570,780 100 % (1) Two loan investments secured by mixed use properties consisting of office space and an industrial warehouse in Aurora, IL and Colorado Springs, CO are classified as office for the purpose of counting the number of loans in our portfolio because the majority of the square footage of each of the properties consists of office space. The carrying value of these loan investments is reflected in office and industrial based on the fair value of the buildings at the time of origination relative to the total fair value of the properties. June 30, 2022 December 31, 2021 Geographic Location Number of Loans Carrying Value Percentage of Value Number of Loans Carrying Value Percentage of Value East 3 $ 66,120 10 % 3 $ 55,132 10 % South 7 181,890 27 % 7 153,495 27 % West 9 173,245 26 % 8 145,453 25 % Midwest 9 248,930 37 % 8 216,700 38 % 28 $ 670,185 100 % 26 $ 570,780 100 % The following table allocates the carrying value of our loan portfolio at June 30, 2022 and December 31, 2021 based on our internal risk rating policy: June 30, 2022 December 31, 2021 Risk Rating Number of Loans Carrying Value Number of Loans Carrying Value 1 — $ — — $ — 2 10 225,169 4 94,743 3 16 418,153 21 463,600 4 2 26,863 1 12,437 5 — — — — 28 $ 670,185 26 $ 570,780 |
Secured Financing Agreements (T
Secured Financing Agreements (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Long-term Debt | As of June 30, 2022, our outstanding borrowings under our Secured Financing Facilities had the following remaining maturities: Principal Payments on 2022 $ 31,448 2023 94,117 2024 248,050 2025 81,429 2026 and thereafter — $ 455,044 |
Schedule of Long-term Debt Instruments | The table below summarizes our Secured Financing Facilities as of June 30, 2022 and December 31, 2021: Debt Obligation Weighted Average Collateral Maximum Facility Size Principal Balance Carrying Value Coupon Rate (1) Remaining Maturity (2) (years) Principal Balance June 30, 2022: Citibank Master Repurchase Facility $ 215,000 $ 170,338 $ 170,013 3.32 % 1.4 $ 237,917 UBS Master Repurchase Facility 192,000 135,003 134,300 3.57 % 1.6 182,198 Wells Fargo Master Repurchase Facility 125,000 67,427 66,694 3.34 % 2.7 88,446 BMO Facility 150,000 82,276 81,698 3.14 % 2.5 109,897 Total/Weighted Average $ 682,000 $ 455,044 $ 452,705 3.36 % 1.9 $ 618,458 December 31, 2021: UBS Master Repurchase Facility $ 192,000 $ 167,928 $ 167,024 2.09 % 2.0 $ 225,868 Citibank Master Repurchase Facility 213,482 161,825 161,724 2.03 % 0.7 222,129 BMO Facility 100,000 11,116 10,879 2.01 % 2.7 14,821 Total/weighted average $ 505,482 $ 340,869 $ 339,627 2.06 % 1.4 $ 462,818 (1) The weighted average coupon rate is determined using LIBOR or SOFR plus a spread ranging from 1.80% to 2.30%, as applicable, for the respective borrowings under our Secured Financing Facilities as of the applicable date. (2) The weighted average remaining maturity is determined using the current maturity date of the corresponding loans, assuming no borrower loan extension options have been exercised. As of June 30, 2022, our Citibank Master Repurchase Facility, UBS Master Repurchase Facility and Wells Fargo Master Repurchase Facility mature on March 15, 2025, February 18, 2024 and March 11, 2025, respectively. Our BMO Facility matures at various dates based on the respective underlying loans held for investment. |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The table below provides information regarding financial assets and liabilities not carried at fair value on a recurring basis in our condensed consolidated balance sheets: June 30, 2022 December 31, 2021 Carrying Value Fair Value Carrying Value Fair Value Financial assets Loans held for investment $ 670,185 $ 680,658 $ 570,780 $ 597,669 Financial liabilities Secured Financing Facilities $ 452,705 $ 452,585 $ 339,627 $ 341,679 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Schedule of Distributions Declared and Paid | For the six months ended June 30, 2022, we declared and paid a distribution to common shareholders, using cash on hand, as follows: Record Date Payment Date Distribution per Share Total Distribution January 24, 2022 February 17, 2022 $ 0.25 $ 3,649 April 25, 2022 May 19, 2022 0.25 3,649 $ 0.50 $ 7,298 |
Loans Held for Investment - Loa
Loans Held for Investment - Loan Portfolio Statistics (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 USD ($) loan | Dec. 31, 2021 USD ($) loan | Mar. 31, 2022 USD ($) | Jun. 30, 2021 USD ($) | Mar. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Receivables [Abstract] | ||||||
Number of loans | loan | 28 | 26 | ||||
Total loan commitments | $ 734,883 | $ 648,266 | ||||
Unfunded loan commitments | 52,694 | 57,772 | ||||
Principal Balance | 682,285 | 590,590 | $ 636,831 | $ 212,515 | $ 148,652 | $ 92,863 |
Carrying value | $ 670,185 | $ 570,780 | ||||
Weighted average coupon rate | 5.14% | 4.54% | ||||
Weighted average all in yield | 5.64% | 5.08% | ||||
Weighted average floor | 0.61% | 0.68% | ||||
Weighted average maximum maturity (years) | 3 years 7 months 6 days | 3 years 9 months 18 days | ||||
Weighted average risk rating | 2.7 | 2.9 |
Loans Held for Investment - L_2
Loans Held for Investment - Loan Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Loan Activities | ||||
Principal, beginning balance | $ 636,831 | $ 148,652 | $ 590,590 | $ 92,863 |
Deferred fees and other items, beginning balance | (14,121) | (1,405) | (19,810) | (984) |
Carrying value, beginning balance | 622,710 | 147,247 | 570,780 | 91,879 |
Additional funding | 4,926 | 693 | 8,230 | 967 |
Principal, originations | 51,620 | 63,170 | 142,804 | 118,685 |
Deferred fees and other items, originations | (321) | (755) | (1,469) | (1,430) |
Carrying value, originations | 51,299 | 62,415 | 141,335 | 117,255 |
Repayments | (11,092) | (59,339) | ||
Deferred fees and other items, repayments | (108) | (504) | ||
Carrying value, repayment | (11,200) | (59,843) | ||
Net amortization of deferred fees | 814 | 387 | 2,112 | 641 |
Net purchase discount accretion | 1,636 | 7,571 | ||
Principal, ending balance | 682,285 | 212,515 | 682,285 | 212,515 |
Deferred fees and other items, ending balance | (12,100) | (1,773) | (12,100) | (1,773) |
Carrying value, ending balance | $ 670,185 | $ 210,742 | $ 670,185 | $ 210,742 |
Loans Held for Investment - L_3
Loans Held for Investment - Loan Portfolio (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 USD ($) loan | Dec. 31, 2021 USD ($) loan | Mar. 31, 2022 USD ($) | Jun. 30, 2021 USD ($) | Mar. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | 28 | 26 | ||||
Carrying value | $ | $ 670,185 | $ 570,780 | $ 622,710 | $ 210,742 | $ 147,247 | $ 91,879 |
Percentage of Value | 100% | 100% | ||||
East | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | 3 | 3 | ||||
Carrying value | $ | $ 66,120 | $ 55,132 | ||||
Percentage of Value | 10% | 10% | ||||
South | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | 7 | 7 | ||||
Carrying value | $ | $ 181,890 | $ 153,495 | ||||
Percentage of Value | 27% | 27% | ||||
West | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | 9 | 8 | ||||
Carrying value | $ | $ 173,245 | $ 145,453 | ||||
Percentage of Value | 26% | 25% | ||||
Midwest | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | 9 | 8 | ||||
Carrying value | $ | $ 248,930 | $ 216,700 | ||||
Percentage of Value | 37% | 38% | ||||
Office | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | 12 | 13 | ||||
Carrying value | $ | $ 267,803 | $ 269,865 | ||||
Percentage of Value | 40% | 47% | ||||
Multifamily | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | 8 | 5 | ||||
Carrying value | $ | $ 194,387 | $ 106,002 | ||||
Percentage of Value | 29% | 19% | ||||
Lab | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | 0 | 1 | ||||
Carrying value | $ | $ 0 | $ 13,398 | ||||
Percentage of Value | 0% | 2% | ||||
Retail | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | 6 | 4 | ||||
Carrying value | $ | $ 148,255 | $ 88,724 | ||||
Percentage of Value | 22% | 16% | ||||
Industrial | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | 2 | 3 | ||||
Carrying value | $ | $ 59,740 | $ 92,791 | ||||
Percentage of Value | 9% | 16% | ||||
Mixed Use Properties | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | 2 |
Loans Held for Investment - L_4
Loans Held for Investment - Loan Risk Ratings (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 USD ($) loan | Dec. 31, 2021 USD ($) loan | Mar. 31, 2022 USD ($) | Jun. 30, 2021 USD ($) | Mar. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | loan | 28 | 26 | ||||
Carrying value | $ | $ 670,185 | $ 570,780 | $ 622,710 | $ 210,742 | $ 147,247 | $ 91,879 |
Risk Rating, 1 | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | loan | 0 | 0 | ||||
Carrying value | $ | $ 0 | $ 0 | ||||
Risk Rating, 2 | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | loan | 10 | 4 | ||||
Carrying value | $ | $ 225,169 | $ 94,743 | ||||
Risk Rating, 3 | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | loan | 16 | 21 | ||||
Carrying value | $ | $ 418,153 | $ 463,600 | ||||
Risk Rating, 4 | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | loan | 2 | 1 | ||||
Carrying value | $ | $ 26,863 | $ 12,437 | ||||
Risk Rating, 5 | ||||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||||
Number of loans | loan | 0 | 0 | ||||
Carrying value | $ | $ 0 | $ 0 |
Loans Held for Investment - Nar
Loans Held for Investment - Narrative (Details) $ in Thousands | 1 Months Ended | 6 Months Ended | 12 Months Ended |
Feb. 28, 2022 USD ($) | Jun. 30, 2022 USD ($) loan | Dec. 31, 2021 loan | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Weighted average risk rating | 2.7 | 2.9 | |
Number of loans | loan | 28 | 26 | |
Percentage of value (as a percent) | 100% | 100% | |
Office Property, Yardley, PA | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Increased loan commitment | $ 1,600 | ||
Unaccreted purchase discounts | $ 1,748 | ||
LIBOR | Office Property, Yardley, PA | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Variable basis rate (as a percent) | 12% | ||
Risk Rating, 4 | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Number of loans | loan | 2 | 1 | |
Percentage of value (as a percent) | 4% | ||
Risk Rating, 4 | Office Property, Yardley, PA | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Outstanding principal amount | $ 14,972 |
Secured Financing Agreements -
Secured Financing Agreements - Narrative (Details) - USD ($) $ in Thousands | Jul. 25, 2022 | Jun. 30, 2022 | Apr. 25, 2022 | Mar. 15, 2022 | Mar. 11, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||||||
Principal Balance | $ 455,044 | |||||
Subsequent Event | ||||||
Debt Instrument [Line Items] | ||||||
Principal Balance | $ 469,810 | |||||
Mortgages And Related Assets | ||||||
Debt Instrument [Line Items] | ||||||
Maximum amount of available advancements | 682,000 | $ 505,482 | ||||
Principal Balance | $ 618,458 | 462,818 | ||||
Wells Fargo Master Repurchase Facility | Asset Specific Financing | ||||||
Debt Instrument [Line Items] | ||||||
Maximum amount of available advancements | $ 125,000 | |||||
Option to increase maximum facility | $ 250,000 | |||||
Wells Fargo Master Repurchase Facility | Mortgages And Related Assets | ||||||
Debt Instrument [Line Items] | ||||||
Percentage of loan guaranteed (as a percent) | 25% | |||||
Debt instrument, loan percentage guaranteed in event of certain bad acts (as a percent) | 100% | |||||
Wells Fargo Master Repurchase Facility | Mortgages And Related Assets | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Percentage of purchased asset, initial purchase price (as a percent) | 75% | |||||
Wells Fargo Master Repurchase Facility | Mortgages And Related Assets | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Percentage of purchased asset, initial purchase price (as a percent) | 80% | |||||
UBS Master Repurchase Facility | Asset Specific Financing | ||||||
Debt Instrument [Line Items] | ||||||
Maximum amount of available advancements | $ 215,000 | |||||
BMO Facility | Asset Specific Financing | ||||||
Debt Instrument [Line Items] | ||||||
Maximum amount of available advancements | $ 150,000 | $ 100,000 | 100,000 | |||
Option to increase maximum facility | $ 150,000 | |||||
Principal Balance | $ 109,897 | $ 14,821 |
Secured Financing Agreements _2
Secured Financing Agreements - Debt Maturities (Details) - Total/Weighted Average $ in Thousands | Jun. 30, 2022 USD ($) |
Debt Instrument [Line Items] | |
2022 | $ 31,448 |
2023 | 94,117 |
2024 | 248,050 |
2025 | 81,429 |
2026 and thereafter | 0 |
Total | $ 455,044 |
Secured Financing Agreements _3
Secured Financing Agreements - Schedule of Debt (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Dec. 31, 2021 | Apr. 25, 2022 | Mar. 15, 2022 | Mar. 11, 2022 | |
Debt Instrument [Line Items] | |||||
Principal Balance | $ 455,044 | ||||
Total/Weighted Average | |||||
Debt Instrument [Line Items] | |||||
Maximum Facility Size | 682,000 | $ 505,482 | |||
Principal Balance | 455,044 | 340,869 | |||
Carrying Value | $ 452,705 | $ 339,627 | |||
Coupon Rate | 3.36% | 2.06% | |||
Remaining maturity (years) | 1 year 10 months 24 days | 1 year 4 months 24 days | |||
Principal Balance | $ 618,458 | $ 462,818 | |||
Total/Weighted Average | LIBOR or SOFR | Minimum | |||||
Debt Instrument [Line Items] | |||||
Coupon Rate | 1.80% | 1.80% | |||
Total/Weighted Average | LIBOR or SOFR | Maximum | |||||
Debt Instrument [Line Items] | |||||
Coupon Rate | 2.30% | 2.30% | |||
Master Repurchase Agreements | Citibank Master Repurchase Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum Facility Size | $ 215,000 | $ 192,000 | |||
Principal Balance | 170,338 | 167,928 | |||
Carrying Value | $ 170,013 | $ 167,024 | |||
Coupon Rate | 3.32% | 2.09% | |||
Remaining maturity (years) | 1 year 4 months 24 days | 2 years | |||
Principal Balance | $ 237,917 | $ 225,868 | |||
Master Repurchase Agreements | UBS Master Repurchase Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum Facility Size | 192,000 | 213,482 | |||
Principal Balance | 135,003 | 161,825 | |||
Carrying Value | $ 134,300 | $ 161,724 | |||
Coupon Rate | 3.57% | 2.03% | |||
Remaining maturity (years) | 1 year 7 months 6 days | 8 months 12 days | |||
Principal Balance | $ 182,198 | $ 222,129 | |||
Master Repurchase Agreements | Wells Fargo Master Repurchase Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum Facility Size | 125,000 | ||||
Principal Balance | 67,427 | ||||
Carrying Value | $ 66,694 | ||||
Coupon Rate | 3.34% | ||||
Remaining maturity (years) | 2 years 8 months 12 days | ||||
Principal Balance | $ 88,446 | ||||
Asset Specific Financing | UBS Master Repurchase Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum Facility Size | $ 215,000 | ||||
Asset Specific Financing | Wells Fargo Master Repurchase Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum Facility Size | $ 125,000 | ||||
Asset Specific Financing | BMO Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum Facility Size | 150,000 | 100,000 | $ 100,000 | ||
Principal Balance | 82,276 | 11,116 | |||
Carrying Value | $ 81,698 | $ 10,879 | |||
Coupon Rate | 3.14% | 2.01% | |||
Remaining maturity (years) | 2 years 6 months | 2 years 8 months 12 days | |||
Principal Balance | $ 109,897 | $ 14,821 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - Level III - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans held for investment | $ 670,185 | $ 570,780 |
Secured Financing Facilities | 452,705 | 339,627 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans held for investment | 680,658 | 597,669 |
Secured Financing Facilities | $ 452,585 | $ 341,679 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||||
Jul. 14, 2022 USD ($) $ / shares | May 26, 2022 trustee $ / shares shares | May 19, 2022 USD ($) | Apr. 25, 2022 $ / shares | Feb. 17, 2022 USD ($) | Jan. 24, 2022 $ / shares | Jun. 30, 2022 USD ($) installment | Mar. 31, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) installment $ / shares | |
Class of Stock [Line Items] | ||||||||||
Distribution per Share, declared (in dollars per share) | $ 0.25 | $ 0.25 | $ 0.50 | |||||||
Total Distribution | $ | $ 3,649 | $ 3,649 | $ 3,649 | $ 3,649 | $ 1,530 | $ 7,298 | ||||
Subsequent Event | ||||||||||
Class of Stock [Line Items] | ||||||||||
Distribution per Share, declared (in dollars per share) | $ 0.25 | |||||||||
Total Distribution | $ | $ 3,660 | |||||||||
Restricted Stock | 2021 Equity Compensation Plan | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of installments | installment | 5 | 5 | ||||||||
Restricted Stock | Trustee Compensation Arrangements | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of trustees | trustee | 7 | |||||||||
Shares granted (in shares) | shares | 6,000 | |||||||||
Shares granted (in dollars per share) | $ 10.66 |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
May 19, 2022 | Apr. 25, 2022 | Feb. 17, 2022 | Jan. 24, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | |
Equity [Abstract] | ||||||||
Distribution per Share, declared (in dollars per share) | $ 0.25 | $ 0.25 | $ 0.50 | |||||
Distribution per Share, paid (in dollars per share) | $ 0.25 | $ 0.25 | $ 0.50 | |||||
Total Distribution | $ 3,649 | $ 3,649 | $ 3,649 | $ 3,649 | $ 1,530 | $ 7,298 |
Management Agreement with Tre_2
Management Agreement with Tremont (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 USD ($) employee | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) employee | Jun. 30, 2021 USD ($) | |
Related Party Transaction [Line Items] | ||||
Number of employees | employee | 0 | 0 | ||
Quarterly base management fee (as a percent) | 0.375% | 0.375% | ||
Annualized base management fee (as a percent) | 1.50% | 1.50% | ||
Base management fees | $ 1,063,000 | $ 721,000 | $ 2,126,000 | $ 1,436,000 |
Incentive fee | 0 | 0 | 0 | 0 |
Shared service costs | $ 514,000 | $ 312,000 | $ 1,148,000 | 664,000 |
Principal Owner | ||||
Related Party Transaction [Line Items] | ||||
Base management fees | $ 1,414,000 |
Related Person Transactions (De
Related Person Transactions (Details) - Management Services - Affiliated Entity - USD ($) $ in Thousands | May 11, 2022 | Jun. 30, 2022 |
Diane Portnoy | Tremont Realty Advisors LLC | ||
Related Party Transaction [Line Items] | ||
Shares purchased (in shares) | 882,407 | |
Aggregate purchase price | $ 9,469 | |
Number of days for weighted average (in days) | 90 days | |
Tremont Realty Advisors LLC | ||
Related Party Transaction [Line Items] | ||
Shares owned (in shares) | 1,708,058 | |
Outstanding common shares (as a percent) | 13.50% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Other Commitments [Line Items] | ||
Unfunded loan commitments | $ 52,694 | $ 57,772 |
Weighted average maximum maturity (in years) | 3 years 7 months 6 days | 3 years 9 months 18 days |
Unfunded Commitments | ||
Other Commitments [Line Items] | ||
Weighted average maximum maturity (in years) | 1 year 10 months 24 days |