Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 13, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Tremont Mortgage Trust | |
Entity Central Index Key | 1,708,405 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | No | |
Entity Filer Category | Smaller Reporting Company | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Common Stock, Shares Outstanding | 3,100,100 |
BALANCE SHEET
BALANCE SHEET $ in Thousands | Sep. 30, 2017USD ($) |
Assets | |
Cash and cash equivalents | $ 61,954 |
Total assets | 61,954 |
Liabilities and Shareholders' Equity | |
Accounts payable and other liabilities | 75 |
Due to related persons | 115 |
Total liabilities | 190 |
Commitments and contingencies | |
Shareholders' Equity: | |
Common shares of beneficial interest, $0.01 par value per share; 25,000,000 shares authorized; 3,100,100 shares issued and outstanding | 31 |
Additional paid in capital | 61,971 |
Cumulative net loss | (238) |
Total shareholders’ equity | 61,764 |
Total liabilities and shareholders' equity | $ 61,954 |
BALANCE SHEET (Parenthetical)
BALANCE SHEET (Parenthetical) | Sep. 30, 2017$ / sharesshares |
Statement of Financial Position [Abstract] | |
Common shares of beneficial interest, par value (in dollars per share) | $ / shares | $ 0.01 |
Common shares of beneficial interest, shares authorized | 25,000,000 |
Common shares of beneficial interest, shares issued | 3,100,100 |
Common shares of beneficial interest, shares outstanding | 3,100,100 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 4 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Interest Income: | ||
Interest income from investments | $ 23 | $ 23 |
Expenses: | ||
General and administrative expenses | 261 | 261 |
Net loss | $ (238) | $ (238) |
Weighted average common shares outstanding - basic and diluted (in shares) | 438 | 330 |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.54) | $ (0.72) |
STATEMENT OF CASH FLOW
STATEMENT OF CASH FLOW $ in Thousands | 4 Months Ended |
Sep. 30, 2017USD ($) | |
Cash Flows from Operating Activities | |
Net loss | $ (238) |
Changes in operating assets and liabilities: | |
Accounts payable and other liabilities | 75 |
Due to related persons | 115 |
Net cash used in operating activities | (48) |
Cash Flows from Financing Activities | |
Proceeds from issuance of common shares | 62,002 |
Net cash provided by financing activities | 62,002 |
Increase in cash and cash equivalents | 61,954 |
Cash and cash equivalents at beginning of period | 0 |
Cash and cash equivalents at end of period | $ 61,954 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying financial statements of Tremont Mortgage Trust, or TRMT, we, us or our, are unaudited. We believe the disclosures made are adequate to make the information presented not misleading. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. The preparation of these financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. |
Organization
Organization | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization We were organized as a real estate investment trust, or REIT, under Maryland law on June 1, 2017. On September 18, 2017, we sold 2,500,000 of our common shares of beneficial interest, par value $0.01 per share, or our common shares, at a price of $20.00 per share in our initial public offering, or our IPO. Concurrently with our IPO, we sold an additional 600,000 of our common shares at a price of $20.00 per share to Tremont Realty Advisors LLC, or our Manager, in a private placement. The aggregate proceeds from these sales were $62,000 . |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Fair Value of Financial Instruments. The accompanying balance sheet includes the following financial instruments: cash, accounts payable and other liabilities and due to related persons. We consider the carrying values of cash, accounts payable and other liabilities and due to related persons to approximate the fair values of these financial instruments based on the short duration between origination of these instruments and their expected realizations. Per Common Share Amounts. We calculate basic earnings per common share by dividing net loss by the weighted average number of our common shares outstanding during the period. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, Revenue From Contracts With Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services”. In August 2015, the FASB provided for a one year deferral of the effective date for ASU No. 2014-09, which is now effective for us beginning January 1, 2018. We have evaluated ASU No. 2014-09 and related clarifying guidance issued by the FASB and determined that interest income and gains and losses on financial instruments are outside of its scope; therefore, we do not expect the adoption of ASU No. 2014-09 to have a material impact in our financial statements and related disclosures. In June 2016, the FASB issued 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 than is currently required. 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. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We expect that the adoption of ASU No. 2016-13 will increase our timing and carrying amounts for credit losses, but we are continuing to assess the potential impact our adoption of ASU No. 2016-13 will have in our financial statements. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders' Equity On September 18, 2017, we sold 2,500,000 of our common shares at a price of $20.00 per share in our IPO. Concurrently with our IPO, we sold an additional 600,000 of our common shares at a price of $20.00 per share to our Manager in a private placement. The aggregate proceeds from these sales were $62,000 . We did not declare or pay any cash dividends on our common shares during the period from our inception (June 1, 2017) through September 30, 2017 . |
Management Agreement With Our M
Management Agreement With Our Manager | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Management Agreement With Our Manager | Management Agreement with our Manager We have no employees. The personnel and various services we require to operate our business are provided to us by our Manager. In connection with our IPO, we entered into a management agreement with our Manager, which provides for the day to day management of our operations by our Manager, subject to the oversight and direction of our Board of Trustees. We pay our Manager an annual base management fee that is equal to 1.5% of our “equity,” as defined. We pay this business management fee in cash quarterly in arrears. In addition, beginning in the fourth quarter of 2018, we may pay our Manager an incentive fee if it is earned under our management agreement. The incentive fee, if any, will be payable in cash quarterly in arrears. We also will be obligated to pay our Manager a termination fee in the event our management agreement is terminated by us without cause or by our Manager for a material breach by us. Pursuant to our management agreement, we recognized management fees of $32 for the period beginning on September 18, 2017, the date on which we entered into the agreement, through September 30, 2017. Our management fees are included in general and administrative expenses in our statements of operations. Our Manager, and not us, is responsible for the costs of its employees who provide services to us, including the cost of our Manager’s personnel who originate our loans, unless any such payment or reimbursement is specifically approved by a majority of our Independent Trustees, is a shared services cost or relates to awards made under any equity compensation plan adopted by us. We are generally required to pay or to reimburse our Manager and its affiliates for all other costs and expenses of our operations. Some of these overhead, professional and other services are provided by The RMR Group LLC, or RMR LLC, pursuant to a shared services agreement between our Manager and RMR LLC. We will reimburse our Manager for shared services costs our Manager pays to RMR LLC and its affiliates, and these reimbursements may include an allocation of the cost of personnel employed by RMR LLC, with such shared services costs subject to approval by a majority of our Independent Trustees at least annually. In addition, we will also pay our pro rata portion of internal audit costs incurred by RMR LLC on behalf of us and other public companies to which RMR LLC or its affiliates provide management services. For the period beginning on September 18, 2017, the date we entered into our management agreement, through September 30, 2017, we incurred shared service costs of $53 payable to our Manager as reimbursement for shared service costs it paid to RMR LLC, which amounts are included in general and administrative expenses in our statements of operations. For further information about our management agreement with our Manager and RMR LLC’s shared services agreement with our Manager, please refer to the prospectus related to our IPO dated September 13, 2017, or our IPO Prospectus, which was filed with the Securities and Exchange Commission, or SEC, on September 15, 2017, including the sections captioned “Our Manager and our Management Agreement” and “Certain relationships and related person transactions - Our relationship with our Manager, RMR and other entities managed by RMR”. Our filings with the SEC, including our IPO Prospectus, are available at the SEC’s website at www.sec.gov . |
Related Person Transactions
Related Person Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Person Transactions | Related Person Transactions 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 provides management services and which have trustees, directors and officers who are also our Trustees or officers. We were formerly a 100% owned subsidiary of our Manager. Our Manager is our largest shareholder and, as of September 30, 2017, owned 600,100 of our common shares, or approximately 19.4% of our outstanding common shares. Our Manager has agreed to pay the initial organizational costs related to our formation and the other costs of our IPO, including the underwriting discounts and commissions; as of September 30, 2017, our Manager has incurred approximately $6,823 in such costs. Each of our Managing Trustees and officers is also a director or officer of our Manager and of RMR LLC. Our Manager, Tremont Realty Advisors LLC. We have a management agreement with our Manager to provide management services to us. See Note 6, Management Agreement with our Manager for further information regarding our management agreement with our Manager. We and our Manager entered into a private placement purchase agreement concurrent with our IPO, pursuant to which our Manager acquired 600,000 of our common shares at a price of $20.00 per share, which was the same price at which we sold our common shares in our IPO. Under the private placement purchase agreement, we granted to our Manager certain demand and piggyback registration rights, subject to certain limitations, covering our common shares owned by our Manager. RMR Inc. and RMR LLC . Our Manager is a subsidiary of RMR LLC, which is a subsidiary of RMR Inc. and RMR Inc. is the managing member of RMR LLC. The controlling shareholder of RMR Inc., ABP Trust, is owned by our Managing Trustees. RMR LLC provides certain shared services to our Manager which are applicable to us, and we reimburse our Manager for the amounts it pays for those services. See Note 6, Management Agreement with our Manager for further information regarding these shared services arrangements. For further information about these and certain other related person relationships and transactions, please refer to our IPO Prospectus, including the sections captioned “Our Manager and our Management Agreement” and “Certain relationships and related person transactions - Our relationship with our Manager, RMR and other entities managed by RMR”. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We intend to elect and qualify for taxation as a REIT for U.S. federal income tax purposes, commencing with our taxable year ending December 31, 2017, and to maintain that qualification thereafter. We therefore expect to generally not be subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain requirements to qualify for taxation as a REIT for U.S. federal income tax purposes. However, we expect to be subject to income tax in certain states and local jurisdictions despite our qualification for taxation as a REIT for U.S. federal income tax purposes. |
Summary of Significant Accoun14
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments. The accompanying balance sheet includes the following financial instruments: cash, accounts payable and other liabilities and due to related persons. We consider the carrying values of cash, accounts payable and other liabilities and due to related persons to approximate the fair values of these financial instruments based on the short duration between origination of these instruments and their expected realizations. |
Per Common Share Amounts | Per Common Share Amounts. We calculate basic earnings per common share by dividing net loss by the weighted average number of our common shares outstanding during the period. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, Revenue From Contracts With Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services”. In August 2015, the FASB provided for a one year deferral of the effective date for ASU No. 2014-09, which is now effective for us beginning January 1, 2018. We have evaluated ASU No. 2014-09 and related clarifying guidance issued by the FASB and determined that interest income and gains and losses on financial instruments are outside of its scope; therefore, we do not expect the adoption of ASU No. 2014-09 to have a material impact in our financial statements and related disclosures. In June 2016, the FASB issued 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 than is currently required. 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. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We expect that the adoption of ASU No. 2016-13 will increase our timing and carrying amounts for credit losses, but we are continuing to assess the potential impact our adoption of ASU No. 2016-13 will have in our financial statements. |
Organization (Details)
Organization (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 18, 2017 | Sep. 30, 2017 |
Subsidiary, Sale of Stock [Line Items] | ||
Common shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Proceeds from sale of common shares | $ 62,000 | |
IPO | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of shares issued (in shares) | 2,500,000 | |
Price of shares issued (in dollars per share) | $ 20 | |
Private Placement | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of shares issued (in shares) | 600,000 | |
Price of shares issued (in dollars per share) | $ 20 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) $ / shares in Units, $ in Thousands | Sep. 18, 2017USD ($)$ / sharesshares |
Subsidiary, Sale of Stock [Line Items] | |
Proceeds from sale of common shares | $ | $ 62,000 |
IPO | |
Subsidiary, Sale of Stock [Line Items] | |
Number of shares issued (in shares) | shares | 2,500,000 |
Price of shares issued (in dollars per share) | $ / shares | $ 20 |
Private Placement | |
Subsidiary, Sale of Stock [Line Items] | |
Number of shares issued (in shares) | shares | 600,000 |
Price of shares issued (in dollars per share) | $ / shares | $ 20 |
Management Agreement With Our17
Management Agreement With Our Manager (Details) $ in Thousands | Sep. 30, 2017USD ($)employee |
Related Party Transaction [Line Items] | |
Number of employees | employee | 0 |
Principal Owner | |
Related Party Transaction [Line Items] | |
Annualized base management fee | 1.50% |
Management fee expense | $ 32 |
Shared Service Costs | Principal Owner | |
Related Party Transaction [Line Items] | |
Related party transaction | $ 53 |
Related Person Transactions (De
Related Person Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 29, 2017 | Sep. 18, 2017 | Sep. 30, 2017 |
Initial organizational and IPO costs | Principal Owner | |||
Related Party Transaction [Line Items] | |||
Related party transaction | $ 6,823 | ||
Private Placement | |||
Related Party Transaction [Line Items] | |||
Number of shares issued (in shares) | 600,000 | ||
Price of shares issued (in dollars per share) | $ 20 | ||
Tremont Mortgage Trust | Tremont Realty Advisors LLC | |||
Related Party Transaction [Line Items] | |||
Ownership percentage | 100.00% | ||
Shares owned (in shares) | 600,100 | ||
Noncontrolling ownership interest | 19.40% |