Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 13, 2018 | |
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 | Mar. 31, 2018 | |
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 | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Common Stock, Shares Outstanding | 3,142,939 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 60,621 | $ 61,666 |
Restricted cash | 214 | 0 |
Deferred financing costs, net | 746 | 0 |
Prepaid expenses and other assets | 223 | 259 |
Total assets | 61,804 | 61,925 |
Liabilities and Shareholders' Equity | ||
Accounts payable, accrued liabilities and deposits | 749 | 301 |
Due to related persons | 1,114 | 754 |
Total liabilities | 1,863 | 1,055 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common shares of beneficial interest, $0.01 par value per share; 25,000,000 shares authorized; 3,127,939 and 3,126,439 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively | 31 | 31 |
Additional paid in capital | 62,155 | 62,135 |
Cumulative net loss | (2,245) | (1,296) |
Total shareholders’ equity | 59,941 | 60,870 |
Total liabilities and shareholders' equity | $ 61,804 | $ 61,925 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares of beneficial interest, shares authorized | 25,000,000 | 25,000,000 |
Common shares of beneficial interest, shares issued | 3,127,939 | 3,126,439 |
Common shares of beneficial interest, shares outstanding | 3,127,939 | 3,126,439 |
CONSOLIDATED STATEMENT OF OPERA
CONSOLIDATED STATEMENT OF OPERATIONS shares in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Income: | |
Interest income from investments | $ 233 |
Less: Interest and related expenses | (37) |
Total income from investments, net | 196 |
Expenses: | |
Management fees | 225 |
General and administrative expenses | 545 |
Shared services agreement reimbursement | 375 |
Total expenses | 1,145 |
Loss before income tax expense | (949) |
Income tax expense | 0 |
Net loss | $ (949) |
Weighted average common shares outstanding (in shares) | shares | 3,111 |
Net loss per common share - basic and diluted (in dollars per share) | $ / shares | $ (0.31) |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | |
Cash Flows from Operating Activities | |||
Net loss | $ (949) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Share based compensation | 20 | ||
Amortization of deferred financing costs | 38 | ||
Changes in operating assets and liabilities: | |||
Prepaid expenses and other assets | 34 | ||
Accounts payable, accrued liabilities and deposits | 432 | ||
Due to related persons | 360 | ||
Net cash used in operating activities | (65) | ||
Cash Flows from Financing Activities | |||
Payments for deferred financing costs | (766) | ||
Net cash provided by financing activities | (766) | ||
Decrease in cash, cash equivalents and restricted cash | (831) | ||
Cash, cash equivalents and restricted cash at beginning of period | 61,666 | ||
Cash, cash equivalents and restricted cash at end of period | 60,835 | ||
Supplemental disclosure of cash, cash equivalents and restricted cash: | |||
Cash and cash equivalents | $ 60,621 | $ 61,666 | |
Restricted cash | 214 | 0 | |
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statement of cash flows | $ 61,666 | $ 60,835 | $ 61,666 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of Tremont Mortgage Trust and its 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. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period 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 condensed consolidated financial statements include the fair value of financial instruments. |
Organization
Organization | 3 Months Ended |
Mar. 31, 2018 | |
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 | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Cash, Cash Equivalents and Restricted Cash. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. 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. Repurchase Agreements. Loans financed through repurchase agreements will generally be treated as collateralized financing transactions and will remain recorded in our consolidated balance sheets as assets, and cash received from the purchasers will be recorded in our consolidated balance sheets as a liability. Interest paid in accordance with repurchase agreements will be recorded as interest expense in our consolidated statement of operations. Deferred Financing Costs. Costs incurred in connection with financings are capitalized and amortized over the respective financing terms and are recorded in our consolidated statement of operations as a component of interest and related expenses. At March 31, 2018, we had approximately $ 746 of capitalized financing costs, net of amortization. Fair Value of Financial Instruments. Our consolidated balance sheets include the following financial instruments: cash and cash equivalents, accounts payable, accrued liabilities and deposits and due to related persons. We consider the carrying values of cash, restricted cash, accounts payable and deposits 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. Net Loss Per Common Share. We calculate basic earnings per common share by dividing net loss by the weighted average number of common shares outstanding during the period. We calculate diluted net loss per share using the more dilutive of the two class method or the treasury stock method. Revenue Recognition. Interest income related to our first mortgage loans secured by commercial real estate, or CRE, will generally be accrued based on the coupon rates applied to the outstanding principal balance of such loans. Fees, premiums and discounts, if any, will be amortized or accreted into interest income over the remaining lives of the loans using the effective interest method, as adjusted for any prepayments. 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. For loans purchased at a discount, GAAP limits the yield that may be accreted (accretable yield) to the excess of the investor’s estimate of undiscounted expected principal, interest and other cash flows (cash flows expected at acquisition to be collected) over the investor’s initial investment in the loan. GAAP also requires that the excess of contractual cash flows over cash flows expected to be collected (non-accretable difference) not be recognized as an adjustment of yield, loss accrual or valuation allowance. Subsequent increases in cash flows expected to be collected from such loans generally will be recognized prospectively through adjustment of the loan’s yield over its remaining life. Decreases in cash flows expected to be collected will be recorded as impairment. Loan Impairment. Generally, our loans will be classified as held for investment based upon our intent and ability to hold them until maturity. We expect that loans that are held for investment will be carried at cost, net of unamortized loan fees and origination and acquisition costs which are required to be recognized in the carrying value of the loans in accordance with GAAP, unless the loans are deemed to be impaired. Loans that we have a plan to sell or liquidate will be held at the lower of cost or fair value. We will evaluate loans classified as held for investment for impairment periodically. Impairment occurs when it is deemed probable that we will not be able to collect all amounts due according to contractual terms. Impairment will then be measured based on the present value of expected future cash flows discounted at an impaired 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 involve judgments and assumptions based on objective and subjective factors. Consideration will be given to various factors, such as property occupancies, tenant profiles, rental rates, operating expenses and borrowers’ repayment plans, among others, and will require significant judgments, including making 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 consolidated statement of operations. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On January 1, 2018, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2014-09 (and related clarifying guidance issued by the FASB), 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.” 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, the adoption of ASU No. 2014-09 did not have a material impact in our consolidated financial statements. 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. 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 are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our consolidated financial statements. On January 1, 2018, we adopted FASB ASU No. 2016-18, Restricted Cash , which requires companies to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. This update also requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. As a result, amounts included in restricted cash in our condensed consolidated balance sheets are included with cash and cash equivalents in the consolidated statement of cash flows. Restricted cash, which primarily consists of deposit proceeds from potential borrowers 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, totaled $ 214 as of March 31, 2018. The adoption of this update did not change our balance sheet presentation. |
Repurchase Facility
Repurchase Facility | 3 Months Ended |
Mar. 31, 2018 | |
Repurchase Agreement [Abstract] | |
Repurchase Facility | Repurchase Facility On February 9, 2018, one of our wholly owned subsidiaries entered into a master repurchase agreement, or our master repurchase agreement, with Citibank, N.A., or Citibank, for a $100,000 master repurchase facility, or our master repurchase facility, pursuant to which we may sell to Citibank, and later repurchase, floating rate mortgage loans and other related assets, or purchased assets. Our master repurchase agreement expires February 9, 2021, unless terminated earlier according to its terms. Under our master repurchase facility, 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 month 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. In connection with our master repurchase facility, 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. This guaranty also requires us to comply with customary financial covenants which include 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 also contains margin maintenance provisions that provide Citibank with the right, in certain circumstances related to a credit event, as defined in our master repurchase agreement, to re-determine the value of purchased assets. Where a decline in the value of purchased assets has resulted in a margin deficit, Citibank may require us to eliminate such margin deficit through a combination of purchased asset repurchases and cash transfers to Citibank, subject to Citibank's approval. Our master repurchase agreement 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 control of us, which includes our Manager ceasing to act as our sole manager or be a wholly owned subsidiary of The RMR Group LLC, or RMR LLC. As of March 31, 2018, we had no outstanding balances under our master repurchase facility. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders' Equity Share Awards We have common shares available for issuance under the terms of our 2017 Equity Compensation Plan. On March 9, 2018, in accordance with our Trustee compensation arrangements, we granted 1,500 of our common shares, valued at $13.31 per share, the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on that day, to our Managing Trustee who was elected as a Managing Trustee that day. On April 25, 2018, we granted 3,000 of our common shares, valued at $12.61 per share, the closing price of our common shares on Nasdaq on that day, to each of our five Trustees as part of their annual compensation. |
Management Agreement With Our M
Management Agreement With Our Manager | 3 Months Ended |
Mar. 31, 2018 | |
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 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. 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. Pursuant to our management agreement, we recognized management fees of $225 for the three months ended March 31, 2018. Our Manager 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, 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 subsidiaries provide management services. For the three months ended March 31, 2018, we incurred shared services costs of $ 375 payable to our Manager as reimbursement for shared services costs it paid to RMR LLC. |
Related Person Transactions
Related Person Transactions | 3 Months Ended |
Mar. 31, 2018 | |
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 or its subsidiaries provide management services and which have trustees, directors and officers who are also our Trustees or officers. Our Manager, Tremont Realty Advisors LLC. We have a management agreement with our Manager to provide management services to us. See Note 7 for further information regarding our management agreement with our Manager. We were formerly a 100% owned subsidiary of our Manager. Our Manager is our largest shareholder and, as of March 31, 2018, owned 600,100 of our common shares, or approximately 19.2% 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. RMR Inc. and RMR LLC . Our Manager is a subsidiary of RMR LLC, which is a majority owned subsidiary of RMR Inc., and RMR Inc. is the managing member of RMR LLC. Adam D. Portnoy, one of our Managing Trustees, is the sole trustee of ABP Trust, the controlling shareholder of RMR Inc., and is a managing director, president and chief executive officer of RMR Inc. and an officer of our Manager, ABP Trust and RMR LLC. David M. Blackman, our other Managing Trustee and our Chief Executive Officer, also serves as the President of our Manager and an executive officer of RMR LLC. 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 7 for further information regarding these shared services arrangements. For further information about these and other such relationships and certain other related person transactions, refer to our Annual Report. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We intend to elect and qualify for taxation as a REIT under the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2017, and to maintain such qualification thereafter. Accordingly, we generally are not, and will not be, subject to U.S. federal income taxes provided that we distribute our taxable income and meet certain other requirements to qualify for taxation as a REIT. We are subject to certain state and local taxes, certain of which amounts are reported as income taxes in our condensed consolidated statement 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. |
Weighted Average Common Shares
Weighted Average Common Shares | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Weighted Average Common Shares | Weighted Average Common Shares We calculated earnings per share, or EPS, for the period ended March 31, 2018 using the weighted average number of common shares outstanding during the period. When applicable, diluted EPS reflects the more dilutive earnings per common share amount calculated using the two class method or the treasury stock method. The period ended March 31, 2018 had 856 of restricted unvested common shares that were not included in the calculation of diluted EPS because to do so would have been antidilutive. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Events In April 2018, we announced the closing of a $18,100 first mortgage bridge loan, of which $15,800 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 interest at a variable rate of one month LIBOR plus a premium of 500 basis points payable monthly and an as-is loan to value ratio, or LTV ratio, of approximately 80% . This loan also includes a future funding allowance of up to $2,300 for tenant improvements, leasing commissions, marketing and capital expenditures. The loan has a three year initial term and two one year borrower extension options. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Cash and Cash Equivalents | Cash, Cash Equivalents and Restricted Cash. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. 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. |
Repurchase Agreements | Repurchase Agreements. Loans financed through repurchase agreements will generally be treated as collateralized financing transactions and will remain recorded in our consolidated balance sheets as assets, and cash received from the purchasers will be recorded in our consolidated balance sheets as a liability. Interest paid in accordance with repurchase agreements will be recorded as interest expense in our consolidated statement of operations. |
Deferred Financing Costs | Deferred Financing Costs. Costs incurred in connection with financings are capitalized and amortized over the respective financing terms and are recorded in our consolidated statement of operations as a component of interest and related expenses. At March 31, 2018, we had approximately $ 746 of capitalized financing costs, net of amortization. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments. Our consolidated balance sheets include the following financial instruments: cash and cash equivalents, accounts payable, accrued liabilities and deposits and due to related persons. We consider the carrying values of cash, restricted cash, accounts payable and deposits 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. |
Net Loss Per Common Share | Net Loss Per Common Share. We calculate basic earnings per common share by dividing net loss by the weighted average number of common shares outstanding during the period. We calculate diluted net loss per share using the more dilutive of the two class method or the treasury stock method. |
Revenue Recognition | Revenue Recognition. Interest income related to our first mortgage loans secured by commercial real estate, or CRE, will generally be accrued based on the coupon rates applied to the outstanding principal balance of such loans. Fees, premiums and discounts, if any, will be amortized or accreted into interest income over the remaining lives of the loans using the effective interest method, as adjusted for any prepayments. 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. For loans purchased at a discount, GAAP limits the yield that may be accreted (accretable yield) to the excess of the investor’s estimate of undiscounted expected principal, interest and other cash flows (cash flows expected at acquisition to be collected) over the investor’s initial investment in the loan. GAAP also requires that the excess of contractual cash flows over cash flows expected to be collected (non-accretable difference) not be recognized as an adjustment of yield, loss accrual or valuation allowance. Subsequent increases in cash flows expected to be collected from such loans generally will be recognized prospectively through adjustment of the loan’s yield over its remaining life. Decreases in cash flows expected to be collected will be recorded as impairment. |
Loan Impairment | Loan Impairment. Generally, our loans will be classified as held for investment based upon our intent and ability to hold them until maturity. We expect that loans that are held for investment will be carried at cost, net of unamortized loan fees and origination and acquisition costs which are required to be recognized in the carrying value of the loans in accordance with GAAP, unless the loans are deemed to be impaired. Loans that we have a plan to sell or liquidate will be held at the lower of cost or fair value. We will evaluate loans classified as held for investment for impairment periodically. Impairment occurs when it is deemed probable that we will not be able to collect all amounts due according to contractual terms. Impairment will then be measured based on the present value of expected future cash flows discounted at an impaired 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 involve judgments and assumptions based on objective and subjective factors. Consideration will be given to various factors, such as property occupancies, tenant profiles, rental rates, operating expenses and borrowers’ repayment plans, among others, and will require significant judgments, including making 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 consolidated statement of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On January 1, 2018, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2014-09 (and related clarifying guidance issued by the FASB), 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.” 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, the adoption of ASU No. 2014-09 did not have a material impact in our consolidated financial statements. 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. 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 are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our consolidated financial statements. On January 1, 2018, we adopted FASB ASU No. 2016-18, Restricted Cash , which requires companies to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. This update also requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. As a result, amounts included in restricted cash in our condensed consolidated balance sheets are included with cash and cash equivalents in the consolidated statement of cash flows. Restricted cash, which primarily consists of deposit proceeds from potential borrowers 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, totaled $ 214 as of March 31, 2018. The adoption of this update did not change our balance sheet presentation. |
Organization (Details)
Organization (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 18, 2017 | Mar. 31, 2018 | Dec. 31, 2017 |
Subsidiary, Sale of Stock [Line Items] | |||
Common shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 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 |
Summary of Significant Accoun19
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Deferred financing costs | $ 746 | $ 0 |
Recent Accounting Pronounceme20
Recent Accounting Pronouncements - Additional Information (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Restricted cash | $ 214 | $ 0 |
Repurchase Facility (Details)
Repurchase Facility (Details) - Citibank, N.A. - Mortgages and Related Assets | Feb. 09, 2018USD ($) |
Assets Sold under Agreements to Repurchase [Line Items] | |
Authorized amount | $ 100,000,000 |
Percentage of purchased asset, initial purchase price | 75.00% |
LIBOR | Minimum | |
Assets Sold under Agreements to Repurchase [Line Items] | |
Variable basis spread | 2.00% |
LIBOR | Maximum | |
Assets Sold under Agreements to Repurchase [Line Items] | |
Variable basis spread | 2.50% |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - Fully Vested Common Shares - 2017 Plan - Trustee - $ / shares | Apr. 25, 2018 | Mar. 09, 2018 |
Subsidiary, Sale of Stock [Line Items] | ||
Shares granted (in shares) | 1,500 | |
Shares granted (in dollars per share) | $ 13.31 | |
Subsequent Event | ||
Subsidiary, Sale of Stock [Line Items] | ||
Shares granted (in shares) | 3,000 | |
Shares granted (in dollars per share) | $ 12.61 |
Management Agreement With Our23
Management Agreement With Our Manager (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($)employee | |
Related Party Transaction [Line Items] | |
Number of employees | employee | 0 |
Annualized base management fee | 1.50% |
Management fees | $ 225 |
Shared services agreement reimbursement | 375 |
Principal Owner | |
Related Party Transaction [Line Items] | |
Management fees | 225 |
Shared Service Costs | Principal Owner | |
Related Party Transaction [Line Items] | |
Shared services agreement reimbursement | $ 375 |
Related Person Transactions (De
Related Person Transactions (Details) - USD ($) $ in Thousands | Jun. 01, 2017 | Mar. 31, 2018 |
Initial organizational and IPO costs | RMR, LLC | ||
Related Party Transaction [Line Items] | ||
Related party transaction | $ 6,823 | |
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 | 19.20% |
Weighted Average Common Shares
Weighted Average Common Shares (Details) | 3 Months Ended |
Mar. 31, 2018shares | |
Restricted unvested common shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive securities (in shares) | 856 |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent Event ft² in Thousands, $ in Thousands | 1 Months Ended |
Apr. 30, 2018USD ($)ft²extension_option | |
Subsequent Event [Line Items] | |
Total loan commitment | $ 18,100 |
Amount funded upon closing | $ 15,800 |
Area of building (in sqft) | ft² | 184,000 |
LTV ratio percentage | 0.80 |
Future allowance for tenant improvements, leasing commissions, market and capital expenditures | $ 2,300 |
Mortgage loan term | 3 years |
Number of extensions | extension_option | 2 |
Mortgage loan extension term | 1 year |
LIBOR | |
Subsequent Event [Line Items] | |
Variable rate | 5.00% |