Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2021 | Jul. 26, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-38199 | |
Entity Registrant Name | Tremont Mortgage Trust | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 82-1719041 | |
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 | 796-8317 | |
Title of 12(b) Security | Common Shares of Beneficial Interest | |
Trading Symbol | TRMT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Smaller Business Entity | true | |
Emerging Growth Company | true | |
Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 8,312,322 | |
Entity Central Index Key | 0001708405 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
ASSETS | ||
Cash and cash equivalents | $ 8,273 | $ 10,521 |
Restricted cash | 95 | 0 |
Loans held for investment, net | 237,697 | 282,246 |
Accrued interest receivable | 796 | 996 |
Prepaid expenses and other assets | 303 | 419 |
Total assets | 247,164 | 294,182 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Accounts payable, accrued liabilities and deposits | 1,127 | 5,041 |
Master repurchase facility, net | 155,562 | 200,233 |
Due to related persons | 602 | 5 |
Total liabilities | 157,291 | 205,279 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common shares of beneficial interest, $0.01 par value per share; 25,000,000 shares authorized; 8,312,322 and 8,302,911 shares issued and outstanding, respectively | 83 | 83 |
Additional paid in capital | 89,288 | 89,160 |
Cumulative net income | 12,461 | 10,788 |
Cumulative distributions | (11,959) | (11,128) |
Total shareholders’ equity | 89,873 | 88,903 |
Total liabilities and shareholders' equity | $ 247,164 | $ 294,182 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock shares issued (in shares) | 8,312,322 | 8,302,911 |
Common stock shares outstanding (in shares) | 8,312,322 | 8,302,911 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
INCOME FROM INVESTMENTS: | ||||
Interest income from investments | $ 4,148 | $ 4,496 | $ 8,634 | $ 8,780 |
Less: interest and related expenses | (988) | (1,368) | (2,123) | (3,125) |
Income from investments, net | 3,160 | 3,128 | 6,511 | 5,655 |
OTHER EXPENSES: | ||||
Base management fees | 341 | 0 | 682 | 0 |
Management incentive fees | 0 | 0 | 620 | 0 |
General and administrative expenses | 685 | 524 | 1,328 | 1,064 |
Reimbursement of shared services expenses | 206 | 242 | 344 | 563 |
Transaction related expenses | 1,822 | 0 | 1,849 | 0 |
Total expenses | 3,054 | 766 | 4,823 | 1,627 |
Income before income tax expense | 106 | 2,362 | 1,688 | 4,028 |
Income tax expense | (8) | 0 | (15) | 0 |
Net income | $ 98 | $ 2,362 | $ 1,673 | $ 4,028 |
Weighted average common shares outstanding - basic (in shares) | 8,218 | 8,177 | 8,215 | 8,173 |
Weighted average common shares outstanding - diluted (in shares) | 8,266 | 8,177 | 8,253 | 8,173 |
Net income per common share - basic (in dollars per share) | $ 0.01 | $ 0.29 | $ 0.20 | $ 0.49 |
Net income per common share - diluted (in dollars per share) | $ 0.01 | $ 0.29 | $ 0.20 | $ 0.49 |
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, 2019 | 8,240,000 | ||||
Beginning balance at Dec. 31, 2019 | $ 86,221 | $ 82 | $ 88,869 | $ 1,937 | $ (4,667) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share grants | 42 | 42 | |||
Share repurchases (in shares) | (1,000) | ||||
Share repurchases | (2) | (2) | |||
Net income | 1,666 | 1,666 | |||
Distributions | (1,895) | (1,895) | |||
Ending balance (in shares) at Mar. 31, 2020 | 8,239,000 | ||||
Ending balance at Mar. 31, 2020 | 86,032 | $ 82 | 88,909 | 3,603 | (6,562) |
Beginning balance (in shares) at Dec. 31, 2019 | 8,240,000 | ||||
Beginning balance at Dec. 31, 2019 | 86,221 | $ 82 | 88,869 | 1,937 | (4,667) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 4,028 | ||||
Ending balance (in shares) at Jun. 30, 2020 | 8,254,000 | ||||
Ending balance at Jun. 30, 2020 | 88,465 | $ 83 | 88,979 | 5,965 | (6,562) |
Beginning balance (in shares) at Mar. 31, 2020 | 8,239,000 | ||||
Beginning balance at Mar. 31, 2020 | 86,032 | $ 82 | 88,909 | 3,603 | (6,562) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share grants (in shares) | 15,000 | ||||
Share grants | 72 | $ 1 | 71 | ||
Share repurchases | (1) | (1) | |||
Net income | 2,362 | 2,362 | |||
Ending balance (in shares) at Jun. 30, 2020 | 8,254,000 | ||||
Ending balance at Jun. 30, 2020 | $ 88,465 | $ 83 | 88,979 | 5,965 | (6,562) |
Beginning balance (in shares) at Dec. 31, 2020 | 8,302,911 | 8,303,000 | |||
Beginning balance at Dec. 31, 2020 | $ 88,903 | $ 83 | 89,160 | 10,788 | (11,128) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share grants (in shares) | 3,000 | ||||
Share grants | 51 | 51 | |||
Share repurchases | (51) | (51) | |||
Net income | 1,575 | 1,575 | |||
Ending balance (in shares) at Mar. 31, 2021 | 8,306,000 | ||||
Ending balance at Mar. 31, 2021 | $ 90,529 | $ 83 | 89,211 | 12,363 | (11,128) |
Beginning balance (in shares) at Dec. 31, 2020 | 8,302,911 | 8,303,000 | |||
Beginning balance at Dec. 31, 2020 | $ 88,903 | $ 83 | 89,160 | 10,788 | (11,128) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 1,673 | ||||
Distributions | $ (5,232) | ||||
Ending balance (in shares) at Jun. 30, 2021 | 8,312,322 | 8,312,000 | |||
Ending balance at Jun. 30, 2021 | $ 89,873 | $ 83 | 89,288 | 12,461 | (11,959) |
Beginning balance (in shares) at Mar. 31, 2021 | 8,306,000 | ||||
Beginning balance at Mar. 31, 2021 | 90,529 | $ 83 | 89,211 | 12,363 | (11,128) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Share grants (in shares) | 15,000 | ||||
Share grants | 128 | 128 | |||
Share repurchases (in shares) | (9,000) | ||||
Net income | 98 | 98 | |||
Distributions | $ (831) | (831) | |||
Ending balance (in shares) at Jun. 30, 2021 | 8,312,322 | 8,312,000 | |||
Ending balance at Jun. 30, 2021 | $ 89,873 | $ 83 | $ 89,288 | $ 12,461 | $ (11,959) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 1,673 | $ 4,028 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Share based compensation | 179 | 114 |
Amortization of deferred financing costs | 214 | 241 |
Amortization of loan origination and exit fees | (467) | (950) |
Changes in operating assets and liabilities: | ||
Accrued interest receivable and interest advances | (72) | (575) |
Prepaid expenses and other assets | 116 | 28 |
Accounts payable, accrued liabilities and deposits | 487 | (234) |
Due to related persons | 597 | 279 |
Net cash provided by operating activities | 2,727 | 2,931 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Origination of loans held for investment | (13,199) | (25,738) |
Additional funding of loans held for investment | (2,475) | (9,067) |
Repayment of loans held for investment | 60,962 | 0 |
Net cash provided by (used in) investing activities | 45,288 | (34,805) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from master repurchase facility | 17,112 | 35,602 |
Repayments under master repurchase facility | (61,997) | 0 |
Payments of deferred financing costs | 0 | (72) |
Repurchase of common shares | (51) | (3) |
Distributions | (5,232) | (1,895) |
Net cash (used in) provided by financing activities | (50,168) | 33,632 |
(Decrease) increase in cash, cash equivalents and restricted cash | (2,153) | 1,758 |
Cash, cash equivalents and restricted cash at beginning of period | 10,521 | 8,875 |
Cash, cash equivalents and restricted cash at end of period | 8,368 | 10,633 |
SUPPLEMENTAL DISCLOSURES: | ||
Interest paid | 1,956 | 2,941 |
Income taxes paid | 56 | 0 |
Cash and cash equivalents | 8,273 | 10,632 |
Restricted cash | 95 | 1 |
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows | $ 8,368 | $ 10,633 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2021 | |
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 consolidated subsidiaries 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, 2020, 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 accompanying condensed consolidated financial statements include the fair value of financial instruments. On April 26, 2021, we and RMR Mortgage Trust, or RMRM, entered into an Agreement and Plan of Merger, or the Merger Agreement, pursuant to which, on the terms and subject to the satisfaction or waiver of the conditions thereof, we have agreed to merge with and into RMRM, with RMRM continuing as the surviving entity in the merger, or the Merger. Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger, or the Effective Time, each of our common shares of beneficial interest, $0.01 par value per share, or our common shares, issued and outstanding immediately prior to the Effective Time will be converted into the right to receive 0.52, or the Exchange Ratio, of one newly issued common share of beneficial interest, $0.001 par value per share, of RMRM, or the RMRM Common Shares, subject to adjustment as described in the Merger Agreement, with cash paid in lieu of fractional shares. Under the Merger Agreement, the Exchange Ratio is fixed and will not be adjusted to reflect changes in the market price of our common shares or the RMRM Common Shares prior to the Effective Time. Pursuant to the Merger Agreement, at the Effective Time, any unvested common share awards outstanding under our equity compensation plan generally will be converted into an unvested RMRM Common Share award under RMRM’s equity compensation plan, subject to substantially similar vesting requirements and other terms and conditions, determined by multiplying the number of our unvested common shares subject to such award by the Exchange Ratio (rounded down to the nearest whole number). The Merger and the other transactions contemplated by the Merger Agreement are collectively referred to herein as the other Transactions. We have incurred $1,849 of transaction expenses related to the Merger that are included in transaction related expenses in the condensed consolidated statements of operations for the six months ended June 30, 2021. Following the consummation of the Merger, the combined company will continue to be managed by our and RMRM’s current manager, Tremont Realty Advisors LLC, or TRA or our Manager, pursuant to the terms of RMRM’s existing management agreement with TRA. Contemporaneously with the execution of the Merger Agreement, we, RMRM and TRA entered into a letter agreement, or the TRA Letter Agreement, pursuant to which, on the terms and subject to conditions contained therein, we, RMRM and TRA have acknowledged and agreed that, effective upon consummation of the Merger, we shall have terminated our management agreement with TRA, and TRA shall have waived its right to receive payment of the termination fee pursuant to such agreement. In consideration of this waiver, RMRM has agreed that, effective upon consummation of the Merger and the termination of our management agreement with TRA, certain of the expenses TRA had paid on our behalf pursuant to such management agreement will be included in the “Termination Fee” under and as defined in RMRM’s existing management agreement with TRA. The TRA Letter Agreement further provides that such termination by us and waiver by TRA shall apply only in respect of the Merger and will not apply in respect of any competing proposal or superior proposal (as those terms are defined in the Merger Agreement) or to any other transaction or arrangement. Contemporaneously with the execution of the Merger Agreement, we entered into a voting agreement, or the Voting Agreement, with Diane Portnoy, in her capacity as a greater than 5% holder of RMRM Common Shares, pursuant to which she has agreed to vote all of the RMRM Common Shares which she is entitled to vote in favor of approval of the issuance of RMRM Common Shares to be issued in the Merger, or the Merger Share Issuance, at the special meeting of RMRM’s shareholders scheduled to be held on September 17, 2021 for that purpose, and against any competing acquisition proposal. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board, or 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. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. As an emerging growth company that has opted to take advantage of the extended transition period, we expect to adopt ASU No. 2016-13 on January 1, 2023. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have on our condensed consolidated financial statements. |
Loans Held for Investment
Loans Held for Investment | 6 Months Ended |
Jun. 30, 2021 | |
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 we generally hold until maturity or, if earlier, repayment. We funded our existing loan portfolio using cash on hand and advancements under our master repurchase facility with Citibank, N.A., or Citibank, or our Master Repurchase Facility, and other debt financing. See Note 4 for further information regarding our Master Repurchase Facility. The table below provides overall statistics for our loan portfolio as of June 30, 2021 and December 31, 2020: As of June 30, 2021 As of December 31, 2020 Number of loans 13 14 Total loan commitments $ 246,029 $ 293,890 Unfunded loan commitments (1) $ 9,085 $ 12,236 Principal balance $ 236,944 $ 281,654 Unamortized net deferred origination and exit fees $ 753 $ 592 Carrying value $ 237,697 $ 282,246 Weighted average coupon rate 5.61 % 5.70 % Weighted average all in yield (2) 6.36 % 6.39 % Weighted average LIBOR floor 1.94 % 2.10 % Weighted average maximum maturity (years) (3) 2.2 2.6 Weighted average risk rating 3.0 3.2 Weighted average LTV (4) 65 % 67 % (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, excluding any repurchase debt funding applicable to the loan, and including amortization of deferred fees over the initial term of the loan. (3) Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions. (4) Loan to value ratio, or LTV, represents the initial loan amount divided by the underwritten in-place value of the underlying collateral at closing. The table below represents our loan activities during the three months ended June 30, 2021: Principal Balance Deferred Fees Carrying Value Balance at March 31, 2021 $ 259,390 $ 789 $ 260,179 Additional funding 210 — 210 Originations 13,506 (208) 13,298 Repayments (36,162) 137 (36,025) Net amortization of deferred fees — 35 35 Balance at June 30, 2021 $ 236,944 $ 753 $ 237,697 The table below represents our loan activities during the six months ended June 30, 2021: Principal Balance Deferred Fees Carrying Value Balance at December 31, 2020 $ 281,654 $ 592 $ 282,246 Additional funding 2,746 — 2,746 Originations 13,506 (307) 13,199 Repayments (60,962) 137 (60,825) Net amortization of deferred fees — 331 331 Balance at June 30, 2021 $ 236,944 $ 753 $ 237,697 In February 2021, we amended the agreement governing our loan secured by a retail property located in Coppell, TX to extend the maturity date of the loan by six months to August 12, 2021. As part of this amendment, the borrower funded an interest reserve of $500 and repaid $250 of the principal balance of the loan, thereby reducing the total loan commitment to $19,865. This amendment also includes a six month extension option contingent upon the borrower repaying an additional $250 of the principal balance and meeting certain other conditions. We collected a fee from the borrower of $99 in connection with this amendment. In February 2021, we received $24,830 of repayment proceeds from the borrower on our loan that was used to finance the acquisition of a 432 unit apartment community located in Rochester, NY, which included the $24,550 principal amount outstanding under the loan, as well as accrued interest, an exit fee and our associated legal expenses. In April 2021, we amended the agreement governing our loan secured by an office property located in Metairie, LA to extend the maturity date of the loan by six months to October 11, 2021 and to eliminate any further borrower extension rights. We collected a fee from the borrower of $45 in connection with this amendment. As of June 30, 2021, the outstanding principal amount under this loan was $17,351. In May 2021, we originated a first mortgage loan of $15,250 to refinance an office property with 125,000 square feet located in Westminster, CO. This loan requires the borrower to pay interest at the floating rate of LIBOR plus a premium of 375 basis points per annum. This floating rate loan includes an initial funding of $13,506 and a future funding allowance of $1,744 for tenant improvements, leasing commissions and capital expenditures and has a three year initial term with two, one-year extension options, subject to the borrower meeting certain conditions. Also in May 2021, we received $36,726 of repayment proceeds from the borrower under our loan secured by an industrial facility located in Barrington, NJ, which included the $36,162 principal amount outstanding under the loan, as well as accrued interest, an exit fee and our associated legal expenses. In June 2021, at the borrower's request, we amended the agreement governing our loan secured by an office property located in Houston, TX to extend the maturity date of the loan by 45 days to August 10, 2021. As of June 30, 2021, the outstanding principal amount under this loan was $14,489. In July 2021, the borrower under our loan secured by a retail property located in Paradise Valley, AZ notified us that the property is expected to be sold during the third quarter of 2021. Upon sale, we expect to be repaid the principal amount outstanding under the loan, as well as accrued interest, an exit fee and our associated legal expenses. As of June 30, 2021, the outstanding principal amount under this loan was $11,197. Also in July 2021, the borrower under our loan secured by a multifamily property located in Houston, TX notified us that the property is expected to be sold during the third quarter of 2021. Upon sale, we expect to be repaid the principal amount outstanding under the loan, as well as accrued interest, an exit fee and our associated legal expenses. As of June 30, 2021, the outstanding principal amount under this loan was $27,929. Also in July 2021, the borrower under our loan secured by an office property located in Dublin, OH notified us that the property is expected to be refinanced during the third quarter of 2021. Upon refinance, we expect to be repaid the principal amount outstanding under the loan, as well as accrued interest, an exit fee and our associated legal expenses. As of June 30, 2021 the outstanding principal under this loan was $21,556. The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 Property Type Number of Loans Carrying Value Percentage of Value Number of Loans Carrying Value Percentage of Value Office 6 $ 109,208 46 % 5 $ 94,412 34 % Multifamily 2 46,276 19 % 3 70,417 25 % Industrial 1 13,960 6 % 2 49,209 17 % Retail 3 44,284 19 % 3 44,298 16 % Hotel 1 23,969 10 % 1 23,910 8 % 13 $ 237,697 100 % 14 $ 282,246 100 % June 30, 2021 December 31, 2020 Geographic Location Number of Loans Carrying Value Percentage of Value Number of Loans Carrying Value Percentage of Value East 3 $ 46,321 20 % 5 $ 105,695 37 % South 5 104,216 44 % 5 104,256 37 % Midwest 3 62,484 26 % 3 61,185 22 % West 2 24,676 10 % 1 11,110 4 % 13 $ 237,697 100 % 14 $ 282,246 100 % Loan Risk Ratings 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 Annual Report for more information regarding our loan risk ratings. The following table allocates the carrying value of our loan portfolio at June 30, 2021 and December 31, 2020 based on our internal risk rating policy: June 30, 2021 December 31, 2020 Risk Rating Number of Loans Carrying Value Number of Loans Carrying Value 1 — $ — — $ — 2 3 67,567 3 77,553 3 6 98,921 4 76,343 4 4 71,209 7 128,350 5 — — — — 13 $ 237,697 14 $ 282,246 The weighted average risk rating of our loans by carrying value was 3.0 and 3.2 as of June 30, 2021 and December 31, 2020, respectively. The COVID-19 pandemic has negatively impacted some of our borrowers’ business operations or tenants, particularly in the cases of our retail and hospitality 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 United States has improved significantly from the low points during the pandemic to date, certain industries have not recovered to their pre-pandemic positions. 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, 2021, we had four loans representing 30% of the carrying value of our loan portfolio with a loan risk rating of “4” or “higher risk", compared to seven loans representing 45% of the carrying value of our loan portfolio as of December 31, 2020. We did not have any impaired loans or nonaccrual loans as of June 30, 2021 or December 31, 2020. As of July 26, 2021, all of our borrowers had paid all of their debt service obligations owed and due to us and none of the loans included in our investment portfolio were in default. |
Debt Agreements
Debt Agreements | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Debt Agreements | Debt Agreements The table below summarizes our debt agreements as of June 30, 2021 and December 31, 2020: Debt Obligation Weighted Average Collateral Maximum Facility Size Principal Balance Carrying Value Coupon Rate Remaining Maturity (1) (years) Principal Balance Fair Value (2) June 30, 2021: Master Repurchase Facility $ 213,482 $ 156,167 $ 155,562 L + 2.00% 0.6 $ 236,944 $ 233,032 December 31, 2020: Master Repurchase Facility $ 213,482 $ 201,051 $ 200,233 L + 2.00% 1.1 $ 281,654 $ 279,381 (1) 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. Our Master Repurchase Facility matures on November 6, 2022. (2) See Note 5 for further discussion of our financial assets and liabilities not carried at fair value. Master Repurchase Facility Under our Master Repurchase Agreement, the initial purchase price paid by Citibank for each purchased asset is up to 75% of the lesser of the market value of the purchased asset or the unpaid principal balance of such purchased asset, subject to Citibank’s approval. Upon the repurchase of a purchased asset, we are required to pay Citibank the outstanding purchase price of the purchased asset, accrued interest and all accrued and unpaid expenses of Citibank relating to such purchased asset. The price differential (or interest rate) relating to a purchased asset is equal to LIBOR plus a premium of 200 to 250 basis points, determined by the yield of the purchased asset and the property type of the purchased asset’s real estate collateral. Citibank has the discretion under our Master Repurchase Agreement to make advancements at margins higher than 75% and at premiums of less than 200 basis points. The weighted average interest rate for advancements under our Master Repurchase Facility was 1.98% and 2.47% f or the three months ended June 30, 2021, and 2020, respectively, and 2.18% and 2.97% for the six months ended June 30, 2021 and 2020, respectively. At June 30, 2021, we had approximately $605 of capitalized financing costs, net of amortization. In connection with our Master Repurchase Agreement, we entered into a guaranty, or, as amended, the Guaranty, which requires us to guarantee 25% of our subsidiary's prompt and complete payment of the purchase price, purchase price differential and any costs and expenses of Citibank related to our Master Repurchase Agreement. The Guaranty also requires us to comply with customary financial covenants, which include the maintenance of a minimum tangible net worth, minimum cash liquidity, a total indebtedness to tangible net worth ratio and a minimum interest coverage ratio. These maintenance provisions 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. As of June 30, 2021, we have not received a margin call under our Master Repurchase Agreement. Our Master Repurchase Agreement also provides for acceleration of the date of repurchase of the purchased assets and Citibank’s liquidation of the purchased assets upon the occurrence and continuation of certain events of default, including a change of control of us, which includes our Manager, ceasing to act as our sole manager or to be a wholly owned subsidiary of The RMR Group LLC, or RMR LLC. As of June 30, 2021, we were in compliance with all of the covenants and ot her terms under our Master Repurchase Agreement and the Guaranty. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurements , 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. The outstanding principal balances under our Master Repurchase Facility approximate their fair values, as interest is based on floating rates based on LIBOR plus a spread, and the spread is consistent with those demanded by the market. We estimate the fair values of our loans held for investment and outstanding principal balances under our Master Repurchase Facility 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 LTV, property types and loan pricing expectations which are corroborated by a comparison with other market participants to determine the appropriate market spread to add to the one month LIBOR (Level III inputs as defined in the fair value hierarchy under GAAP). 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, 2021 December 31, 2020 Carrying Value Fair Value Carrying Value Fair Value Financial assets Loans held for investment $ 237,697 $ 233,032 $ 282,246 $ 279,381 Financial liabilities Master Repurchase Facility $ 155,562 $ 155,962 $ 200,233 $ 199,936 |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders' Equity Common Share Awards and Repurchases We have common shares available for issuance under the terms of our 2017 Amended and Restated Equity Compensation Plan, or the 2017 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 awarded to our Trustees vest immediately. The common shares awarded to our officers and other employees of our Manager and of RMR LLC 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 share forfeitures as they occur. On February 19, 2021, in accordance with our Trustee compensation arrangements, we awarded one of our Trustees 3,000 of our common shares, valued at $4.81 per common share, the closing price of our common shares on the Nasdaq that day. On May 27, 2021, in accordance with our Trustee compensation arrangements, we awarded to each of our five Trustees 3,000 of our common shares, valued at $6.11 per common share, the closing price of our common shares on the Nasdaq that day. On June 30, 2021, we purchased 8,589 of our common shares, valued at $6.07 per common share, the closing price of our common shares on Nasdaq on that day, from our former Trustee and officer and from a former officer and employee of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. Distributions For the six months ended June 30, 2021, we declared and paid a distribution to common shareholders as follows: Record Date Payment Date Distribution Per Share Total Distribution December 17, 2020 January 15, 2021 $ 0.53 $ 4,401 April 26, 2021 May 20, 2021 0.10 831 $ 0.63 $ 5,232 Our distribution paid on January 15, 2021 is treated for federal income tax purposes as having been paid and received on December 31, 2020. On July 15, 2021, we declared a quarterly distribution of $0.10 per common share, or approximately $831 in aggregate, to shareholders of record as of July 26, 2021. We expect to pay this distribution on or about August 19, 2021. |
Management Agreement with our M
Management Agreement with our Manager | 6 Months Ended |
Jun. 30, 2021 | |
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 recognized base management fees of $341 and no management incentive fees for the three months ended June 30, 2021, and base management fees of $682 and management incentive fees of $620 for the six months ended June 30, 2021. Our Manager previously waived any base management or management incentive fees otherwise due and payable by us under our management agreement for the period beginning July 1, 2018 until December 31, 2020. As a result, we did not recognize any base management or management incentive fees for the three or six months ended June 30, 2020. If our Manager had not waived these base management and management incentive fees, we would have recognized $323 and $643 of base management fees for the three and six months ended June 30, 2020 and $36, respectively, of management incentive fees would have been paid or payable for both the three and six months ended June 30, 2020. 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 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. These reimbursements include an allocation of the cost of personnel employed by RMR LLC and our share of RMR LLC’s costs for providing our internal audit function. These shared services costs are subject to approval by a majority of our Independent Trustees at least annually. We incurred shared services costs of $241 and $280 payable to our Manager for the three months ended June 30, 2021 and 2020, respectively, and $417 and $638 for the six months ended June 30, 2021 and 2020, 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. Pursuant to the TRA Letter Agreement, on the terms and subject to conditions contained therein, we and our Manager agreed that, effective upon consummation of the Merger, we shall have terminated our management agreement, and our Manager shall have waived its right to receive payment of the termination fee due on account thereof. Following termination of the management agreement in accordance with the TRA Letter Agreement, pro rata base management and management incentive fees will continue to be payable under the terms of the management agreement. See Note 1 for further information regarding the TRA Letter Agreement and the Merger. |
Related Person Transactions
Related Person Transactions | 6 Months Ended |
Jun. 30, 2021 | |
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 some of which have trustees, directors or officers who are also our Trustees or officers. 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. RMR LLC provides certain shared services to our Manager that are applicable to us, and we reimburse our Manager for the amounts it pays for those services. One of our Managing Trustees, Adam 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 our Manager, a managing director and the president and chief executive officer of RMR Inc., and an officer and employee of RMR LLC. David M. Blackman served as our other Managing Trustee and our President and Chief Executive Officer, and as a director and the president, and chief executive officer of our Manager until his resignation from those positions on December 31, 2020 in connection with his retirement. Following Mr. Blackman’s resignation, Matthew P. Jordan was appointed as our other Managing Trustee and Thomas J. Lorenzini was appointed as our President, each effective January 1, 2021. Also effective January 1, 2021, Mr. Jordan was appointed as a director and the president and chief executive officer of our Manager. Mr. Jordan is an officer of RMR Inc. and an officer and employee of RMR LLC and Mr. Lorenzini is an officer and employee of our Manager and an officer of RMR LLC. In addition, each of our other officers is also an officer and/or employee of our Manager or RMR LLC. Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as the chair of the boards of trustees and boards of directors of several of these public companies and as a managing director or managing trustee of all of these companies. Other officers of RMR LLC, including Mr. Jordan and certain of our other officers and officers of our Manager, serve as managing trustees, managing directors or officers of certain of these companies. 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. Our Manager is our largest shareholder and, as of June 30, 2021, owned 1,600,100 of our common shares, or approximately 19.2% of our outstanding common shares. RMR Mortgage Trust . As described further in Note 1, on April 26, 2021, we and RMRM entered into the Merger Agreement. Adam D. Portnoy and Matthew P. Jordan, our Managing Trustees, are also RMRM’s managing trustees. Thomas J. Lorenzini, our President, also serves as president of RMRM, and G. Douglas Lanois, our Chief Financial Officer and Treasurer, also serves as chief financial officer and treasurer of RMRM. John L. Harrington serves as one of our Independent Trustees and is also an independent trustee of RMRM, and Joseph L. Morea, one of our Independent Trustees, previously served as an independent trustee of RMRM; Jeffrey P. Somers previously served as one of our Independent Trustees and is currently an independent trustee of RMRM. See Note 1 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 Annual Report and to our Current Report on Form 8-K dated April 26, 2021. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesWe have elected to be taxed as 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, 2021 | |
Earnings Per Share [Abstract] | |
Weighted Average Common Shares | Weighted Average Common SharesUnvested share awards and other potentially dilutive common share issuances, and the related impact on earnings, are considered when calculating diluted net income per share. The table below provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted net income per share (amounts in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2021 2020 2021 2020 Weighted average common shares for basic net income per share 8,218 8,177 8,215 8,173 Effect of dilutive securities: unvested share awards (1) 48 — 38 — Weighted average common shares for diluted net income per share 8,266 8,177 8,253 8,173 (1) For the three and six months ended June 30, 2020, 105 and 64 unvested common shares, respectively, were not included in the calculation of diluted earnings per share because to do so would have been antidilutive. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Unfunded Loan Commitments As of June 30, 2021, we had unfunded loan commitments of $9,085 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 0.8 years as of June 30, 2021. See Note 3 for further information related to our loans held for investment. Secured Borrowings |
Legal Proceedings and Claims
Legal Proceedings and Claims | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings and Claims | Legal Proceedings and Claims As of July 26, 2021, three lawsuits have been filed by purported shareholders of ours in connection with the proposed Merger between us and RMRM. The lawsuits were brought by the plaintiffs individually and are captioned Bishins v. Tremont Mortgage Trust, et al., Case No. 1:21-cv-05435 (S.D.N.Y., filed June 21, 2021), Lee v. Tremont Mortgage Trust, et al., Case No. 1:21-cv-05618 (S.D.N.Y., filed June 29, 2021) and Merewether v. Tremont Mortgage Trust, et al., Case No. 1:21-cv-13116 (D.N.J., filed June 29, 2021), each, a complaint, and collectively, the complaints. The Bishins, Lee and Merewether complaints name as defendants us and our Board of Trustees. The Bishins and Lee complaints also name RMRM as a defendant. The plaintiffs generally assert claims under Section 14(a) and Section 20(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, contending that the registration statement on Form S-4 filed with the Securities and Exchange Commission, or SEC, on June 9, 2021, and serving as the preliminary joint proxy statement/prospectus, omitted or misrepresented material information regarding the proposed merger between us and RMRM. The complaints generally seek injunctive relief preventing us and RMRM from consummating the Merger, rescission or rescissory damages, an award of plaintiffs’ costs, including attorneys’ fees and expenses, and such other relief the court may deem just and proper. The Bishins complaint also seeks a declaration that the Merger Agreement was entered into in breach of the Bishins individual defendants’ fiduciary duties and is therefore unlawful and unenforceable. The Lee and Merewether complaints additionally seek a declaration that the defendants violated Sections 14(a) and 20(a) of the Exchange Act and an order directing the defendants to disseminate a registration statement that does not contain any untrue or misleading statements of material fact. We and our Board of Trustees deny that we have violated any laws or breached any duties to our shareholders and believe the claims asserted in the complaints are without merit. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying condensed consolidated financial statements of Tremont Mortgage Trust and its consolidated subsidiaries 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, 2020, 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. |
Use of Estimates | 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 | Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board, or 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. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. As an emerging growth company that has opted to take advantage of the extended transition period, we expect to adopt ASU No. 2016-13 on January 1, 2023. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have on our condensed consolidated financial statements. |
Loans Held for Investment (Tabl
Loans Held for Investment (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Receivables [Abstract] | |
Schedule of Loans | The table below provides overall statistics for our loan portfolio as of June 30, 2021 and December 31, 2020: As of June 30, 2021 As of December 31, 2020 Number of loans 13 14 Total loan commitments $ 246,029 $ 293,890 Unfunded loan commitments (1) $ 9,085 $ 12,236 Principal balance $ 236,944 $ 281,654 Unamortized net deferred origination and exit fees $ 753 $ 592 Carrying value $ 237,697 $ 282,246 Weighted average coupon rate 5.61 % 5.70 % Weighted average all in yield (2) 6.36 % 6.39 % Weighted average LIBOR floor 1.94 % 2.10 % Weighted average maximum maturity (years) (3) 2.2 2.6 Weighted average risk rating 3.0 3.2 Weighted average LTV (4) 65 % 67 % (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, excluding any repurchase debt funding applicable to the loan, and including amortization of deferred fees over the initial term of the loan. (3) Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions. (4) Loan to value ratio, or LTV, represents the initial loan amount divided by the underwritten in-place value of the underlying collateral at closing. The table below represents our loan activities during the three months ended June 30, 2021: Principal Balance Deferred Fees Carrying Value Balance at March 31, 2021 $ 259,390 $ 789 $ 260,179 Additional funding 210 — 210 Originations 13,506 (208) 13,298 Repayments (36,162) 137 (36,025) Net amortization of deferred fees — 35 35 Balance at June 30, 2021 $ 236,944 $ 753 $ 237,697 The table below represents our loan activities during the six months ended June 30, 2021: Principal Balance Deferred Fees Carrying Value Balance at December 31, 2020 $ 281,654 $ 592 $ 282,246 Additional funding 2,746 — 2,746 Originations 13,506 (307) 13,199 Repayments (60,962) 137 (60,825) Net amortization of deferred fees — 331 331 Balance at June 30, 2021 $ 236,944 $ 753 $ 237,697 The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of June 30, 2021 and December 31, 2020: June 30, 2021 December 31, 2020 Property Type Number of Loans Carrying Value Percentage of Value Number of Loans Carrying Value Percentage of Value Office 6 $ 109,208 46 % 5 $ 94,412 34 % Multifamily 2 46,276 19 % 3 70,417 25 % Industrial 1 13,960 6 % 2 49,209 17 % Retail 3 44,284 19 % 3 44,298 16 % Hotel 1 23,969 10 % 1 23,910 8 % 13 $ 237,697 100 % 14 $ 282,246 100 % June 30, 2021 December 31, 2020 Geographic Location Number of Loans Carrying Value Percentage of Value Number of Loans Carrying Value Percentage of Value East 3 $ 46,321 20 % 5 $ 105,695 37 % South 5 104,216 44 % 5 104,256 37 % Midwest 3 62,484 26 % 3 61,185 22 % West 2 24,676 10 % 1 11,110 4 % 13 $ 237,697 100 % 14 $ 282,246 100 % June 30, 2021 December 31, 2020 Risk Rating Number of Loans Carrying Value Number of Loans Carrying Value 1 — $ — — $ — 2 3 67,567 3 77,553 3 6 98,921 4 76,343 4 4 71,209 7 128,350 5 — — — — 13 $ 237,697 14 $ 282,246 |
Debt Agreements (Tables)
Debt Agreements (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The table below summarizes our debt agreements as of June 30, 2021 and December 31, 2020: Debt Obligation Weighted Average Collateral Maximum Facility Size Principal Balance Carrying Value Coupon Rate Remaining Maturity (1) (years) Principal Balance Fair Value (2) June 30, 2021: Master Repurchase Facility $ 213,482 $ 156,167 $ 155,562 L + 2.00% 0.6 $ 236,944 $ 233,032 December 31, 2020: Master Repurchase Facility $ 213,482 $ 201,051 $ 200,233 L + 2.00% 1.1 $ 281,654 $ 279,381 (1) 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. Our Master Repurchase Facility matures on November 6, 2022. |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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, 2021 December 31, 2020 Carrying Value Fair Value Carrying Value Fair Value Financial assets Loans held for investment $ 237,697 $ 233,032 $ 282,246 $ 279,381 Financial liabilities Master Repurchase Facility $ 155,562 $ 155,962 $ 200,233 $ 199,936 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Schedule of Distributions | For the six months ended June 30, 2021, we declared and paid a distribution to common shareholders as follows: Record Date Payment Date Distribution Per Share Total Distribution December 17, 2020 January 15, 2021 $ 0.53 $ 4,401 April 26, 2021 May 20, 2021 0.10 831 $ 0.63 $ 5,232 |
Weighted Average Common Shares
Weighted Average Common Shares (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Weighted Average Number of Common Shares | The table below provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted net income per share (amounts in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2021 2020 2021 2020 Weighted average common shares for basic net income per share 8,218 8,177 8,215 8,173 Effect of dilutive securities: unvested share awards (1) 48 — 38 — Weighted average common shares for diluted net income per share 8,266 8,177 8,253 8,173 (1) For the three and six months ended June 30, 2020, 105 and 64 unvested common shares, respectively, were not included in the calculation of diluted earnings per share because to do so would have been antidilutive. |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 26, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Business Acquisition [Line Items] | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |||
Transaction related expenses | $ 1,822 | $ 0 | $ 1,849 | $ 0 | ||
Merger Agreement | ||||||
Business Acquisition [Line Items] | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | |||||
Exchange ratio of shares issued per acquiree share ( in shares) | 0.52 | |||||
Voting agreement, ownership percent threshold | 5.00% | |||||
Merger Agreement | RMR Mortgage Trust | ||||||
Business Acquisition [Line Items] | ||||||
Common stock, par value (in dollars per share) | $ 0.001 |
Loans Held for Investment - Loa
Loans Held for Investment - Loan Portfolio Statistics (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021USD ($)loan | Dec. 31, 2020USD ($)loan | Mar. 31, 2021USD ($) | |
Receivables [Abstract] | |||
Number of Loans | loan | 13 | 14 | |
Total loan commitments | $ 246,029 | $ 293,890 | |
Unfunded loan commitments | 9,085 | 12,236 | |
Principal balance | 236,944 | 281,654 | $ 259,390 |
Unamortized net deferred origination and exit fees | 753 | 592 | $ 789 |
Carrying value | $ 237,697 | $ 282,246 | |
Weighted average coupon rate | 5.61% | 5.70% | |
Weighted average all in yield | 6.36% | 6.39% | |
Weighted average LIBOR floor | 1.94% | 2.10% | |
Weighted average maximum maturity (years) | 2 years 2 months 12 days | 2 years 7 months 6 days | |
Weighted average risk rating | 3 | 3.2 | |
Weighted average LTV | 0.65 | 0.67 |
Loans Held for Investment - L_2
Loans Held for Investment - Loan Activity (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Feb. 28, 2021 | Jun. 30, 2021 | Jun. 30, 2021 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | |||
Principal, beginning balance | $ 259,390 | $ 281,654 | |
Deferred fees, beginning balance | 789 | 592 | |
Carrying value, beginning balance | 260,179 | 282,246 | |
Additional funding | 210 | 2,746 | |
Principal, originations | 13,506 | 13,506 | |
Deferred fees, loan funding | $ (99) | (208) | (307) |
Net book value, loan funding | 13,298 | 13,199 | |
Repayments | (36,162) | (60,962) | |
Deferred fees, repayments | 137 | 137 | |
Repayments, net | (36,025) | (60,825) | |
Net amortization of deferred fees | 35 | 331 | |
Principal, ending balance | 236,944 | 236,944 | |
Deferred fees, ending balance | 753 | 753 | |
Carrying value, ending balance | $ 237,697 | $ 237,697 |
Loans Held for Investment - Nar
Loans Held for Investment - Narrative (Details) ft² in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
May 31, 2021USD ($)ft²trustee | Apr. 30, 2021USD ($) | Feb. 28, 2021USD ($)apartment_unit | Jun. 30, 2021USD ($) | Jun. 30, 2021USD ($)loan | Jun. 30, 2020loan | Dec. 31, 2020USD ($)loan | Jul. 31, 2021USD ($) | Mar. 31, 2021USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Deferred fees, loan funding | $ 99 | $ 208 | $ 307 | ||||||
Committed principal amount | $ 236,944 | $ 236,944 | $ 281,654 | $ 259,390 | |||||
Weighted average risk rating | 3 | 3 | 3.2 | ||||||
Number of Loans | loan | 13 | 14 | |||||||
Percentage of Value | 100.00% | 100.00% | 100.00% | ||||||
Risk Rating, 4 | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Number of Loans | loan | 4 | 7 | 7 | ||||||
Percentage of Value | 30.00% | 30.00% | 45.00% | ||||||
Coppell, TX | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Period of extension | 6 months | ||||||||
Interest reserve funded by borrower | $ 500 | ||||||||
Repaid principal amount | 250 | ||||||||
Proceeds from reduce loan commitment | 19,865 | ||||||||
Rochester, NY | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Proceeds from repayment | $ 24,830 | ||||||||
Number of apartment units | apartment_unit | 432,000 | ||||||||
Committed principal amount | $ 24,550 | ||||||||
Metairie, LA | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Period of extension | 6 months | ||||||||
Deferred fees, loan funding | $ 45 | ||||||||
Committed principal amount | $ 17,351 | ||||||||
Westminster, Colorado | First Mortgage Bridge Loans | Office Property | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Committed principal amount | $ 15,250 | ||||||||
Area of property | ft² | 125 | ||||||||
Initial term | 3 years | ||||||||
Number of extension options | trustee | 2 | ||||||||
Extension term | 1 year | ||||||||
Westminster, Colorado | First Mortgage Bridge Loans | Office Property | Initial Funding | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Committed principal amount | $ 13,506 | ||||||||
Westminster, Colorado | First Mortgage Bridge Loans | Office Property | Future Funding Allowance | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Committed principal amount | $ 1,744 | ||||||||
Westminster, Colorado | LIBOR | First Mortgage Bridge Loans | Office Property | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Basis spread on variable rate | 3.75% | ||||||||
Barrington, NJ | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Proceeds from repayment | $ 36,726 | ||||||||
Committed principal amount | $ 36,162 | ||||||||
Houston, TX | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Period of extension | 45 days | ||||||||
Committed principal amount | $ 14,489 | $ 27,929 | $ 27,929 | ||||||
Paradise Valley, AZ | Subsequent Event | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Committed principal amount | $ 11,197 | ||||||||
Dublin, OH | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Committed principal amount | $ 21,556 | $ 21,556 |
Loans Held for Investment - L_3
Loans Held for Investment - Loan Portfolio (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021USD ($)loan | Dec. 31, 2020USD ($)loan | Mar. 31, 2021USD ($) | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans | loan | 13 | 14 | |
Carrying value | $ | $ 237,697 | $ 282,246 | $ 260,179 |
Percentage of Value | 100.00% | 100.00% | |
East | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans | loan | 3 | 5 | |
Carrying value | $ | $ 46,321 | $ 105,695 | |
Percentage of Value | 20.00% | 37.00% | |
South | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans | loan | 5 | 5 | |
Carrying value | $ | $ 104,216 | $ 104,256 | |
Percentage of Value | 44.00% | 37.00% | |
Midwest | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans | loan | 3 | 3 | |
Carrying value | $ | $ 62,484 | $ 61,185 | |
Percentage of Value | 26.00% | 22.00% | |
West | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans | loan | 2 | 1 | |
Carrying value | $ | $ 24,676 | $ 11,110 | |
Percentage of Value | 10.00% | 4.00% | |
Office | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans | loan | 6 | 5 | |
Carrying value | $ | $ 109,208 | $ 94,412 | |
Percentage of Value | 46.00% | 34.00% | |
Multifamily | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans | loan | 2 | 3 | |
Carrying value | $ | $ 46,276 | $ 70,417 | |
Percentage of Value | 19.00% | 25.00% | |
Industrial | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans | loan | 1 | 2 | |
Carrying value | $ | $ 13,960 | $ 49,209 | |
Percentage of Value | 6.00% | 17.00% | |
Retail | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans | loan | 3 | 3 | |
Carrying value | $ | $ 44,284 | $ 44,298 | |
Percentage of Value | 19.00% | 16.00% | |
Hotel | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans | loan | 1 | 1 | |
Carrying value | $ | $ 23,969 | $ 23,910 | |
Percentage of Value | 10.00% | 8.00% |
Loans Held for Investment - L_4
Loans Held for Investment - Loan Risk Ratings (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021USD ($)loan | Jun. 30, 2020loan | Dec. 31, 2020USD ($)loan | Mar. 31, 2021USD ($) | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||
Number of Loans | loan | 13 | 14 | ||
Carrying value | $ | $ 237,697 | $ 282,246 | $ 260,179 | |
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 | 3 | 3 | ||
Carrying value | $ | $ 67,567 | $ 77,553 | ||
Risk Rating, 3 | ||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||
Number of Loans | loan | 6 | 4 | ||
Carrying value | $ | $ 98,921 | $ 76,343 | ||
Risk Rating, 4 | ||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||||
Number of Loans | loan | 4 | 7 | 7 | |
Carrying value | $ | $ 71,209 | $ 128,350 | ||
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 |
Debt Agreements - Schedule of D
Debt Agreements - Schedule of Debt (Details) - Master Repurchase Facility - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | ||
Maximum Facility Size | $ 213,482 | $ 213,482 |
Principal Balance | 156,167 | 201,051 |
Carrying Value | $ 155,562 | $ 200,233 |
Weighted Average, Remaining Maturity (years) | 7 months 6 days | 1 year 1 month 6 days |
Collateral, principal balance | $ 236,944 | $ 281,654 |
Collateral, Fair Value | $ 233,032 | $ 279,381 |
LIBOR | ||
Debt Instrument [Line Items] | ||
Weighted Average, Coupon Rate | 2.00% | 2.00% |
Debt Agreements - Narrative (De
Debt Agreements - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Assets Sold under Agreements to Repurchase [Line Items] | ||||
Capitalized financing costs, net | $ 605 | $ 605 | ||
Mortgages and Related Assets | ||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||
Debt, weighted average interest rate | 1.98% | 2.47% | 2.18% | 2.97% |
Percentage of loan guaranteed | 25.00% | 25.00% | ||
Citibank, N.A. | Mortgages and Related Assets | ||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||
Percentage of purchased asset, initial purchase price | 75.00% | 75.00% | ||
Minimum percentage of margin to advance | 75.00% | 75.00% | ||
Citibank, N.A. | Mortgages and Related Assets | LIBOR | ||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||
Variable basis spread | 2.00% | |||
Citibank, N.A. | Mortgages and Related Assets | LIBOR | Minimum | ||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||
Variable basis spread | 2.00% | |||
Citibank, N.A. | Mortgages and Related Assets | LIBOR | Maximum | ||||
Assets Sold under Agreements to Repurchase [Line Items] | ||||
Variable basis spread | 2.50% |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - Level III - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans held for investment | $ 237,697 | $ 282,246 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans held for investment | 233,032 | 279,381 |
Master Repurchase Facility | Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Master Repurchase Facility | 155,562 | 200,233 |
Master Repurchase Facility | Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Master Repurchase Facility | $ 155,962 | $ 199,936 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) $ / shares in Units, $ in Thousands | Jul. 26, 2021USD ($)$ / shares | May 27, 2021trustee$ / sharesshares | Apr. 26, 2021USD ($)$ / shares | Feb. 19, 2021trustee$ / sharesshares | Dec. 17, 2020USD ($)$ / shares | Jun. 30, 2021USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2021USD ($)installment$ / sharesshares |
Subsequent Event [Line Items] | ||||||||
Number of trustees | trustee | 5 | |||||||
Grants awarded (in shares) | shares | 3,000 | |||||||
Grants awarded (in dollars per share) | $ 6.11 | $ 4.81 | ||||||
Shares repurchased (in shares) | shares | 8,589 | |||||||
Shares repurchased, cost per share (in dollars per share) | $ 6.07 | |||||||
Distributions declared (in dollars per share) | $ 0.10 | $ 0.53 | $ 0.63 | |||||
Distributions | $ | $ 831 | $ 4,401 | $ 831 | $ 1,895 | $ 5,232 | |||
Subsequent Event | ||||||||
Subsequent Event [Line Items] | ||||||||
Distributions declared (in dollars per share) | $ 0.10 | |||||||
Distributions | $ | $ 831 | |||||||
Trustee | ||||||||
Subsequent Event [Line Items] | ||||||||
Number of trustees | trustee | 1 | |||||||
Grants awarded (in shares) | shares | 3,000 | |||||||
Fully Vested Common Shares | Officer | 2017 Plan | ||||||||
Subsequent Event [Line Items] | ||||||||
Number of installments | installment | 5 |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Share Repurchases and Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands | May 20, 2021 | Apr. 26, 2021 | Jan. 15, 2021 | Dec. 17, 2020 | Jun. 30, 2021 | Mar. 31, 2020 | Jun. 30, 2021 |
Equity [Abstract] | |||||||
Distributions declared (in dollars per share) | $ 0.10 | $ 0.53 | $ 0.63 | ||||
Distributions paid (in dollars per share) | $ 0.10 | $ 0.53 | $ 0.63 | ||||
Distributions | $ 831 | $ 4,401 | $ 831 | $ 1,895 | $ 5,232 |
Management Agreement with our_2
Management Agreement with our Manager (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021USD ($)employee | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)employee | Jun. 30, 2020USD ($) | |
Related Party Transaction [Line Items] | ||||
Number of employees | employee | 0 | 0 | ||
Base management fees | $ 341 | $ 0 | $ 682 | $ 0 |
Management incentive fees | 0 | 0 | 620 | 0 |
Reimbursement of shared services expenses | 206 | 242 | 344 | 563 |
Principal Owner | ||||
Related Party Transaction [Line Items] | ||||
Base management fees | 323 | 643 | ||
Management incentive fees | 36 | 36 | ||
Principal Owner | Shared Service Costs | ||||
Related Party Transaction [Line Items] | ||||
Reimbursement of shared services expenses | $ 241 | $ 280 | $ 417 | $ 638 |
Related Person Transactions (De
Related Person Transactions (Details) - Tremont Mortgage Trust - Tremont Realty Advisors LLC | Jun. 30, 2021shares |
Related Party Transaction [Line Items] | |
Shares owned (in shares) | 1,600,100 |
Noncontrolling ownership interest | 19.20% |
Weighted Average Common Share_2
Weighted Average Common Shares (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Earnings Per Share [Abstract] | ||||
Weighted average common shares outstanding - basic (in shares) | 8,218 | 8,177 | 8,215 | 8,173 |
Effect of dilutive securities: unvested share awards (in shares) | 48 | 0 | 38 | 0 |
Weighted average common shares outstanding - diluted (in shares) | 8,266 | 8,177 | 8,253 | 8,173 |
Antidilutive securities (in shares) | 105 | 64 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Other Commitments [Line Items] | ||
Unfunded loan commitments | $ 9,085 | $ 12,236 |
Weighted average maximum maturity | 2 years 2 months 12 days | 2 years 7 months 6 days |
Mortgages and Related Assets | ||
Other Commitments [Line Items] | ||
Borrowings outstanding | $ 156,167 | |
Weighted average maturity | 7 months 6 days | 1 year 1 month 6 days |
Unfunded Commitments | ||
Other Commitments [Line Items] | ||
Weighted average maximum maturity | 9 months 18 days |
Legal Proceedings and Claims (D
Legal Proceedings and Claims (Details) | Jul. 26, 2021claim |
Subsequent Event | |
Subsequent Event [Line Items] | |
Number of lawsuits filed | 3 |