TRMT - Earnings call transcript Q1 2020

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Operator

Good morning and welcome to Tremont Mortgage Trust First Quarter 2020 Financial Results Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I'd now like to turn the conference over to Christopher Ranjitkar, Senior Director of Marketing and Corporate Communications. Please go ahead sir.

Christopher Ranjitkar

morning good and you everyone. Thank us Thanks for joining today. President me Financial Officer, Executive the Officer our on call, and David Treasurer, Lanois. Chief Doug With and Blackman and Chief business will In moment first provide and XXXX. our details quarter just of performance they about a the for our

side then sell the session open will to a We -answer question-and call with analysts.

today's First, of prior is that, call without XXXX results the call today's project. written These or Also publicly laws. like beliefs of conference no strictly today's looking of expectations note revisions conference company. Securities X, call. today, security revise as Litigation may the are that looking The the to obligation forward would from to Reform results forward of conference in I the actual recording Act to May retransmission statements the differ that those consent company the on forward statements of and looking contains meaning materially other Private prohibited and statements undertakes note we within Tremont's any of and Monday, release and based XXXX made the

forward-looking and information can Commission website. Additional that those Securities cause is or statements. in cautioned not or are factors Investors reliance our our the any with SEC, undue could contained which website, from upon be filings SEC accessed differences trmtreit.com concerning Exchange the place to

earnings. will discussing this be including non-GAAP we addition, core during In numbers call,

in income available of website. this reconciliation a on GAAP is determined quarterly net with which morning's earnings to release, For see accordance core earnings please our

session. non-essential could audio three result this to to of would separate we are from question-and-answer a conducting note and delays as the locations businesses turn over Massachusetts call like I I during cause our which in Before the could impact closure of call that David,

David?

David Blackman

and Mortgage morning. earnings you, for first Thank quarter the Welcome Trust. call to good Christopher Tremont

capital. One grade an two Allentown, a is million we in garage fully refinanced quarter the investment downtown first Ohio. closed leased office and of other $XX.X a loans Columbus, Pennsylvania foot first investment in lab suburban that to loan committed company aggregate whole and refinanced commitments parking complex our the square mortgage that During with XXX,XXX master

As include with transitional bridge $XXX aggregate securities commitments. of million mortgage whole consists and does completely not any a portfolio investment reminder first approximately our loans in

As investment and COVID-XX a economic the our closed brought by pandemic focused non-essential asset managing of result businesses that acutely fully substantially committing U.S. the capital our loan the across attention portfolio. on is on our shock

service as had have one and We but all borrowers we a one borrower result of in April debt default. pay our

received a we Citigroup, our However, have not repurchase margin lender. call from facility

is note for loan which will amendment we disclosures condition failed April you defaulted rent to borrower submit they morning become they the the collected a released executed in As have amendment to but this had us a with our to precedent effective. in a

good standing believe the We fact the defaults. is kept yield position, us the minimum with greater cure this than loans, loan generated basis will points in Citi XXX our required This debt which payment XX% the combined from which aggregate is has imminent Citi. with

and time our the of was it strong the to our to shock impact on has our tenant first such cash the deferral Notwithstanding prudent until have of the for borrower conserve economic as us believe economy borrowers core per impact quarter, by subsided. will earnings rent led to our the uncertain reducing $X.XX share COVID-XX distribution stabilizes

waiving and it's a which our also outstanding of our its As XX.X% until wholly owns from a reminder RMR June manager XXXX fee management shares owned July subsidiary of XXXX. is

through review challenging situation, long-term what the In patience it to we and how we loan be to view is likely understand plans service better of We cash shortfalls you with of shareholders the debt executing a normal our flow current mitigate the would our we have thought portfolio course of light as reserves each helpful loans business anticipated. a sweeps appreciate risk structured the recession. help and of more in economic interest managing take our of to than slowly existing

million mortgage first XX whole have of loans flow hotel with The full-service secured loan We approximately is and One loan in representing a aggregate in cash also $XXX suite of X% total manner working commitments. strength in believe borrower as our We cooperative by is the is this the commitments. situation. the a view loans current risk the of higher in the keep one is our a current. integrity loan borrower huge to but loan

total service. experiencing our business borrowers XX% tenants level retail are to the a where Two in as space neighborhood of the are a of rent non-essential stress have anchor a cash number of sweep Two or businesses three of debt tenants. loans inline of of centers in relief. by but to loans performing the have reserves Three and renew complete loans interest commitments pay leasing are requested the all are flow secured representing is plan to

of an a of a amendment default the these full cash borrower. the has we to expect executed that financially loan April sweep to by by which One in collected loans is and sponsor. flow our reserve strong cure a in to and is the loan recourse payment interest This rent us is

capital reserve. a Three business commitments where plans in the Five has XX% tenant to one are are sponsors interest an our the complete by cash of loans improvement flow sweep secured provide total loans and leasing office to representing properties are of plan.

Two The these provide are financial assistance hardship CARES of the support and experiencing working to energy are located stimulus. Act Houston and in tenants with and tenants rent for have for to buildings Louisiana loans sector. exposure the office sponsors in

are used with loans to reserves can pay service. interest these be of debt both structured that However,

XX% commitments multi-family communities, The balance a of parking lease representing industrial secured garage. master our of loans lower by risk buildings are total and our

execute reserves with the experiencing structured Even though shock, are the from less plans financial expected. current interest these should not economic property types loans distress as timely of several business are the as

our to help are exposed mitigate there pressure and securing see and we the execute are plans of to sweeps types flow have reserves can loans shortfalls than economic interest anticipated. you that the property current risk business employed cash from slowly debt service more may that shock, some while So

Likewise now changed portfolio. our of increasing rating to X.X end year see in closely loan we quarter. risk X.X at loan first to more ratings the of average changes result with as the weighted risk aligned we The have the our the portfolio in from end

and any taken financial we or optimism the will that the load no to challenges through manage loss reserves that quarter for change and pandemic. borrowers arisen We with closely the have COVID-XX does loan have our not rating work modifications way in the impairments from risk Citi our

I’ll over to Doug now to our turn the review Doug? call results. financial

Doug Lanois

David and you everyone. good Thank morning

statement review of of operations. a Let's begin with the

first Our per fourth Interest quarter $X.XX for loans interest of investments core and the the from payments partial XX on two the quarter. full the was XXXX. diluted first million earnings weighted average compared share was $X.X in on reflecting share quarter loans $X.X payments quarter in income to interest million quarter that per or $X.XX quarter closed

and with million $X.X was our for repurchase quarter. of facility related from us income master from expenses Interest million borrowings investments leaving approximately the $X.X on incurred

average as financial basis XXXX supplemental investments our basis presented floor of a average points. our March LIBOR yield As LIBOR our is our XXX is package points all-in XX, XXX on weighted in plus weighted and

$XXX,XXX which approximately $XXX,XXX was compensation stock totaled quarter and of include first expenses the G&A in $XX,XXX expenses non-cash Our of expense.

$XXX,XXX of to reinstatement XXXX. we that service quarter first amounted fee is in quarter. shared expenses quarterly in our run expect the for the an quarter, first management Excluding Reimbursed our third appropriate G&A rate the

time over to As to we our some other quarter allocates these we mentioned, expect last decrease of services companies. as shared manager managed expense expenses

we in cash equivalents. turning cash sheet Now to the end had million $XX.X at and balance the first our of quarter,

unfunded held at an million, loan quarter. had million quarter $XXX.X $XX.X quarter we loans $XX.X million investment Our for commitments. At of end increase from totaled last end in

additional $XX.X $XXX.X master During the we agreement two fund existing million. repurchase on on to balance loans and a in borrowed quarter of new our loans resulting advances million an

on had including that $X leverage the total XX, of pledged is March below million million which of million is undrawn from As master of repurchase $XXX.X facility $XX.X we loans. capacity existing our maximum

Operator this our prepared remarks. concludes

research questions take We will from now sell-side analysts.

Operator

Thank will ahead. Our first you. Jason Please from Trading. Jones with come go Stewart question [Operator Instructions]

Jason Stewart

thank end of the morning, Could the loans you appreciate us color of additional as the quarter? total sweep I portfolio. the on good at percentage cash the give you. that Hi are in

David Blackman

a haven’t of question, I good calculated I calculated in That's more percentage? that actually Jason. that it Doug, thought the numbers. you percentage. terms about

David Blackman

we’ve tell that you the I – cash have a loans we don't sweep. Yes. currently X in I percentage. can have

Jason Stewart

reserves, think your Okay. about reserves there? payment interest And for typical coverage requirement when what's we

David Blackman

cash to write behalf. closed can help cash those advance flow In another an other borrower be In as part of the we plan. while supplement proceeds. on to some of noting flow worth the we've service we may the if draw debt it's the what actually reserve those its up cases, the have is isn't executed typically interest property to to have borrower for It's business to loans sweeps cases, used that their that reason into or the Jason sufficient. some Well, done one also from we structured loan

in debt a not, threshold. cash of it's but most coverage below the in as our a ratio defaults certain loans aren't flow being these So sweeps result service cases

Jason Stewart

that pick me borrowers I two, when when look All sense. office about, right. the color more makes have it's these any underlying gotten retail maybe you one example, collections property a better you a their on loans? their whether That from is for at portfolios or And retail maybe backing then you guess think are from

David Blackman

need in that release. let types know the of been of all we've tenants the in might have they in active that percentage number dialogue assistance assets some with They've tenants or are our their mean I Yes. of or borrowers. us of of

our So yes, with of all that. had sponsors conversations regarding we

Jason Stewart

from retail of XXs And I pretty share along? could heard mean color example? specific there being of we've you Any could guess you mid XXs maybe collection terms types wide numbers rates pass portfolios? in a us is to mid with those I in anything

David Blackman

Yes.

we are shops, made grocery that pay drugstores either up at have tenants other our struggled they Most centers sufficient centers tenants April the salons, line they're shopping neighborhood revenue of types stores, I fine. of in look think anchor or have in collect larger those rent. all to barber doing as of nail to space restaurants, that are

our be are them that anywhere at the tenants collecting going from borrowers loans the rents average helpful. and which A have number would XX% in on I retail this say Act to PCC qualified between of point. relief is are for phase and getting that XX% have So of CARES

Jason Stewart

All right.

helpful. else the groups workout you amount then I somebody the Last one that's Okay, about assets jump manager, me of let in. think the the When sponsor will for and RMR, that if sufficient work you have that loans do to have, of should necessary need sell some be you is to feel these perhaps these like and them? support you do behind that out

David Blackman

operate Certainly a one that our the fact have been companies of we real own has of number estate. of strengths platform that Yes. that Jason, always the we

We have our management property own group.

operate hotels. have that operating as We senior several well companies as living

and of plans So business experience we operating executing have lot properties. hands-on a in

have So living. and very office, we industrial, hotels retail, management also teams deep senior asset for

tremendous default we over borrowers our adverse but So have a have doesn't work there's situation. and at expertise over certainly manage of an take a take through property that amount to it to of to Obviously RMR we to expertise and the asset. hope we of operation the should come one

Jason Stewart

the appreciate Got time I safe. and questions stay it. the for

David Blackman

you. Thank

too. You

Operator

the David Please turn This to Instructions] to for remarks. our over sir. closing session. back ahead I concludes [Operator conference like Blackman go question-and-answer any would

David Blackman

Thank for joining our all us and on the thank concludes today. call you That operator you call.

Operator

Thank The today's conference now for has you attending presentation. concluded.

now You disconnect. may

Tremont Mortgage Trust (TRMT) 4 May 202020 Q1 Earnings call transcript