TRMT - Earnings call transcript Q2 2020

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Operator

Good morning and welcome to Tremont Mortgage Trust’s Second Quarter 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. At this time, I would like to turn the conference over to Christopher Ranjitkar, Senior Director of Marketing and Corporate Communications. Please go ahead.

Christopher Ranjitkar

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

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

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

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

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

our see of David. will income I to please earnings reconciliation morning’s this the call available website. earnings, determined the that core quarterly on a which GAAP For in accordance now to with David? over release, turn is

David Blackman

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

quarter. our capacity capital is during TRMT’s committed, to the discussed eliminated loans last which we quarter, As originate new second fully

as that am debt that amidst closed on quickly was are borrowers our of to various to a we loans including on operate have a first able borrower require relief. from had I quarter report non-payment and during many payments said, one resolved. We of borrowers. With that that July, levels from service the focus paid asset As rest on are some Throughout reported pleased rent payments. a borrowers tenants current the not from the our expected. been our do the quarter, was of partially distress all have our result, of and that experience economy managing impact Recall borrowers

ended where debt For from and the loans X the the to we was sufficient trailing X months not XXXX, XX, income June generated had operating tenants pay and expenses service.

properties However, these easily are structured maintain deferrals and loans an in reserves to rent lender the X case status keep and loans facility our with hospitality sponsor May. the shortfall receiving the call where and the In hotel, active of to June. service the result relationship loan sufficient retail loan In good case sectors. two reserves of and Both and without we of months resumed made the for standing, regarding our secured the are April capital in liquidity a tenants PPP of in with by X the sponsor small of and tenants retail was The was the X rent meet shortfalls. by property, the managed by received The remains the repo the loans. payments current. our debt dialogue secured a of the

that the manager, capital its to during a At Advisors, effectively of We ability management waiver quarterly result we fee end distributions the of well our who shareholders, to as in with experiencing are our months. extended X underscores as our these borrowers, this and preserve important XX, alignment to a we quality additional an announced which reduced believe Realty proactive manager’s measure our on the In economic to portfolio distribution reduced loan the COVID-XX as per both loans. During Tremont as distress declared XXXX, we result a waiver $X.XX brought through July, our our quarter, distribution, commitments health advanced underscores quarter, money of the difficult second the Citi economic loan confidence as quarter the our comments. manage lender asset December believe fund a the of by share a pandemic. consecutive of

business our perform, out to to of assuming December and nothing may we will However, out maintain to taxable need in in an increased order income the to declare continues pay ordinary, distribution sufficient and now REIT to to financial be status. Doug? results. call remain under over quarter. fourth types the amount and will during Doug review turn review The our payment determined the I

Doug Lanois

Good morning, David. Thank everybody. you,

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

core This our are Interest was master repurchase XXXX. in $X.X incurred facility from $X.X is per share first $X.X the per on million, earnings income diluted share $X.X the outstanding quarter was reduction from reflecting quarter investments Interest to partial $X.XX compared of interest quarter. compared second million million was approximately for prior weighted last quarter. $X.XX average or million loans $X.X million Income to Our the with quarter investments impact expense expenses full quarter and the two in prior full in when of in a XX from to and interest loans LIBOR. million on the result for for trend floors a of downward were quarter payments $X.X $X.X the increased quarter loans our of compared LIBOR outstanding borrowers million a and quarter XX the quarter. related from for

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

Our totaled $XXX,XXX to compensation was the quarter amounted shared second Reimbursed expenses in second $XXX,XXX expenses services the which quarter. $XX,XXX stock in and approximately of include expense. G&A expenses of non-cash $XXX,XXX,

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

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

end, at we unfunded. an which $XXX quarter for million At had balance principal increase a of loans of of $XXX.X $XX.X last loan totaled quarter held from million commitments total Our was end quarter. of $X.X investment million, million,

borrowed loan an in our we fund $X.X borrowers outstanding made million of on principal facility to balance quarter, advances resulting the on an by commitments, repurchase additional $XXX.X to million. TRMT master During its

our a $X.X Operator, and We retail facility balance to property June As site had capacity is Texas, our repurchase leverage is million this master we including maximum existing these to $XX.X retain their prepared the on loans. facility, In loan million of master proceeds in our million for a remarks. pad $X.X below total un-drawn, loan. Coppell, which the pledged sold of XX, the liquidity. repaid under reduce our from that $XXX.X utilized of $X.X million of and borrower concludes July, million of repurchase

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

Operator

Thank you.

the [Operator now our Steve Delaney begin will Please Instructions] Securities. We ahead. from will first come question-and-answer go JMP session. And question today of

Steve Delaney

everyone. Good morning,

manager’s commend to through end decision management of to waive like the would the year. the fees I First, the

for Board September? $X.XX follow-ups your so that reasonable assume I that the that. tax as appreciate think on move that’s addressing you it David, status current for the be it a maintain so Two placeholder third I be just it. thank dividend, that, in thank likely about visibility great for actually with towards of payout the given us my year-end will some quarter, question, would in would you comments the the had to I just distribution.

David Blackman

a assumption. is Steve, Yes, that fair

Steve Delaney

personal between looking all Would numbers has We can you and is or the it to and it now thanks. be would very appreciated combination to And plan it or pay year. all. your stock? required? and pay end cash, requirement? whatever is this and view say you dividends and in earlier get much cash allow then Okay, is – can’t possibly versus then some tax plan your meet year have my they obviously stock by tax can’t final to shareholders to does to ahead of Doug a your it change Would I some stock cash seen – but lot are be it I

David Blackman

in Steve, is what a that Yes. a spending thinking great and And really about time days. we are lot question. of these analyzing that’s reality,

minimum, and fourth all right is decision perspective our is in will cash. We wanting into the XX% question the issuing our that of to end the during is just we that would take of the fourth shares distribution pay total get what cash. don’t availability best But distribution. the either. of the we at that have understand like to understand have to quarter. is quarter, in interest receive cash, But we and that now, pay do the totally feel the towards At in liability big a consideration certainly I as we we make tax of how distribution will of least

Steve Delaney

for appreciate and Thank Understood, for need David. comments. Citi. relationship And the important the maintaining with your completely you I liquidity

David Blackman

Yes, thank you, Steve.

Operator

of today [Operator will Instructions] come Please UBS. ahead. question Vandervliet go Our Brock next from

Brock Vandervliet

good guys. morning, Hey,

David Blackman

morning, Good Brock.

Brock Vandervliet

morning. Good

it on that in about looking update on an have If start have credit, like that looks you know got are you this is – how is retail Coppell, just at maybe what XX, you left year point? got credit I with Also, you could – the bucket. Texas Slide the X.X

David Blackman

business It’s loan a property. a The primary be that below the was right It’s that its repayment is to plan good property of performing Brock. for now. question, sale source – going of

debt months, so a coverage And pretty ratio. debt pretty a the Xx, it and trailing – delivered yield X strong for had good it is it service above

extension are stabilize. in So whether going not for this exercise to market question the they sale of the or to the their think big to more themselves rights in or give time order market whether want is I asset one to they market for

Brock Vandervliet

year? are those X they And extensions

David Blackman

was Yes, slightly at on were my yield debt I earlier. and Brock, right I Xx. sheet. line wrong misspoke Their X%, around Yes. the they actually, below looking was

would amendment to automatic the So type discuss qualify order them or for in they and of extend. not would some we to today for need extension, restructure

Brock Vandervliet

could and in And that past, at guess, trending you how hotel you’ve it’s talked this point? other us more the it. one I two update about Okay, I got – broadly, those credit are an the guess, retail on give exposures

David Blackman

RevPAR hotel hotel support a the have amount have the current. kept improved not They They breakeven the but occupancy. are is give still I a payments continue – to it of experiencing I at positive generate and and up cash credit. sponsor get tremendous stepped flow, Well, to

amount So they hand I they with are and doing doing. the what that’s think for tremendous them to kind are a great respect of of the have dealt job been a

didn’t two have tenants months for they May. back we interest we other The cash Both that rent. an and reserve, trailing property for are deferrals had April had a X received of tenants slight where paying rent flow and negative those the

going And we is loan positive be expect they a for generate the debt quarter that, would expect go-forward fine so coverage on ratio. a that to and third basis

Brock Vandervliet

That’s Nebraska? credit or in the Arizona

David Blackman

Nebraska.

Brock Vandervliet

Got Got it. it.

you. thank Okay,

David Blackman

Yes.

Operator

At our closing Ladies I’d this Blackman, over to back conference and the President remarks. time, will turn for conclude gentlemen, question-and-answer to this any David CEO, session. like and

David Blackman

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

Operator

thank may The conference We now presentation your today’s lines. disconnect has concluded. and now you for you attending

Tremont Mortgage Trust (TRMT) 9 Aug 202020 Q2 Earnings call transcript