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Tremont Mortgage Trust Reports Second Quarter 2018 Financial Results

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Tremont Mortgage Trust (NASDAQ:TRMT) today announced financial results
for the quarter and six months ended June 30, 2018.

David Blackman, Chief Executive Officer of TRMT, made the following
statement:

"Since the end of the first quarter, Tremont Mortgage Trust has
closed four loans with an aggregate value of over $88.5 million. We
continue to actively pursue investment opportunities, having evaluated
over 100 prospective financing opportunities for total loan commitments
of over $2.5 billion during the second quarter. We remain focused on
investing our capital and positioning ourselves to pay our first
distribution to common shareholders."

Results for the Quarter and Six Months Ended June 30, 2018:

For the quarter and six months ended June 30, 2018, TRMT's net loss was
$781,000 and $1.7 million, respectively, or $0.25 per diluted share and
$0.55 per diluted share, respectively. For the three months ended
June 30, 2018, TRMT generated interest income of $495,000 and incurred
interest and related expenses of $66,000, which resulted in $429,000 net
interest income. For the six months ended June 30, 2018, TRMT generated
interest income of $728,000 and incurred interest and related expenses
of $103,000, which resulted in $625,000 of net interest income.

In June 2018, TRMT's manager, Tremont Realty Advisors LLC, agreed to
waive TRMT's payment of the management fee, as defined, under its
management agreement for the period beginning July 1, 2018 and ending
June 30, 2020. The management fee equals 1.5% of TRMT's "equity," as
measured for the applicable period. In addition, no incentive fee, as
defined, under TRMT's management agreement will be paid or payable by
TRMT for the 2018 or 2019 calendar years. For further information
regarding the definitions and calculations of TRMT's management fees,
see TRMT's Annual Report on Form 10-K for the year ended December 31,
2017, and TRMT's other filings with the Securities and Exchange
Commission, or SEC, which are accessible at the SEC's website, www.sec.gov.

Recent Investment Activities:

In April 2018, TRMT closed a $18.1 million first mortgage bridge loan to
finance the acquisition of a 184,000 square foot, 14-story office tower
located in Metairie, LA. This floating rate loan includes total funding
at closing of $15.9 million and an as-is loan to value ratio, or LTV
ratio, of approximately 80%. This loan also includes a future funding
allowance of up to $2.2 million for tenant improvements, leasing
commissions, marketing and capital expenditures and has a three year
initial term and two one year borrower extension options. As of June 30,
2018, TRMT had advanced an additional $104,000 under this loan and there
was a remaining future funding allowance of up to $2.1 million.

In June 2018, TRMT closed a $15.2 million first mortgage bridge loan to
refinance a 136,000 square foot, 8-story office building with structured
parking located in Houston, TX. This floating rate loan includes initial
funding of $12.7 million and an as-is LTV ratio of approximately 69%.
This loan also includes a future funding allowance of up to $2.5 million
for building improvements and leasing capital and has a three year
initial term and two one year borrower extension options.

In July 2018, TRMT closed a $40.4 million first mortgage bridge loan to
finance the acquisition of the Hampton Inn JFK, a 216-key, 13-story
hotel located adjacent to John F. Kennedy International Airport in
Queens, NY, or the JFK Loan. This floating rate loan includes initial
funding of $39.6 million and an as-is LTV ratio of approximately 71%.
This loan also includes a future funding allowance of $750,000 for a
property improvement plan and has a three year initial term and two one
year borrower extension options.

In July 2018, TRMT closed a $14.8 million first mortgage bridge loan to
refinance a 62,000 square foot, 4-story office building located in
Scarsdale, NY. This floating rate loan includes initial funding of $13.7
million and an as-is LTV ratio of approximately 78%. This loan also
includes a future funding allowance of $1.1 million for building
improvements and leasing capital and has a three year initial term and
two one year borrower extension options.

Recent Financing Activities:

On July 27, 2018, one of TRMT's wholly owned subsidiaries entered into a
term loan facility, in the form of a note receivable loan, with Texas
Capital Bank, National Association, or Texas Capital Bank, pursuant to
which that subsidiary may borrow up to $32.3 million. The note
receivable loan is secured by a collateral assignment of the JFK Loan.
The note receivable loan advances up to 80% of the JFK Loan amount and
matures in July 2021. Interest on amounts advanced to TRMT's subsidiary
under the note receivable loan is calculated at a floating rate based on
one month LIBOR plus a premium of 215 basis points. As of July 27, 2018,
Texas Capital Bank had advanced to TRMT's subsidiary $31.7 million under
the note receivable loan.

In July 2018, pursuant to its master repurchase facility with Citibank,
N.A., or Citibank, TRMT sold to, and committed to later repurchase from,
Citibank, two first mortgage bridge loans, with an aggregate principal
balance of $28.8 million, and, as a result, Citibank advanced to TRMT
75% of the aggregate outstanding balance of those loans, or $21.6
million under the master repurchase facility.

Distribution:

TRMT plans to declare and pay its first distribution to common
shareholders after successfully deploying the capital raised in its
initial public offering, or IPO, and concurrent private placement,
consistent with TRMT's leverage strategy.

Conference Call:

At 10:00 a.m. Eastern Time today, Chief Executive Officer, David
Blackman, and Chief Financial Officer, Doug Lanois, will host a
conference call to discuss TRMT's second quarter 2018 financial results.

The conference call telephone number is (877) 270-2148. Participants
calling from outside the United States and Canada should dial (412)
902-6510. No pass code is necessary to access the call from either
number. Participants should dial in about 15 minutes prior to the
scheduled start of the call. A replay of the conference call will be
available through 11:59 p.m. on Friday, August 17, 2018. To access the
replay, dial (412) 317-0088. The replay pass code is 10121849.

A live audio webcast of the conference call will also be available in a
listen-only mode on TRMT's website, which is located at www.trmtreit.com.
Participants wanting to access the webcast should visit TRMT's website
about five minutes before the call. The archived webcast will be
available for replay on TRMT's website following the call for about one
week after the call. The transcription, recording and
retransmission in any way of TRMT's second quarter conference call are
strictly prohibited without the prior written consent of TRMT.

WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER TRMT USES
WORDS SUCH AS "BELIEVE", "EXPECT", "ANTICIPATE", "INTEND", "PLAN",
"ESTIMATE", "WILL", "MAY" AND NEGATIVES OR DERIVATIVES OF THESE OR
SIMILAR EXPRESSIONS, TRMT IS MAKING FORWARD LOOKING STATEMENTS. THESE
FORWARD LOOKING STATEMENTS ARE BASED UPON TRMT'S PRESENT INTENT, BELIEFS
OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO
OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
CONTAINED IN OR IMPLIED BY TRMT'S FORWARD LOOKING STATEMENTS AS A RESULT
OF VARIOUS FACTORS. FOR EXAMPLE:

  • MR. BLACKMAN NOTES THAT TRMT CONTINUES TO ACTIVELY PURSUE INVESTMENT
    OPPORTUNITIES. THIS STATEMENT MAY IMPLY THAT TRMT WILL BE ABLE TO
    SUCCESSFULLY INVEST THE REMAINING PROCEEDS OF ITS IPO AND CONCURRENT
    PRIVATE PLACEMENT, CONSISTENT WITH TRMT'S LEVERAGE STRATEGY. IN FACT,
    TRMT MAY FAIL TO DO SO.
  • MR. BLACKMAN STATES THAT TRMT REMAINS FOCUSED ON INVESTING ITS CAPITAL
    AND POSITIONING ITSELF TO PAY ITS FIRST DISTRIBUTION. IN ADDITION,
    THIS PRESS RELEASE STATES THAT TRMT PLANS TO DECLARE AND PAY ITS FIRST
    DISTRIBUTION TO COMMON SHAREHOLDERS AFTER SUCCESSFULLY DEPLOYING THE
    CAPITAL RAISED IN ITS IPO AND CONCURRENT PRIVATE PLACEMENT, CONSISTENT
    WITH TRMT'S LEVERAGE STRATEGY. THESE STATEMENTS MAY IMPLY THAT TRMT
    WILL BE SUCCESSFUL IN DEPLOYING THAT CAPITAL. TO DATE, TRMT HAS MADE
    FOUR INVESTMENTS. TRMT MAY BE UNABLE TO MAKE ADDITIONAL INVESTMENTS OR
    IT MAY TAKE AN EXTENDED PERIOD OF TIME FOR TRMT TO FULLY DEPLOY ITS
    CAPITAL. AS A RESULT, TRMT MAY NOT DECLARE ANY DISTRIBUTIONS TO COMMON
    SHAREHOLDERS IN THE FUTURE, AND IF TRMT WERE TO DECLARE A
    DISTRIBUTION, THE AMOUNT OF SUCH DISTRIBUTION IS UNDETERMINED AND MAY
    BE MODEST IN AMOUNT. IN ADDITION, THE TIMING FOR WHEN TRMT MAY DECLARE
    AND PAY ANY DISTRIBUTION IS UNCERTAIN AND MAY NOT OCCUR FOR AN
    EXTENDED PERIOD OF TIME, IF AT ALL. FURTHER, ANY DISTRIBUTION TRMT MAY
    DECLARE AND PAY MAY NOT BE SUSTAINED FOR FUTURE PERIODS AND COULD
    DECLINE IN AMOUNT OR BE SUSPENDED OR DISCONTINUED.
  • ACTUAL COSTS UNDER THE NOTE RECEIVABLE LOAN WILL BE HIGHER THAN LIBOR
    PLUS A PREMIUM BECAUSE OF FEES AND EXPENSES ASSOCIATED WITH THIS LOAN.
  • TRMT'S OPTIONS TO EXTEND THE MATURITY DATE OF THE NOTE RECEIVABLE LOAN
    ARE SUBJECT TO ITS PAYMENT OF EXTENSION FEES AND MEETING OTHER
    CONDITIONS, BUT THE APPLICABLE CONDITIONS MAY NOT BE MET.
  • CONTINUED AVAILABILITY OF FINANCING UNDER THE NOTE RECEIVABLE LOAN IS
    SUBJECT TO TRMT SATISFYING CERTAIN FINANCIAL AND OTHER COVENANTS AND
    OTHER CONDITIONS THAT IT MAY BE UNABLE TO SATISFY.
  • TRMT HAS A LIMITED OPERATING HISTORY, AND, AS OF THE DATE OF THIS
    PRESS RELEASE, TRMT HAS A PORTFOLIO OF INVESTMENTS WITH A NET BOOK
    VALUE OF APPROXIMATELY $81.5 MILLION AND $53.3 MILLION OF DEBT
    OBLIGATIONS OUTSTANDING. VARIOUS FACTORS COULD HAVE A MATERIAL ADVERSE
    EFFECT UPON TRMT'S BUSINESS, FINANCIAL CONDITION, LIQUIDITY AND
    RESULTS OF OPERATIONS, INCLUDING THE IMPACT OF CONDITIONS AND CHANGES
    IN THE ECONOMY, THE COMMERCIAL REAL ESTATE INDUSTRY AND THE CAPITAL
    MARKETS ON TRMT AND ITS BORROWERS. TRMT MAY NOT BE ABLE TO OPERATE ITS
    BUSINESS SUCCESSFULLY OR GENERATE SUFFICIENT REVENUE TO MAKE OR
    SUSTAIN DISTRIBUTIONS TO COMMON SHAREHOLDERS.

THE INFORMATION CONTAINED IN TRMT'S FILINGS WITH THE SEC INCLUDING UNDER
"RISK FACTORS" IN TRMT'S PERIODIC REPORTS, OR INCORPORATED THEREIN,
IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE TRMT'S ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR IMPLIED BY TRMT'S
FORWARD LOOKING STATEMENTS. TRMT'S FILINGS WITH THE SEC ARE AVAILABLE ON
THE SEC'S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, TRMT DOES NOT INTEND TO UPDATE OR CHANGE ANY
FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS
OR OTHERWISE.

 

TREMONT MORTGAGE TRUST
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS

(Amounts in thousands, except
per share data)

(unaudited)

       

Three Months Ended
June 30, 2018

Six Months Ended
June 30, 2018

Income:
Interest income from investments $ 495 $ 728
Less: Interest and related expenses (66 ) (103 )
Total income from investments, net 429 625
 
Expenses:
Management fees 222 447
General and administrative expenses 613 1,158
Shared services agreement reimbursement 375   750  
Total expenses 1,210   2,355  
Loss before income tax expense (781 ) (1,730 )
Income tax expense    
Net loss $ (781 ) $ (1,730 )
 
Weighted average common shares outstanding 3,123 3,117
 
Net loss per common share - basic and diluted $ (0.25 ) $ (0.55 )
 
 

TREMONT MORTGAGE TRUST
CONDENSED CONSOLIDATED
BALANCE SHEETS

(Dollars in thousands, except share
data)

(unaudited)

       
June 30, December 31,
2018 2017
Assets
Cash and cash equivalents $ 30,525 $ 61,666
Restricted cash 284
Loans held-for-investment, net 28,456
Accrued interest receivable 66
Prepaid expenses and other assets 248 259
Deferred financing costs, net 683    
Total assets $ 60,262   $ 61,925  
 
Liabilities and Shareholders' Equity
Accounts payable, accrued liabilities and deposits $ 687 $ 301
Due to related persons 226   754  
Total liabilities 913   1,055  
 
Commitments and contingencies
 
Shareholders' equity:
Common shares of beneficial interest, $0.01 par value per share;
25,000,000 shares authorized; 3,142,939 and 3,126,439 shares issued
and outstanding at June 30, 2018 and December 31, 2017, respectively
31 31
Additional paid in capital 62,344 62,135
Cumulative net loss (3,026 ) (1,296 )
Total shareholders' equity 59,349   60,870  
Total liabilities and shareholders' equity $ 60,262   $ 61,925  
 

A Maryland Real Estate Investment Trust with transferable shares of
beneficial interest listed on the Nasdaq.

No shareholder,
Trustee or officer is personally liable for any act or obligation of the
Trust.

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