TRET MTG SECOND QUARTER 2021
Supplemental Operating and Financial Data
ALL AMOUNTS IN THIS REPORT ARE UNAUDITED.
Table of Contents | |
CORPORATE INFORMATION | |
Company Profile...................................................................................................................................................... | 3 |
Investor Information............................................................................................................................................... | 4 |
Research Coverage................................................................................................................................................ | 5 |
FINANCIALS | |
Second Quarter 2021 Highlights......................................................................................................................... | 6 |
Condensed Consolidated Balance Sheets........................................................................................................ | 7 |
Condensed Consolidated Statements of Operations..................................................................................... | 8 |
Debt Summary......................................................................................................................................................... | 9 |
Reconciliation of Net Income to Distributable Earnings and Adjusted Distributable Earnings.............. | 10 |
PORTFOLIO OVERVIEW | |
Second Quarter 2021 Portfolio Summary.......................................................................................................... | 11 |
Loan Investment Details......................................................................................................................................... | 12 |
Loan Portfolio Composition.................................................................................................................................. | 13 |
Loan Portfolio Credit Quality................................................................................................................................ | 14 |
Interest Rate Sensitivity.......................................................................................................................................... | 15 |
Capital Structure Overview................................................................................................................................... | 16 |
WARNING CONCERNING FORWARD-LOOKINGSTATEMENTS............................................................................... | 17 |
NON-GAAPFINANCIAL MEASURES AND CERTAIN DEFINITIONS.......................................................................... | 18 |
Please refer to Non-GAAP Financial Measures and Certain Definitions for terms used throughout this document.
TRMT
Nasdaq Listed
Supplemental Q2 2021 | 2 |
Company Profile
The Company:
Tremont Mortgage Trust, or TRMT, we, our or us, is a real estate investment trust, or REIT, that focuses on originating and investing in floating rate first mortgage whole loans secured by middle market and transitional commercial real estate, or CRE. We define middle market CRE as commercial properties that have values up to $100.0 million and transitional CRE as commercial properties subject to redevelopment or repositioning activities that are expected to increase the value of the properties.
Management:
Our Manager, Tremont Realty Advisors LLC, or TRA, is registered with the Securities and Exchange Commission, or SEC, as an investment adviser. In addition to TRMT, TRA also provides management services to RMR Mortgage Trust (Nasdaq: RMRM), a publicly traded mortgage REIT that focuses on originating and investing in floating rate first mortgage whole loans secured by middle market and transitional CRE. TRA is owned by The RMR Group LLC, or RMR LLC, the majority owned operating subsidiary of The RMR Group Inc., or RMR Inc., a holding company listed on The Nasdaq Stock Market LLC, or Nasdaq, under the symbol "RMR". We collectively refer to RMR Inc. and its consolidated subsidiaries, including RMR LLC, as RMR. RMR is an alternative asset management company that is focused on commercial real estate and related businesses. RMR primarily provides management services to publicly traded real estate companies, privately held real estate funds and real estate related operating businesses. As of June 30, 2021, RMR had $32.4 billion of real estate assets under management and the combined RMR managed companies had approximately $10.0 billion of annual revenues, nearly 2,100 properties and approximately 42,000 employees. We believe our Manager's relationship with RMR provides us with a depth of market knowledge that may allow us to identify high quality investment opportunities and to evaluate them more thoroughly than many of our competitors, including other commercial mortgage REITs. We also believe RMR's broad platform provides us with access to RMR's extensive network of real estate owners, operators, intermediaries, sponsors, financial institutions and other real estate related professionals and businesses with which RMR has historical relationships. We also believe that our Manager provides us with significant experience and expertise in investing in middle market and transitional CRE.
Corporate Headquarters:
Two Newton Place
255 Washington Street, Suite 300 Newton, MA 02458-1634
(617) 796-8317
Stock Exchange Listing:
Nasdaq
Trading Symbol:
Common Shares: TRMT
Key Data (as of and for the three months ended June 30, 2021): (dollars in thousands)
Q2 | 2021 income from investments, net | $ | 3,160 |
Q2 | 2021 net income | $ | 98 |
Q2 | 2021 Adjusted Distributable Earnings | $ | 2,048 |
Loans held for investment, net | $ | 237,697 | |
Total assets | $ | 247,164 |
RETURN TO TABLE OF CONTENTS | Supplemental Q2 2021 | 3 |
Investor Information
Board of Trustees
John L. Harrington | William A. Lamkin | Joseph L. Morea |
Independent Trustee | Independent Trustee | Independent Trustee |
Matthew P. Jordan | Adam D. Portnoy | |
Managing Trustee | Managing Trustee | |
Executive Officers | ||
Thomas J. Lorenzini | G. Douglas Lanois | |
President | Chief Financial Officer and Treasurer | |
Contact Information | ||
Investor Relations | Inquiries | |
Tremont Mortgage Trust | Financial, investor and media inquiries should be directed to: | |
Two Newton Place | Kevin Barry, Manager, Investor Relations | |
255 Washington Street, Suite 300 | at (617) 796-7651 or kbarry@trmtreit.com | |
(617) 796-7651 | ||
kbarry@trmtreit.com | ||
www.trmtreit.com |
RETURN TO TABLE OF CONTENTS | Supplemental Q2 2021 | 4 |
Research Coverage
Equity Research Coverage
UBS Securities LLC | Citibank Global Markets, Inc. |
Brock Vandervliet | Arren Cyganovich, CFA |
(212) 713-2382 | (212) 816-3733 |
brock.vandervliet@ubs.com | arren.cyganovich@citi.com |
JMP Securities | Jones Trading Institutional Services, LLC |
Steven C. DeLaney | Jason M. Stewart |
(212) 906-3517 | (646) 465-9932 |
sdelaney@jmpsecurities.com | jstewart@jonestrading.com |
TRMT is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding TRMT's performance made by these analysts do not represent opinions, estimates or forecasts of TRMT or its management. TRMT does not by its reference above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts.
RETURN TO TABLE OF CONTENTS | Supplemental Q2 2021 | 5 |
Second Quarter 2021 Highlights
Financial Results
Loan Portfolio
Capitalization
Interest Rates
- Net income of $0.1 million and Adjusted Distributable Earnings of $2.0 million, or $0.01 and $0.25 per diluted common share, respectively.
- Book value per common share of $10.81.
- Distribution of $0.10 per common share declared in July 2021 and payable in August 2021.
- 13 first mortgage whole loans diversified among office, retail, multifamily, industrial and hotel collateral, with an aggregate total loan commitment of $246.0 million.
- Weighted average maturity of 2.2 years based on Maximum Maturities.
- Weighted average coupon of 5.61% and weighted average All In Yield of 6.36%.
- All loans are current on debt service.
- Our master repurchase facility with Citibank, N.A., or our Master Repurchase Facility, has $57.3 million available, comprised of $10.8 million immediately available to be drawn on existing loans and $46.5 million available to be drawn to fund future advances on unfunded loan commitments or new loan originations.
- Outstanding principal balance of $156.2 million under our Master Repurchase Facility; 1.6x Net Debt to Book Equity Ratio.
- All loans held for investment have floating interest rates and we require borrowers to obtain hedging instruments to mitigate the risk of increasing interest rates. The weighted average LIBOR floor for the portfolio is 1.94%.
- Borrowings under our Master Repurchase Facility are subject to floating interest rates with no LIBOR floor.
- Floating rate investments and floating rate liabilities support earnings stability.
Note: As of June 30, 2021
RETURN TO TABLE OF CONTENTS | Supplemental Q2 2021 | 6 |
Condensed Consolidated Balance Sheets
(dollars in thousands, except per share data)
ASSETS
Cash and cash equivalents
Restricted cash
Loans held for investment, net
Accrued interest receivable
Prepaid expenses and other assets
Total assetsFinancial
LIABILITIES AND SHAREHOLDERS' EQUITY
AccountsSummarypayable, accrued liabilities and deposits
Master repurchase facility, net
Due to related persons
Total liabilities
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
Additional paid in capital
Cumulative net income
Cumulative distributions
Total shareholders' equity
Total liabilities and shareholders' equity
June 30, | December 31, | |||
2021 | 2020 | |||
$ | 8,273 | $ | 10,521 | |
95 | - | |||
237,697 | 282,246 | |||
796 | 996 | |||
303 | 419 | |||
$ | 247,164 | $ | 294,182 | |
$ | 1,127 | $ | 5,041 | |
155,562 | 200,233 | |||
602 | 5 | |||
157,291 | 205,279 |
83 | 83 | |||
89,288 | 89,160 | |||
12,461 | 10,788 | |||
(11,959) | (11,128) | |||
89,873 | 88,903 | |||
$ | 247,164 | $ | 294,182 | |
RETURN TO TABLE OF CONTENTS | Supplemental Q2 2021 | 7 |
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2021 | 2020 | 2021 | 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 (1) | 341 | - | 682 | - | |||||||
Management incentive fees (1) | - | - | 620 | - | |||||||
General and administrative expenses | 685 | 524 | 1,328 | 1,064 | |||||||
Reimbursement of shared services expenses | 206 | 242 | 344 | 563 | |||||||
Transaction related expenses | 1,822 | - | 1,849 | - | |||||||
Total expenses (1) | 3,054 | 766 | 4,823 | 1,627 | |||||||
Income before income tax expense | 106 | 2,362 | 1,688 | 4,028 | |||||||
Income tax expense | (8) | - | (15) | - | |||||||
Net income | $ | 98 | $ | 2,362 | $ | 1,673 | $ | 4,028 | |||
Weighted average common shares outstanding - basic | 8,218 | 8,177 | 8,215 | 8,173 | |||||||
Weighted average common shares outstanding - diluted | 8,266 | 8,177 | 8,253 | 8,173 | |||||||
Net income per common share - basic and diluted | $ | 0.01 | $ | 0.29 | $ | 0.20 | $ | 0.49 | |||
- Our Manager waived any base management or management incentive fees that would have otherwise been due and payable by us under our management agreement for the period beginning July 1, 2018 until December 31, 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, respectively. Management incentive fees of $36 would have been paid or payable by us
for each of the three and six months ended June 30, 2020.
RETURN TO TABLE OF CONTENTS | Supplemental Q2 2021 | 8 |
DEBT SUMMARY
Debt Summary
(dollars in thousands)
June 30, 2021 | |||||||
Coupon Rate | Principal Balance | Maturity Date | |||||
Financings under Master Repurchase | |||||||
Facility: | |||||||
Office, Houston, TX (1) | L + 2.15% | $ | 10,815 | 08/10/2021 | |||
Retail, Coppell, TX | L + 2.10% | 10,132 | 08/12/2021 | ||||
Office, Metairie, LA (2) | L + 2.35% | 10,877 | 10/11/2021 | ||||
Multifamily, Houston, TX (3) | L + 1.85% | 21,980 | 11/10/2021 | ||||
Retail, Paradise Valley, AZ (3) | L + 2.10% | 7,700 | 11/30/2021 | ||||
Office, St. Louis, MO | L + 1.85% | 20,229 | 12/19/2021 | ||||
Hotel, Atlanta, GA | L + 2.00% | 15,067 | 12/21/2021 | ||||
Office, Dublin, OH (3) | L + 2.10% | 15,822 | 02/18/2022 | ||||
Retail, Omaha, NE | L + 2.00% | 9,761 | 06/14/2022 | ||||
Office, Yardley, PA | L + 2.00% | 10,506 | 11/06/2022 | ||||
Multifamily, Orono, ME | L + 1.85% | 12,778 | 11/06/2022 | ||||
Industrial, Allentown, PA | L + 2.00% | 10,500 | 11/06/2022 | ||||
Total/weighted average | L + 2.00% | $ | 156,167 | ||||
- In June 2021, we amended the agreement governing this loan to extend the maturity date of the loan by 45 days to August 10, 2021.
- In April 2021, we amended the agreement governing this loan to extend the maturity date by six months to October 11, 2021 and to eliminate any further borrower extension rights.
- In July 2021, the borrower under this loan notified us that they intend to repay the loan in the third quarter of 2021. We expect to be repaid the principal amount outstanding under this loan, as well as accrued interest, exit fees and our associated legal expenses, and we will be required to repay the outstanding balance and accrued interest associated with this loan under the Master Repurchase Facility.
RETURN TO TABLE OF CONTENTS | Supplemental Q2 2021 | 9 |
Reconciliation of Net Income to Distributable Earnings and Adjusted Distributable Earnings
(amounts in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||
Reconciliation of net income to Distributable Earnings and | |||||||||||
Adjusted Distributable Earnings | |||||||||||
Net income | $ | 98 | $ | 2,362 | $ | 1,673 | $ | 4,028 | |||
Management incentive fees | - | - | 620 | - | |||||||
Non-cash equity compensation expense | 128 | 71 | 179 | 113 | |||||||
Distributable Earnings | 226 | 2,433 | 2,472 | 4,141 | |||||||
Transaction related expenses | 1,822 | - | 1,849 | - | |||||||
Adjusted Distributable Earnings | $ | 2,048 | $ | 2,433 | $ | 4,321 | $ | 4,141 | |||
Weighted average common shares outstanding - basic | 8,218 | 8,177 | 8,215 | 8,173 | |||||||
Weighted average common shares outstanding - diluted | 8,266 | 8,177 | 8,253 | 8,173 | |||||||
Adjusted Distributable Earnings per common share - basic | $ | 0.25 | $ | 0.30 | $ | 0.53 | $ | 0.51 | |||
Adjusted Distributable Earnings per common share - diluted | $ | 0.25 | $ | 0.30 | $ | 0.52 | $ | 0.51 | |||
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Second Quarter 2021 Portfolio Summary
(dollars in thousands)
June 30, 2021 | |||||||||||||
Number of loans | 13 | ||||||||||||
Second Quarter 2021 Portfolio Activity | |||||||||||||
Average loan commitment | $17,752 | ||||||||||||
Total loan commitments | $246,029 | ||||||||||||
Unfunded loan commitments | $9,085 | ||||||||||||
Principal balance | $236,944 | ||||||||||||
Weighted average coupon rate | 5.61% | ||||||||||||
Weighted average All In Yield | 6.36% | ||||||||||||
Weighted average Maximum | 2.2 | ||||||||||||
Maturity | |||||||||||||
Weighted average LTV | 65% | ||||||||||||
Weighted average LIBOR floor | 1.94% | ||||||||||||
Loans with active LIBOR floors | 100% | ||||||||||||
Weighted average risk rating | 3.0 | ||||||||||||
Total Commitments Unfunded Commitments
Principal Balance
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Loan Investment Details
(dollars in thousands)
First Mortgage Loans as of June 30, 2021:
Committed | Maximum | ||||||||||||||||||||
Property | Origination | Principal | Principal | Coupon | All in | Maturity | Maturity | Risk | |||||||||||||
Location | Type | Date | Amount | Balance | Rate | Yield | Date | Date | LTV | Rating | |||||||||||
Houston, TX (1) | Office | 06/26/2018 | $ | 15,200 | $ | 14,489 | L + 4.00% | L + 4.57% | 08/10/2021 | 08/10/2021 | 69% | 3 | |||||||||
Coppell, TX | Retail | 02/05/2019 | 19,865 | 19,865 | L + 3.50% | L + 4.24% | 08/12/2021 | 02/12/2022 | 73% | 4 | |||||||||||
Metairie, LA (2) | Office | 04/11/2018 | 18,102 | 17,351 | L + 5.00% | L + 5.65% | 10/11/2021 | 10/11/2021 | 79% | 3 | |||||||||||
Houston, TX (3) | Multifamily | 05/10/2019 | 27,929 | 27,929 | L + 3.50% | L + 4.52% | 11/10/2021 | 11/10/2022 | 56% | 3 | |||||||||||
Paradise Valley, AZ (3) | Retail | 11/30/2018 | 11,853 | 11,197 | L + 4.25% | L + 5.71% | 11/30/2021 | 11/30/2022 | 48% | 3 | |||||||||||
St. Louis, MO | Office | 12/19/2018 | 29,500 | 27,763 | L + 3.25% | L + 3.74% | 12/19/2021 | 12/19/2023 | 72% | 2 | |||||||||||
Atlanta, GA | Hotel | 12/21/2018 | 24,000 | 23,904 | L + 3.25% | L + 3.72% | 12/21/2021 | 12/21/2023 | 62% | 4 | |||||||||||
Dublin, OH (3) | Office | 02/18/2020 | 22,820 | 21,556 | L + 3.75% | L + 4.83% | 02/18/2022 | 02/18/2023 | 33% | 2 | |||||||||||
Omaha, NE | Retail | 06/14/2019 | 14,500 | 13,054 | L + 3.65% | L + 4.05% | 06/14/2022 | 06/14/2024 | 77% | 4 | |||||||||||
Yardley, PA | Office | 12/19/2019 | 14,900 | 14,264 | L + 3.75% | L + 4.47% | 12/19/2022 | 12/19/2024 | 75% | 4 | |||||||||||
Orono, ME | Multifamily | 12/20/2019 | 18,110 | 18,066 | L + 3.25% | L + 3.85% | 12/20/2022 | 12/20/2024 | 72% | 2 | |||||||||||
Allentown, PA | Industrial | 01/24/2020 | 14,000 | 14,000 | L + 3.50% | L + 4.02% | 01/24/2023 | 01/24/2025 | 67% | 3 | |||||||||||
Westminster, CO | Office | 05/24/2021 | 15,250 | 13,506 | L + 3.75% | L + 5.09% | 05/24/2024 | 05/24/2026 | 66% | 3 | |||||||||||
Total/weighted average | $ | 246,029 | $ | 236,944 | L + 3.66% | L + 4.42% | 65% | 3.0 | |||||||||||||
- In June 2021, we amended the agreement governing this loan to extend the maturity date of the loan by 45 days to August 10, 2021.
- In April 2021, we amended the agreement governing this loan to extend the maturity date by six months to October 11, 2021 and to eliminate any further borrower extension rights.
- In July 2021, the borrower under this loan notified us that they intend to repay the loan in the third quarter of 2021. 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.
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Loan Portfolio Composition
(dollars in thousands)
Geographic Region(1)
Property Type(1)
Maximum Maturity Profile(2)
(1) Based on carrying value of loans held for investment as of June 30, 2021.
(2) Based on principal balances as of June 30, 2021.
RETURN TO TABLE OF CONTENTS | Supplemental Q2 2021 13 |
Loan Portfolio Credit Quality
Loan to Value(1)
Weighted Average
LTV: 65%
Loan Count | 3 | 1 | 3 | 4 | 2 |
Risk Rating Distribution(1)
(1) Percent of portfolio based on carrying value of loans held for investment as of June 30, 2021.
Weighted Average
Risk Rating: 3.0
Loan Count | 6 | 4 | 0 |
RETURN TO TABLE OF CONTENTS | Supplemental Q2 2021 14 |
Interest Rate Sensitivity
Net Interest Income Per Share Sensitivity to LIBOR
Annualized impact per share
The interest income on our loans held for investment and the interest expense on our borrowings float with LIBOR subject to applicable LIBOR floor arrangements. We have interest rate floor provisions in our loan agreements with borrowers which set a LIBOR minimum for each loan. These floors range from 0.50% to 2.49% and the portfolio weighted average is 1.94% as of June 30, 2021. As a result, our interest income will increase if LIBOR exceeds the floor established in any of our investments, and if LIBOR further decreases below the floor established in any of our investments, our interest income will not be impacted. We do not currently have a LIBOR floor provision relating to any of the outstanding balances under our Master Repurchase Facility and as a result our interest expense will increase as LIBOR increases and will decrease as LIBOR decreases.
The above table illustrates the incremental impact on our annual income from investments, net, due to hypothetical increases and decreases in LIBOR, taking into consideration our borrowers' interest rate floors as of June 30, 2021. The hypothetical decreases in LIBOR have been limited in the analysis above to 8 basis points to result in a LIBOR of 0.00%. The results in the table above are based on our loan portfolio and debt outstanding and LIBOR of 0.08% at June 30, 2021. Any changes to the mix of our investments or debt outstanding could impact the interest rate sensitivity analysis and this illustration is not meant to forecast future results.
LIBOR is currently expected to be phased out for new contracts by December 31, 2021 and for pre-existing contracts by June 30, 2023. On October 30, 2020, we amended our Master Repurchase Agreement to, among other things, provide that at such time as LIBOR is no longer available as a base rate to calculate interest payable on amounts outstanding under our Master Repurchase Facility, the replacement base rate shall be the secured overnight financing rate, or SOFR, or if SOFR is not available, such other rate as may be determined by Citibank, N.A. in accordance with the terms of our Master Repurchase Agreement. We also currently expect that, as a result of any phase out of LIBOR, the interest rates under our loan agreements with borrowers would be revised as provided under the agreements or amended as necessary to provide for an interest rate that approximates the existing interest rate as calculated in accordance with LIBOR.
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CAPITAL STRUCTURE OVERVIEW
Capital Structure Overview as of June 30, 2021
(amounts in thousands)
Capital Structure Composition | Leverage Capacity | ||||||||
Outstanding Debt to Funded Investments | Capital Structure Detail | ||||||||||||
Maximum | |||||||||||||
Facility | Coupon | Maturity | Principal | ||||||||||
Secured Financing | Size | Rate (1) | Date | Balance | |||||||||
Master Repurchase Facility | $ | 213,482 | L + 2.00% | 11/06/2022 | $ | 156,167 | |||||||
Book Value per Common Share | |||||||||||||
Shareholders' equity | $ | 89,873 | |||||||||||
Total outstanding common shares | 8,312 | ||||||||||||
Book value per common share | $ | 10.81 | |||||||||||
- Weighted average rate based on outstanding principal balances as of June 30, 2021.
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Warning Concerning Forward-Looking Statements
This supplemental operating and financial data may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever we use words such as "believe", "expect", "anticipate", "intend", "plan", "estimate", "will", "may" and negatives or derivatives of these or similar expressions, we are making forward-looking statements. These forward-looking statements are based upon our 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 our forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control.
The information contained in our filings with the SEC, including under "Risk Factors" in our periodic reports, or incorporated therein, identifies important factors that could cause our actual results to differ materially from those stated in or implied by our forward-looking statements. Our 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, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
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Non-GAAP Financial Measures and Certain Definitions
Non-GAAP Financial Measures:
We present Distributable Earnings and Adjusted Distributable Earnings, which are considered "non-GAAP financial measures" within the meaning of the applicable SEC rules. Distributable Earnings and Adjusted Distributable Earnings do not represent net income or cash generated from operating activities and should not be considered as alternatives to net income determined in accordance with GAAP or indications of our cash flows from operations determined in accordance with GAAP, measures of our liquidity or operating performance or indications of funds available for our cash needs. In addition, our methodologies for calculating Distributable Earnings and Adjusted Distributable Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures; therefore, our reported Distributable Earnings and Adjusted Distributable Earnings may not be comparable to the distributable earnings and adjusted distributable earnings as reported by other companies.
In order to maintain our qualification for taxation as a REIT, we are generally required to distribute substantially all of our taxable income, subject to certain adjustments, to our shareholders. We believe that one of the factors that investors consider important in deciding whether to buy or sell securities of a REIT is its distribution rate. Over time, Distributable Earnings has been a useful indicator of distributions to our shareholders and is a measure that is considered by our Board of Trustees when determining the amount of such distributions. We believe that Distributable Earnings and Adjusted Distributable Earnings provide meaningful information to consider in addition to net income and cash flows from operating activities determined in accordance with GAAP. These measures help us to evaluate our performance excluding the effects of certain transactions, the variability of any management incentive fees that may be paid or payable and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations. In addition, Distributable Earnings is used in determining the amount of base management and management incentive fees payable by us to our Manager under our management agreement.
Distributable Earnings:
We calculate Distributable Earnings as net income, computed in accordance with GAAP, including realized losses not otherwise included in net income determined in accordance with GAAP, and excluding: (a) the management incentive fees earned by our Manager, if any; (b) depreciation and amortization, if any; (c) non-cash equity compensation expense; (d) unrealized gains, losses and other similar non-cash items that are included in net income for the period of the calculation (regardless of whether such items are included in or deducted from net income or in other comprehensive income under GAAP), if any; and (e) one-time events pursuant to changes in GAAP and certain non-cash items, if any. Distributable Earnings are reduced for realized losses on loan investments when amounts are deemed uncollectable.
Adjusted Distributable Earnings:
We define Adjusted Distributable Earnings as Distributable Earnings excluding certain non-recurring expenses, such as transaction expenses related to the merger with RMRM.
Other Measures:
All In Yield:
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.
LTV:
Loan to value ratio, or LTV, represents the initial loan amount divided by the underwritten in place value of the underlying collateral at closing.
Maximum Maturity:
Maximum Maturity assumes all loan extension options are exercised, which options are subject to the borrower meeting certain conditions.
Net Debt:
Principal balance of debt, less cash.
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Disclaimer
Tremont Mortgage Trust published this content on 26 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 July 2021 21:32:08 UTC.
