8-K
Seven Hills Realty Trust (SEVN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT of 1934
Date of report (Date of earliest event reported): May 4, 2021
RMR Mortgage Trust
(Exact Name of Registrant as Specified in Its Charter)
Maryland
(State or other Jurisdiction of Incorporation)
| 001-34383 | 20-4649929 |
|---|---|
| (Commission File Number) | (IRS Employer Identification Number) |
Two Newton Place, 255 Washington Street, Suite 300,
Newton, Massachusetts 02458-1634
(Address of Principal Executive Offices) (Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Shares of Beneficial Interest | RMRM | The Nasdaq Stock Market LLC |
(617) 332-9530
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☒ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 4, 2021, RMR Mortgage Trust, or the Company, issued a press release regarding the Company’s results of operations and financial condition for the quarter ended March 31, 2021 and also provided certain supplemental operating and financial data for the quarter ended March 31, 2021. Copies of the Company’s press release and supplemental operating and financial data are furnished as Exhibits 99.1 and 99.2 hereto, respectively.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Press release dated May 4, 2021
99.2 First Quarter 2021 Supplemental Operating and Financial Data
104 Cover Page Interactive Data File. (Embedded within the inline XBRL document.)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| RMR MORTGAGE TRUST | |||
|---|---|---|---|
| Date: | May 4, 2021 | By: | /s/ G. Douglas Lanois |
| Name: | G. Douglas Lanois | ||
| Title: | Chief Financial Officer and Treasurer |
3
Document
Exhibit 99.1
FOR IMMEDIATE RELEASE
RMR Mortgage Trust Announces First Quarter 2021 Results
First Quarter Net Income and Distributable Earnings Per Common Share of $0.03
Cumulative Loan Originations of $250 Million
Quarterly Distribution Declared of $0.15 per Common Share
Announced Agreement to Merge with Tremont Mortgage Trust
____________________________________________________________________________________________________
Newton, MA (May 4, 2021): RMR Mortgage Trust (Nasdaq: RMRM) today announced financial results for the quarter ended March 31, 2021.
Tom Lorenzini, President of RMRM, made the following statement:
“"During the first quarter we successfully completed the transition of RMRM to a commercial mortgage REIT and made significant progress executing on our new business plan to invest capital in first mortgage whole loans secured by middle market and transitional real estate. We closed two loans totaling $65.5 million during the first quarter, and subsequent to quarter end, we closed two additional loans totaling $73.5 million, increasing our aggregate investments to nine loans with committed capital of approximately $250.0 million.
Additionally, we are excited about the recently announced plans to merge with Tremont Mortgage Trust. This transaction provides us a tremendous opportunity to build on our momentum and quickly scale our company, creating a larger, more diversified commercial mortgage REIT well positioned to approach $1 billion in assets.”
Quarterly Results
•Net income and Distributable Earnings of $0.4 million, or $0.03 per common share.
•Interest income from investments of $2.0 million.
•Book value per common share of $18.94.
For the three months ended March 31, 2021, Distributable Earnings was equal to net income. Additional information about Distributable Earnings appears later in this press release.
Portfolio Summary and Recent Investment Activities
| (dollars in thousands) | As of March 31, 2021 | As of December 31, 2020 |
|---|---|---|
| Number of loans | 7 | 5 |
| Total loan commitment | $177,195 | $111,720 |
| Weighted average maximum maturity (years) | 4.3 | 4.2 |
| Weighted average coupon rate | 4.99% | 5.08% |
| Weighted average all in yield | 5.65% | 5.71% |
| Weighted average risk rating | 3.0 | 3.0 |
| Weighted average loan to value | 67% | 68% |
RMRM committed capital and funded the following first mortgage whole loans during the three months ended March 31, 2021:
| Location | Property Type | Origination Date | Committed Principal Balance | Principal Balance | Coupon Rate | All in Yield | Maximum <br>Maturity <br>(date) | LTV | |||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | |||||||||||
| Miami, FL | Office | 01/19/21 | $ | 10,900 | $ | 10,900 | L + 4.50% | L + 5.47% | 01/19/2025 | 68 | % |
| Olmstead Falls, OH | Multifamily | 01/28/21 | 54,575 | 44,615 | L + 4.00% | L + 4.65% | 01/28/2026 | 63 | % | ||
| Total/weighted average | $ | 65,475 | $ | 55,515 | L + 4.10% | L + 4.81% | 64 | % |
•In April 2021, RMRM originated a first mortgage whole loan of $34.3 million to refinance an office/industrial property with 288,275 square feet located in Colorado Springs, CO. This loan requires the borrower to pay interest at the floating rate of LIBOR plus a premium of 450 basis points per annum. This floating rate loan includes an initial funding of $29.0 million and a future funding allowance of $5.3 million for tenant improvements, leasing commissions and capital expenditures and has a three year initial term with one, one-year extension option subject to the borrower meeting certain conditions.
•Also in April 2021, RMRM originated a first mortgage whole loan of $39.2 million to finance the acquisition of two cold storage industrial buildings located in Londonderry, NH. This loan requires the borrower to pay interest at the floating rate of LIBOR plus a premium of 400 basis points per annum. This floating rate loan includes an initial funding of $34.2 million and a future funding allowance of $5.0 million 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.
Merger with Tremont Mortgage Trust
As previously announced, RMRM and Tremont Mortgage Trust (Nasdaq: TRMT) have entered into a definitive agreement and plan of merger, dated April 26, 2021, or the Merger Agreement, pursuant to which TRMT will merge with and into RMRM, with RMRM continuing as the surviving company. Pursuant to the terms of the Merger Agreement, TRMT’s shareholders will receive 0.52 of one newly issued common share of RMRM for each common share of TRMT they hold, with cash paid in lieu of fractional shares. Completion of the merger will require
certain approvals of RMRM’s and TRMT's satisfaction or waiver of other conditions. The merger is expected to close during the third quarter of 2021.
Recent Financing Activities
•On February 18, 2021, one of RMRM's wholly owned subsidiaries entered into an agreement for a master repurchase facility with UBS AG, or the Master Repurchase Facility, which it may use to leverage its financing transactions. The facility has a three year term and permits advancements of up to 75% of whole loan amounts. While the Master Repurchase Facility has no maximum facility amount, RMRM expects the use of the Master Repurchase Facility to not exceed equity, which was $193.2 million as of March 31, 2021. RMRM's equity will change from time-to-time and may increase or decrease. RMRM expects that the size of the Master Repurchase Facility may similarly change as its equity changes.
•As of March 31, 2021, RMRM had no outstanding balance under the Master Repurchase Facility and, as of April 30, 2021, RMRM had a $23.2 million aggregate outstanding principal balance under the Master Repurchase Facility.
Distributions
•On April 15, 2021, RMRM declared a quarterly distribution of $0.15 per common share for the first quarter of 2021, or approximately $1.5 million, to shareholders of record on April 26, 2021. RMRM expects to pay this distribution on or about May 20, 2021.
Business Change
•As previously announced on January 5, 2021, the Securities and Exchange Commission, or SEC, issued an order granting RMRM’s request to deregister as an investment company under the Investment Company Act of 1940. This order enables RMRM to proceed with full implementation of its new business mandate to operate as a commercial mortgage real estate investment trust, or REIT. As a commercial mortgage REIT, RMRM is focused primarily on originating and investing in first mortgage whole loans secured by middle market and transitional commercial real estate.
Conference Call
At 10:00 a.m. Eastern Time on Wednesday, May 5, 2021, President, Tom Lorenzini, and Chief Financial Officer and Treasurer, Doug Lanois, will host a conference call to discuss RMRM’s first quarter 2021 financial results and our previously announced merger with TRMT. 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 Wednesday, May 12, 2021. To access the replay, dial (412) 317-0088. The replay pass code is 10153760.
A live audio webcast of the conference call will also be available in a listen-only mode on RMRM’s website, which is located at www.rmrmortgagetrust.com. Participants wanting to access the webcast should visit RMRM’s website about five minutes before the call. The archived webcast will be available for replay on RMRM’s website after the call. The transcription, recording and retransmission in any way of RMRM’s first quarter conference call are strictly prohibited without the prior written consent of RMRM.
Supplemental Data
A copy of RMRM’s First Quarter 2021 Supplemental Operating and Financial Data is available for download at RMRM’s website, www.rmrmortgagetrust.com. RMRM’s website is not incorporated as part of this press release.
About RMR Mortgage Trust
RMRM is a real estate finance company that originates and invests in first mortgage loans secured by middle market and transitional commercial real estate. RMRM is managed by an affiliate of The RMR Group Inc. (Nasdaq: RMR). Substantially all of RMR’s business is conducted by its majority owned subsidiary, The RMR Group LLC, which is an alternative asset management company with $31.8 billion in assets under management and more than 30 years of institutional experience in buying, selling, financing and operating commercial real estate. For more information about RMRM, please visit www.rmrmortgagetrust.com.
Non-GAAP Financial Measures
RMRM presents Distributable Earnings, which is considered a “non-GAAP financial measure” within the meaning of the applicable SEC rules. Distributable Earnings does not represent net income or cash generated from operating activities and should not be considered as an alternative to net income determined in accordance with GAAP or an indication of RMRM’s cash flows from operations determined in accordance with GAAP, a measure of RMRM’s liquidity or operating performance or an indication of funds available for RMRM’s cash needs. In addition, RMRM’s methodology for calculating Distributable Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures; therefore, RMRM’s reported Distributable Earnings may not be comparable to the distributable earnings as reported by other companies.
In order to maintain its qualification for taxation as a REIT, RMRM is generally required to distribute substantially all of its taxable income, subject to certain adjustments, to its shareholders. RMRM believes 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 may be a useful indicator of distributions to RMRM's shareholders and is a measure that is considered by RMRM's Board of Trustees when determining the amount of such distributions. RMRM believes that Distributable Earnings provides meaningful information to consider in addition to net income and cash flows from operating activities determined in accordance with GAAP. This measure helps RMRM to evaluate its performance excluding the effects of certain transactions, the variability of any incentive fees that may be paid or payable and GAAP adjustments that RMRM believes are not necessarily indicative of RMRM’s current loan portfolio and operations. In addition, Distributable Earnings is used in determining the amount of base management and management incentive fees payable by RMRM to RMRM’s manager under RMRM’s management agreement. There were no adjustments in the first quarter of 2021.
Please see the pages attached hereto for a more detailed statement of RMRM’s operating results and financial condition.
RMR MORTGAGE TRUST
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
| Three Months Ended March 31, 2021 | ||
|---|---|---|
| INCOME FROM INVESTMENTS: | ||
| Interest income from investments | $ | 2,001 |
| OTHER EXPENSES: | ||
| Base management fees | 715 | |
| General and administrative expenses | 592 | |
| Reimbursement of shared services expenses | 326 | |
| Total expenses | 1,633 | |
| Income before income tax expense | 368 | |
| Income tax expense | (18) | |
| Net income | $ | 350 |
| Weighted average common shares outstanding | 10,202 | |
| Net income per common share | $ | 0.03 |
RMR MORTGAGE TRUST
CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands, except per share data)
(unaudited)
| March 31, | ||
|---|---|---|
| 2021 | ||
| ASSETS | ||
| Cash and cash equivalents | $ | 46,839 |
| Restricted cash | 220 | |
| Loans held for investment, net | 147,247 | |
| Accrued interest receivable | 456 | |
| Prepaid expenses and other assets | 305 | |
| Total assets | $ | 195,067 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Accounts payable, accrued liabilities and deposits | $ | 1,121 |
| Due to related persons | 702 | |
| Total liabilities | 1,823 | |
| Commitments and contingencies | ||
| Shareholders' equity: | ||
| Common shares of beneficial interest, $0.001 par value per share; unlimited number of shares authorized; 10,202,009 shares issued and outstanding | 10 | |
| Additional paid in capital | 192,884 | |
| Cumulative net income | 350 | |
| Total shareholders' equity | 193,244 | |
| Total liabilities and shareholders' equity | $ | 195,067 |
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 RMRM uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, RMRM is making forward-looking statements. These forward-looking statements are based upon RMRM’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 RMRM’s forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond RMRM’s control. For example:
•Mr. Lorenzini states that RMRM successfully completed its transition to a commercial mortgage REIT and made significant progress executing on its new business plan to invest capital in first mortgage whole loans secured by middle market and transitional real estate. Additionally, this press release references recent loans closed. These statements may imply that RMRM will close additional loans, that it will achieve its business plan objectives and that its business will continue to improve as a result. However, RMRM’s business and ability to execute loans and realize its business plan objectives are subject to various risks, including the competitive nature of the industry in which it operates, as well as other factors, many of which are outside its control, such as the current COVID-19 pandemic. These risks and other factors may prevent RMRM from successfully closing additional loans, executing its new business plan and realizing its business plan objectives. Further, once RMRM invests or commits its remaining capital, its ability to continue to grow and fund loans will be subject to its ability to obtain additional cost-effective capital or its redeploying proceeds from repayments of its loan investments.
•RMRM has announced a regular quarterly distribution to its shareholders. However, the timing, amount and form of future distributions will be determined at the discretion of RMRM’s Board of Trustees and will depend upon various factors that its Board of Trustees deems relevant, including RMRM’s projected income, its Distributable Earnings, the then-current and expected needs and availability of cash to pay its obligations and fund its investments, distributions which may be required to be paid to maintain RMRM’s qualification for taxation as a REIT, limitations on distributions contained in RMRM’s financing arrangements and other factors deemed relevant by RMRM’s Board of Trustees, in its discretion.
•RMRM and TRMT have entered into a definitive agreement to merge. The merger is expected to close during the third quarter of 2021, subject to the satisfaction or waiver of closing conditions, including the receipt of the requisite approvals by RMRM’s and TRMT’s shareholders, and RMRM cannot be sure that these conditions will be satisfied or waived. Accordingly, the merger may not close by the end of the third quarter of 2021, or at all, or the terms contemplated by the Merger Agreement may change.
•RMRM expects to realize benefits from the merger, including increased scale, a more diversified loan portfolio and a greater presence within the commercial real estate lending market. These expectations are contingent upon the consummation of the merger and may not be realized as currently expected or at all.
The information contained in RMRM's “Summary of Principal Risk Factors” included in RMRM's Current Report on Form 8-K filed on March 24, 2021 with the SEC identifies other important factors that
could cause RMRM’s actual results to differ materially from those stated in or implied by RMRM’s forward looking statements. RMRM’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, RMRM does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
Additional Information about the Merger
In connection with the proposed merger, RMRM expects to file with the SEC a registration statement on Form S-4, containing a joint proxy statement/prospectus, and other documents with respect to the proposed merger and other transactions contemplated by the Merger Agreement. The joint proxy/prospectus will contain important information about the proposed merger and related transactions. SHAREHOLDERS OF RMRM AND TRMT ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED BY RMRM AND TRMT WITH THE SEC CAREFULLY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT RMRM, TRMT AND THE PROPOSED MERGER AND RELATED TRANSACTIONS.
Shareholders of RMRM and TRMT may obtain free copies of the registration statements, the joint proxy statement/prospectus and other relevant documents filed by RMRM or TRMT with the SEC (if and when they become available) through the website maintained by the SEC at www.sec.gov. Copies of the documents filed by RMRM with the SEC are also available free of charge on RMRM's website at www.rmrmortgagetrust.com. Copies of the documents filed by TRMT with the SEC are also available free of charge on TRMT's website at www.trmtreit.com.
This press release is for informational purposes only and is not intended to and shall not constitute an offer to sell or the solicitation of an offer to buy any securities, or the solicitation of any vote or approval in any jurisdiction pursuant to or in connection with the proposed transaction or otherwise, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale of securities would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
Participants in Solicitation Relating to the Merger
RMRM, TRMT and their respective trustees and executive officers, and Tremont Realty Advisors LLC, The RMR Group LLC, The RMR Group Inc. and certain of their respective directors, officers and employees may be deemed to be participants in the solicitation of proxies from the shareholders of RMRM and TRMT in respect of the proposed merger. Information regarding RMRM’s trustees and executive officers can be found in RMRM’s proxy statement filed with the SEC on March 24, 2021. Information regarding TRMT’s trustees and executive officers can be found in TRMT’s proxy statement filed with the SEC on March 25, 2021. Additional information regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and other relevant documents filed with the SEC in connection with the proposed merger if and when they become available. These documents are available
free of charge on the SEC’s website and from RMRM or TRMT, as applicable, using the sources indicated above.
Contact:
Kevin Barry
Manager, Investor Relations
(617) 796-7651
(END)
9
exhibit992
FIRST QUARTER 2021 Supplemental Operating and Financial Data ALL AMOUNTS IN THIS REPORT ARE UNAUDITED. Exhibit 99.2
2 Supplemental Q1 2021 2 Table of Contents CORPORATE INFORMATION Company Profile................................................................................................................................................ 3 Investor Information.......................................................................................................................................... 4 FINANCIALS First Quarter 2021 Highlights.......................................................................................................................... 5 Condensed Consolidated Balance Sheet...................................................................................................... 6 Condensed Consolidated Statement of Operation..................................................................................... 7 PORTFOLIO OVERVIEW First Quarter 2021 Portfolio Summary............................................................................................................ 8 Loan Investment Details................................................................................................................................... 9 Loan Portfolio Composition............................................................................................................................. 10 Loan Portfolio Credit Quality........................................................................................................................... 11 Interest Rate Sensitivity..................................................................................................................................... 12 WARNING CONCERNING FORWARD-LOOKING STATEMENTS........................................................................... 13 NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS........................................................................ 14 RMRM Nasdaq Listed 2 Please refer to Non-GAAP Financial Measures and Certain Definitions for terms used throughout this document.
3 Supplemental Q1 2021 3 Management: Our manager, Tremont Realty Advisors LLC, or TRA, or our Manager, is registered with the SEC, as an investment adviser. In addition to RMRM, TRA also provides management services to Tremont Mortgage Trust (Nasdaq: TRMT), 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 March 31, 2021, RMR had $31.8 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 43,000 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. The Company: RMR Mortgage Trust, or RMRM, we, our or us, is a real estate finance company 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. Business Change: As previously announced on January 5, 2021, the Securities and Exchange Commission, or SEC, issued an order granting our request to deregister as an investment company under the Investment Company Act of 1940. This order enables us to proceed with full implementation of our new business mandate to operate as a commercial mortgage real estate investment trust, or REIT. As a result of the changes to our business, we have not provided a comparison of our financial statements to prior periods in which we were operating as a registered investment company because it would not be useful to our shareholders. Corporate Headquarters: Two Newton Place 255 Washington Street, Suite 300 Newton, MA 02458-1634 (617) 332-9530 Stock Exchange Listing: Nasdaq Trading Symbol: Common Shares: RMRM Key Data (as of and for the three months ended March 31, 2021): (dollars in thousands) Q1 2021 interest income $ 2,001 Q1 2021 net income $ 350 Q1 2021 Distributable Earnings $ 350 Loans held for investment, net $ 147,247 Total assets $ 195,067 Company Profile RETURN TO TABLE OF CONTENTS
4 Supplemental Q1 2021 4 Investor Information Board of Trustees Barbara D. Gilmore John L. Harrington Jeffrey P. Somers 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 RMR 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) 332-9530 or ir@rmrmortgagetrust.com (617) 796-8253 ir@rmrmortgagetrust.com www.rmrmortgagetrust.com RETURN TO TABLE OF CONTENTS
5 Supplemental Q1 2021 5 Financial Results Loan Portfolio Capitalization Interest Rates Note: As of March 31, 2021 (unless otherwise noted) • Net income and Distributable Earnings of $0.4 million or $0.03 per common share. • Book value per common share of $18.94. • Distribution of $0.15 per common share declared in April 2021 and payable in May 2021. • 7 first mortgage whole loans diversified among office, multifamily, retail, lab and industrial collateral, with an aggregate total loan commitment of $177.2 million. ◦ Weighted average maturity of 4.3 years based on Maximum Maturities. ◦ Weighted average coupon of 4.99% and weighted average All In Yield of 5.65%. ◦ All loans are current on debt service. • 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 0.77%. • 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. • Entered into master repurchase facility with UBS AG, or UBS, or our Master Repurchase Facility, which we will use to leverage our financing transactions. The Master Repurchase Facility has a three- year term and no maximum facility amount. We expect advancements under the facility to not exceed our equity, which as of March 31, 2021 was $193.2 million • As of March 31, 2021, we had no outstanding balance under our Master Repurchase Facility and, as of April 30, 2021, we had a $23.2 million aggregate outstanding principal balance under our Master Repurchase Facility. First Quarter 2021 Highlights RETURN TO TABLE OF CONTENTS
6 Supplemental Q1 2021 6 Financial Summary March 31, 2021 ASSETS Cash and cash equivalents $ 46,839 Restricted cash 220 Loans held for investment, net 147,247 Accrued interest receivable 456 Prepaid expenses and other assets 305 Total assets $ 195,067 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable, accrued liabilities and deposits $ 1,121 Due to related persons 702 Total liabilities 1,823 Commitments and contingencies Shareholders' equity: Common shares of beneficial interest, $0.001 par value per share; unlimited number of shares authorized; 10,202,009 shares issued and outstanding 10 Additional paid in capital 192,884 Cumulative net income 350 Total shareholders' equity 193,244 Total liabilities and shareholders' equity $ 195,067 Condensed Consolidated Balance Sheet (dollars in thousands, except per share data) RETURN TO TABLE OF CONTENTS
7 Supplemental Q1 2021 7 Condensed Consolidated Statement of Operations Three Months Ended March 31, 2021 INCOME FROM INVESTMENTS: Interest income from investments $ 2,001 OTHER EXPENSES: Base management fees 715 General and administrative expenses 592 Reimbursement of shared services expenses 326 Total expenses 1,633 Income before income tax expense 368 Income tax expense (18) Net income $ 350 Weighted average common shares outstanding 10,202 Net income per common share $ 0.03 (amounts in thousands, except per share data) RETURN TO TABLE OF CONTENTS
8 Supplemental Q1 2021 8 (dollars in thousands) First Quarter 2021 Portfolio Activity Total Loan Commitments Unfunded Commitments First Quarter 2021 Originations Portfolio Summary as of March 31, 2021 Number of loans 2 7 Average loan commitment $32,738 $25,314 Total loan commitments $65,475 $177,195 Unfunded loan commitments $9,960 $28,613 Principal balance $55,515 $148,652 Weighted average coupon rate 4.10% 4.99% Weighted average All In Yield 4.81% 5.65% Weighted average Maximum Maturity 4.7 4.3 Weighted average LTV 64% 67% Weighted average LIBOR Floor 0.74% 0.77% Loans with active LIBOR floors 100% 100% Weighted average risk rating 3.0 3.0 Principal Balance First Quarter 2021 Portfolio Summary RETURN TO TABLE OF CONTENTS Total Loan Commitments Unfunded Commitments Principal Balance Loan Originations by Quarter $30,000 $177,195
9 Supplemental Q1 2021 9 First Mortgage Whole Loans as of March 31, 2021: (1) Location Property Type Origination Date Committed Principal Amount Principal Balance Coupon Rate All in Yield Maturity Date Maximum Maturity Date LTV Risk Rating Los Angeles, CA Retail 12/17/2020 $ 24,600 $ 17,429 L + 4.25% L + 5.09% 12/17/2022 12/17/2024 67% 3 Miami, FL Office 01/19/2021 10,900 10,900 L + 4.50% L + 5.47% 01/19/2023 01/19/2025 68% 3 Downers Grove, IL Office 09/25/2020 30,000 29,500 L + 4.25% L + 4.69% 11/25/2023 11/25/2024 67% 3 Durham, NC Lab 12/17/2020 21,500 13,500 L + 4.35% L + 5.20% 12/17/2023 12/17/2025 57% 3 Aurora, IL Office / Industrial 12/18/2020 16,500 14,710 L + 4.35% L + 5.04% 12/18/2023 12/18/2024 73% 3 Berkeley, CA Lab 12/30/2020 19,120 17,998 L + 4.35% L + 4.85% 12/30/2023 12/30/2025 75% 3 Olmstead Falls, OH Multifamily 01/28/2021 54,575 44,615 L + 4.00% L + 4.65% 01/28/2024 01/28/2026 63% 3 Total/weighted average $ 177,195 $ 148,652 L + 4.22% L + 4.88% 67% 3.0 (1) As of April 30, 2021, all of our borrowers had paid their debt service obligations owed and due to us, and none of the loans included in our investment portfolio were in default. Loan Investment Details RETURN TO TABLE OF CONTENTS (dollars in thousands)
10 Supplemental Q1 2021 10 Retail Geographic Region (1) Property Type (1) Maximum Maturity Profile (2) (dollars in thousands) Loan Portfolio Composition RETURN TO TABLE OF CONTENTS (1) Based on book value of loans held for investment as of March 31, 2021. (2) Based on principal balances as of March 31, 2021.
11 Supplemental Q1 2021 11 Loan to Value (1) % of Portfolio Loan Portfolio Credit Quality Loan Count 1 1 3 2 0 0 0Loan Count 7 0 0 Risk Rating Distribution (1) % of Portfolio Weighted Average LTV: 67% Weighted Average Risk Rating: 3.0 RETURN TO TABLE OF CONTENTS (1) Percentage of portfolio based on book value of loans held for investment as of March 31, 2021.
12 Supplemental Q1 2021 12 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 minimum LIBOR for each loan. These floors range from 0.50% to 1.00% and the portfolio weighted average is 0.77% as of March 31, 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. The above table illustrates the incremental impact on our interest income due to increases in LIBOR, taking into consideration our borrowers’ interest rate floors as of March 31, 2021. The results in the table above are based on our loan portfolio and LIBOR of 0.11% at March 31, 2021. As of March 31, 2021, RMRM had no outstanding balance under our Master Repurchase Facility and, as such, this interest rate sensitivity analysis does not consider the effects of interest expense. 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. Our master repurchase agreement, or the Master Repurchase Agreement, with UBS AG, or UBS, states that at such time as LIBOR shall no longer be made available or used for determining the interest rate of loans, the replacement base rate shall be an alternative benchmark rate (including any mathematical or other adjustments to the benchmark rate (if any) incorporated therein so that the resulting rate approximates LIBOR as close as reasonably possible) as determined by UBS under similar facilities for the financing of similar assets and is consistent with the pricing index of similarly situated counterparties. 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 amended to replace LIBOR for an alternative benchmark rate (which may include the secured overnight borrowing rate, or SOFR, or another rate based on SOFR) that will approximate the existing interest rate as calculated in accordance with LIBOR. Interest Rate Sensitivity Net Interest Income Per Share Sensitivity to LIBOR (Annualized impact per share) RETURN TO TABLE OF CONTENTS
13 Supplemental Q1 2021 13 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 “Summary of Principal Risk Factors” included in our Current Report on Form 8-K filed on March 24, 2021 with the SEC, identifies other important factors that could cause RMRM’s actual results to differ materially from those stated in or implied by RMRM’s forward looking statements. RMRM’s filings with the SEC are available on the SEC’s website at www.sec.gov. Warning Concerning Forward-Looking Statements RETURN TO TABLE OF CONTENTS
14 Supplemental Q1 2021 14 O N- G AA P FI NA NC IA L M EA SU RE S AN D CE RT AI N DE FI NI TI O NS Non-GAAP Financial Measures: We present Distributable Earnings, which is considered a “non-GAAP financial measure” within the meaning of the applicable SEC rules. Distributable Earnings does not represent net income or cash generated from operating activities and should not be considered as an alternative to net income determined in accordance with GAAP or an indication of our cash flows from operations determined in accordance with GAAP, a measure of our liquidity or operating performance or an indication of funds available for our cash needs. In addition, our methodology for calculating 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 may not be comparable to the distributable earnings as reported by other companies. We intend to elect to be taxed as a REIT under the internal revenue code of 1986, as amended, effective for our 2020 taxable year. 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 may be 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 provides meaningful information to consider in addition to net income and cash flows from operating activities determined in accordance with GAAP. This measure helps us to evaluate our performance excluding the effects of certain transactions, the variability of any 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. For the three months ended March 31, 2021, Distributable Earnings was equal to net income, and therefore there were no adjustments. 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. Maximum Maturity: Maximum Maturity assumes all loan extension options are exercised, which options are subject to the borrower meeting certain conditions. 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. Non-GAAP Financial Measures and Certain Definitions RETURN TO TABLE OF CONTENTS