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
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 Maturity
(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.
A Maryland Statutory 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210504006191/en/
Kevin Barry Manager, Investor Relations (617) 796-7651
RMR Mortgage (NASDAQ:RMRM)
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