10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549 

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-38199

Tremont Mortgage Trust

(Exact Name of Registrant as Specified in Its Charter)

Maryland	82-1719041
(State of Organization)	(IRS Employer Identification No.)

Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458-1634

(Address of Principal Executive Offices)                            (Zip Code)

Registrant’s Telephone Number, Including Area Code 617-796-8317

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	TRMT	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
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 in Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

Number of registrant's common shares of beneficial interest, $0.01 par value per share, outstanding as of November 2, 2020: 8,303,254

TREMONT MORTGAGE TRUST

FORM 10-Q

September 30, 2020

INDEX

		Page
PART I	Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets — September 30, 2020 and December 31, 2019	1
	Condensed Consolidated Statements of Operations — Three and Nine Months Ended September 30, 2020 and 2019	2
	Condensed Consolidated Statements of Shareholders’ Equity — Three and Nine Months Ended September 30, 2020 and 2019	3
	Condensed Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2020 and 2019	4
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31
	Warning Concerning Forward-Looking Statements	32
PART II	Other Information	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 5.	Other Information	39
Item 6.	Exhibits	40
	Signatures	41

References in this Quarterly Report on Form 10-Q to the Company, we, us or our include Tremont Mortgage Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

PART I. Financial Information

Item 1. Financial Statements

TREMONT MORTGAGE TRUST

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(unaudited)

	September 30,		December 31,
	2020		2019
ASSETS
Cash and cash equivalents	$	11,036	$	8,732
Restricted cash	—		143
Loans held for investment, net	280,219		242,078
Accrued interest receivable	946		755
Prepaid expenses and other assets	40		221
Total assets	$	292,241	$	251,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, accrued liabilities and deposits	$	658	$	1,011
Master repurchase facility, net	200,501		164,694
Due to related persons	19		3
Total liabilities	201,178		165,708
Commitments and contingencies
Shareholders' equity:
Common shares of beneficial interest, $0.01 par value per share; 25,000,000 shares authorized; 8,303,254 and 8,239,610 shares issued and outstanding, respectively	83		82
Additional paid in capital	89,035		88,869
Cumulative net income	8,590		1,937
Cumulative distributions	(6,645)		(4,667)
Total shareholders’ equity	91,063		86,221
Total liabilities and shareholders' equity	$	292,241	$	251,929

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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TREMONT MORTGAGE TRUST

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
INCOME FROM INVESTMENTS:
Interest income from investments	$	4,632	$	4,959	$	13,412	$	11,872
Less: interest and related expenses	(1,242)		(1,992)		(4,367)		(5,572)
Income from investments, net	3,390		2,967		9,045		6,300
OTHER EXPENSES:
General and administrative expenses	576		541		1,640		1,662
Reimbursement of shared services expenses	189		370		752		1,110
Total expenses	765		911		2,392		2,772
Net income	$	2,625	$	2,056	$	6,653	$	3,528
Weighted average common shares outstanding - basic and diluted	8,190		8,156		8,179		5,583
Net income per common share - basic and diluted	$	0.32	$	0.25	$	0.81	$	0.63

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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TREMONT MORTGAGE TRUST

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(amounts in thousands)

(unaudited)

	Number of			Additional
	Common	Common		Paid In		Cumulative		Cumulative
	Shares	Shares		Capital		Net Income (Loss)		Distributions		Total
Balance at December 31, 2019	8,240	$	82	$	88,869	$	1,937	$	(4,667)	$	86,221
Share grants	—	—		42		—		—		42
Share repurchases	(1)	—		(2)		—		—		(2)
Net income	—	—		—		1,666		—		1,666
Distributions	—	—		—		—		(1,895)		(1,895)
Balance at March 31, 2020	8,239	82		88,909		3,603		(6,562)		86,032
Share grants	15	1		71		—		—		72
Share repurchases	—	—		(1)		—		—		(1)
Net income	—	—		—		2,362		—		2,362
Balance at June 30, 2020	8,254	83		88,979		5,965		(6,562)		88,465
Share grants	56	—		76		—		—		76
Share repurchases	(7)	—		(20)		—		—		(20)
Net income	—	—		—		2,625		—		2,625
Distributions	—	—		—		—		(83)		(83)
Balance at September 30, 2020	8,303	$	83	$	89,035	$	8,590	$	(6,645)	$	91,063
Balance at December 31, 2018	3,179	$	32	$	62,540	$	(2,904)	$	—	$	59,668
Share grants	—	—		35		—		—		35
Net income	—	—		—		578		—		578
Distributions	—	—		—		—		(350)		(350)
Balance at March 31, 2019	3,179	32		62,575		(2,326)		(350)		59,931
Share grants	15	—		185		—		—		185
Share repurchases	(1)	—		(6)		—		—		(6)
Net income	—	—		—		894		—		894
Distributions	—	—		—		—		(702)		(702)
Issuance of shares, net	5,000	50		26,024		—		—		26,074
Balance at June 30, 2019	8,193	82		88,778		(1,432)		(1,052)		86,376
Share grants	53	—		80		—		—		80
Share repurchases	(6)	—		(31)		—		—		(31)
Net income	—	—		—		2,056		—		2,056
Distributions	—	—		—		—		(1,802)		(1,802)
Balance at September 30, 2019	8,240	$	82	$	88,827	$	624	$	(2,854)	$	86,679

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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TREMONT MORTGAGE TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)

	Nine Months Ended September 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,653	$	3,528
Adjustments to reconcile net income to net cash provided by operating activities:
Share based compensation	190		300
Amortization of deferred financing costs	364		502
Amortization of loan origination and exit fees	(1,441)		(1,333)
Changes in operating assets and liabilities:
Accrued interest receivable and interest advances	(933)		(367)
Prepaid expenses and other assets	181		136
Accounts payable, accrued liabilities and deposits	(353)		(176)
Due to related persons	16		(101)
Net cash provided by operating activities	4,677		2,489
CASH FLOWS FROM INVESTING ACTIVITIES:
Origination of loans held for investment	(25,738)		(119,062)
Additional funding of loans held for investment	(12,309)		(4,835)
Repayment of loans held for investment	2,089		53,610
Net cash used in investing activities	(35,958)		(70,287)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from master repurchase facility	36,873		92,983
Repayments under master repurchase facility	(1,358)		(34,312)
Proceeds from RMR credit agreement	—		14,220
Repayment of RMR credit agreement	—		(14,220)
Repayment of note payable	—		(31,690)
Payments of deferred financing costs	(72)		(347)
Proceeds from issuance of common shares, net	—		26,074
Repurchase of common shares	(23)		(37)
Distributions	(1,978)		(2,854)
Net cash provided by financing activities	33,442		49,817
Increase (decrease) in cash, cash equivalents and restricted cash	2,161		(17,981)
Cash, cash equivalents and restricted cash at beginning of period	8,875		27,335
Cash, cash equivalents and restricted cash at end of period	$	11,036	$	9,354
SUPPLEMENTAL DISCLOSURES:
Interest paid	$	4,059	$	4,974

4

SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

The table below provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:

	As of September 30,
	2020		2019
Cash and cash equivalents	$	11,036	$	9,244
Restricted cash	—		110
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	11,036	$	9,354

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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TREMONT MORTGAGE TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Note 1. Basis of Presentation

The accompanying condensed consolidated financial statements of Tremont Mortgage Trust and its consolidated subsidiaries are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2019, or our Annual Report.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the accompanying condensed consolidated financial statements include the fair value of financial instruments.

Note 2. Summary of Significant Accounting Policies

    Consolidation. For each investment we make, we evaluate whether consolidation of the borrower's financial statements is required under GAAP. GAAP addresses the application of consolidation principles to an investor with a controlling financial interest. Variable interest entities, or VIEs, are subject to consolidation under GAAP if their equity investors do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties, are not able to direct the entity’s most significant activities or are not exposed to the entity’s losses or entitled to its residual returns. VIEs are required to be consolidated by their primary beneficiaries, which are the entities with the power to direct the activities which are most significant to the economic performance of the VIE. These determinations often involve complex and subjective analyses. As of September 30, 2020, we concluded that our investments were not VIEs.

    Cash, Cash Equivalents and Restricted Cash. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

    Restricted cash primarily consists of deposit proceeds from potential borrowers when originating loans, which may be returned to the applicable borrower upon the closing of the loan, after deducting any transaction costs paid by us for the benefit of such borrower.

    Repurchase Agreements. Loans financed through repurchase agreements are treated as collateralized financing transactions, unless they meet sales treatment under GAAP. Pursuant to GAAP treatment of collateralized financing transactions, loans financed through repurchase agreements remain on our consolidated balance sheet as assets, and cash received from the purchasers is recorded on our consolidated balance sheet as liabilities. Interest paid in accordance with repurchase agreements is recorded as interest expense.

    Loans Held for Investment. Generally, our loans are classified as held for investment based upon our intent and ability to hold them until maturity. Loans that are held for investment are carried at cost, net of unamortized loan origination and accreted exit fees that are required to be recognized in the carrying value of the loans in accordance with GAAP, unless the loans are deemed to be impaired. Loans that we have a plan to sell or liquidate are held at the lower of cost or fair value less cost to sell.

    We evaluate each of our loans for impairment at least quarterly by assessing a variety of risk factors in relation to each loan and assigning a risk rating to each loan based on those factors. Factors considered in these evaluations include, but are not limited to, property type, geographic and local market dynamics, physical condition, leasing and tenant profile, projected cash flow, risk of loss, current loan to value ratio, or LTV, debt yield, collateral performance, structure, exit plan and sponsorship. Loans are rated “1” (lower risk) through “5” (impaired/loss likely) as defined below:

    "1" lower risk—Criteria reflects a sponsor having a strong financial condition and low credit risk and our evaluation of management's experience; collateral performance exceeding performance metrics included in the business plan or

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TREMONT MORTGAGE TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(dollars in thousands, except per share data)

credit underwriting; and the property demonstrating stabilized occupancy and/or market rates, resulting in strong current cash flow and net operating income and/or having a very low LTV.

    "2" average risk—Criteria reflects a sponsor having a stable financial condition and our evaluation of management's experience; collateral performance meeting or exceeding substantially all performance metrics included in the business plan or credit underwriting; and the property demonstrating improved occupancy at market rents, resulting in sufficient current cash flow and/or having a low LTV.

    "3" acceptable risk—Criteria reflects a sponsor having a history of repaying loans at maturity and meeting its credit obligations and our evaluation of management's experience; collateral performance expected to meet performance metrics included in the business plan or credit underwriting; and the property having a moderate LTV. New loans and loans with a limited history will typically be assigned this rating and will be adjusted to other levels from time to time as appropriate.

    "4" higher risk—Criteria reflects a sponsor having a history of unresolved missed or late payments, maturity extensions and difficulty timely fulfilling its credit obligations and our evaluation of management's experience; collateral performance failing to meet the business plan or credit underwriting; the existence of a risk of default possibly leading to a loss and/or potential weaknesses that deserve management’s attention; and/or the property having a high LTV.

     "5" impaired/loss likely—Criteria reflects a very high risk of realizing a principal loss or having incurred a principal loss; a sponsor having a history of default payments, trouble fulfilling its credit obligations, deeds in lieu of foreclosures, and/or bankruptcies; collateral performance is significantly worse than performance metrics included in the business plan; loan covenants or performance milestones having been breached or not attained; timely exit via sale or refinancing being uncertain; and/or the property having a very high LTV.

See Note 4 for further information regarding our current loan portfolio’s assessment under our internal risk rating policy.

Impairment occurs when it is deemed probable that we will not be able to collect all amounts due under a loan according to its contractual terms. Impairment will then be measured based on the estimated fair value of the underlying collateral, net of any costs we expect to incur to realize that value. The determination of this estimated fair value involves judgments and assumptions based on objective and subjective factors. Consideration will be given to various factors, such as business plans, property occupancies, tenant profiles, rental rates, operating expenses and borrowers’ repayment plans, among others, and will require significant judgments regarding certain circumstances, such as guarantees, if any. Upon measurement of an impairment, we will record an allowance to reduce the carrying value of the loan accordingly, and record a corresponding charge to net income in our condensed consolidated statements of operations.

    Fair Value of Financial Instruments. Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 820-10, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands the required disclosure regarding fair value measurements. ASC Topic 820-10 defines fair value as the price that would be received for a financial instrument in a current sale, which assumes an orderly transaction between market participants on the measurement date. We determine the estimated fair value of financial assets and liabilities using the three-tier fair value hierarchy established by GAAP, which prioritizes the inputs used in measuring fair value. GAAP establishes market based or observable inputs as the preferred source of values followed by valuation models using management assumptions in the absence of market inputs. The three levels of inputs that may be used to measure fair value are as follows:

    Level I—Inputs include quoted prices in active markets for identical assets or liabilities that we have the ability to access.

    Level II—Inputs include quoted prices in markets that are less active or inactive or for which all significant inputs are observable, either directly or indirectly.

    Level III—Inputs include unobservable prices and are supported by little or no market activity and are significant to the overall fair value measurement.

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TREMONT MORTGAGE TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(dollars in thousands, except per share data)

    Loan Deferred Fees. Loan origination and exit fees are reflected in loans held for investment, net, in our condensed consolidated balance sheets and include fees charged to borrowers. These fees are amortized and accreted, respectively, into interest income over the life of the related loans held for investment.

Deferred Financing Costs. Costs incurred in connection with financings are capitalized and recorded as an offset to the related liability and amortized over the respective financing terms and are recorded in our consolidated statements of operations as a component of interest and related expenses. At September 30, 2020, we had approximately $550 of capitalized financing costs, net of amortization.

    Net Earnings Per Common Share. We calculate basic earnings per common share, or EPS, by dividing net income by the weighted average number of common shares outstanding during the period. We calculate diluted net EPS using the more dilutive of the two-class method or the treasury stock method.

    Revenue Recognition. Interest income related to our first mortgage whole loans secured by commercial real estate, or CRE, will generally be accrued based on the coupon rates applied to the outstanding principal balance of such loans. Fees, premiums and discounts, if any, will be amortized or accreted into interest income over the remaining lives of the loans using the effective interest method, as adjusted for any prepayments.

    If a loan's interest or principal payments are not paid when due and there is uncertainty that such payments will be collected, the loan may be categorized as non-accrual and no interest will be recorded unless it is collected. When all overdue payments are collected and, in our judgment, a loan is likely to remain current, it may be re-categorized as accrual.

    For loans purchased at a discount, GAAP limits the yield that may be accreted (accretable yield) to the excess of the investor’s estimate of undiscounted expected principal, interest and other cash flows (cash flows expected at acquisition to be collected) over the investor’s initial investment in the loan. GAAP also requires that the excess of contractual cash flows over cash flows expected to be collected (non-accretable difference) not be recognized as an adjustment of yield, loss accrual or valuation allowance. Subsequent increases in cash flows expected to be collected from such loans generally will be recognized prospectively through adjustment of the loan’s yield over its remaining life. Decreases in cash flows expected to be collected will be recorded as an impairment.

Note 3. Recent Accounting Pronouncements

    In June 2016, FASB issued Accounting Standards Update, or ASU, No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. As an emerging growth company that has opted to take advantage of the extended transition period, we expect to adopt ASU No. 2016-13 on January 1, 2023. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have on our condensed consolidated financial statements.

Note 4. Loans Held for Investment

    We originate first mortgage whole loans secured by middle market and transitional CRE, which are generally to be held as long term investments. We funded our existing loan portfolio using cash on hand and advancements under our master repurchase facility with Citibank, N.A., or Citibank, or our Master Repurchase Facility, and other debt financing. See Note 5 for further information regarding our Master Repurchase Facility.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(dollars in thousands, except per share data)

The table below details overall statistics for our loan portfolio as of September 30, 2020 and December 31, 2019:    

	Balance at September 30, 2020			Balance at December 31, 2019
Number of loans	14			12
Total loan commitments	$	293,961		$	260,167
Unfunded loan commitments (1)	$	13,974		$	17,268
Principal balance	$	279,987		$	242,899
Unamortized net deferred origination and exit fees	$	232		$	(821)
Carrying value	$	280,219		$	242,078
Weighted average coupon rate	5.70		%	5.76		%
Weighted average all in yield (2)	6.38		%	6.41		%
Weighted average maximum maturity (years) (3)	2.9			3.6
Weighted average LTV (4)	67		%	70		%

(1)    Unfunded loan commitments are primarily used to finance property and building improvements and leasing capital and are generally funded over the term of the loan.

(2)     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.

(3)     Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions.

(4)     LTV represents the initial loan amount divided by the underwritten in-place value at closing.

The table below details our loan activities during the three months ended September 30, 2020:

	Principal Balance		Deferred Fees		Carrying Value
Balance at June 30, 2020	$	278,484	$	(259)	$	278,225
Additional funding	3,592		—		3,592
Repayments	(2,089)		—		(2,089)
Net amortization of deferred fees	—		491		491
Balance at September 30, 2020	$	279,987	$	232	$	280,219

The table below details our loan activities during the nine months ended September 30, 2020:

	Principal Balance		Deferred Fees		Carrying Value
Balance at December 31, 2019	$	242,899	$	(821)	$	242,078
Additional funding	13,051		—		13,051
Originations	26,126		(388)		25,738
Repayments	(2,089)		—		(2,089)
Net amortization of deferred fees	—		1,441		1,441
Balance at September 30, 2020	$	279,987	$	232	$	280,219

In July 2020, the borrower under our loan related to a retail property located in Coppell, TX sold a parcel of land that was a part of the property securing the loan. The borrower used $2,089 of the sale proceeds to repay part of the outstanding principal balance under the loan which also reduced the committed principal by the same amount and we allowed the borrower to use the remaining $100 of sale proceeds to increase the reserve for its future debt service obligation payments owed to us under the loan. We used $1,358 of these repayment proceeds to repay a part of the outstanding balance under our Master Repurchase Facility.

In October 2020, the borrower under our loan related to a retail property located in Paradise Valley, AZ exercised its right and satisfied the applicable conditions to extend the maturity date of the loan by one year to November 30, 2021 pursuant to the terms of the loan agreement.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(dollars in thousands, except per share data)

    The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of September 30, 2020 and December 31, 2019:

	September 30, 2020					December 31, 2019
Property Type	Number of Loans	Carrying Value		Percentage of Value		Number of Loans	Carrying Value		Percentage of Value
Office	5	$	93,480	33	%	4	$	71,446	30	%
Multifamily	3	70,107		25	%	3	68,911		28	%
Industrial	2	48,951		17	%	1	34,838		14	%
Retail	3	43,802		16	%	3	43,782		18	%
Hotel	1	23,879		9	%	1	23,101		10	%
	14	$	280,219	100	%	12	$	242,078	100	%

	September 30, 2020					December 31, 2019
Geographic Location	Number of Loans	Carrying Value		Percentage of Value		Number of Loans	Carrying Value		Percentage of Value
East	5	$	105,099	37	%	4	$	90,047	37	%
South	5	103,958		37	%	5	103,295		43	%
Midwest	3	60,496		22	%	2	39,722		16	%
West	1	10,666		4	%	1	9,014		4	%
	14	$	280,219	100	%	12	$	242,078	100	%

Loan Risk Ratings

    We evaluate each of our loans for impairment at least quarterly by assessing a variety of risk factors in relation to each loan and assigning a risk rating to each loan based on those factors. The following table allocates the carrying value of our loan portfolio at September 30, 2020 and December 31, 2019 based on our internal risk rating policy:

	September 30, 2020			December 31, 2019
Risk Rating	Number of Loans	Carrying Value		Number of Loans	Carrying Value
1	—	$	—	—	$	—
2	1	24,589		1	24,462
3	6	128,037		11	217,616
4	7	127,593		—	—
5	—	—		—	—
	14	$	280,219	12	$	242,078

    The weighted average risk rating of our loans by carrying value was 3.4 and 2.9 as of September 30, 2020 and December 31, 2019, respectively. The COVID-19 pandemic has negatively impacted some of our borrowers’ business operations or tenants, particularly in the cases of our retail and hospitality collateral, which are the types of properties that have been most negatively impacted by the pandemic. We expect that those negative impacts may continue and may apply to other borrowers and/or their tenants. Therefore, certain of our borrowers’ business plans will likely take longer to execute than initially expected and certain of our borrowers may be unable to pay their debt service obligations owed and due to us as currently scheduled or at all. As of September 30, 2020, we had seven loans representing 46% of the carrying value of our loan portfolio with a loan risk rating of “4” or “higher risk." Six of these loans were downgraded from a risk rating of "3" or "acceptable risk" during the three months ended March 31, 2020, and the seventh loan was downgraded from a risk rating of "3" or "acceptable risk" during the three months ended September 30, 2020. We did not have any impaired loans or nonaccrual loans as of September 30, 2020 or December 31, 2019. See Note 2 for further information regarding our loan risk ratings.

    As of November 2, 2020, all of our borrowers had paid all of their debt service obligations owed and due to us and none of the loans included in our investment portfolio were in default.

10

TREMONT MORTGAGE TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(dollars in thousands, except per share data)

Note 5. Debt Agreements

    The table below is an overview of our debt agreements that provided financing for our loans held for investment:

	Debt Obligation
							Weighted Average		Collateral
	Maximum Facility Size		Principal Balance		Carrying Value		Coupon Rate	Remaining Maturity (1)(2) (years)	Principal Balance		Fair Value (3)
September 30, 2020:
Master repurchase facility	$	213,482	$	201,051	$	200,501	L + 2.00%	0.9	$	279,987	$	277,457
December 31, 2019:
Master repurchase facility	$	213,482	$	165,536	$	164,694	L + 1.99%	1.6	$	242,899	$	242,763

(1)The weighted average remaining maturity is determined using the current maturity date of the corresponding loans, assuming no borrower loan extension options have been exercised.

(2)On October 30, 2020, we amended the agreements that govern our Master Repurchase Facility, or collectively, as amended, our Master Repurchase Agreement to, among other things, extend the expiration date by one year to November 6, 2022, subject to early termination as provided for in our Master Repurchase Agreement.

(3)See Note 6 for further discussion of our financial assets and liabilities not carried at fair value.

    Under our Master Repurchase Agreement, the initial purchase price paid by Citibank for each purchased asset is up to 75% of the lesser of the market value of the purchased asset or the unpaid principal balance of such purchased asset, subject to Citibank’s approval. Upon the repurchase of a purchased asset, we are required to pay Citibank the outstanding purchase price of the purchased asset, accrued interest and all accrued and unpaid expenses of Citibank relating to such purchased asset. The price differential (or interest rate) relating to a purchased asset is equal to LIBOR plus a premium of 200 to 250 basis points, determined by the yield of the purchased asset and the property type of the purchased asset’s real estate collateral. Citibank has the discretion under our Master Repurchase Agreement to make advancements at margins higher than 75% and at premiums of less than 200 basis points. The weighted average interest rate for advancements under our Master Repurchase Facility was 2.17% and 4.18% for the three months ended September 30, 2020 and 2019, respectively, and 2.70% and 4.38% for the nine months ended September 30, 2020 and 2019, respectively. For the three months ended September 30, 2020 and 2019, we recorded interest expense of $1,120 and $1,563, respectively, and $4,003 and $4,126 for the nine months ended September 30, 2020 and 2019, respectively, in connection with our Master Repurchase Facility.

    In connection with our Master Repurchase Agreement, we entered into a guaranty, or, as amended, the Guaranty, which requires us to guarantee 25% of our subsidiary's prompt and complete payment of the purchase price, purchase price differential and any costs and expenses of Citibank related to our Master Repurchase Agreement. The Guaranty also requires us to comply with customary financial covenants, which include the maintenance of a minimum tangible net worth, minimum cash liquidity, a total indebtedness to tangible net worth ratio and a minimum interest coverage ratio. These maintenance provisions provide Citibank with the right, in certain circumstances related to a credit event, as defined in our Master Repurchase Agreement, to re-determine the value of purchased assets. Where a decline in the value of purchased assets has resulted in a margin deficit, Citibank may require us to eliminate such margin deficit through a combination of purchased asset repurchases and cash transfers to Citibank, subject to Citibank's approval. As of September 30, 2020, we have not received a margin call under our Master Repurchase Agreement.

Our Master Repurchase Agreement also provides for acceleration of the date of repurchase of the purchased assets and Citibank’s liquidation of the purchased assets upon the occurrence and continuation of certain events of default, including a change of control of us, which includes our Tremont Realty Advisors LLC, or our Manager, ceasing to act as our sole manager or to be a wholly owned subsidiary of The RMR Group LLC, or RMR LLC. As of September 30, 2020, we were in compliance with all of the covenants and other terms under our Master Repurchase Agreement and the Guaranty.

    From July 2018 until August 2019, we were a party to a term loan facility, in the form of a note payable, with Texas Capital Bank, National Association, or the TCB note payable. Following our repayment of the $31,790 then outstanding principal and accrued interest under the TCB note payable, the TCB note payable terminated in accordance with its terms. We recorded $155 and $891 of interest expense for the three and nine months ended September 30, 2019, respectively, in connection with the TCB note payable.

11

TREMONT MORTGAGE TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(dollars in thousands, except per share data)

    From February 2019 until May 2019, we were a party to a credit agreement with our Manager as lender, or the RMR Credit Agreement. Following our repayment of the $14,220 balance then outstanding under the RMR Credit Agreement, the RMR Credit Agreement was terminated. We recorded $39 of interest expense for the nine months ended September 30, 2019, in connection with the RMR Credit Agreement.

At September 30, 2020, our outstanding advancements under our Master Repurchase Facility had the following remaining maturities:

Year	Principal Payments (1)
2020	$	29,680
2021	171,371
2022	—
2023	—
2024	—
	$	201,051

(1)The allocation of our outstanding advancements under our Master Repurchase Facility is based on the current maturity date of each loan investment with respect to which the individual borrowing relates assuming no borrower loan extension options have been exercised.

Note 6. Fair Value of Financial Instruments

    ASC 820, Fair Value Measurements, establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level I), and the lowest priority to unobservable inputs (Level III). A financial asset’s or financial liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

As of September 30, 2020 and December 31, 2019, the carrying values of cash and cash equivalents, restricted cash and accounts payable approximated their fair values due to the short term nature of these financial instruments. As of December 31, 2019, the outstanding principal balances under our Master Repurchase Facility approximated their fair values, as interest was based on floating rates based on LIBOR plus a spread, and the spread was consistent with those demanded by the market.

We estimate the fair values of our loans held for investment and outstanding principal balances under our Master Repurchase Facility by using Level III inputs, including discounted cash flow analyses and currently prevailing market terms as of the measurement date, determined by significant unobservable market inputs, which include holding periods, discount rates based on LTV, property types and loan pricing expectations which are corroborated by a comparison with other market participants to determine the appropriate market spread to add to the one month LIBOR (Level III inputs as defined in the fair value hierarchy under GAAP).

The table below provides information regarding financial assets and liabilities not carried at fair value on a recurring basis in our condensed consolidated balance sheets:

	September 30, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets
Loans held for investment	$	280,219	$	277,457	$	242,078	$	242,763
Financial liabilities
Master Repurchase Facility	$	200,501	$	200,184	$	164,694	$	165,536

There were no transfers of financial assets or liabilities within the fair value hierarchy during the three or nine months ended September 30, 2020.

12

TREMONT MORTGAGE TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(dollars in thousands, except per share data)

Note 7. Shareholders' Equity

Common Share Awards:

On May 13, 2020, in accordance with our Trustee compensation arrangements, we awarded to each of our five Trustees 3,000 of our common shares, valued at $1.92 per common share, the closing price of our common shares on Nasdaq that day.

On September 17, 2020, we awarded under our equity compensation plan an aggregate of 56,600 of our common shares, valued at $2.92 per share, the closing price of our common shares on Nasdaq on that day, to our officers and certain other employees of our Manager and of RMR LLC.

Common Share Purchases:

During the nine months ended September 30, 2020, we purchased our common shares from certain of our officers and certain former and current officers and employees of our Manager and of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares, valued at the closing price of our common shares on Nasdaq on the purchase dates, as follows:

Date Purchased	Number of Shares	Price per Share
January 9, 2020	384	$	5.33
June 30, 2020	390	$	3.08
September 21, 2020	7,182	$	2.77

Distributions:

    During the nine months ended September 30, 2020, we declared and paid a quarterly distribution to common shareholders as follows:

Record Date	Payment Date	Distribution Per Share		Total Distribution
January 27, 2020	February 20, 2020	$	0.22	$	1,813
April 10, 2020	May 21, 2020	0.01		82
July 27, 2020	August 20, 2020	0.01		83
		$	0.24	$	1,978

On October 15, 2020, we declared a quarterly distribution of $0.01 per common share for the third quarter of 2020, or approximately $83, to shareholders of record on October 26, 2020. We expect to pay this distribution on or about November 19, 2020.

Note 8. Management Agreement with our Manager

We have no employees. The personnel and various services we require to operate our business are provided to us by our Manager pursuant to a management agreement, which provides for the day to day management of our operations by our Manager, subject to the oversight and direction of our Board of Trustees.

We did not recognize any base management or incentive fees for the three or nine months ended September 30, 2020 or 2019. Our Manager has waived any base management or incentive fees otherwise due and payable by us under our management agreement for and through the periods ending December 31, 2020. If our Manager had not waived these base management and incentive fees, we would have recognized $332 and $322 of base management fees for the three months ended September 30, 2020 and 2019, respectively, $975 and $812 of base management fees for the nine months ended September 30, 2020 and 2019, respectively, and $129 and $164 of incentive fees for the three and nine months ended September 30, 2020. No incentive fees would have been paid or payable for either of the three or nine months ended September 30, 2019.

Our Manager, and not us, is responsible for the costs of its employees who provide services to us, including the cost of our Manager’s personnel who originate our loans, unless any such payment or reimbursement is specifically approved by a majority of our Independent Trustees, is a shared services cost or relates to awards made under any equity compensation plan adopted by us. We are required to pay or to reimburse our Manager and its affiliates for all other costs and expenses of our

13

TREMONT MORTGAGE TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(dollars in thousands, except per share data)

operations. Some of these overhead, professional and other services are provided by RMR LLC pursuant to a shared services agreement between our Manager and RMR LLC. We reimburse our Manager for shared services costs our Manager pays to RMR LLC and its affiliates. These reimbursements include an allocation of the cost of personnel employed by RMR LLC and our share of RMR LLC’s costs for providing our internal audit function. These shared services costs are subject to approval by a majority of our Independent Trustees at least annually. We incurred shared services costs of $218 and $406 payable to our Manager for the three months ended September 30, 2020 and 2019, respectively, and $856 and $1,217 for the nine months ended September 30, 2020 and 2019, respectively. We include these amounts in reimbursement of shared services expenses or general and administrative expenses, as applicable, in our condensed consolidated statements of operations.

Note 9. Related Person Transactions

We have relationships and historical and continuing transactions with our Manager, RMR LLC, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. Our Manager is a subsidiary of RMR LLC, which is a majority owned subsidiary of RMR Inc., and RMR Inc. is the managing member of RMR LLC. RMR LLC provides certain shared services to our Manager that are applicable to us, and we reimburse our Manager for the amounts it pays for those services. One of our Managing Trustees, Adam Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., and he is also a director of our Manager, a managing director and the president and chief executive officer of RMR Inc., and an officer and employee of RMR LLC. David M. Blackman, our other Managing Trustee and our President and Chief Executive Officer, also serves as a director and the president, and chief executive officer of our Manager and is an officer and employee of RMR LLC. Mr. Blackman has announced his decision to retire and, therefore, resign as our Managing Trustee, President and Chief Executive Officer and as a director, the president and chief executive officer of our Manager, effective December 31, 2020. In replacement of Mr. Blackman, Matthew P. Jordan has been elected as our Managing Trustee and Thomas L. Lorenzini has been appointed our President, each effective January 1, 2021. Also effective January 1, 2021, Mr. Jordan has been elected as a director and the president and chief executive officer of our Manager in replacement of Mr. Blackman. Mr. Jordan is an officer of RMR Inc. and he and Mr. Lorenzini are both officers of RMR LLC and our Manager. In addition, each of our other officers is also an officer and/or employee of our Manager or RMR LLC. Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as the chair of the boards of trustees and boards of directors of several of these public companies and as a managing director or managing trustee of all of these companies and other officers of RMR LLC, including Mr. Blackman and certain of our other officers, serve as managing trustees, managing directors or officers of certain of these companies. In addition, officers of our Manager, RMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or its subsidiaries provide management services.

See Note 7 for information relating to the annual share awards we made in September 2020 to our officers and certain other employees of our Manager and RMR LLC and common shares we purchased from certain of our officers and employees of our Manager and RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares to them. We include amounts recognized as expense for share awards to employees of our Manager or RMR LLC, as applicable, in general and administrative expenses in our condensed consolidated statements of operations.

Our Manager, Tremont Realty Advisors LLC. We have a management agreement with our Manager to provide management services to us. See Note 8 for further information regarding our management agreement with our Manager.

Our Manager is our largest shareholder and, as of September 30, 2020, owned 1,600,100 of our common shares or approximately 19.3% of our outstanding common shares.

Until May 23, 2019, we were a party to the RMR Credit Agreement.

For further information about these and other such relationships and certain other related person transactions, refer to our Annual Report.

14

TREMONT MORTGAGE TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(dollars in thousands, except per share data)

Note 10. Income Taxes

We have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the IRC. Accordingly, we generally are not, and will not be, subject to U.S. federal income tax, provided that we meet certain distribution and other requirements. We are subject to certain state and local taxes, certain of which amounts are or will be reported as income taxes in our condensed consolidated statements of operations.

Note 11. Weighted Average Common Shares

    We calculate basic EPS by dividing net income by the weighted average number of common shares outstanding during the relevant period. We calculate diluted EPS using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common share issuances, and the related impact on earnings, are considered when calculating diluted earnings per share. For the three months ended September 30, 2020 and 2019, 63,429 and 39,024 unvested common shares, respectively, and for the nine months ended September 30, 2020 and 2019, 63,630 and 15,037 unvested common shares, respectively, were excluded from the calculation of diluted earnings per share because to do so would have been antidilutive.

Note 12. Commitments and Contingencies

Unfunded Loan Commitments

As of September 30, 2020, we had unfunded commitments of $13,974 related to our loans held for investment that are not reflected in our condensed consolidated balance sheets. These unfunded commitments had a weighted average initial maturity of 1.2 years as of September 30, 2020. See Note 4 for further information related to our loans held for investment.

Secured Borrowings

As of September 30, 2020, we had an aggregate of $201,051 in principal amount outstanding under our Master Repurchase Facility with a weighted average life to maturity of 0.9 years. See Note 5 for further information regarding our secured debt agreements.

15

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our condensed consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report.

OVERVIEW (dollars in thousands, except share data)

    We are a REIT that was organized under Maryland law in 2017. Our business strategy is focused on originating and investing in first mortgage whole loans secured by middle market and transitional CRE. We define middle market CRE as commercial properties that have values up to $75,000 and transitional CRE as commercial properties subject to redevelopment or repositioning activities that are expected to increase the value of the properties. These assets are classified as loans held for investment in our condensed consolidated balance sheets. Loans held for investment are reported at cost, net of any unamortized loan fees and origination costs as applicable, unless the assets are deemed impaired.

    Our Manager is registered with the Securities and Exchange Commission, or the SEC, as an investment adviser under the Investment Advisers Act of 1940, as amended. We believe that our Manager provides us with significant experience and expertise in investing in middle market and transitional CRE.

    We operate our business in a manner consistent with our qualification for taxation as a REIT under the IRC. As such, we generally are not subject to U.S. federal income tax, provided that we meet certain distribution and other requirements. We also operate our business in a manner that permits us to maintain our exemption from registration under the Investment Company Act of 1940, as amended, or the Investment Company Act.

COVID-19 Pandemic    

    In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, the United States declared a national emergency concerning this pandemic, and several states and municipalities have declared public health emergencies. The COVID-19 pandemic and various governmental and market responses intended to contain and mitigate the spread of the virus and its detrimental public health impact have negatively impacted, and continue to negatively impact, the global economy, including the U.S. economy. As a result, most market observers believe the global economy and the U.S. economy are currently in a recession. States and municipalities across the United States have been allowing most businesses to re-open and have generally eased certain restrictions they had previously implemented in response to the COVID-19 pandemic, often in stages that are phased in over time, although some states and municipalities have imposed or re-imposed certain restrictions in response to recent increases in COVID-19 infections. Recently, economic data have indicated that the U.S. economy has improved since the lowest periods experienced in March and April 2020, although the U.S. gross domestic product remains below pre-pandemic levels. It is unclear whether the increases in the number of COVID-19 infections will continue and/or amplify in the United States or elsewhere and, if so, what the impact of that would be on human health and safety, the economy or our business.

    The current economic conditions are adversely impacting some of our borrowers’ tenants, which in turn, has negatively impacted our borrowers’ businesses and liquidity and their ability to pay interest owed under our loans. See elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information about the impact these conditions have had on our borrowers, our loans and Master Repurchase Agreement, as well as on the broader market conditions, including for the CRE lending industry, and certain actions we have taken in response.

    We and our Manager are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including:

•our borrowers and their ability to withstand the current economic conditions and continue to fund their debt service obligations owed and due to us,

•our operations, liquidity and capital needs and resources,

•conducting financial modeling and sensitivity analysis,

•actively communicating with our borrowers, Citibank and other key constituents and stakeholders in order to help assess market conditions, opportunities, best practices and mitigate risks and potential adverse impacts, and

16

•monitoring, with the assistance of counsel and other specialists, possible government relief funding sources and other programs that may be available to us or our borrowers to enable us and them to operate through the current economic conditions and enhance their ability to fund their debt service obligations owed and due to us.

    In order to preserve our near term capital due to the economic downturn and uncertainty as to future economic conditions as a result of the COVID-19 pandemic, beginning with the first quarter of 2020, we reduced our quarterly distribution rate payable to our common shareholders to $0.01 per share. In addition, our Manager extended its waiver of the management and incentive fees under our management agreement, for and through the periods ending December 31, 2020. This waiver had been scheduled to expire on June 30, 2020.

    We believe that some of our impacted borrowers or their tenants have benefited from provisions of the Coronavirus Aid, Relief, and Economic Security Act, passed by Congress in March 2020, or other Federal or state assistance allowing them to continue or resume business activity.

    We do not have any employees and the personnel and various services we require to operate our business are provided to us by our Manager or by RMR LLC, pursuant to our management agreement with our Manager and our Manager’s shared services agreement with RMR LLC. RMR LLC has implemented enhanced cleaning protocols and social distancing guidelines at its corporate headquarters and its regional offices, as well as business continuity plans to ensure that employees of our Manager and of RMR LLC remain safe and able to support us and RMR LLC’s other managed companies, including providing appropriate information technology such as notebook computers, smart phones, computer applications, information technology security applications and technology support. RMR LLC has also taken measures to reduce the possibility of persons gathering in groups and in close proximity to each other, for the purpose of mitigating the potential for spreading of COVID-19 infections.

    There are extensive uncertainties surrounding the COVID-19 pandemic and its aftermath. These uncertainties include among others:

•the duration and severity of the negative economic impact;

•the strength and sustainability of any economic recovery;

•the timing and process for how the federal, state and local governments and other market participants may oversee and conduct the return of economic activity when the COVID-19 pandemic ends, such as what continuing restrictions and protective measures may remain in place, be re-imposed or be added and what restrictions and protective measures may be lifted or reduced in order to foster a return of increased economic activity in the United States; and

•the responses of governments, businesses and the general public to any increased levels or rates of COVID-19 infections.

    As a result of these uncertainties, we are unable to determine what the ultimate impact will be on our borrowers’ and other stakeholders’ businesses, operations, financial results and financial position. For further information and risks relating to the COVID-19 pandemic and its aftermath on us and our business, see elsewhere in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 1A Risk Factors, in this Quarterly Report on Form 10-Q.

Book Value per Common Share

The table below calculates our book value per common share (amounts in thousands, except per share data):

	September 30, 2020		December 31, 2019
Shareholders' equity	$	91,063	$	86,221
Total outstanding common shares	8,303		8,240
Book value per common share	$	10.97	$	10.46

17

Our Loan Portfolio

The table below details overall statistics for our loan portfolio as of September 30, 2020 and December 31, 2019:

	Balance at September 30, 2020			Balance at December 31, 2019
Number of loans	14			12
Total loan commitments	$	293,961		$	260,167
Unfunded loan commitments (1)	$	13,974		$	17,268
Principal balance	$	279,987		$	242,899
Unamortized net deferred origination and exit fees	$	232		$	(821)
Carrying value	$	280,219		$	242,078
Weighted average coupon rate	5.70		%	5.76		%
Weighted average all in yield (2)	6.38		%	6.41		%
Weighted average maximum maturity (years) (3)	2.9			3.6
Weighted average LTV (4)	67		%	70		%

(1) Unfunded loan commitments are primarily used to finance property and building improvements and leasing capital and are generally funded over the term of the loan.

(2) 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.

(3) Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions.

(4) LTV represents the initial loan amount divided by the underwritten in-place value at closing.

Loan Portfolio Details

    The table below details our loan portfolio as of September 30, 2020:

Location	Property Type	Origination Date	Committed Principal Amount		Principal Balance		Coupon Rate	All in Yield (1)	Maximum Maturity(2) (date)	LTV(3)	Risk Rating
First mortgage whole loans
Coppell, TX (4)	Retail	02/05/2019	$	20,826	$	20,115	L + 3.50%	L + 4.24%	02/05/2021	73%	4
Houston, TX	Multifamily	05/10/2019	28,000		27,897		L + 3.50%	L + 4.36%	11/10/2022	56%	4
Paradise Valley, AZ	Retail	11/30/2018	11,853		10,564		L + 4.25%	L + 5.72%	11/30/2022	48%	4
Dublin, OH	Office	02/18/2020	22,820		20,049		L + 3.75%	L + 4.91%	02/18/2023	33%	3
Metairie, LA	Office	04/11/2018	18,102		17,173		L + 5.00%	L + 5.65%	04/11/2023	79%	4
Barrington, NJ	Industrial	05/06/2019	37,600		34,962		L + 3.50%	L + 4.05%	05/06/2023	79%	3
Houston, TX	Office	06/26/2018	15,200		14,421		L + 4.00%	L + 4.59%	06/26/2023	69%	4
St. Louis, MO	Office	12/19/2018	29,500		27,611		L + 3.25%	L + 3.75%	12/19/2023	72%	3
Atlanta, GA	Hotel	12/21/2018	24,000		23,904		L + 3.25%	L + 3.72%	12/21/2023	62%	4
Rochester, NY	Multifamily	01/22/2019	24,550		24,550		L + 3.25%	L + 3.86%	01/22/2024	74%	2
Omaha, NE	Retail	06/14/2019	14,500		13,054		L + 3.65%	L + 4.05%	06/14/2024	77%	4
Yardley, PA	Office	12/19/2019	14,900		14,264		L + 3.75%	L + 4.47%	12/19/2024	75%	3
Orono, ME	Multifamily	12/20/2019	18,110		17,423		L + 3.25%	L + 3.88%	12/20/2024	72%	3
Allentown, PA	Industrial	01/24/2020	14,000		14,000		L + 3.50%	L + 4.02%	01/24/2025	67%	3
Total/weighted average			$	293,961	$	279,987	L + 3.60%	L + 4.28%		67%	3.4

(1)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.

(2)Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions.

(3)    LTV represents the initial loan amount divided by the underwritten in-place value at closing.

(4)    In July 2020, the borrower under our loan related to a retail property located in Coppell, TX sold a parcel of land that was a part of the property securing the loan. The borrower used $2,089 of the sale proceeds to repay part of the outstanding balance under the loan which also reduced the committed principal by the same amount and we allowed the borrower to use the remaining $100 of sale proceeds to increase the reserve for its future debt service obligation payments owed to us under the loan. We used $1,358 of these repayment proceeds to repay a part of the outstanding balance under our Master Repurchase Facility.

18

As of September 30, 2020, we had $293,961 in aggregate loan commitments, consisting of a diverse portfolio, geographically and by property type, of 14 first mortgage whole loans. The impact from the COVID-19 pandemic has negatively impacted some of our borrowers’ business operations or tenants, particularly in the cases of our retail and hospitality collateral, which are the types of properties that have been most negatively impacted by the pandemic. We expect that those negative impacts may continue and may apply to other borrowers and/or their tenants. Therefore, certain of our borrowers’ business plans will likely take longer to execute than initially expected and certain of our borrowers may be unable to pay their debt service obligation owed and due to us as currently scheduled. As of September 30, 2020, we had seven loans representing 46% of the carrying value of our loan portfolio with a loan risk rating of “4” or “higher risk”. Six of these loans were downgraded from a risk rating of "3" or "acceptable risk" during the three months ended March 31, 2020 and the seventh loan was downgraded from a risk rating of "3" or "acceptable risk" during the three months ended September 30, 2020.

All of the loans in our portfolio are structured with risk mitigation mechanisms, such as cash flow sweeps or interest reserves, to help protect us against investment losses. In addition, we continue to actively engage with our borrowers regarding their execution of the business plan for the underlying collateral, among other things.

    As of November 2, 2020, all of our borrowers had paid all of their debt service obligations owed and due to us and none of the loans included in our investment portfolio were in default.

In October 2020, the borrower under our loan related to a retail property located in Paradise Valley, AZ exercised its right and satisfied the applicable conditions to extend the maturity date of the loan by one year to November 30, 2021 pursuant to the terms of the loan agreement.

In November 2020, we expect to execute an amendment to the loan agreement with the borrower under our loan related to a multifamily property located in Houston, TX which will extend the maturity date of the loan by one year to November 10, 2021, subject to the borrower funding an interest reserve of $500 and definitive documentation.

We did not have any impaired loans, non-accrual loans or loans in default as of September 30, 2020; thus, we did not record a reserve for loan loss as of that date. For further information regarding our risk rating policy, see Notes 2 and 4 to the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. However, depending on the duration and severity of the COVID-19 pandemic and the current economic downturn, our borrowers' businesses, operations and liquidity may be materially adversely impacted. As a result, they may become unable to pay their debt service obligations owed and due to us, which may result in the impairment of those loans, and our recording loan loss reserves with respect to those loans and recording of any income with respect to those loans on a nonaccrual basis. For further information regarding the risks associated with our loan portfolio, see the risk factors identified in Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q and the risk factors identified in Part I, Item IA, "Risk Factors" of our Annual Report.

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Financing Activities

    The table below is an overview of our Master Repurchase Facility, which provided financing for our loans held for investment, as of September 30, 2020 and December 31, 2019:

	Initial Maturity Date (1)	Principal Balance		Unused Capacity		Maximum Facility Size		Collateral Principal Balance
September 30, 2020:
Master repurchase facility	11/06/2021	$	201,051	$	12,431	$	213,482	$	279,987
December 31, 2019:
Master repurchase facility	11/06/2021	$	165,536	$	47,946	$	213,482	$	242,899

(1)On October 30, 2020, we amended our Master Repurchase Agreement to, among other things, extend the expiration date of our Master Repurchase Facility by one year to November 6, 2022, subject to early termination as provided for in our Master Repurchase Agreement.

The table below details our Master Repurchase Facility activities during the three months ended September 30, 2020:

	Total
Balance at June 30, 2020	$	200,465
Advancements	1,271
Repayments	(1,358)
Amortization of Deferred Fees	123
Balance at September 30, 2020	$	200,501

The table below details our Master Repurchase Facility activities during the nine months ended September 30, 2020:

	Total
Balance at December 31, 2019	$	164,694
Advancements	36,873
Repayments	(1,358)
Deferred Fees	(72)
Amortization of Deferred Fees	364
Balance at September 30, 2020	$	200,501

As of September 30, 2020, outstanding advancements under our Master Repurchase Facility had a weighted average interest rate of LIBOR plus 200 basis points per annum, excluding associated fees and expenses. For further information regarding our Master Repurchase Agreement, see Note 5 to the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

As of September 30, 2020, we had a $201,051 aggregate outstanding principal balance under our Master Repurchase Agreement. In light of the impact of the COVID-19 pandemic, we continue to actively engage with Citibank regarding our liquidity position and the status of the loans in our portfolio that are financed under our Master Repurchase Facility. Our Master Repurchase Agreement is structured with risk mitigation mechanisms, including a cash flow sweep, which would allow Citibank to control interest payments from our borrowers under our loans that are financed under our Master Repurchase Facility, and the ability to accelerate dates of repurchase and institute margin calls, which may require us to pay down balances associated with one or more of our loans that are financed under our Master Repurchase Facility. As of November 2, 2020, we believe we were in compliance with all the covenants and other terms under our Master Repurchase Agreement and, to date, Citibank has not utilized any such risk mitigation mechanisms under our Master Repurchase Agreement.

We could experience a loss on repurchase transactions under our Master Repurchase Agreement if a counterparty to these transactions defaults on its obligation to resell the underlying collateral back to us at the end of the transaction term, or if the value of the underlying collateral has declined as of the end of that term, or if we default on our obligations under the applicable agreement governing any such arrangement.

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    We have fully committed the capital available to us. Our ability to obtain additional financing advancements under our Master Repurchase Facility is contingent upon our making additional advancements to our existing borrowers or our ability to effectively reinvest any additional capital, including any loan repayment proceeds, that we may obtain or receive. However, we cannot be sure that we will be able to obtain additional capital or additional financing advancements under our Master Repurchase Facility. It may take an extended period for us to reinvest any additional capital we may receive, and any reinvestments we may be able to make may not provide us with similar returns or comparable risks as those of our current investments. See “—Factors Affecting Operating Results—Market Conditions” below for information regarding the impact of the current market conditions on the access of capital for CRE lenders such as us.

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RESULTS OF OPERATIONS (dollars in thousands, except share data)

Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019:

	Three Months Ended September 30,
	2020		2019		Change		% Change
INCOME FROM INVESTMENTS:
Interest income from investments	$	4,632	$	4,959	$	(327)	(7	%)
Less: interest and related expenses	(1,242)		(1,992)		750		(38	%)
Income from investments, net	3,390		2,967		423		14	%
OTHER EXPENSES:
General and administrative expenses	576		541		35		6	%
Reimbursement of shared services expenses	189		370		(181)		(49	%)
Total expenses (1)	765		911		(146)		(16	%)
Net income	$	2,625	$	2,056	$	569	28	%
Weighted average common shares outstanding - basic and diluted	8,190		8,156		34		—	%
Net income per common share - basic and diluted	$	0.32	$	0.25	$	0.07	28	%

(1)Our Manager has waived any base management or incentive fees otherwise due and payable by us under our management agreement for and through the periods ending December 31, 2020. If our Manager had not waived these base management and incentive fees, we would have recognized $332 and $322 of base management fees for the three months ended September 30, 2020 and 2019, respectively, and $129 of incentive fees for the three months ended September 30, 2020. No incentive fees would have been paid or payable for the three months ended September 30, 2019.

Interest income from investments. The decrease in interest income from investments was primarily the result of $428 of deferred fees recognized in 2019 for two loans that were repaid by borrowers and a related prepayment premium of $449 that was earned on one of these repaid loans. This decrease was partially offset by an increase in interest income of $587 which was earned on the 14 loans included in our portfolio at September 30, 2020, as compared to 10 loans included in our portfolio at September 30, 2019.

Interest and related expenses. The decrease in interest and related expenses was primarily a result of a decline in average LIBOR rates of approximately 200 basis points or $642. Also contributing to this decrease was $154 of interest expense recognized in the 2019 period for loans that were repaid during the 2019 period and $157 of deferred fees that we recognized in 2019 with respect to the prepayment and termination of the TCB note payable as a result of the early repayment of a loan we funded to finance the borrower’s acquisition of a hotel located adjacent to the John F. Kennedy International Airport in Queens, NY, or the JFK loan. These decreases were partially offset by an increase of $263 in interest expense related to advancements under our Master Repurchase Facility for four loans originated after September 30, 2019.

General and administrative expenses. General and administrative expenses increased due to increases in subscription costs and professional fees.

Reimbursement of shared services expenses. Reimbursement of shared services expenses represents reimbursement of the costs for the services that our Manager arranges on our behalf from RMR LLC. The decrease in reimbursement of shared services expenses was primarily the result of our reduced usage of shared services due to our loan portfolio being fully invested.

Net income. The increase in net income was due to the changes noted above.

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Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019:

	Nine Months Ended September 30,
	2020		2019		Change		% Change
INCOME FROM INVESTMENTS:
Interest income from investments	$	13,412	$	11,872	$	1,540	13	%
Less: interest and related expenses	(4,367)		(5,572)		1,205		(22	%)
Income from investments, net	9,045		6,300		2,745		44	%
OTHER EXPENSES:
General and administrative expenses	1,640		1,662		(22)		(1	%)
Reimbursement of shared services expenses	752		1,110		(358)		(32	%)
Total expenses (1)	2,392		2,772		(380)		(14	%)
Net income	$	6,653	$	3,528	$	3,125	89	%
Weighted average common shares outstanding - basic and diluted	8,179		5,583		2,596		46	%
Net income per common share - basic and diluted	$	0.81	$	0.63	$	0.18	29	%

(1)Our Manager has waived any base management or incentive fees otherwise due and payable by us under our management agreement for and through the periods ending December 31, 2020. If our Manager had not waived these base management and incentive fees, we would have recognized $975 and $812 of base management fees for the nine months ended September 30, 2020 and 2019, respectively, and $164 of incentive fees for the nine months ended September 30, 2020. No incentive fees would have been paid or payable for the nine months ended September 30, 2019.

Interest income from investments. The increase in interest income from investments was primarily the result of an increase in interest income of $2,347 earned on the 14 loans included in our portfolio at September 30, 2020, as compared to 10 loans included in our portfolio at September 30, 2019. This increase is partially offset by $428 of deferred fees that we recognized in 2019 period for two loans that were repaid by borrowers and a related prepayment premium of $449 earned on one of these repaid loans.

Interest and related expenses. The decrease in interest and related expenses was a result of a decline in average LIBOR rates of approximately 175 basis points or $870. Also contributing to this decrease was $1,208 of interest expense that we recognized in the 2019 period for two loans that were repaid during the 2019 period and $191 of deferred fees that we recognized in the 2019 period with respect to the prepayment and termination of the TCB note payable as a result of the early repayment of the JFK loan, as well as the repayment and termination of the RMR Credit Agreement. These decreases were partially offset by an increase of $848 in interest expense related to advancements under our Master Repurchase Facility for four loans originated after September 30, 2019, and $216 of interest expense in the 2020 period related to three loans originated during the nine months ended September 30, 2019.

General and administrative expenses. The decrease in general and administrative expenses was primarily the result of a decrease in share based compensation expense and audit fees, partially offset by an increase in insurance expense.

Reimbursement of shared services expenses. The decrease in reimbursement of shared services expenses was primarily the result of our reduced usage of shared services due to our loan portfolio being fully invested.

Net income. The increase in net income was due to the changes noted above.

Non-GAAP Financial Measures

We present Core Earnings, which is considered a “non-GAAP financial measure” within the meaning of the applicable SEC rules. Core 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 Core Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures; therefore, our reported Core Earnings may not be comparable to the core earnings as reported by other companies.

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We believe that Core 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 and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations. In addition, Core Earnings is used in determining the amount of base management and incentive fees payable by us to our Manager under our management agreement.

Core Earnings

We calculate Core 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 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).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Reconciliation of Net Income to Core Earnings:
Net income	$	2,625	$	2,056	$	6,653	$	3,528
Non-cash equity compensation expense	76		80		189		300
Core earnings	$	2,701	$	2,136	$	6,842	$	3,828
Weighted average common shares outstanding - basic and diluted	8,190		8,156		8,179		5,583
Core earnings per common share - basic and diluted	$	0.33	$	0.26	$	0.84	$	0.69

Factors Affecting Operating Results

Our results of our operations are impacted by a number of factors and primarily depend on the interest income from our investments and the financing and other costs associated with our business. Our operating results are also impacted by general CRE market conditions and unanticipated defaults by our borrowers.

Credit Risk. We are subject to the credit risk of our borrowers in connection with our investments. We seek to mitigate this risk by utilizing a comprehensive underwriting, diligence and investment selection process and by ongoing monitoring of our investments. Nevertheless, unanticipated credit losses could occur that could adversely impact our operating results. For further information regarding the risks associated with our loan portfolio, see the risk factors identified in Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q and the risk factors identified in Part I, Item IA, "Risk Factors" of our Annual Report.

Changes in Fair Value of our Assets. We generally hold our investments for their contractual terms, unless repaid earlier by the borrower. We evaluate our investments for impairment quarterly. Impairments occur when it is probable that we will not be able to collect all amounts due according to the applicable contractual terms. If we determine that a loan is impaired, we will record an allowance to reduce the carrying value of the loan to an amount that takes into account both the present value of expected future cash flows discounted at the loan's contractual effective interest rate and the fair value of any available collateral, net of any costs we expect to incur to realize that value.

Although we generally hold our investments for their contractual terms, we may occasionally classify some of our investments as held for sale. Investments held for sale will be carried at the lower of their amortized cost or fair value within loans held for sale on our condensed consolidated balance sheets, with changes in fair value recorded through earnings. Fees received from our borrowers on any loans held for sale will be recognized as part of the gain or loss on sale. We do not currently expect to hold any of our investments for trading purposes.

For further information regarding the risks associated with our loan portfolio, see the risk factors identified in Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q and the risk factors identified in Part I, Item IA, "Risk Factors" of our Annual Report.

Availability of Leverage and Equity. We use leverage to make additional investments that may increase our returns. We may not be able to obtain the expected amount of leverage we desire, or its cost may exceed our expectation and,

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consequently, the returns generated from our investments may be reduced. In order to grow our loan portfolio, we will need to obtain additional capital. However, our access to additional capital depends on many factors including the price at which our common shares trade relative to their book value and market lending conditions. See " —Market Conditions" below. We have experienced and may continue to experience challenges raising equity capital in the future.

Market Conditions. Prior to the COVID-19 pandemic, CRE transaction volumes were increasing, driving demand for CRE loans. In 2019, alternative lenders, like us, had gained considerable market share and loan pricing had begun to stabilize. The outbreak of the COVID-19 pandemic in the first quarter of 2020 led to a sharp decline in economic activity over the first half of the year. The closing of non-essential businesses, municipalities' "shelter-in-place" orders, restrictions on travel, cancellation of events and gatherings, and limitations on building occupancies implemented to stop the spread of the virus had a substantial negative impact on the commercial real estate market. Many property owners were forced to structure lease forbearance with tenants unable or, in some cases, unwilling to make rent payments which in turn, increased the number of loan forbearance requests due to these borrowers’ acceptance of rent deferral requests from their tenants. In addition, volatility in the capital markets resulted in a substantial widening of CMBS bond credit spreads and increased overall borrowing costs for banks, as well as alternative lenders that utilize warehouse lines of credit and repurchase facilities to finance lending activities. Lastly, uncertainty surrounding the depth and duration of the economic downturn resulted in a severe decline in overall CRE transaction volume over the first half of this year. The financial burdens resulting from margin calls imposed on lenders by providers of repurchase facilities and warehouse lines of credit as a result of increased borrowing costs and many lenders’ shift in focus to active portfolio management duties required to handle such large volumes of forbearance requests from borrowers caused lenders to virtually cease all new loan origination in the second quarter of 2020.

The CRE debt markets have begun to rebound in the latter half of the third quarter of 2020. In June 2020, the CMBS loan delinquency rate was near the highs experienced in 2010, but since then has steadily declined, as defaults have been "cured", either by borrowers investing additional capital to support their loans or in the form of a loan forbearance. With interest rates hovering around zero percent across the globe, investors’ appetite for higher returns has resulted in a rebound for the CMBS market. CMBS bond spreads have declined such that new issue AAA rated, investment grade bonds for conservatively underwritten loan pools with high quality collateral are expected to trade at credit spreads close to those seen prior to the pandemic. Lower rated tranches of CMBS bonds are still trading with wider yields than prior to the pandemic; however, overall volatility has subsided which we believe will have a positive impact on the alternative lending market. In addition, with a more stabilized secondary market for CMBS bonds, we believe that CRE-CLO issuance (the securitization of short-term, floating rate loans) will increase, and begin to restore much needed liquidity to those alternative lenders who need to recycle capital and free up warehouse lines of credit to facilitate new lending activity.

Although credit spreads offered to borrowers by alternative lenders have increased from those offered prior to the pandemic, the dearth of property sale transaction activity has resulted in fewer transactions to be financed and greater competition amongst lenders seeking to fund new loans. We believe that this increased competition amongst lenders, along with significant declines in the LIBOR and U.S. treasury index rates has benefited borrowers seeking loans to refinance high quality properties, particularly multifamily, industrial, life-science or R&D/lab properties, that are either stabilized or near stabilization.

The CRE debt markets have demonstrated resiliency over the past several months and have started to rebound from the liquidity crisis experienced in the early part of the second quarter of 2020. Most, if not all, bank CMBS aggregators are once again quoting new business, and increased demand from bond purchasers seeking higher yields than what is available in other asset classes is providing an important source of liquidity to the market. However, despite the return of the securitization markets and the uptick in lending activity, we believe challenges remain.

The hospitality and retail sectors have been most negatively impacted by the economic downturn. It is unclear how consumer and travel habits will be impacted over the long term during and after the COVID-19 pandemic; if consumer and travel activity do not substantially rebound, we believe that this uncertainty will continue to burden these sectors and lenders with significant exposure to these property types will continue to face challenges. It is still unclear how the shift to flexible work-from-home schedules will impact the office sector and demand for office space going forward. As such, lenders will continue to face underwriting challenges with respect to assumptions related to new leasing, tenant renewal probabilities and occupancy rates for office properties, especially assets located in downtown or CBD markets. Multifamily properties are expected to continue to be a preferred asset class by most lenders and investors for the near term; however, it is unclear what the impact of the U.S. Centers for Disease Control and Prevention moratorium on tenant evictions will have on the sector and how rent collections will be impacted absent a new federal stimulus bill. Lastly, industrial properties have performed well throughout the downturn and continue to benefit from the shift in consumers’ behavior to increased levels of e-commerce, which has accelerated during the pandemic.

The longer-term impact of the COVID-19 pandemic is still uncertain. Notwithstanding a surge in new COVID-19 cases or another large-scale economic shut-down, we believe there will be a modest increase in CRE sales transaction volume

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in the fourth quarter of 2020. We believe that as the U.S. economy improves and returns to a more stable state, there will be significant opportunities for alternative lenders, like us, to provide creative, flexible debt capital for a wide array of circumstances and business plans.

Changes in Market Interest Rates. With respect to our business operations, increases in interest rates, in general, may cause: (a) the interest expense associated with our variable rate borrowings, if any, to increase; (b) the value of our fixed rate investments, if any, to decline; (c) the coupon rates on our variable rate investments, if any, to reset, perhaps on a delayed basis, to higher rates; and (d) it to become more difficult and costly for our borrowers, which may negatively impact their ability to repay our investments. See " —Market Conditions" above for a discussion of the current market including interest rates.

Conversely, decreases in interest rates, in general, may cause: (a) the interest expense associated with our variable rate borrowings, if any, to decrease; (b) the value of our fixed rate investments, if any, to increase; (c) the coupon rates on our variable rate investments, if any, to reset, perhaps on a delayed basis, to lower rates; and (d) it to become easier and more affordable for our borrowers to refinance, and as a result repay, our loans, but may negatively impact our future returns if any such repayment proceeds were to be reinvested in lower yielding investments.

The interest income on our loans and interest expense on our borrowings float with one month LIBOR. Because we generally leverage approximately 75% of our investments, as LIBOR increases, our income from investments, net of interest and related expenses, will increase. LIBOR decreases are mitigated by interest rate floor provisions in our loan agreements with borrowers; therefore, changes to income from investments, net, may not move proportionately with the decrease in LIBOR. Based on our loan portfolio at September 30, 2020, the LIBOR rate was 0.16% and would have to exceed the floor established by any of our loans ranging from 1.50% to 2.50% to realize an increase in interest income.

LIBOR is currently expected to be phased out in 2021 and 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 in accordance with the terms of the amended 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.

Size of Portfolio. The size of our loan portfolio, as measured both by the aggregate principal balance and the number of our CRE loans and our other investments, is also an important factor in determining our operating results. Generally, if the size of our loan portfolio grows, the amount of interest income we receive would increase and we may achieve certain economies of scale and diversify risk within our loan portfolio. A larger portfolio, however, may result in increased expenses; for example, we may incur additional interest expense or other costs to finance our investments. Also, if the aggregate principal balance of our loan portfolio grows but the number of our loans or the number of our borrowers does not grow, we could face increased risk by reason of the concentration of our investments. At this time, we are focused on managing our current loan portfolio. We believe our growth is limited by our ability to access additional cost-effective capital.

LIQUIDITY AND CAPITAL RESOURCES (dollars in thousands, except per share amounts)

    Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to fund our lending commitments, repay or meet margin calls resulting from our borrowings, fund and maintain our assets and operations, make distributions to our shareholders and fund other business operating requirements. We require a significant amount of cash to originate, purchase and invest in our target investments, make additional unfunded loan commitment payments, repay principal and interest on our borrowings, make distributions to our shareholders and fund other business operating requirements. We have been limited in our ability to access capital and, as a result, we have limited capital to invest. The long-term impact of the COVID-19 pandemic and its aftermath on financial markets is uncertain. To the extent that impact is sustained for an extended period, we expect that we will be further challenged in accessing capital. Our sources of cash flows include payments of principal, interest and fees we receive on our investments, other cash we may generate from our business and operations and any unused borrowing capacity, including under our Master Repurchase Facility or other repurchase agreements or financing arrangements, and may also include bank loans or public or private issuances of debt or equity securities. We believe that these sources of funds will be sufficient to meet our operating and capital expenses and pay our debt service obligations owed and make any distributions to our shareholders for the next 12 months and for the foreseeable future, subject to the duration and severity of the COVID-19 pandemic and economic impact on our borrowers and their ability to fund their debt service obligations owed to us. For further information regarding the risks associated with our loan portfolio, see the risk factors identified in Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q and the risk factors identified in Part I, Item IA, "Risk Factors" of our Annual Report.

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    Pursuant to our Master Repurchase Agreement, we may sell to, and later repurchase from, Citibank floating rate mortgage loans and other related assets, or purchased assets. The initial purchase price paid by Citibank for each purchased asset is up to 75% of the lesser of the market value of the purchased asset or the unpaid principal balance of such purchased asset, subject to Citibank’s approval. Upon the repurchase of a purchased asset, we are required to pay Citibank the outstanding purchase price of the purchased asset, accrued interest and all accrued and unpaid expenses of Citibank relating to such purchased asset. The price differential (or interest rate) relating to a purchased asset is equal to one month LIBOR plus a premium of 200 to 250 basis points, determined by the yield of the purchased asset and the property type of the purchased asset's real estate collateral. As of September 30, 2020, the maximum amount available for advancement under our Master Repurchase Facility was $213,482, of which we had a $201,051 aggregate outstanding principal balance, and the weighted average interest rate of advancements under our Master Repurchase Facility was 2.70% for the nine months ended September 30, 2020. On October 30, 2020, we amended our Master Repurchase Agreement to, among other things, extend the expiration date of our Master Repurchase Facility by one year to November 6, 2022, subject to early termination as provided for in our Master Repurchase Agreement. For further information regarding our Master Repurchase Facility, see Note 5 to the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I Item 1 of this Quarterly Report on Form 10-Q and "—Overview-Financing Activities" above.

    The following is a summary of our sources and uses of cash flows for the periods presented (dollars in thousands):

	Nine Months Ended September 30,
	2020		2019
Cash, cash equivalents and restricted cash at beginning of period	$	8,875	$	27,335
Net cash provided by (used in):
Operating activities	4,677		2,489
Investing activities	(35,958)		(70,287)
Financing activities	33,442		49,817
Cash, cash equivalents and restricted cash at end of period	$	11,036	$	9,354

The increase in cash provided by operating activities was primarily the result of an increase in net income, partially offset by unfavorable changes in working capital. The decrease in cash used in investing activities was primarily due to a decrease in our loan origination activity in the 2020 period, partially offset by loan principal repayments in the 2019 period related to the prepayment of two of our loans held for investment. The decrease in cash provided by financing activities was primarily due to a decrease in advancements under our Master Repurchase Facility due to a decrease in loan origination activity in the 2020 period, partially offset by repayment activity in the 2019 period. During the 2019 period, we used the net proceeds from our September 2019 issuance and sale of common shares in an underwritten public offering to repay the outstanding balance under the RMR Credit Agreement and to reduce borrowings under our Master Repurchase Facility. Also during the 2019 period, we used proceeds from the prepayment of two of our loans held for investment to repay borrowings outstanding under the TCB note payable and outstanding balances under our Master Repurchase Facility.

We have fully committed the capital available to us. Our ability to obtain additional financing advancements under our Master Repurchase Facility is contingent upon our making additional fundings to our existing borrowers or our ability to effectively reinvest any additional capital, including any loan repayment proceeds, that we may obtain or receive. However, we cannot be sure that we will be able to obtain additional capital or additional financing advancements under our Master Repurchase Facility. It may take an extended period for us to reinvest any additional capital we may receive, and any reinvestments we may be able to make may not provide us with similar returns or comparable risks as those of our current investments.

Distributions

During the nine months ended September 30, 2020, we paid quarterly distributions to our shareholders aggregating $1,978, or $0.24 per common share, using cash on hand. For further information regarding distributions, see Note 7 to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

In order to preserve our near term capital due to the economic downturn and uncertainty as to future economic conditions as a result of the COVID-19 pandemic, beginning with the first quarter of 2020, we reduced our quarterly distribution rate payable to our common shareholders to $0.01 per share and on October 15, 2020, declared a quarterly distribution payable to our common shareholders of $0.01 per share.

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Our Board of Trustees will continue to monitor our financial performance and economic outlook to determine a prudent level for any subsequent quarterly distribution. In addition, we expect to declare in December 2020 and pay in January 2021 a one-time cash distribution as required to maintain our qualification for taxation as a REIT. The year-end distribution will be an amount that allows us to meet the requirement to pay out at least 90% of our REIT taxable income for 2020.

Contractual Obligations and Commitments

Our contractual obligations and commitments as of September 30, 2020 were as follows:

	Payment Due by Period
	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 years
Unfunded loan commitments (1)	$	13,974	$	3,812	$	10,162	$	—	$	—
Principal payments on master repurchase facility (2)	201,051		29,680		171,371		—		—
Interest payments (3)	3,958		3,534		424		—		—
	$	218,983	$	37,026	$	181,957	$	—	$	—

(1)The allocation of our unfunded loan commitments is based on the current loan maturity date to which the commitments relate.

(2)The allocation of outstanding advancements under our Master Repurchase Agreement is based on the current maturity date of each loan investment with respect to which the individual borrowing relates.

(3)Projected interest expense is attributable to only our debt service obligations at existing rates as of September 30, 2020 and is not intended to estimate future interest costs which may result from debt prepayments, additional borrowings, new debt issuances or changes in interest rates.

Off-Balance Sheet Arrangements

As of September 30, 2020, we had no off-balance sheet arrangements that have had or that we expect would be reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Debt Covenants

    Our principal debt obligations at September 30, 2020 were the outstanding balances under our Master Repurchase Facility. Our Master Repurchase Agreement provides for acceleration of the date of repurchase of any then purchased assets and Citibank’s liquidation of the purchased assets upon the occurrence and continuation of certain events of default, including a change of control of us, which includes our Manager ceasing to act as our sole manager or to be a wholly owned subsidiary of RMR LLC. Our Master Repurchase Agreement also provides that upon the repurchase of any then purchased asset, we are required to pay Citibank the outstanding purchase price of such purchased asset and accrued interest and any and all accrued and unpaid expenses of Citibank relating to such purchased asset.

    In connection with our Master Repurchase Agreement, we entered into the Guaranty, which requires us to guarantee 25% of our subsidiary's prompt and complete payment of the purchase price, purchase price differential and any costs and expenses of Citibank related to our Master Repurchase Agreement. The Guaranty also requires us to comply with customary financial covenants, which include the maintenance of a minimum tangible net worth, minimum cash liquidity, a total indebtedness to tangible net worth ratio and a minimum interest coverage ratio.

    As of September 30, 2020, we had a $201,051 aggregate outstanding principal balance under our Master Repurchase Facility. In light of the impact of the COVID-19 pandemic, we continue to actively engage with Citibank regarding our liquidity position and the status of the loans in our portfolio that are financed under our Master Repurchase Facility. Our Master Repurchase Agreement is structured with risk mitigation mechanisms, including a cash flow sweep, which would allow Citibank to control interest payments from our borrowers under our loans that are financed under our Master Repurchase Facility, and the ability to accelerate dates of repurchase and institute margin calls, which may require us to pay down balances associated with one or more of our loans that are financed under our Master Repurchase Facility. As of September 30, 2020, we believe we were in compliance with all the covenants and other terms under our Master Repurchase Agreement and, to date, Citibank has not utilized any such risk mitigation mechanisms under our Master Repurchase Agreement.

Related Person Transactions

    We have relationships and historical and continuing transactions with our Manager, RMR LLC, RMR Inc. and others related to them. For example: we have no employees and the personnel and various services we require to operate our business are provided to us by our Manager pursuant to our management agreement with our Manager; our Manager is a subsidiary of RMR LLC and certain of the services provided to us by our Manager are provided by RMR LLC pursuant to a shared services agreement between our Manager and RMR LLC; our Manager is our largest shareholder and, at September 30, 2020, owned

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approximately 19.3% of our outstanding common shares; RMR Inc. is the managing member of RMR LLC; Adam Portnoy, one of our Managing Trustees, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., and he is also a director of our Manager, a managing director and the president and chief executive officer of RMR Inc., and an officer and employee of RMR LLC; David M. Blackman, our other Managing Trustee and our President and Chief Executive Officer, also serves as the president, chief executive officer and a director of our Manager and is an officer and employee of RMR LLC; and each of our other officers is also an officer and/or employee of our Manager or RMR LLC. In addition, other companies to which RMR LLC or its subsidiaries provide management services have trustees, directors and officers some of whom are also trustees, directors or officers of us, our Manager, RMR LLC or RMR Inc. and some of our Trustees and officers serve as trustees, directors or officers of these companies.

    For further information about these and other such relationships and related person transactions, see Notes 8 and 9 to the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our Annual Report, our definitive Proxy Statement for our 2020 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” of our Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. Our filings with the SEC and copies of certain of our agreements with these related persons, including our management agreement with our Manager, are available as exhibits to our filings with the SEC and accessible at the SEC’s website, www.sec.gov. We may engage in additional transactions with related persons, including businesses to which RMR LLC or its subsidiaries provide management services.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk (dollars in thousands, except per share data)

    We believe that our business is exposed to two principal market risks: (a) changes in the level of economic activity in the U.S. economy generally or in geographic areas where the properties that are the subject of our real estate investments are located; and (b) changes in market interest rates.

    Changes in the general economy may impact the ability and willingness of our borrowers to pay interest on and repay principal of our loans. A U.S. recession or a slowing of economic activity, including as a result of the COVID-19 pandemic, in the markets where the underlying collateral for our loans are located may cause our borrowers to default or may cause the value of the collateral to decrease and be less than the outstanding amount of the loan. To mitigate these market risks, when evaluating a potential investment, we perform thorough diligence on the value of the proposed collateral, including as compared to comparable collateral in the same market, and the historical business practices and credit worthiness of our borrowers and their affiliates, as well as compare our borrowers' proposed business plans for and projected income from the proposed collateral to our expectations regarding the market conditions of the geographic area where the collateral is located and the potential for future income from the collateral. In addition, with respect to our existing loans, we continuously monitor the credit quality and performance of our borrowers and loan collateral, and we structure our loans with risk mitigation mechanisms, such as cash flow sweeps or interest reserves, to help protect us against investment losses. However, despite these risk mitigation efforts and measures, our borrowers may default on our loans and/or the value of the underlying collateral may decrease significantly if market conditions decline or for other reasons. For further information regarding the risks associated with our loan portfolio, see the risk factors identified in Part II, Item 1A, "Risk Factors" of this Quarterly Report on Form 10-Q and the risk factors identified in Part I, Item IA, "Risk Factors" of our Annual Report.

Floating Rate Investments

As of September 30, 2020, our loans held for investment had an aggregate principal balance of $279,987 and the weighted average maximum maturity of our loan portfolio was 2.9 years, assuming all borrower loan extension options have been exercised. All our loans held for investment were made in U.S. dollars and earn interest at LIBOR plus a premium. Accordingly, we are exposed to interest rate risk for changes in U.S. dollar based short term rates, specifically LIBOR. As LIBOR decreases, our risk is partially mitigated by interest rate floor provisions in our loan agreements with borrowers. In addition, upon repayment from our borrowers we are vulnerable to decreases in interest rate premiums due to market conditions at the time any such repayment proceeds are reinvested.

Floating Rate Debt

At September 30, 2020, our floating rate debt obligations consisted of $201,051 in outstanding advancements under our Master Repurchase Facility. Our Master Repurchase Facility matures in November 2022, subject to early termination as provided for in our Master Repurchase Agreement.

All our floating rate debt was borrowed in U.S. dollars and requires interest to be paid at a rate of LIBOR plus a premium. Accordingly, we are exposed to interest rate risk for changes in U.S. dollar based short term rates, specifically LIBOR. In addition, upon selling additional mortgage loans and other assets under our Master Repurchase Facility, we are vulnerable to increases in interest rate premiums due to market conditions or perceived credit characteristics of our borrowers.

The table below details the impact, based on our current loan portfolio and debt outstanding at September 30, 2020, on our interest income and interest expense of an immediate increase or decrease of 100 basis points in LIBOR, the applicable interest rate benchmark:

	Principal Balance as of September 30, 2020		Interest Rate Per Year (1)	100 Basis Point Increase		16 Basis Point Decrease (3)
Assets (Liabilities) Subject to Interest Rate Sensitivity:
Loans held for investment	$	279,987	5.70%	$	—	$	—
Master repurchase facility	(201,051)		2.16%	(2,011)		313
Total change in net income from investments				$	(2,011)	$	313
Annual earnings per share impact (2)				$	(0.25)	$	0.04

(1)Weighted based on interest rates and principal balances as of September 30, 2020.

(2)Based on weighted average number of shares outstanding (diluted) for the three months ended September 30, 2020.

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(3)Our loan agreements with borrowers include interest rate floor provisions which set a minimum LIBOR for each loan. These floors range from 1.50% to 2.50% and the portfolio weighted average is 2.10% as of September 30, 2020. As a result, our interest income will increase if LIBOR exceeds the floor established by any of our investments, and as LIBOR decreases below the floor established for 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 increases and decreases in LIBOR of 100 basis points, taking into consideration our borrowers' interest rate floors as of September 30, 2020. The 100 basis point increase in LIBOR used in the analysis above does not result in any increase in interest we would receive in our loans held for investment because the increased rate would not exceed the current interest rate floor provision. The 100 basis point decrease in LIBOR has been limited in the analysis to 16 basis points to result in a LIBOR rate of 0.00%. The results are based on our current loan portfolio and debt outstanding at September 30, 2020. and a LIBOR rate of 0.16%. Any changes to the mix of our investments of debt outstanding could impact this interest rate sensitivity analysis and this illustration is not meant to forecast future results.

    To mitigate the impact of future changes in market interest rates on our business, we require borrowers to pay floating interest rates to us rather than fixed interest rates on our loans held for investment and, to the extent that we use leverage to make investments, we will continue to "match index" certain investments with our debt or leverage obligations so that they create similar movements in interest rates based upon similar indexes and other terms. Furthermore, depending upon our beliefs regarding future market conditions affecting interest rates, we may purchase interest rate hedge instruments that allow us to change the character of interest receipts and debt service obligations owed to us from fixed to floating rates or the reverse.

LIBOR Phase Out

    LIBOR is currently expected to be phased out in 2021. 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 SOFR, or if SOFR is not available, such other rate as may be determined by Citibank in accordance with the terms of our amended Master Repurchase Agreement. All the agreements governing our loans held for investment currently require our borrowers to pay interest at floating rates based on LIBOR. Future agreements governing loans that we may make and debt that we may incur may also require interest to be paid at floating rates based on LIBOR. We currently expect that the determination of interest under such agreements would be revised as provided under such agreements or amended as necessary to provide for an interest rate that approximates the existing interest rate as calculated in accordance with LIBOR. Despite our current expectations, we cannot be sure that, if LIBOR is phased out or transitioned, the changes to the determination of interest under such agreements would approximate the current calculation in accordance with LIBOR.

Item 4. Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Warning Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q 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 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. Forward-looking statements in this Quarterly Report on Form 10-Q relate to various aspects of our business, including:

•The duration and severity of the economic downturn resulting from the COVID-19 pandemic and its impact on us and our borrowers,

•The likelihood and extent to which our borrowers will be negatively impacted by the COVID-19 pandemic and its aftermath and be able and willing to fund their debt service obligations owed to us,

•Our expectations about our borrowers’ business plans and their abilities to successfully execute them,

•Our expectations regarding the diversity and other characteristics of our loan investment portfolio,

•Our ability to carry out our business strategy and take advantage of opportunities for our business that we believe exist,

•Our expectations of the volume of transactions and opportunities that will exist in the CRE debt market, including the middle market, when the U.S. economy improves and returns to a more stable state for a sustained period,

•Our ability to obtain additional capital to enable us to make additional investments or to increase our potential returns, including by using available leverage,

•Our ability to pay distributions to our shareholders and to sustain the amount of such distributions,

•Our expectations as to the amount of capital we may be able to preserve as a result of reducing the distribution rate on our common shares,

•Our operating and investment targets, investment and financing strategies and leverage policies,

•Our expected operating results,

•The amount and timing of cash flows we receive from our investments,

•Our expectations regarding the impact of the COVID-19 pandemic on our borrowers and our financial condition,

•The ability of our Manager to locate suitable investments for us, to monitor, service and administer our existing investments and to otherwise implement our investment strategy,

•Our ability to maintain and increase the net interest spread between the interest we earn on our investments and the interest we pay on our borrowings,

•The origination, extension, exit, prepayment or other fees we may earn from our investments,

•Yields that may be available to us from mortgages on middle market and transitional CRE,

•The duration and other terms of our loan agreements with borrowers,

•The credit qualities of our borrowers,

•The ability and willingness of our borrowers to repay our investments in a timely manner or at all,

•Our projected leverage,

•The cost and availability of additional advancements under our Master Repurchase Facility, or other debt financing under additional repurchase or bank facilities we may obtain from time to time, and our ability to obtain such additional debt financing,

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•Our qualification for taxation as a REIT,

•Our expectation that we will declare a one-time cash distribution in December 2020 to be paid in January 2021 to maintain our qualification for taxation as a REIT for 2020,

•Our ability to maintain our exemption from registration under the Investment Company Act,

•Our understanding of the competitive nature of our industry and our ability to successfully compete under such circumstances,

•Market trends in our industry or with respect to interest rates, real estate values, the debt securities markets or the economy generally,

•Regulatory requirements and the effect they may have on us or our competitors, and

•Other matters.

Our 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. Risks, uncertainties and other factors that could have a material adverse effect on our forward-looking statements and upon our business, financial condition, liquidity, results of operations, cash flow, prospects and ability to make distributions include, but are not limited to:

•The impact of conditions in the economy, the CRE, industry and the capital markets on us and our borrowers,

•Competition within the CRE lending industry,

•Changes in the availability, sourcing and structuring of CRE lending,

•Defaults by our borrowers,

•Compliance with, and changes to, federal, state or local laws or regulations, accounting rules, tax laws or similar matters,

•Limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our qualification for taxation as a REIT for U.S. federal income tax purposes,

•Actual and potential conflicts of interest with our related parties, including our Managing Trustees, our Manager, RMR LLC, and others affiliated with them,

•Acts of terrorism, outbreaks of pandemics, including the COVID-19 pandemic, or other manmade or natural disasters beyond our control, and

•Additional factors, including, but not limited to, those set forth in Part II, Item IA, "Risk Factors" of this Quarterly Report on Form 10-Q and the risk factors identified in Part I, Item IA, "Risk Factors" of our Annual Report.

For example:

•We have a limited operating history, and we may not be able to operate our business successfully or generate sufficient revenue to make or sustain distributions to our shareholders,

•To make additional investments and continue to grow our business, we will need to obtain additional cost-effective capital. We cannot be sure that we will be successful in obtaining any such additional capital. If we are unable to obtain such additional capital, we may not be able to further grow our business by making additional investments,

•Beginning with the first quarter of 2020, we reduced our quarterly distribution rate on our common shares to $0.01 per share. Our distributions and distribution rate are set from time to time by our Board of Trustees. The timing, amount and form of future distributions will be determined at the discretion of our Board of Trustees and will depend upon various factors that our Board of Trustees deems relevant, including our historical and projected income, our Core Earnings, the then-current and expected needs and availability of cash to pay our obligations and fund our investments, distributions which may be required to be paid by us to maintain our qualification for taxation as a REIT, limitations on distributions contained in our financing arrangements and other factors deemed relevant by

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our Board of Trustees in its discretion. Accordingly future distribution rates may be increased or decreased and there is no assurance as to the rate at which future distributions will be paid or that we will pay a one-time distribution in January 2021 to maintain our qualification for taxation as a REIT for 2020,

•Competition may limit our ability to identify and make desirable investments with any additional capital we may obtain or with any proceeds we may receive from repayments of our investments,

•Our belief that there will be strong demand for alternative sources of CRE debt capital when the U.S. economy improves and returns to a more stable state for a sustained period may not be correct,

•The value of our loans depends upon our borrowers’ ability to generate cash flows from operating the underlying collateral for our loans. Our borrowers may not have sufficient cash flows to repay our loans according to their terms, which may result in delinquency and foreclosure on our loans,

•Our investments contain certain risk mitigation mechanisms that may help protect us against investment losses by mitigating the impact from our borrowers being unable to pay their debt service obligations owed to us as scheduled for a temporary period. However, these mechanisms may not adequately cover the debt service amount and will likely not be able to fully fund the debt service obligations owed to us if the tenants’ businesses fail or they default on their debt service obligations owed to us,

•The impact of the COVID-19 pandemic is affecting all parts of the economy including our borrowers who are experiencing the negative impact of current economic conditions. As a result, we may not have sufficient capital to meet commitments from actions that Citibank takes if our borrowers default or the value of our collateral declines below required levels,

•Our actions to actively manage our investments to minimize the impact of the economic challenges imposed by the COVID-19 pandemic may not succeed or any success they may have may not help us avoid realizing negative impacts resulting from economic challenges imposed by the COVID-19 pandemic, including with respect to our liquidity and financial results,

•Our engagement with Citibank, the lender under our Master Repurchase Facility, and our borrowers may not enable us to maximize our ability to collect interest and principal on our investments and minimize any actions that Citibank may take if our borrowers default or the value of any of the collateral underlying our loans declines below prescribed levels. These actions may not succeed or, any success they may have, may not prevent us from realizing negative impacts from the current business conditions, including with respect to our liquidity and financial results. Further, despite our active engagement with Citibank, Citibank may ultimately determine to utilize one or more of the risk mitigation mechanisms available to it under our Master Repurchase Agreement,

•Prepayment of our loans may adversely affect the value of our loan portfolio and our ability to make or sustain distributions to our shareholders,

•Loans secured by properties in transition involve a greater risk of loss than loans secured by stabilized properties,

•Our Manager's and RMR LLC's only experience managing or servicing a mortgage REIT is with respect to us, and we have a limited operating history,

•We may incur significant debt, and our governing documents contain no limit on the amount of debt we may incur,

•Although, as of November 2, 2020, Citibank has not instituted cash sweeps on our accounts and we have not received a margin call under our Master Repurchase Facility, it may do so in the future in accordance with our Master Repurchase Agreement,

•Continued availability of additional advancements under our Master Repurchase Facility is subject to us identifying suitable loans to invest in and our satisfying certain financial covenants and other conditions, as applicable, that we may be unable to satisfy,

•Financing for floating rate mortgages and other related assets that we may seek to sell pursuant to our Master Repurchase Facility is subject to approval by the lender under our Master Repurchase Facility, whose approval we may not obtain,

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•Actual costs under our Master Repurchase Facility will be higher than LIBOR plus a premium because of fees and expenses associated with our debt,

•We have fully committed the capital available to us. Our ability to obtain additional financing advancements under our Master Repurchase Facility is contingent upon our making additional advancements to our existing borrowers or our ability to effectively reinvest any additional capital, including any loan repayment proceeds, that we may obtain or receive. However, we cannot be sure that we will be able to obtain additional capital or additional financing advancements under our Master Repurchase Facility. It may take an extended period for us to reinvest any additional capital we may receive, and any reinvestments we may be able to make may not provide us with similar returns or comparable risks as those of our current investments,

•Any phase out of LIBOR may have an impact on our investments and our debt financing arrangements,

•We believe that the market price for our common shares may need to increase to approximately book value for us to practically access additional capital in the public market. We believe this because of expected negative market reactions, among other reasons, if we were to complete an equity offering at a price that is below approximately book value. However, we are not prohibited from selling our common shares at less than book value and could do so if we determined it to be in our interests,

•We are dependent upon our Manager, its affiliates and their personnel. We may be unable to find suitable replacements if our management agreement is terminated,

•We believe that our relationships with our related parties, including our Managing Trustees, our Manager, RMR LLC and others affiliated with them may benefit us and provide us with competitive advantages in operating and growing our business. However, the advantages we believe we may realize from these relationships may not materialize,

•Our intention to remain exempt from registration under the Investment Company Act imposes limits on our operations, and we may fail to remain exempt from registration under the Investment Company Act, and

•Our failure to remain qualified for taxation as a REIT could have significant adverse consequences.

•We expect to execute an amendment to the loan agreement with the borrower under our loan related to a multifamily property located in Houston, TX to extend the maturity date of the loan by one year to November 10, 2021. This may imply that the amendment will be executed. However, this amendment is subject to conditions. These conditions may not be satisfied and this amendment may not occur, may be delayed or the terms may change.

Currently unexpected results could occur due to many different circumstances, some of which are beyond our control, such as acts of terrorism, the COVID-19 pandemic, natural disasters or changes in capital markets or the economy generally.

The information contained elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report or in our other filings with the SEC, including in the section captioned “Risk Factors” herein or therein, or incorporated herein or therein, identifies other important factors that could cause differences from 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 our 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.

Statement Concerning Limited Liability

The Articles of Amendment and Restatement of Tremont Mortgage Trust, a copy of which, together with any amendments or supplements thereto, is duly filed with the State Department of Assessments and Taxation of Maryland, provide that the name Tremont Mortgage Trust refers to the trustees collectively as trustees, but not individually or personally. No trustee, officer, shareholder, employee or agent of Tremont Mortgage Trust shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, Tremont Mortgage Trust. All persons or entities dealing with Tremont Mortgage Trust, in any way, shall look only to the assets of Tremont Mortgage Trust for the payment of any sum or the performance of any obligation.

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Part II. Other Information

Item 1A. Risk Factors

Our business faces many risks, a number of which are described in the section captioned “Risk Factors” in our Annual Report. The risks described in our Annual Report and below may not be the only risks we face. Other risks of which we are not yet aware, or that we currently believe are not material, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in our Annual Report or described below occur, our business, financial condition or results of operations could be adversely impacted and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described in our Annual Report and below, and the information contained in the section captioned “Warning Concerning Forward-Looking Statements” and elsewhere in this Quarterly Report before deciding whether to invest in our securities.

    Our business, operations, financial results and liquidity could be materially adversely impacted by the COVID-19 pandemic, and it is not known what the duration of this pandemic will be or what its ultimate adverse impact on us and our business will be.

    COVID-19 has been declared a pandemic by the World Health Organization and, in response to the outbreak, the U.S. Health and Human Services Secretary has declared a public health emergency in the United States. COVID-19 has had a devastating impact on the global economy, including the U.S. economy, and has resulted in a global economic recession.

    These conditions could materially and adversely impact our business, results of operations and liquidity. In addition, some of our borrowers and their tenants have experienced substantial declines in their businesses and some of our borrowers have sought relief from us from their debt service obligations owed to us, and we expect these declines and requests to continue or increase in the future. As a result of the COVID-19 pandemic and restrictions implemented in response, there have been construction moratoriums and decreases in available construction workers and construction activity, including required inspectors and governmental personnel for permitting and other requirements. These conditions, if they should continue or return, may prevent our borrowers from completing ongoing and planned construction projects and improving their properties that secure our loans. As a result, borrowers may be unable to generate sufficient cash flow to make payments on or refinance our loans, and we may not recover some or all of our investment. We have, as of November 2, 2020, provided relief to one of our borrowers who was in default during April 2020 but is no longer in default and we continue to actively engage in discussions with our borrowers to maximize our ability to collect interest and principal payments from them. We cannot be sure these efforts will succeed and, if the current economic conditions continue or worsen for a prolonged period, there is a significant risk that some of our other borrowers may default on their debt service obligations owed to us.

    During economic recessions, real estate values typically decline, sometimes significantly. Declining real estate values may increase the likelihood that our borrowers will default on their debt service obligations owed to us and that we will incur losses as a result because the value of the collateral that secures our loans may then be less than the debt owed to us plus our costs of recovery. Further, if borrowers do not repay our loans or we realize amounts that are less than the amount of the investment plus our costs, our investment portfolio will reduce in size. In addition, if a borrower defaults on our loan and we take actions related to the collateral securing that loan, we may be delayed for an extended period of time on converting that collateral to investable cash, which would impair our ability to redeploy that capital and grow our portfolio.

    We have been limited in our ability to access capital and, as a result, we have limited capital to invest. The long-term impact of the COVID-19 pandemic and its aftermath on financial markets is uncertain. To the extent that impact is sustained for an extended period, we expect that we will be further challenged in accessing capital. As a result, our ability to grow our business and investment portfolio may be limited for an indefinite period.

    In addition, we believe that the risks associated with our investments will increase during periods of economic slowdown or recession, especially if these periods are accompanied by declining real estate values. Consequently, our investment strategy may be adversely affected by a prolonged economic downturn or recession related to the COVID-19 pandemic where declining real estate values would likely reduce the level of new mortgage and other real estate related loan originations since borrowers often use the appreciation in the value of their existing properties to support the purchase or investment in additional properties. Any sustained period of increased payment delinquencies, foreclosures or losses resulting from the impact of the COVID-19 pandemic would adversely affect our ability to originate or acquire loans, which would materially and adversely affect our results of operations, financial condition, liquidity and business and our ability to make or sustain distributions to our shareholders.

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    We cannot predict the extent and duration of the COVID-19 pandemic or the severity and duration of its economic impact, but we expect it will be substantial. Potential consequences of the current unprecedented measures taken in response to the spread of COVID-19 and the current market disruptions and volatility affecting us include, but are not limited to:

◦the current low market price of our common shares may continue for an indefinite period and could decline further;

◦possible significant declines in the value of our portfolio;

◦our inability to accurately or reliably value our portfolio;

◦our inability to comply with financial covenants that could result in our defaulting under our Master Repurchase Agreement;

◦our maintaining the current reduced rate of distributions on our common shares for an extended period of time or suspending our payment of distributions entirely, subject to our paying distributions to comply with applicable REIT tax requirements;

◦our failure to pay interest and principal when due on our outstanding debt, which would result in events of default under our Master Repurchase Facility and our possible loss of our Master Repurchase Facility;

◦our inability to access debt and equity capital on attractive terms, or at all;

◦increased risk of default or bankruptcy of our borrowers;

◦increased risk of our borrowers being unable to weather an extended cessation of normal economic activity and thereby impairing their ability to continue functioning as going concerns and to pay their debt service obligations owed to us;

◦our and our borrowers’ inability to operate our businesses if the health of our respective management personnel and other employees is affected, particularly if a significant number of individuals are impacted; and

◦reduced economic demand resulting from mass employee layoffs or furloughs in response to governmental action taken to slow the spread of COVID-19, which could impact the continued viability of our borrowers.

    Further, the extent and strength of any economic recovery after the COVID-19 pandemic ends or otherwise are uncertain and subject to various factors and conditions. Our business, operations and financial position may continue to be negatively impacted after the COVID-19 pandemic ends and may remain at depressed levels compared to prior to the outbreak of the COVID-19 pandemic and those conditions may continue for an extended period.

    We reduced our quarterly distribution rate on our common shares to $0.01 per share; future distributions may remain at this level for an indefinite period, subject to applicable REIT tax requirements, or be eliminated and the form of payment could change.

    Beginning with the first quarter of 2020, we reduced our quarterly distribution rate on our common shares to $0.01 per share. We currently intend to continue to make quarterly distributions to our shareholders at this rate, subject to applicable REIT tax requirements, and we also expect to declare a one-time distribution in December 2020 to be paid in January 2021. However:

◦our ability to make or sustain the rate of distributions may continue to be adversely affected by the negative impact of the COVID-19 pandemic and its aftermath on our business, results of operations and liquidity;

◦our making of distributions is subject to restrictions contained in our Master Repurchase Agreement and may be subject to restrictions in future debt service obligations we may incur; during the continuance of any event of default under our Master Repurchase Agreement, we may be limited or in some cases prohibited from making distributions to our shareholders; and

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◦our distribution rate is set and reset from time to time by our Board of Trustees. The timing, amount and form of future distributions will be determined at the discretion of our Board of Trustees and will depend upon various factors that our Board of Trustees deems relevant, including our historical and projected income, our Core Earnings, the then-current and expected needs and availability of cash to pay our obligations and fund our investments, distributions which may be required to be paid to maintain our qualification for taxation as a REIT, limitations on distributions contained in our financing arrangements and other factors deemed relevant by our Board of Trustees in its discretion. Accordingly, future distribution rates may be increased or decreased and there is no assurance as to the rate at which future distributions will be paid.

    For these reasons, among others, our distribution rate may not increase for an indefinite period and could be eliminated.

    In order to preserve liquidity, we may elect to pay distributions to our shareholders, in part, in a form other than cash, such as issuing additional common shares of ours to our shareholders, as permitted by the applicable tax rules.

    Some of our borrowers have requested relief from their debt service obligations owed to us in response to the current economic conditions resulting from the COVID-19 pandemic and we may receive additional similar requests in the future; we may determine to grant relief in response to these requests in the future if we determine it prudent or appropriate to do so.

    The current economic conditions resulting from the COVID-19 pandemic have significantly negatively impacted some of our borrowers’ businesses, operations and liquidity. Some of our borrowers have requested relief from their debt service obligations owed to us. As of November 2, 2020, we have provided one borrower with relief in the form of an increase to the interest reserve balance that may be used to make interest payments. We may receive additional similar requests in the future, and we may determine to grant relief in the future if we determine it prudent or appropriate to do so. In addition, if our borrowers are unable to continue as going concerns as a result of the current economic conditions or otherwise, we may incur losses of all or some of our loan investments to them, including if the collateral securing our loans less our costs of recovery are less than the defaulted amounts.

    Our Master Repurchase Agreement requires, and the agreements governing any additional repurchase facilities, bank credit facilities or debt arrangements that we may enter into will likely require, us to provide additional collateral or pay down debt.

Our Master Repurchase Facility, or other repurchase or bank credit facilities (including term loans and revolving facilities) or debt arrangements that we may enter into to finance investments, may involve the risk that the value of the investments sold by us or pledged to the provider of such repurchase or other bank credit facilities or debt arrangements may decline, and, in such circumstances, we would likely be required to provide additional collateral or to repay all or a portion of the funds advanced thereunder. With respect to our Master Repurchase Facility, subject to certain conditions, Citibank has sole discretion to determine the market value of the investments that serve as collateral under the facility for purposes of determining whether we are required to pay margin to Citibank. Where a decline in the value of collateral, including as a result of the impact of COVID-19 pandemic, results in a margin deficit, Citibank may require us to eliminate that margin deficit through a combination of purchased asset repurchases and cash transfers to Citibank, subject to Citibank's approval. We may not have funds available to eliminate any such margin deficit and may be unable to raise funds from alternative sources on favorable terms or at all, which would likely result in a default under our Master Repurchase Agreement. In the event of any such default, Citibank could accelerate our outstanding debts and terminate our ability to obtain additional advancements under our Master Repurchase Facility, and our financial condition and prospects would be materially and adversely affected. Any debt arrangements that we may enter into in the future would likely contain similar provisions. In addition, if any of our current or future lenders file for bankruptcy or become insolvent, our investments that serve as collateral under the applicable repurchase or other bank credit facilities or debt arrangement may become subject to bankruptcy or insolvency proceedings, thus depriving us, at least temporarily, of the benefit of those assets. Such an event could restrict our access to additional debt arrangements and therefore increase our cost of capital. Lenders under any future repurchase or other bank credit facilities or debt arrangements may also require us to maintain a certain amount of cash or set aside assets sufficient to maintain a specified liquidity position that would allow us to satisfy our collateral obligations. As a result, we may not be able to leverage our assets to maximum capacity, which could reduce our return on assets. If we are unable to meet any such collateral obligations, our financial condition and prospects could deteriorate rapidly.

38

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

    Issuer purchases of equity securities. The following table provides information about our purchases of our equity securities during the quarter ended September 30, 2020.

Calendar Month	Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
September 2020	7,182	$	2.77	—	$	—
Total	7,182	$	2.77	—	$	—

(1)These common share withholdings and purchases were made to satisfy the tax withholding and payment obligations of one of our officers and certain other employees of RMR LLC in connection with the vesting of awards of our common shares. We withheld and purchased these shares at their fair market value based upon the trading price of our common shares at the close of trading on Nasdaq on the purchase date.

Item 5. Other Information

On October 30, 2020, we amended our Master Repurchase Agreement with Citibank to, among other things, (1) extend the stated expiration date of our Master Repurchase Facility by one year, from November 6, 2021 to November 6, 2022, subject to early termination as provided for in our Master Repurchase Agreement, and (2) 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 SOFR, or if SOFR is not available, such other rate as may be determined by Citibank in accordance with the terms of our amended Master Repurchase Agreement.

The foregoing description of the amendment to our Master Repurchase Agreement is not complete and is qualified in its entirety by reference to the full text of the Second Amendment to Master Repurchase Agreement and Fourth Amendment to Fee Agreement, copies of which are attached hereto as Exhibit 10.2 and 10.3, respectively, and are incorporated herein by reference.

39

Item 6. Exhibits

Exhibit Number	Description
3.1	Articles of Amendment and Restatement of the Company effective September 14, 2017. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 18, 2017.)
3.2	Amended and Restated Bylaws of the Company dated September 14, 2017. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 18, 2017.)
4.1	Form of Common Share Certificate. (Incorporated by reference to Amendment No. 1 to the Company’s Registration Statement on Form S-11 filed on August 3, 2017, File No. 333-219205.)
10.1	Form of Share Award Agreement. (Filed herewith.)
10.2	Second Amendment to Master Repurchase Agreement, dated October 30, 2020, among Citibank, N.A., TRMT CB Lender LLC and, for certain specified purposes, the Company. (Filed herewith.)
10.3	Fourth Amendment to Fee Agreement, dated October 30, 2020, among Citibank, N.A., TRMT CB Lender LLC and, for certain specified purposes, the Company. (Filed herewith.)
31.1	Rule 13a-14(a) Certification. (Filed herewith.)
31.2	Rule 13a-14(a) Certification. (Filed herewith.)
32.1	Section 1350 Certification. (Furnished herewith.)
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document. (Filed herewith.)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
104	Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101.)

40

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, thereunto duly authorized.

TREMONT MORTGAGE TRUST
By:	/s/ David M. Blackman
	David M. Blackman President and Chief Executive Officer
	Dated: November 3, 2020
By:	/s/ G. Douglas Lanois
	G. Douglas Lanois Chief Financial Officer and Treasurer (principal financial and accounting officer)
	Dated: November 3, 2020

41

EX-10.1

Exhibit 10.1

FORM OF

TREMONT MORTGAGE TRUST

Share Award Agreement

This Share Award Agreement (this “Agreement”) is made as of «DATE», 2020, between «NAME» (the “Recipient”) and Tremont Mortgage Trust (the “Company”).

In consideration of the mutual promises and covenants contained in this Agreement, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.    Grant of Shares. Subject to the terms and conditions hereinafter set forth and the terms and conditions of the Tremont Mortgage Trust 2017 Equity Compensation Plan, as it may be amended from time to time (the “Plan”), the Company hereby grants to the Recipient, effective as of the date of this Agreement, «NUMBER» of its common shares of beneficial interest, par value $0.01 per share (the “Common Shares”). The shares so granted are hereinafter referred to as the “Shares,” which term shall also include any shares of the Company issued to the Recipient by virtue of his or her ownership of the Shares, by share dividend, share split or combination, recapitalization or otherwise.

2.    Vesting; Forfeiture of Shares.

(a)    Subject to Sections 2(b) and 2(c) hereof, the Shares shall vest one-fifth of the total number of Shares as of the date hereof and as to a further one-fifth of such total number of Shares on each anniversary of the date hereof for the next four calendar years. Any Shares not vested as of any date are herein referred to as “Unvested Shares.”

(b)    Subject to Section 2(c) hereof, at the option of the Company, in the event the Recipient ceases to render significant services, whether as an employee or otherwise, to (i) the Company, (ii) the entity which is the manager or shared services provider to the Company or an entity controlled by, under common control with or controlling such entity (collectively, the “Manager”), or (iii) an affiliate of the Company (which shall be deemed for such purpose to include any other entity to which the Manager is the manager or shared services provider), all or any portion of the Unvested Shares shall be forfeited by the Recipient on or after the date the Recipient ceases to render all such services, as determined by the Company. The Company may exercise such option by delivering or mailing to the Recipient (or his or her estate), at any time after the Recipient has ceased to render such services, a written notice of exercise of such option. Such notice shall specify the number of Unvested Shares to be forfeited.

(c)    Notwithstanding anything in this Agreement to the contrary, immediately upon the occurrence of an Acceleration Event (as defined below), all of the Unvested Shares shall vest and any forfeiture or other rights of the Company described in Section 2(b) shall lapse in their entirety, and such vesting and lapse of forfeiture or other

{S2661943; 1}

Company rights shall also immediately apply to each other Common Share previously granted to the Recipient which then remains subject to comparable restrictions and rights. For purposes of this Section 2(c), an Acceleration Event shall be deemed to occur immediately upon the occurrence of any of the following events: a Change in Control, a Termination Event (as each such term is defined in Exhibit A hereto) or the death of the Recipient.

3.    Legends. Vested and Unvested Shares granted under this Agreement may bear or contain, as applicable, such legends and notations as may be required by the Plan or the Company’s declaration of trust, any applicable supplement thereto or bylaws, each as in effect from time to time, or as the Company may otherwise determine appropriate.

Promptly following the request of the Recipient with respect to any Shares (or any other Common Shares previously granted to the Recipient), the Company shall take, at its sole cost and expense, all such actions as may be required to permit the Recipient to sell such shares including, as applicable and without limitation, providing to the Company’s transfer agent certificates of officers of the Company, and opinions of counsel and/or filing an appropriate registration statement, and taking all such other actions as may be required to remove the legends set forth above with respect to transfer and vesting restrictions from the certificates evidencing such shares and, if applicable, from the share books and records of the Company. The Company shall reimburse the Recipient, promptly upon the receipt of a request for payment, for all expenses (including legal expenses) reasonably incurred by the Recipient in connection with the enforcement of the Recipient’s rights under this paragraph.

4.    Tax Withholding. To the extent required by law, the Company or the Manager shall withhold or cause to be withheld income and other taxes incurred by the Recipient by reason of a grant of Shares, and the Recipient agrees that he or she shall, upon the request of the Company or the Manager, pay to the Company or to the Manager an amount sufficient to satisfy his or her tax withholding obligations from time to time (including as Shares become vested).

5.    Miscellaneous.

(a)    Amendments. Neither this Agreement nor any provision hereof may be changed or modified except by an agreement in writing executed by the Recipient and the Company; provided, however, that any change or modification that does not adversely affect the rights hereunder of the Recipient, as they may exist immediately prior to the effective date of such change or modification, may be adopted by the Company without an agreement in writing executed by the Recipient, and the Company shall give the Recipient written notice of such change or modification reasonably promptly following the adoption of such change or modification.

(b)    Binding Effect of the Agreement. This Agreement shall inure to the benefit of, and be binding upon , the Company, the Recipient and their respective estates, heirs, executors, transferees, successors, assigns and legal representatives.

{S2661943; 1}                    2

(c)    Provisions Separable. In the event that any of the terms of this Agreement shall be or become or is declared to be illegal or unenforceable by any court or other authority of competent jurisdiction, such terms shall be null and void and shall be deemed deleted from this Agreement, and all the remaining terms of this Agreement shall remain in full force and effect.

(d)    Notices. Any notice in connection with this Agreement shall be deemed to have been properly delivered if it is in writing and is delivered by hand or by facsimile or sent by registered certified mail, postage prepaid, to the party addressed as follows, unless another address has been substituted by notice so given:

To the Recipient:    To the Recipient’s address as set forth on the signature page hereof.

To the Company:    Tremont Mortgage Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, MA 02458

Attn: Secretary

(e)    Construction. The headings and subheadings of this Agreement have been inserted for convenience only, and shall not affect the construction of the provisions hereof. All references to sections of this Agreement shall be deemed to refer as well to all subsections which form a part of such section.

(f)    Employment Agreement. This Agreement shall not be construed as an agreement by the Company, the Manager or any affiliate of the Company or the Manager to employ the Recipient, nor is the Company, the Manager or any affiliate of the Company or the Manager obligated to continue employing the Recipient by reason of this Agreement or the grant of the Shares to the Recipient hereunder.

(g)    Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Maryland, without giving effect to the principles of conflicts of law of such state.

(h)    Binding Arbitration. Any disputes regarding this Agreement, the granting or vesting of any shares of the Company and/or any related matters shall be settled by binding arbitration in accordance with any Mutual Agreement to Resolve Disputes and Arbitrate Claims between the Recipient and the Manager. In the absence of such an agreement, any such claims or disputes shall be resolved through binding arbitration before one arbitrator conducted under the rules of JAMS in Boston, Massachusetts.

{S2661943; 1}                    3

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or caused this Agreement to be executed under seal, as of the date first above written.

TREMONT MORTGAGE TRUST

By:

Name: G. Douglas Lanois

Title: Chief Financial Officer and Treasurer

RECIPIENT:

«NAME»

«ADDRESS»

«CITY», «ST» «ZIP»

{S2661943; 1}                    4

Exhibit A

A “Change in Control” shall be deemed to have occurred if any of the events set forth in any one of the following paragraphs shall have occurred:

(a)    any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of either the then outstanding common shares of beneficial interest of the Company or the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in paragraph (c)(i) below;

(b)    the following individuals cease for any reason to constitute a majority of the number of Trustees then serving: individuals who, on the date of the Agreement, constitute the Board and any new Trustee (other than a Trustee whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of Trustees) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the Trustees then in office who either were Trustees on the date of the Agreement or whose appointment, election or nomination for election was previously so approved or recommended;

(c)    there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other entity, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 50% or more of the combined voting power of the Company’s then outstanding securities; or

(d)    the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

A “Termination Event” shall occur if Tremont Realty Advisors LLC (or any entity controlled by, under common control with or controlling Tremont Realty Advisors LLC) ceases to be the manager or shared services provider to the Company.

{S2661943; 1}                    5

For purposes of the definitions set forth on this Exhibit A, the following definitions shall apply, with capitalized terms used but not defined in this Exhibit A having the meaning set forth in the Plan:

“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

“Agreement” shall mean the Share Award Agreement to which this Exhibit A is attached.

“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities and (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of shares of the Company.

“Trustee” is a member of the Board of Trustees of the Company.

{S2661943; 1}                    6

EX-10.2

Exhibit 10.2

SECOND AMENDMENT TO MASTER REPURCHASE AGREEMENT

THIS SECOND AMENDMENT TO MASTER REPURCHASE AGREEMENT (this “Amendment”), dated as of October 30, 2020 (the “Effective Date”), is made by and among CITIBANK, N.A. (together with its successors and/or assigns, “Buyer”), TRMT CB LENDER LLC, a Delaware limited liability company (“Seller”), and for the purpose of acknowledging and agreeing to the provision set forth in Section 3 hereof, TREMONT MORTGAGE TRUST, a Maryland real estate investment trust (“Guarantor”).

WITNESSETH:

WHEREAS, Seller and Buyer have entered into that certain Master Repurchase Agreement, dated as of February 9, 2018, as amended by that certain First Amendment to Master Repurchase Agreement, dated as of November 6, 2018 (as such agreement may be further amended, supplemented, extended, restated, replaced or otherwise modified from time to time, the “Repurchase Agreement”);

WHEREAS, all capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Repurchase Agreement;

WHEREAS, Seller and Buyer desire to modify certain terms and provisions of the Repurchase Agreement as set forth herein.

NOW, THEREFORE, in consideration of ten dollars ($10) and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Seller and Buyer covenant and agree as follows as of the Effective Date, and Guarantor acknowledges and agrees as to the provision set forth in Section 3 as of the Effective Date:

1.Modification of Repurchase Agreement. The Repurchase Agreement is hereby modified as of the Effective Date as follows:

(a)The definitions of “Alternative Rate” and “Alternative Rate Transaction” in Article 2 of the Repurchase Agreement are hereby deleted in their entirety.

(b)The following definitions in Article 2 of the Repurchase Agreement are hereby deleted in their entirety and the following corresponding definitions are substituted therefor:

“Stated Facility Expiration Date” shall mean November 6, 2022 (or if such day is not a Business Day, the next succeeding Business Day).

“Pricing Rate Determination Date” shall mean, with respect to any Pricing Rate Period with respect to any Transaction:

(i)if the Applicable Index with respect to such Pricing Rate Period is LIBOR (or, if applicable, the Federal Funds Rate), the second (2nd) London Business Day preceding the first day of such Pricing Rate Period;

ACTIVE 262069906v.6

(ii)if the Applicable Index with respect to such Pricing Rate Period is a Replacement Index, a date Buyer determines, on or prior to the applicable Index Transition Date, in its reasonable discretion.

i. The following defined terms are hereby added to Article 2 of the Repurchase Agreement in the appropriate alphabetical order:

“Applicable Alternative Rate” shall have the meaning set forth in the Fee Letter.

“Applicable Index” shall have the meaning set forth in the Fee Letter.

“Available Tenor” shall mean, as of any date of determinationand with respect to the then-current Applicable Index, as applicable, any tenor for such Applicable Index or payment period for Purchase Price Differential or interest calculated with reference to such Applicable Index, as applicable, that is or may be used for determining the length of a Pricing Rate Period pursuant to this Agreement as of such date.

“Conforming Changes” shall mean any technical, administrative or operational changes (including, but not limited to, changes to the definition of “Business Day”, the definition of “Pricing Rate Period”, the timing and frequency of determining rates and making payments of Purchase Price Differential, the timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, the formula for calculating any successor rates identified pursuant to the definition of “Replacement Index” (including whether such formula shall be cumulative or non-cumulative), the formula, methodology or convention for applying the successor floor to the successor Replacement Index and other technical, administrative or operational matters) which Buyer determines are both (i) appropriate to implement the Index Transition and (ii) consistent with Market Practice (or, if Buyer decides that adoption of any portion of such Market Practice is not administratively feasible or if Buyer determines that no Market Practice for the administration of such Index Transition exists, in such other manner of administration as Buyer decides is reasonably necessary in connection with the administration of this Agreement and the other Transaction Documents).

“Corresponding Tenor” shall mean, with respect to any Available Tenor, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding Business Day adjustment) as such Available Tenor.

“Daily Compounded SOFR” shall mean, for any day, SOFR, with interest accruing on a compounded daily basis, with the methodology and conventions for this rate (which will include compounding in arrears with a lookback) being established by Buyer in accordance with the methodology and conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Compounded SOFR” for business loans; provided, that if Buyer decides that any such convention is not administratively feasible for Buyer, then Buyer may establish another convention in its reasonable discretion.

“Fourth Amendment Date” shall mean October 30, 2020.

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ACTIVE 262069906v.6

“Index” shall have the meaning set forth in the Fee Letter.

“Index Rate” shall have the meaning set forth in the Fee Letter.

“Index Transition” shall have the meaning set forth in the Fee Letter.

“Index Transition Date” shall mean the next subsequent Pricing Rate Determination Date which is at least ten (10) Business Days following the date of delivery of an Index Transition Notice.

“Index Transition Event” shall mean the occurrence of a determination by Buyer that one of the following events has occurred with respect to the then-current Applicable Index:

(i)a public statement or publication of information by or on behalf of the administrator of such Applicable Index (or the published component used in the calculation thereof) announcing that the administrator has ceased or will cease to provide all Available Tenors of such Applicable Index (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Applicable Index (or such component thereof);

(ii)a public statement or publication of information by the regulatory supervisor for the administrator of such Applicable Index (or the published component used in the calculation thereof), a Relevant Governmental Body, an insolvency official with jurisdiction over the administrator for such Applicable Index (or such component), a resolution authority with jurisdiction over the administrator for such Applicable Index (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Applicable Index (or such component), which states that the administrator of such Applicable Index (or such component) has ceased or will cease to provide all Available Tenors of such Applicable Index (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Applicable Index (or such component thereof); or

(iii)a public statement or publication of information by the regulatory supervisor for the administrator of such Applicable Index (or the published component used in the calculation thereof) announcing that all Available Tenors of such Applicable Index (or such component thereof) are no longer representative.

For the avoidance of doubt, an “Index Transition Event” will be deemed to have occurred with respect to any Applicable Index if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Applicable Index (or the published component used in the calculation thereof).

    3

ACTIVE 262069906v.6

“Index Transition Notice” shall mean a notice given by Buyer which:

(i)sets forth in reasonable detail the circumstances of the Index Transition;

(ii)designates an Index Transition Date; and

(iii)if feasible, identifies other Interest Determinations and Conforming Changes to implement such Index Transition.

“Interest Determination” shall mean any determination related to an Index or an Index Transition.

“ISDA Definitions” shall mean the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time.

“Market Practice” shall mean the practice and course of dealing, including the manner of implementing Index Transitions, under repurchase facilities for Similar Loans with similarly situated counterparties domiciled in the United States.

“Rate Adjustment” shall mean, with respect to any Index Transition for any applicable Pricing Rate Period and Available Tenor, an adjustment which may be zero (0) or a positive or negative value, and which adjustment shall be the first alternative set forth in the order below:

(i)the adjustment, or method for calculating such adjustment, as of the Index Transition Date that has been selected, endorsed or recommended by the Relevant Governmental Body for such Index Transition for the applicable Corresponding Tenor;

(ii)the adjustment as of the Index Transition Date that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Index Transition for the applicable Corresponding Tenor; and

(iii)the adjustment that has been selected by Buyer, after consultation with Seller, in its reasonable discretion for the applicable Corresponding Tenor consistently with Market Practice for handling such Index Transition, giving due consideration to the then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such adjustment, for the replacement of the then-current Index with the applicable Replacement Index for U.S. dollar denominated floating rate commercial real estate mortgage loans as of the Index Transition Date.

“Relevant Governmental Body” shall mean:

(i)the Federal Reserve Board or the Federal Reserve Bank of New York; or

    4

ACTIVE 262069906v.6

(ii)a committee officially endorsed or convened by the Federal Reserve Board or the Federal Reserve Bank of New York, or any successor thereto.

“Replacement Index” shall mean, for any Available Tenor, as of the relevant Index Transition Date and thereafter until a subsequent Index Transition Date or the Repurchase Date, the first alternative Index set forth in the order below that Buyer determines is available and appropriate for the transaction:

(i)Term SOFR;

(ii)Daily Compounded SOFR; or

(iii) an Index selected by Buyer as the replacement for the then-current Applicable Index for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement Index or the mechanism for determining such an Index by the Relevant Governmental Body, and (ii) any Market Practice.

If the Replacement Index as determined pursuant to clause (i), (ii) or (iii) above would be less than zero (0), the Replacement Index shall be deemed to be zero (0) for all purposes of this Agreement with respect to the applicable Pricing Rate Period.

“SOFR” shall mean, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.

“SOFR Administrator” shall mean the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

“SOFR Administrator’s Website” shall mean the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

“Term SOFR” shall mean, for the applicable Corresponding Tenor as of the applicable Pricing Rate Determination Date, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

ii. Sections 3(f), 3(g) and 3(i)(1) of the Repurchase Agreement are hereby deleted in their entirety and replaced with the following:

“(f)    Upon written demand by Buyer, Seller shall indemnify Buyer and hold Buyer harmless from any cost or expense (including, without limitation, reasonable attorneys’ fees and disbursements) that Buyer actually sustains or incurs as a consequence of (i) a failure by Seller in repurchasing any Purchased Asset on the Early Repurchase Date after Seller has given a notice in accordance with Article 3(d) of an Early Repurchase Date, (ii) any payment of the Repurchase Price on any day other than a Remittance Date, (iii) a default by Seller in selling Eligible Loans after Seller has notified

    5

ACTIVE 262069906v.6

Buyer of a proposed Transaction and Buyer has agreed to purchase such Eligible Loans in accordance with the provisions of this Agreement, and/or (iv) any Interest Determination which results in a transition to a Replacement Index on a day which is not the last day of the then current Pricing Rate Period.

(g)    Upon Buyer’s reasonable determination that an Index Transition Event has occurred:

(i)Buyer shall provide an Index Transition Notice to Seller;

(ii)the Applicable Index shall transition, as of the Index Transition Date, to a Replacement Index identified in accordance with the definition thereof and the provisions hereof; and

(iii)the Rate Adjustment shall transition in accordance with the definition thereof.

To the extent of any such determination by Buyer that an Index Transition Event has occurred, such determination and imposition of a Replacement Index will not be applied to Seller unless Buyer is imposing changes similar in substance on its similarly situated customers domiciled in the United States under repurchase facilities under which Buyer has a comparable contractual right, which repurchase facilities finance commercial real estate mortgage loans similar to the affected Purchased Loans (“Similar Loans”).

Notwithstanding anything to the contrary herein or in any other Transaction Documents, Buyer shall have the right to make Conforming Changes to the Transaction Documents from time to time in connection with an Index Transition Event, and such Conforming Changes shall become effective without any further action or consent by Seller.

(i)(1)    Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof after the date of this Agreement shall make it unlawful for Buyer to effect or continue Transactions as contemplated by the Transaction Documents, (a) the commitment, if any, of Buyer hereunder to enter into new Transactions shall forthwith be canceled, and (b) unless a Replacement Index becomes effective as provided in Section 3(g)(ii), the Pricing Rate for the Transactions then outstanding shall be converted automatically to a per annum rate equal to the Federal Funds Rate plus the Applicable Spread on the last day of the then current Pricing Rate Period or within such earlier period as may be required by law. If any such conversion of a Transaction occurs on a day which is not the last day of the then current Pricing Rate Period with respect to such Transaction, Seller shall pay to Buyer such amounts, if any, as may be required pursuant to Section 3(f) of this Agreement.”

    6

ACTIVE 262069906v.6

2.Seller’s Representations. Seller has taken all necessary action to authorize the execution, delivery and performance of this Amendment. This Amendment has been duly executed and delivered by or on behalf of Seller and constitutes the legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms subject to bankruptcy, insolvency, and other limitations on creditors’ rights generally and to equitable principles. No Event of Default has occurred and is continuing, and no Event of Default will occur as a result of the execution, delivery and performance by Seller of this Amendment. Any consent, approval, authorization, order, registration or qualification of or with any Governmental Authority required for the execution, delivery and performance by Seller of this Amendment has been obtained and is in full force and effect (other than consents, approvals, authorizations, orders, registrations or qualifications that if not obtained, are not reasonably likely to have a Material Adverse Effect).

3.Reaffirmation of Guaranty. Guarantor has executed this Amendment for the purpose of acknowledging and agreeing that, notwithstanding the execution and delivery of this Amendment and the amendment of the Repurchase Agreement hereunder, all of Guarantor’s obligations under the Guaranty remain in full force and effect and the same are hereby irrevocably and unconditionally ratified and confirmed by Guarantor in all respects.

4.Conditions Precedent. This Amendment and its provision shall become effective upon the execution and delivery of this Amendment by a duly authorized officer of each of Seller, Buyer and Guarantor.

5.Agreement Regarding Expenses. Seller agrees to pay Buyer’s reasonable out of pocket expenses (including reasonable legal fees) incurred in connection with the preparation and negotiation of this Amendment promptly (and after Buyer or Buyer’s counsel gives Seller an invoice for such expenses).

6.Full Force and Effect. Except as expressly modified hereby, all of the terms, covenants and conditions of the Repurchase Agreement and the other Transaction Documents remain unmodified and in full force and effect and are hereby ratified and confirmed by Seller. Any inconsistency between this Amendment and the Repurchase Agreement (as it existed before this Amendment) shall be resolved in favor of this Amendment, whether or not this Amendment specifically modifies the particular provision(s) in the Repurchase Agreement inconsistent with this Amendment. All references to the “Agreement” in the Repurchase Agreement or to the “Repurchase Agreement” in any of the other Transaction Documents shall mean and refer to the Repurchase Agreement as modified and amended hereby.

7.No Waiver. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Buyer under the Repurchase Agreement, the Guaranty, any of the other Transaction Documents or any other document, instrument or agreement executed and/or delivered in connection therewith.

8.Headings. Each of the captions contained in this Amendment are for the convenience of reference only and shall not define or limit the provisions hereof.

    7

ACTIVE 262069906v.6

9.Counterparts. This Amendment may be executed in any number of counterparts, and all such counterparts shall together constitute the same agreement. Signatures delivered by email (in PDF format) shall be considered binding with the same force and effect as original signatures.

10.Governing Law. This Amendment shall be governed in accordance with the terms and provisions of Article 19 of the Repurchase Agreement.

[No Further Text on this Page; Signature Pages Follow]

    8

ACTIVE 262069906v.6

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized representatives as of the day and year first above written and effective as of the Effective Date.

SELLER:
TRMT CB LENDER LLC,
a Delaware limited liability company
By:	/s/ G. Douglas Lanois
	Name: G. Douglas Lanois
	Title: Chief Financial Officer

[SIGNATURES PAGES CONTINUE ON NEXT PAGE]

ACTIVE 262069906v.6

GUARANTOR:
TREMONT MORTGAGE TRUST,
a Maryland real estate investment trust
By:	/s/ G. Douglas Lanois
	Name: G. Douglas Lanois
	Title: Chief Financial Officer

[SIGNATURES PAGES CONTINUE ON NEXT PAGE]

ACTIVE 262069906v.6

BUYER:
CITIBANK, N.A.
By:	/s/ Richard B. Schlenger
	Name: Richard B. Schlenger
	Title: Authorized Signatory

ACTIVE 262069906v.6

EX-10.3

Exhibit 10.3

FOURTH AMENDMENT TO FEE AGREEMENT

THIS FOURTH AMENDMENT TO FEE AGREEMENT (this “Amendment”), dated as of October 30, 2020 (the “Effective Date”), is made by and among CITIBANK, N.A. (together with its successors and/or assigns, “Buyer”), TRMT CB LENDER LLC, a Delaware limited liability company (“Seller”), and for the purpose of acknowledging and agreeing to the provision set forth in Section 3 hereof, TREMONT MORTGAGE TRUST, a Maryland real estate investment trust (“Guarantor”).

WITNESSETH:

WHEREAS, Seller and Buyer have entered into that certain Master Repurchase Agreement, dated as of February 9, 2018, as amended by the First Amendment to Master Repurchase Agreement, dated as of November 6, 2018, and the Second Amendment to Master Repurchase Agreement, dated as of the date hereof (as such agreement may be further amended, supplemented, extended, restated, replaced or otherwise modified from time to time, the “Repurchase Agreement”);

WHEREAS, in connection with the Repurchase Agreement, Seller and Buyer entered into that certain Fee Agreement, dated as of February 9, 2018, as amended by the First Amendment to Fee Agreement, dated as of November 6, 2018, the Second Amendment to Fee Agreement, dated as of February 4, 2019 and the Third Amendment to Fee Agreement, dated as of May 1, 2019 (as the same may be further amended, supplemented or otherwise modified from time to time, the “Fee Agreement”);

WHEREAS, all capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Repurchase Agreement; and

WHEREAS, Seller and Buyer desire to amend the Fee Agreement as more particularly set forth herein.

NOW, THEREFORE, in consideration of ten dollars ($10) and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Seller and Buyer covenant and agree as follows as of the Effective Date, and Guarantor acknowledges and agrees as to the provision set forth in Section 3 as of the Effective Date:

1.Amendment to Fee Agreement.

(a)The following definitions in Section 1 of the Fee Agreement are hereby deleted in their entirety and replaced by the versions below:

“Facility Amount” shall mean $213,482,436.

“Pricing Rate” shall mean, for any Pricing Rate Period, an annual rate equal to the LIBOR Rate for such Pricing Rate Period plus the Applicable Spread for such Transaction and shall be subject to adjustment and/or conversion as provided in the Transaction Documents

ACTIVE 262069950

(including, without limitation, as provided in Section 3(g) of the Repurchase Agreement on and after an Index Transition Date, to the Applicable Alternative Rate).

(b)The following definitions are hereby added to Section 1 of the Fee Agreement in alphabetical order:

“Applicable Alternative Rate” shall mean the sum of the Index Rate, the Rate Adjustment, and the Applicable Spread.

“Applicable Index” shall mean:

(a)initially, LIBOR (or, if applicable, the Federal Funds Rate); and

(b)on and after an Index Transition Date, the Replacement Index in effect on such Index Transition Date.

“Index” shall mean LIBOR, Term SOFR, Daily Compounded SOFR and any other interest rate benchmark published for use in, among others, similar repurchase facilities.

“Index Rate” shall mean, with respect to an applicable Pricing Rate Period and Pricing Rate Determination Date, the per annum rate of interest of the Applicable Index.

“Index Transition” shall mean a transition or replacement of an Index with a Replacement Index as the Applicable Index.

“Second Supplemental Facility Fee” shall mean an amount equal to $354,380.84.

(c)The following is hereby added as Section 10 of the Fee Agreement:

“Section 10. Second Supplemental Facility Fee.

On the Fourth Amendment Date, Seller shall pay to Buyer the Second Supplemental Facility Fee.”

2.Seller’s Representations. Seller has taken all necessary action to authorize the execution, delivery and performance of this Amendment. This Amendment has been duly executed and delivered by or on behalf of Seller and constitutes the legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms subject to bankruptcy, insolvency, and other limitations on creditors’ rights generally and to equitable principles. No Event of Default has occurred and is continuing, and no Event of Default will occur as a result of the execution, delivery and performance by Seller of this Amendment. Any consent, approval, authorization, order, registration or qualification of or with any Governmental Authority required for the execution, delivery and performance by Seller of this Amendment has been obtained and is in full force and effect (other than consents, approvals, authorizations, orders, registrations or qualifications that if not obtained, are not reasonably likely to have a Material Adverse Effect).

    2

ACTIVE 262069950

3.Reaffirmation of Guaranty. Guarantor has executed this Amendment for the purpose of acknowledging and agreeing that, notwithstanding the execution and delivery of this Amendment and the amendment of the Repurchase Agreement hereunder, all of Guarantor’s obligations under the Guaranty remain in full force and effect and the same are hereby irrevocably and unconditionally ratified and confirmed by Guarantor in all respects.

4.Conditions Precedent. This Amendment and its provisions shall become effective upon the execution and delivery of this Amendment by a duly authorized officer of each of Seller, Buyer and Guarantor.

5.Agreement Regarding Expenses. Seller agrees to pay Buyer’s reasonable out of pocket expenses (including reasonable legal fees) incurred in connection with the preparation and negotiation of this Amendment promptly (and after Buyer or Buyer’s counsel gives Seller an invoice for such expenses).

6.Full Force and Effect. Except as expressly modified hereby, all of the terms, covenants and conditions of the Repurchase Agreement and the other Transaction Documents remain unmodified and in full force and effect and are hereby ratified and confirmed by Seller. Any inconsistency between this Amendment and the Repurchase Agreement (as it existed before this Amendment) shall be resolved in favor of this Amendment, whether or not this Amendment specifically modifies the particular provision(s) in the Repurchase Agreement inconsistent with this Amendment. All references to the “Agreement” in the Repurchase Agreement or to the “Repurchase Agreement” in any of the other Transaction Documents shall mean and refer to the Repurchase Agreement as modified and amended hereby.

7.No Waiver. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Buyer under the Repurchase Agreement, the Guaranty, any of the other Transaction Documents or any other document, instrument or agreement executed and/or delivered in connection therewith.

8.Headings. Each of the captions contained in this Amendment are for the convenience of reference only and shall not define or limit the provisions hereof.

9.Counterparts. This Amendment may be executed in any number of counterparts, and all such counterparts shall together constitute the same agreement. Signatures delivered by email (in PDF format) shall be considered binding with the same force and effect as original signatures.

10.Governing Law. This Amendment shall be governed in accordance with the terms and provisions of Article 19 of the Repurchase Agreement.

[No Further Text on this Page; Signature Pages Follow]

    3

ACTIVE 262069950

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized representatives as of the day and year first above written and effective as of the Effective Date.

SELLER:
TRMT CB LENDER LLC,
a Delaware limited liability company
By:	/s/ G. Douglas Lanois
	Name: G. Douglas Lanois
	Title: Chief Financial Officer

[SIGNATURES PAGES CONTINUE ON NEXT PAGE]

ACTIVE 262069950

GUARANTOR:
TREMONT MORTGAGE TRUST,
a Maryland real estate investment trust
By:	/s/ G. Douglas Lanois
	Name: G. Douglas Lanois
	Title: Chief Financial Officer

SIGNATURE PAGES CONTINUE ON NEXT PAGE]

ACTIVE 262069950

BUYER:
CITIBANK, N.A.
By:	/s/ Richard B. Schlenger
	Name: Richard B. Schlenger
	Title: Authorized Signatory

ACTIVE 262069950

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, David M. Blackman, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Tremont Mortgage Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2020	/s/ David M. Blackman
	David M. Blackman President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, G. Douglas Lanois, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Tremont Mortgage Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 3, 2020	/s/ G. Douglas Lanois
	G. Douglas Lanois Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Sec. 1350

In connection with the filing by Tremont Mortgage Trust (the “Company”) of the Quarterly Report on Form 10-Q for the period ended September 30, 2020 (the “Report”), each of the undersigned hereby certifies, to the best of his knowledge:

1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ G. Douglas Lanois	/s/ David M. Blackman
G. Douglas Lanois Chief Financial Officer and Treasurer	David M. Blackman President and Chief Executive Officer

Date:    November 3, 2020

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2020	Nov. 02, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	001-38199
Entity Registrant Name	Tremont Mortgage Trust
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	82-1719041
Entity Address, Address Line One	Two Newton Place
Entity Address, Address Line Two	255 Washington Street
Entity Address, Address Line Three	Suite 300
Entity Address, City or Town	Newton
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02458-1634
City Area Code	617
Local Phone Number	796-8317
Title of 12(b) Security	Common Shares of Beneficial Interest
Trading Symbol	TRMT
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Smaller Business Entity	true
Emerging Growth Company	true
Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		8,303,254
Entity Central Index Key	0001708405
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
ASSETS
Cash and cash equivalents	$ 11,036	$ 8,732
Restricted cash	0	143
Loans held for investment, net	280,219	242,078
Accrued interest receivable	946	755
Prepaid expenses and other assets	40	221
Total assets	292,241	251,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, accrued liabilities and deposits	658	1,011
Master repurchase facility, net	200,501	164,694
Due to related persons	19	3
Total liabilities	201,178	165,708
Commitments and contingencies
Shareholders' equity:
Common shares of beneficial interest, $0.01 par value per share; 25,000,000 shares authorized; 8,303,254 and 8,239,610 shares issued and outstanding, respectively	83	82
Additional paid in capital	89,035	88,869
Cumulative net income	8,590	1,937
Cumulative distributions	(6,645)	(4,667)
Total shareholders’ equity	91,063	86,221
Total liabilities and shareholders' equity	$ 292,241	$ 251,929

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock shares authorized (in shares)	25,000,000	25,000,000
Common stock shares issued (in shares)	8,303,254	8,239,610
Common stock shares outstanding (in shares)	8,303,254	8,239,610

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
INCOME FROM INVESTMENTS:
Interest income from investments	$ 4,632	$ 4,959	$ 13,412	$ 11,872
Less: interest and related expenses	(1,242)	(1,992)	(4,367)	(5,572)
Income from investments, net	3,390	2,967	9,045	6,300
OTHER EXPENSES:
General and administrative expenses	576	541	1,640	1,662
Reimbursement of shared services expenses	189	370	752	1,110
Total expenses	765	911	2,392	2,772
Net income	$ 2,625	$ 2,056	$ 6,653	$ 3,528
Weighted average common shares outstanding - basic and diluted (in shares)	8,190	8,156	8,179	5,583
Net income per common share - basic and diluted (in dollars per share)	$ 0.32	$ 0.25	$ 0.81	$ 0.63

XML

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands	Total	Common Shares	Additional Paid In Capital	Cumulative Net Income (Loss)	Cumulative Distributions
Beginning balance (in shares) at Dec. 31, 2018		3,179,000
Beginning balance at Dec. 31, 2018	$ 59,668	$ 32	$ 62,540	$ (2,904)	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share grants	35		35
Net income	578			578
Distributions	(350)				(350)
Ending balance (in shares) at Mar. 31, 2019		3,179,000
Ending balance at Mar. 31, 2019	59,931	$ 32	62,575	(2,326)	(350)
Beginning balance (in shares) at Dec. 31, 2018		3,179,000
Beginning balance at Dec. 31, 2018	59,668	$ 32	62,540	(2,904)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	3,528
Ending balance (in shares) at Sep. 30, 2019		8,240,000
Ending balance at Sep. 30, 2019	86,679	$ 82	88,827	624	(2,854)
Beginning balance (in shares) at Mar. 31, 2019		3,179,000
Beginning balance at Mar. 31, 2019	59,931	$ 32	62,575	(2,326)	(350)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share grants (in shares)		15,000
Share grants	185		185
Share repurchases (in shares)		(1,000)
Share repurchases	(6)		(6)
Net income	894			894
Distributions	(702)				(702)
Issuance of shares, net (in shares)		5,000,000
Issuance of shares, net	26,074	$ 50	26,024
Ending balance (in shares) at Jun. 30, 2019		8,193,000
Ending balance at Jun. 30, 2019	86,376	$ 82	88,778	(1,432)	(1,052)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share grants (in shares)		53,000
Share grants	80		80
Share repurchases (in shares)		(6,000)
Share repurchases	(31)		(31)
Net income	2,056			2,056
Distributions	(1,802)				(1,802)
Ending balance (in shares) at Sep. 30, 2019		8,240,000
Ending balance at Sep. 30, 2019	$ 86,679	$ 82	88,827	624	(2,854)
Beginning balance (in shares) at Dec. 31, 2019	8,239,610	8,240,000
Beginning balance at Dec. 31, 2019	$ 86,221	$ 82	88,869	1,937	(4,667)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share grants	42		42
Share repurchases (in shares)		(1,000)
Share repurchases	(2)		(2)
Net income	1,666			1,666
Distributions	(1,895)				(1,895)
Ending balance (in shares) at Mar. 31, 2020		8,239,000
Ending balance at Mar. 31, 2020	$ 86,032	$ 82	88,909	3,603	(6,562)
Beginning balance (in shares) at Dec. 31, 2019	8,239,610	8,240,000
Beginning balance at Dec. 31, 2019	$ 86,221	$ 82	88,869	1,937	(4,667)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	6,653
Distributions	$ (1,978)
Ending balance (in shares) at Sep. 30, 2020	8,303,254	8,303,000
Ending balance at Sep. 30, 2020	$ 91,063	$ 83	89,035	8,590	(6,645)
Beginning balance (in shares) at Mar. 31, 2020		8,239,000
Beginning balance at Mar. 31, 2020	86,032	$ 82	88,909	3,603	(6,562)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share grants (in shares)		15,000
Share grants	72	$ 1	71
Share repurchases	(1)		(1)
Net income	2,362			2,362
Ending balance (in shares) at Jun. 30, 2020		8,254,000
Ending balance at Jun. 30, 2020	88,465	$ 83	88,979	5,965	(6,562)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share grants (in shares)		56,000
Share grants	76		76
Share repurchases (in shares)		(7,000)
Share repurchases	(20)		(20)
Net income	2,625			2,625
Distributions	$ (83)				(83)
Ending balance (in shares) at Sep. 30, 2020	8,303,254	8,303,000
Ending balance at Sep. 30, 2020	$ 91,063	$ 83	$ 89,035	$ 8,590	$ (6,645)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 6,653	$ 3,528
Adjustments to reconcile net income to net cash provided by operating activities:
Share based compensation	190	300
Amortization of deferred financing costs	364	502
Amortization of loan origination and exit fees	(1,441)	(1,333)
Changes in operating assets and liabilities:
Accrued interest receivable and interest advances	(933)	(367)
Prepaid expenses and other assets	181	136
Accounts payable, accrued liabilities and deposits	(353)	(176)
Due to related persons	16	(101)
Net cash provided by operating activities	4,677	2,489
CASH FLOWS FROM INVESTING ACTIVITIES:
Origination of loans held for investment	(25,738)	(119,062)
Additional funding of loans held for investment	(12,309)	(4,835)
Repayment of loans held for investment	2,089	53,610
Net cash used in investing activities	(35,958)	(70,287)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from master repurchase facility	36,873	92,983
Repayments under master repurchase facility	(1,358)	(34,312)
Proceeds from RMR credit agreement	0	14,220
Repayment of RMR credit agreement	0	(14,220)
Repayment of note payable	0	(31,690)
Payments of deferred financing costs	(72)	(347)
Proceeds from issuance of common shares, net	0	26,074
Repurchase of common shares	(23)	(37)
Distributions	(1,978)	(2,854)
Net cash provided by financing activities	33,442	49,817
Increase (decrease) in cash, cash equivalents and restricted cash	2,161	(17,981)
Cash, cash equivalents and restricted cash at beginning of period	8,875	27,335
Cash, cash equivalents and restricted cash at end of period	11,036	9,354
SUPPLEMENTAL DISCLOSURES:
Interest paid	4,059	4,974
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$ 11,036	$ 9,354

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Basis of Presentation

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements of Tremont Mortgage Trust and its consolidated subsidiaries are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2019, or our Annual Report.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the accompanying condensed consolidated financial statements include the fair value of financial instruments.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

    Consolidation. For each investment we make, we evaluate whether consolidation of the borrower's financial statements is required under GAAP. GAAP addresses the application of consolidation principles to an investor with a controlling financial interest. Variable interest entities, or VIEs, are subject to consolidation under GAAP if their equity investors do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties, are not able to direct the entity’s most significant activities or are not exposed to the entity’s losses or entitled to its residual returns. VIEs are required to be consolidated by their primary beneficiaries, which are the entities with the power to direct the activities which are most significant to the economic performance of the VIE. These determinations often involve complex and subjective analyses. As of September 30, 2020, we concluded that our investments were not VIEs.

    Cash, Cash Equivalents and Restricted Cash. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

    Restricted cash primarily consists of deposit proceeds from potential borrowers when originating loans, which may be returned to the applicable borrower upon the closing of the loan, after deducting any transaction costs paid by us for the benefit of such borrower.

    Repurchase Agreements. Loans financed through repurchase agreements are treated as collateralized financing transactions, unless they meet sales treatment under GAAP. Pursuant to GAAP treatment of collateralized financing transactions, loans financed through repurchase agreements remain on our consolidated balance sheet as assets, and cash received from the purchasers is recorded on our consolidated balance sheet as liabilities. Interest paid in accordance with repurchase agreements is recorded as interest expense.

    Loans Held for Investment. Generally, our loans are classified as held for investment based upon our intent and ability to hold them until maturity. Loans that are held for investment are carried at cost, net of unamortized loan origination and accreted exit fees that are required to be recognized in the carrying value of the loans in accordance with GAAP, unless the loans are deemed to be impaired. Loans that we have a plan to sell or liquidate are held at the lower of cost or fair value less cost to sell.

    We evaluate each of our loans for impairment at least quarterly by assessing a variety of risk factors in relation to each loan and assigning a risk rating to each loan based on those factors. Factors considered in these evaluations include, but are not limited to, property type, geographic and local market dynamics, physical condition, leasing and tenant profile, projected cash flow, risk of loss, current loan to value ratio, or LTV, debt yield, collateral performance, structure, exit plan and sponsorship. Loans are rated “1” (lower risk) through “5” (impaired/loss likely) as defined below:

    "1" lower risk—Criteria reflects a sponsor having a strong financial condition and low credit risk and our evaluation of management's experience; collateral performance exceeding performance metrics included in the business plan or

credit underwriting; and the property demonstrating stabilized occupancy and/or market rates, resulting in strong current cash flow and net operating income and/or having a very low LTV.

    "2" average risk—Criteria reflects a sponsor having a stable financial condition and our evaluation of management's experience; collateral performance meeting or exceeding substantially all performance metrics included in the business plan or credit underwriting; and the property demonstrating improved occupancy at market rents, resulting in sufficient current cash flow and/or having a low LTV.

    "3" acceptable risk—Criteria reflects a sponsor having a history of repaying loans at maturity and meeting its credit obligations and our evaluation of management's experience; collateral performance expected to meet performance metrics included in the business plan or credit underwriting; and the property having a moderate LTV. New loans and loans with a limited history will typically be assigned this rating and will be adjusted to other levels from time to time as appropriate.

    "4" higher risk—Criteria reflects a sponsor having a history of unresolved missed or late payments, maturity extensions and difficulty timely fulfilling its credit obligations and our evaluation of management's experience; collateral performance failing to meet the business plan or credit underwriting; the existence of a risk of default possibly leading to a loss and/or potential weaknesses that deserve management’s attention; and/or the property having a high LTV.

     "5" impaired/loss likely—Criteria reflects a very high risk of realizing a principal loss or having incurred a principal loss; a sponsor having a history of default payments, trouble fulfilling its credit obligations, deeds in lieu of foreclosures, and/or bankruptcies; collateral performance is significantly worse than performance metrics included in the business plan; loan covenants or performance milestones having been breached or not attained; timely exit via sale or refinancing being uncertain; and/or the property having a very high LTV.

See Note 4 for further information regarding our current loan portfolio’s assessment under our internal risk rating policy.

Impairment occurs when it is deemed probable that we will not be able to collect all amounts due under a loan according to its contractual terms. Impairment will then be measured based on the estimated fair value of the underlying collateral, net of any costs we expect to incur to realize that value. The determination of this estimated fair value involves judgments and assumptions based on objective and subjective factors. Consideration will be given to various factors, such as business plans, property occupancies, tenant profiles, rental rates, operating expenses and borrowers’ repayment plans, among others, and will require significant judgments regarding certain circumstances, such as guarantees, if any. Upon measurement of an impairment, we will record an allowance to reduce the carrying value of the loan accordingly, and record a corresponding charge to net income in our condensed consolidated statements of operations.

    Fair Value of Financial Instruments. Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 820-10, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands the required disclosure regarding fair value measurements. ASC Topic 820-10 defines fair value as the price that would be received for a financial instrument in a current sale, which assumes an orderly transaction between market participants on the measurement date. We determine the estimated fair value of financial assets and liabilities using the three-tier fair value hierarchy established by GAAP, which prioritizes the inputs used in measuring fair value. GAAP establishes market based or observable inputs as the preferred source of values followed by valuation models using management assumptions in the absence of market inputs. The three levels of inputs that may be used to measure fair value are as follows:

    Level I—Inputs include quoted prices in active markets for identical assets or liabilities that we have the ability to access.

    Level II—Inputs include quoted prices in markets that are less active or inactive or for which all significant inputs are observable, either directly or indirectly.

    Level III—Inputs include unobservable prices and are supported by little or no market activity and are significant to the overall fair value measurement.

    Loan Deferred Fees. Loan origination and exit fees are reflected in loans held for investment, net, in our condensed consolidated balance sheets and include fees charged to borrowers. These fees are amortized and accreted, respectively, into interest income over the life of the related loans held for investment.

Deferred Financing Costs. Costs incurred in connection with financings are capitalized and recorded as an offset to the related liability and amortized over the respective financing terms and are recorded in our consolidated statements of operations as a component of interest and related expenses. At September 30, 2020, we had approximately $550 of capitalized financing costs, net of amortization.

    Net Earnings Per Common Share. We calculate basic earnings per common share, or EPS, by dividing net income by the weighted average number of common shares outstanding during the period. We calculate diluted net EPS using the more dilutive of the two-class method or the treasury stock method.

    Revenue Recognition. Interest income related to our first mortgage whole loans secured by commercial real estate, or CRE, will generally be accrued based on the coupon rates applied to the outstanding principal balance of such loans. Fees, premiums and discounts, if any, will be amortized or accreted into interest income over the remaining lives of the loans using the effective interest method, as adjusted for any prepayments.

    If a loan's interest or principal payments are not paid when due and there is uncertainty that such payments will be collected, the loan may be categorized as non-accrual and no interest will be recorded unless it is collected. When all overdue payments are collected and, in our judgment, a loan is likely to remain current, it may be re-categorized as accrual.

    For loans purchased at a discount, GAAP limits the yield that may be accreted (accretable yield) to the excess of the investor’s estimate of undiscounted expected principal, interest and other cash flows (cash flows expected at acquisition to be collected) over the investor’s initial investment in the loan. GAAP also requires that the excess of contractual cash flows over cash flows expected to be collected (non-accretable difference) not be recognized as an adjustment of yield, loss accrual or valuation allowance. Subsequent increases in cash flows expected to be collected from such loans generally will be recognized prospectively through adjustment of the loan’s yield over its remaining life. Decreases in cash flows expected to be collected will be recorded as an impairment.

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Recent Accounting Pronouncements	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Recent Accounting Pronouncements	Recent Accounting Pronouncements    In June 2016, FASB issued Accounting Standards Update, or ASU, No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. As an emerging growth company that has opted to take advantage of the extended transition period, we expect to adopt ASU No. 2016-13 on January 1, 2023. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have on our condensed consolidated financial statements.

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Loans Held for Investment

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Loans Held for Investment

Loans Held for Investment     We originate first mortgage whole loans secured by middle market and transitional CRE, which are generally to be held as long term investments. We funded our existing loan portfolio using cash on hand and advancements under our master repurchase facility with Citibank, N.A., or Citibank, or our Master Repurchase Facility, and other debt financing. See Note 5 for further information regarding our Master Repurchase Facility.

The table below details overall statistics for our loan portfolio as of September 30, 2020 and December 31, 2019:    

	Balance at September 30, 2020			Balance at December 31, 2019
Number of loans	14			12
Total loan commitments	$	293,961		$	260,167
Unfunded loan commitments (1)	$	13,974		$	17,268
Principal balance	$	279,987		$	242,899
Unamortized net deferred origination and exit fees	$	232		$	(821)
Carrying value	$	280,219		$	242,078
Weighted average coupon rate	5.70		%	5.76		%
Weighted average all in yield (2)	6.38		%	6.41		%
Weighted average maximum maturity (years) (3)	2.9			3.6
Weighted average LTV (4)	67		%	70		%

(1)    Unfunded loan commitments are primarily used to finance property and building improvements and leasing capital and are generally funded over the term of the loan.

(2)     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.

(3)     Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions.

(4)     LTV represents the initial loan amount divided by the underwritten in-place value at closing.

The table below details our loan activities during the three months ended September 30, 2020:

	Principal Balance		Deferred Fees		Carrying Value
Balance at June 30, 2020	$	278,484	$	(259)	$	278,225
Additional funding	3,592		—		3,592
Repayments	(2,089)		—		(2,089)
Net amortization of deferred fees	—		491		491
Balance at September 30, 2020	$	279,987	$	232	$	280,219

The table below details our loan activities during the nine months ended September 30, 2020:

	Principal Balance		Deferred Fees		Carrying Value
Balance at December 31, 2019	$	242,899	$	(821)	$	242,078
Additional funding	13,051		—		13,051
Originations	26,126		(388)		25,738
Repayments	(2,089)		—		(2,089)
Net amortization of deferred fees	—		1,441		1,441
Balance at September 30, 2020	$	279,987	$	232	$	280,219

In July 2020, the borrower under our loan related to a retail property located in Coppell, TX sold a parcel of land that was a part of the property securing the loan. The borrower used $2,089 of the sale proceeds to repay part of the outstanding principal balance under the loan which also reduced the committed principal by the same amount and we allowed the borrower to use the remaining $100 of sale proceeds to increase the reserve for its future debt service obligation payments owed to us under the loan. We used $1,358 of these repayment proceeds to repay a part of the outstanding balance under our Master Repurchase Facility.

In October 2020, the borrower under our loan related to a retail property located in Paradise Valley, AZ exercised its right and satisfied the applicable conditions to extend the maturity date of the loan by one year to November 30, 2021 pursuant to the terms of the loan agreement.

    The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of September 30, 2020 and December 31, 2019:

	September 30, 2020					December 31, 2019
Property Type	Number of Loans	Carrying Value		Percentage of Value		Number of Loans	Carrying Value		Percentage of Value
Office	5	$	93,480	33	%	4	$	71,446	30	%
Multifamily	3	70,107		25	%	3	68,911		28	%
Industrial	2	48,951		17	%	1	34,838		14	%
Retail	3	43,802		16	%	3	43,782		18	%
Hotel	1	23,879		9	%	1	23,101		10	%
	14	$	280,219	100	%	12	$	242,078	100	%

	September 30, 2020					December 31, 2019
Geographic Location	Number of Loans	Carrying Value		Percentage of Value		Number of Loans	Carrying Value		Percentage of Value
East	5	$	105,099	37	%	4	$	90,047	37	%
South	5	103,958		37	%	5	103,295		43	%
Midwest	3	60,496		22	%	2	39,722		16	%
West	1	10,666		4	%	1	9,014		4	%
	14	$	280,219	100	%	12	$	242,078	100	%

Loan Risk Ratings

    We evaluate each of our loans for impairment at least quarterly by assessing a variety of risk factors in relation to each loan and assigning a risk rating to each loan based on those factors. The following table allocates the carrying value of our loan portfolio at September 30, 2020 and December 31, 2019 based on our internal risk rating policy:

	September 30, 2020			December 31, 2019
Risk Rating	Number of Loans	Carrying Value		Number of Loans	Carrying Value
1	—	$	—	—	$	—
2	1	24,589		1	24,462
3	6	128,037		11	217,616
4	7	127,593		—	—
5	—	—		—	—
	14	$	280,219	12	$	242,078

    The weighted average risk rating of our loans by carrying value was 3.4 and 2.9 as of September 30, 2020 and December 31, 2019, respectively. The COVID-19 pandemic has negatively impacted some of our borrowers’ business operations or tenants, particularly in the cases of our retail and hospitality collateral, which are the types of properties that have been most negatively impacted by the pandemic. We expect that those negative impacts may continue and may apply to other borrowers and/or their tenants. Therefore, certain of our borrowers’ business plans will likely take longer to execute than initially expected and certain of our borrowers may be unable to pay their debt service obligations owed and due to us as currently scheduled or at all. As of September 30, 2020, we had seven loans representing 46% of the carrying value of our loan portfolio with a loan risk rating of “4” or “higher risk." Six of these loans were downgraded from a risk rating of "3" or "acceptable risk" during the three months ended March 31, 2020, and the seventh loan was downgraded from a risk rating of "3" or "acceptable risk" during the three months ended September 30, 2020. We did not have any impaired loans or nonaccrual loans as of September 30, 2020 or December 31, 2019. See Note 2 for further information regarding our loan risk ratings.

    As of November 2, 2020, all of our borrowers had paid all of their debt service obligations owed and due to us and none of the loans included in our investment portfolio were in default.

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Debt Agreements

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Debt Agreements

Debt Agreements

    The table below is an overview of our debt agreements that provided financing for our loans held for investment:

	Debt Obligation
							Weighted Average		Collateral
	Maximum Facility Size		Principal Balance		Carrying Value		Coupon Rate	Remaining Maturity (1)(2) (years)	Principal Balance		Fair Value (3)
September 30, 2020:
Master repurchase facility	$	213,482	$	201,051	$	200,501	L + 2.00%	0.9	$	279,987	$	277,457
December 31, 2019:
Master repurchase facility	$	213,482	$	165,536	$	164,694	L + 1.99%	1.6	$	242,899	$	242,763

(1)The weighted average remaining maturity is determined using the current maturity date of the corresponding loans, assuming no borrower loan extension options have been exercised.

(2)On October 30, 2020, we amended the agreements that govern our Master Repurchase Facility, or collectively, as amended, our Master Repurchase Agreement to, among other things, extend the expiration date by one year to November 6, 2022, subject to early termination as provided for in our Master Repurchase Agreement.

(3)See Note 6 for further discussion of our financial assets and liabilities not carried at fair value.

    Under our Master Repurchase Agreement, the initial purchase price paid by Citibank for each purchased asset is up to 75% of the lesser of the market value of the purchased asset or the unpaid principal balance of such purchased asset, subject to Citibank’s approval. Upon the repurchase of a purchased asset, we are required to pay Citibank the outstanding purchase price of the purchased asset, accrued interest and all accrued and unpaid expenses of Citibank relating to such purchased asset. The price differential (or interest rate) relating to a purchased asset is equal to LIBOR plus a premium of 200 to 250 basis points, determined by the yield of the purchased asset and the property type of the purchased asset’s real estate collateral. Citibank has the discretion under our Master Repurchase Agreement to make advancements at margins higher than 75% and at premiums of less than 200 basis points. The weighted average interest rate for advancements under our Master Repurchase Facility was 2.17% and 4.18% for the three months ended September 30, 2020 and 2019, respectively, and 2.70% and 4.38% for the nine months ended September 30, 2020 and 2019, respectively. For the three months ended September 30, 2020 and 2019, we recorded interest expense of $1,120 and $1,563, respectively, and $4,003 and $4,126 for the nine months ended September 30, 2020 and 2019, respectively, in connection with our Master Repurchase Facility.

    In connection with our Master Repurchase Agreement, we entered into a guaranty, or, as amended, the Guaranty, which requires us to guarantee 25% of our subsidiary's prompt and complete payment of the purchase price, purchase price differential and any costs and expenses of Citibank related to our Master Repurchase Agreement. The Guaranty also requires us to comply with customary financial covenants, which include the maintenance of a minimum tangible net worth, minimum cash liquidity, a total indebtedness to tangible net worth ratio and a minimum interest coverage ratio. These maintenance provisions provide Citibank with the right, in certain circumstances related to a credit event, as defined in our Master Repurchase Agreement, to re-determine the value of purchased assets. Where a decline in the value of purchased assets has resulted in a margin deficit, Citibank may require us to eliminate such margin deficit through a combination of purchased asset repurchases and cash transfers to Citibank, subject to Citibank's approval. As of September 30, 2020, we have not received a margin call under our Master Repurchase Agreement.

Our Master Repurchase Agreement also provides for acceleration of the date of repurchase of the purchased assets and Citibank’s liquidation of the purchased assets upon the occurrence and continuation of certain events of default, including a change of control of us, which includes our Tremont Realty Advisors LLC, or our Manager, ceasing to act as our sole manager or to be a wholly owned subsidiary of The RMR Group LLC, or RMR LLC. As of September 30, 2020, we were in compliance with all of the covenants and other terms under our Master Repurchase Agreement and the Guaranty.

    From July 2018 until August 2019, we were a party to a term loan facility, in the form of a note payable, with Texas Capital Bank, National Association, or the TCB note payable. Following our repayment of the $31,790 then outstanding principal and accrued interest under the TCB note payable, the TCB note payable terminated in accordance with its terms. We recorded $155 and $891 of interest expense for the three and nine months ended September 30, 2019, respectively, in connection with the TCB note payable.

    From February 2019 until May 2019, we were a party to a credit agreement with our Manager as lender, or the RMR Credit Agreement. Following our repayment of the $14,220 balance then outstanding under the RMR Credit Agreement, the RMR Credit Agreement was terminated. We recorded $39 of interest expense for the nine months ended September 30, 2019, in connection with the RMR Credit Agreement.

At September 30, 2020, our outstanding advancements under our Master Repurchase Facility had the following remaining maturities:

Year	Principal Payments (1)
2020	$	29,680
2021	171,371
2022	—
2023	—
2024	—
	$	201,051

(1)The allocation of our outstanding advancements under our Master Repurchase Facility is based on the current maturity date of each loan investment with respect to which the individual borrowing relates assuming no borrower loan extension options have been exercised.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

    ASC 820, Fair Value Measurements, establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level I), and the lowest priority to unobservable inputs (Level III). A financial asset’s or financial liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

As of September 30, 2020 and December 31, 2019, the carrying values of cash and cash equivalents, restricted cash and accounts payable approximated their fair values due to the short term nature of these financial instruments. As of December 31, 2019, the outstanding principal balances under our Master Repurchase Facility approximated their fair values, as interest was based on floating rates based on LIBOR plus a spread, and the spread was consistent with those demanded by the market.

We estimate the fair values of our loans held for investment and outstanding principal balances under our Master Repurchase Facility by using Level III inputs, including discounted cash flow analyses and currently prevailing market terms as of the measurement date, determined by significant unobservable market inputs, which include holding periods, discount rates based on LTV, property types and loan pricing expectations which are corroborated by a comparison with other market participants to determine the appropriate market spread to add to the one month LIBOR (Level III inputs as defined in the fair value hierarchy under GAAP).

The table below provides information regarding financial assets and liabilities not carried at fair value on a recurring basis in our condensed consolidated balance sheets:

	September 30, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets
Loans held for investment	$	280,219	$	277,457	$	242,078	$	242,763
Financial liabilities
Master Repurchase Facility	$	200,501	$	200,184	$	164,694	$	165,536

There were no transfers of financial assets or liabilities within the fair value hierarchy during the three or nine months ended September 30, 2020.

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Shareholders' Equity

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Shareholders' Equity

Shareholders' Equity

Common Share Awards:

On May 13, 2020, in accordance with our Trustee compensation arrangements, we awarded to each of our five Trustees 3,000 of our common shares, valued at $1.92 per common share, the closing price of our common shares on Nasdaq that day.

On September 17, 2020, we awarded under our equity compensation plan an aggregate of 56,600 of our common shares, valued at $2.92 per share, the closing price of our common shares on Nasdaq on that day, to our officers and certain other employees of our Manager and of RMR LLC.

Common Share Purchases:

During the nine months ended September 30, 2020, we purchased our common shares from certain of our officers and certain former and current officers and employees of our Manager and of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares, valued at the closing price of our common shares on Nasdaq on the purchase dates, as follows:

Date Purchased	Number of Shares	Price per Share
January 9, 2020	384	$	5.33
June 30, 2020	390	$	3.08
September 21, 2020	7,182	$	2.77

Distributions:

    During the nine months ended September 30, 2020, we declared and paid a quarterly distribution to common shareholders as follows:

Record Date	Payment Date	Distribution Per Share		Total Distribution
January 27, 2020	February 20, 2020	$	0.22	$	1,813
April 10, 2020	May 21, 2020	0.01		82
July 27, 2020	August 20, 2020	0.01		83
		$	0.24	$	1,978

On October 15, 2020, we declared a quarterly distribution of $0.01 per common share for the third quarter of 2020, or approximately $83, to shareholders of record on October 26, 2020. We expect to pay this distribution on or about November 19, 2020.

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Management Agreement with our Manager

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

Management Agreement with our Manager

Management Agreement with our Manager

We have no employees. The personnel and various services we require to operate our business are provided to us by our Manager pursuant to a management agreement, which provides for the day to day management of our operations by our Manager, subject to the oversight and direction of our Board of Trustees.

We did not recognize any base management or incentive fees for the three or nine months ended September 30, 2020 or 2019. Our Manager has waived any base management or incentive fees otherwise due and payable by us under our management agreement for and through the periods ending December 31, 2020. If our Manager had not waived these base management and incentive fees, we would have recognized $332 and $322 of base management fees for the three months ended September 30, 2020 and 2019, respectively, $975 and $812 of base management fees for the nine months ended September 30, 2020 and 2019, respectively, and $129 and $164 of incentive fees for the three and nine months ended September 30, 2020. No incentive fees would have been paid or payable for either of the three or nine months ended September 30, 2019.

Our Manager, and not us, is responsible for the costs of its employees who provide services to us, including the cost of our Manager’s personnel who originate our loans, unless any such payment or reimbursement is specifically approved by a majority of our Independent Trustees, is a shared services cost or relates to awards made under any equity compensation plan adopted by us. We are required to pay or to reimburse our Manager and its affiliates for all other costs and expenses of our

operations. Some of these overhead, professional and other services are provided by RMR LLC pursuant to a shared services agreement between our Manager and RMR LLC. We reimburse our Manager for shared services costs our Manager pays to RMR LLC and its affiliates. These reimbursements include an allocation of the cost of personnel employed by RMR LLC and our share of RMR LLC’s costs for providing our internal audit function. These shared services costs are subject to approval by a majority of our Independent Trustees at least annually. We incurred shared services costs of $218 and $406 payable to our Manager for the three months ended September 30, 2020 and 2019, respectively, and $856 and $1,217 for the nine months ended September 30, 2020 and 2019, respectively. We include these amounts in reimbursement of shared services expenses or general and administrative expenses, as applicable, in our condensed consolidated statements of operations.

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Related Person Transactions

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

Related Person Transactions

Related Person Transactions

We have relationships and historical and continuing transactions with our Manager, RMR LLC, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. Our Manager is a subsidiary of RMR LLC, which is a majority owned subsidiary of RMR Inc., and RMR Inc. is the managing member of RMR LLC. RMR LLC provides certain shared services to our Manager that are applicable to us, and we reimburse our Manager for the amounts it pays for those services. One of our Managing Trustees, Adam Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., and he is also a director of our Manager, a managing director and the president and chief executive officer of RMR Inc., and an officer and employee of RMR LLC. David M. Blackman, our other Managing Trustee and our President and Chief Executive Officer, also serves as a director and the president, and chief executive officer of our Manager and is an officer and employee of RMR LLC. Mr. Blackman has announced his decision to retire and, therefore, resign as our Managing Trustee, President and Chief Executive Officer and as a director, the president and chief executive officer of our Manager, effective December 31, 2020. In replacement of Mr. Blackman, Matthew P. Jordan has been elected as our Managing Trustee and Thomas L. Lorenzini has been appointed our President, each effective January 1, 2021. Also effective January 1, 2021, Mr. Jordan has been elected as a director and the president and chief executive officer of our Manager in replacement of Mr. Blackman. Mr. Jordan is an officer of RMR Inc. and he and Mr. Lorenzini are both officers of RMR LLC and our Manager. In addition, each of our other officers is also an officer and/or employee of our Manager or RMR LLC. Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as the chair of the boards of trustees and boards of directors of several of these public companies and as a managing director or managing trustee of all of these companies and other officers of RMR LLC, including Mr. Blackman and certain of our other officers, serve as managing trustees, managing directors or officers of certain of these companies. In addition, officers of our Manager, RMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or its subsidiaries provide management services.

See Note 7 for information relating to the annual share awards we made in September 2020 to our officers and certain other employees of our Manager and RMR LLC and common shares we purchased from certain of our officers and employees of our Manager and RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares to them. We include amounts recognized as expense for share awards to employees of our Manager or RMR LLC, as applicable, in general and administrative expenses in our condensed consolidated statements of operations.

Our Manager, Tremont Realty Advisors LLC. We have a management agreement with our Manager to provide management services to us. See Note 8 for further information regarding our management agreement with our Manager.

Our Manager is our largest shareholder and, as of September 30, 2020, owned 1,600,100 of our common shares or approximately 19.3% of our outstanding common shares.

Until May 23, 2019, we were a party to the RMR Credit Agreement.

For further information about these and other such relationships and certain other related person transactions, refer to our Annual Report.

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Income Taxes	9 Months Ended
	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesWe have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the IRC. Accordingly, we generally are not, and will not be, subject to U.S. federal income tax, provided that we meet certain distribution and other requirements. We are subject to certain state and local taxes, certain of which amounts are or will be reported as income taxes in our condensed consolidated statements of operations.

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Weighted Average Common Shares	9 Months Ended
	Sep. 30, 2020
Earnings Per Share [Abstract]
Weighted Average Common Shares	Weighted Average Common Shares    We calculate basic EPS by dividing net income by the weighted average number of common shares outstanding during the relevant period. We calculate diluted EPS using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common share issuances, and the related impact on earnings, are considered when calculating diluted earnings per share. For the three months ended September 30, 2020 and 2019, 63,429 and 39,024 unvested common shares, respectively, and for the nine months ended September 30, 2020 and 2019, 63,630 and 15,037 unvested common shares, respectively, were excluded from the calculation of diluted earnings per share because to do so would have been antidilutive.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Unfunded Loan Commitments

As of September 30, 2020, we had unfunded commitments of $13,974 related to our loans held for investment that are not reflected in our condensed consolidated balance sheets. These unfunded commitments had a weighted average initial maturity of 1.2 years as of September 30, 2020. See Note 4 for further information related to our loans held for investment.

Secured Borrowings

As of September 30, 2020, we had an aggregate of $201,051 in principal amount outstanding under our Master Repurchase Facility with a weighted average life to maturity of 0.9 years. See Note 5 for further information regarding our secured debt agreements.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Consolidation

Consolidation. For each investment we make, we evaluate whether consolidation of the borrower's financial statements is required under GAAP. GAAP addresses the application of consolidation principles to an investor with a controlling financial interest. Variable interest entities, or VIEs, are subject to consolidation under GAAP if their equity investors do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties, are not able to direct the entity’s most significant activities or are not exposed to the entity’s losses or entitled to its residual returns. VIEs are required to be consolidated by their primary beneficiaries, which are the entities with the power to direct the activities which are most significant to the economic performance of the VIE. These determinations often involve complex and subjective analyses. As of September 30, 2020, we concluded that our investments were not VIEs.

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.    Restricted cash primarily consists of deposit proceeds from potential borrowers when originating loans, which may be returned to the applicable borrower upon the closing of the loan, after deducting any transaction costs paid by us for the benefit of such borrower.

Repurchase Agreements

Repurchase Agreements. Loans financed through repurchase agreements are treated as collateralized financing transactions, unless they meet sales treatment under GAAP. Pursuant to GAAP treatment of collateralized financing transactions, loans financed through repurchase agreements remain on our consolidated balance sheet as assets, and cash received from the purchasers is recorded on our consolidated balance sheet as liabilities. Interest paid in accordance with repurchase agreements is recorded as interest expense.

Loans Held for Investment

Loans Held for Investment. Generally, our loans are classified as held for investment based upon our intent and ability to hold them until maturity. Loans that are held for investment are carried at cost, net of unamortized loan origination and accreted exit fees that are required to be recognized in the carrying value of the loans in accordance with GAAP, unless the loans are deemed to be impaired. Loans that we have a plan to sell or liquidate are held at the lower of cost or fair value less cost to sell.

    We evaluate each of our loans for impairment at least quarterly by assessing a variety of risk factors in relation to each loan and assigning a risk rating to each loan based on those factors. Factors considered in these evaluations include, but are not limited to, property type, geographic and local market dynamics, physical condition, leasing and tenant profile, projected cash flow, risk of loss, current loan to value ratio, or LTV, debt yield, collateral performance, structure, exit plan and sponsorship. Loans are rated “1” (lower risk) through “5” (impaired/loss likely) as defined below:

    "1" lower risk—Criteria reflects a sponsor having a strong financial condition and low credit risk and our evaluation of management's experience; collateral performance exceeding performance metrics included in the business plan or

credit underwriting; and the property demonstrating stabilized occupancy and/or market rates, resulting in strong current cash flow and net operating income and/or having a very low LTV.

    "2" average risk—Criteria reflects a sponsor having a stable financial condition and our evaluation of management's experience; collateral performance meeting or exceeding substantially all performance metrics included in the business plan or credit underwriting; and the property demonstrating improved occupancy at market rents, resulting in sufficient current cash flow and/or having a low LTV.

    "3" acceptable risk—Criteria reflects a sponsor having a history of repaying loans at maturity and meeting its credit obligations and our evaluation of management's experience; collateral performance expected to meet performance metrics included in the business plan or credit underwriting; and the property having a moderate LTV. New loans and loans with a limited history will typically be assigned this rating and will be adjusted to other levels from time to time as appropriate.

    "4" higher risk—Criteria reflects a sponsor having a history of unresolved missed or late payments, maturity extensions and difficulty timely fulfilling its credit obligations and our evaluation of management's experience; collateral performance failing to meet the business plan or credit underwriting; the existence of a risk of default possibly leading to a loss and/or potential weaknesses that deserve management’s attention; and/or the property having a high LTV.

     "5" impaired/loss likely—Criteria reflects a very high risk of realizing a principal loss or having incurred a principal loss; a sponsor having a history of default payments, trouble fulfilling its credit obligations, deeds in lieu of foreclosures, and/or bankruptcies; collateral performance is significantly worse than performance metrics included in the business plan; loan covenants or performance milestones having been breached or not attained; timely exit via sale or refinancing being uncertain; and/or the property having a very high LTV.

See Note 4 for further information regarding our current loan portfolio’s assessment under our internal risk rating policy.

Impairment occurs when it is deemed probable that we will not be able to collect all amounts due under a loan according to its contractual terms. Impairment will then be measured based on the estimated fair value of the underlying collateral, net of any costs we expect to incur to realize that value. The determination of this estimated fair value involves judgments and assumptions based on objective and subjective factors. Consideration will be given to various factors, such as business plans, property occupancies, tenant profiles, rental rates, operating expenses and borrowers’ repayment plans, among others, and will require significant judgments regarding certain circumstances, such as guarantees, if any. Upon measurement of an impairment, we will record an allowance to reduce the carrying value of the loan accordingly, and record a corresponding charge to net income in our condensed consolidated statements of operations.

Fair Value of Financial Instruments

Fair Value of Financial Instruments. Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 820-10, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands the required disclosure regarding fair value measurements. ASC Topic 820-10 defines fair value as the price that would be received for a financial instrument in a current sale, which assumes an orderly transaction between market participants on the measurement date. We determine the estimated fair value of financial assets and liabilities using the three-tier fair value hierarchy established by GAAP, which prioritizes the inputs used in measuring fair value. GAAP establishes market based or observable inputs as the preferred source of values followed by valuation models using management assumptions in the absence of market inputs. The three levels of inputs that may be used to measure fair value are as follows:

    Level I—Inputs include quoted prices in active markets for identical assets or liabilities that we have the ability to access.

    Level II—Inputs include quoted prices in markets that are less active or inactive or for which all significant inputs are observable, either directly or indirectly.

    Level III—Inputs include unobservable prices and are supported by little or no market activity and are significant to the overall fair value measurement.

Loan Deferred Fees

Loan Deferred Fees. Loan origination and exit fees are reflected in loans held for investment, net, in our condensed consolidated balance sheets and include fees charged to borrowers. These fees are amortized and accreted, respectively, into interest income over the life of the related loans held for investment.

Deferred Financing Costs

Deferred Financing Costs. Costs incurred in connection with financings are capitalized and recorded as an offset to the related liability and amortized over the respective financing terms and are recorded in our consolidated statements of operations as a component of interest and related expenses.

Net Earnings Per Common Share

Net Earnings Per Common Share. We calculate basic earnings per common share, or EPS, by dividing net income by the weighted average number of common shares outstanding during the period. We calculate diluted net EPS using the more dilutive of the two-class method or the treasury stock method.

Revenue Recognition

Revenue Recognition. Interest income related to our first mortgage whole loans secured by commercial real estate, or CRE, will generally be accrued based on the coupon rates applied to the outstanding principal balance of such loans. Fees, premiums and discounts, if any, will be amortized or accreted into interest income over the remaining lives of the loans using the effective interest method, as adjusted for any prepayments.     If a loan's interest or principal payments are not paid when due and there is uncertainty that such payments will be collected, the loan may be categorized as non-accrual and no interest will be recorded unless it is collected. When all overdue payments are collected and, in our judgment, a loan is likely to remain current, it may be re-categorized as accrual.     For loans purchased at a discount, GAAP limits the yield that may be accreted (accretable yield) to the excess of the investor’s estimate of undiscounted expected principal, interest and other cash flows (cash flows expected at acquisition to be collected) over the investor’s initial investment in the loan. GAAP also requires that the excess of contractual cash flows over cash flows expected to be collected (non-accretable difference) not be recognized as an adjustment of yield, loss accrual or valuation allowance. Subsequent increases in cash flows expected to be collected from such loans generally will be recognized prospectively through adjustment of the loan’s yield over its remaining life. Decreases in cash flows expected to be collected will be recorded as an impairment.

Recent Accounting Pronouncements

Recent Accounting Pronouncements    In June 2016, FASB issued Accounting Standards Update, or ASU, No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. As an emerging growth company that has opted to take advantage of the extended transition period, we expect to adopt ASU No. 2016-13 on January 1, 2023. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have on our condensed consolidated financial statements.

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Loans Held for Investment (Tables)

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Schedule of Loans

The table below details overall statistics for our loan portfolio as of September 30, 2020 and December 31, 2019:    

	Balance at September 30, 2020			Balance at December 31, 2019
Number of loans	14			12
Total loan commitments	$	293,961		$	260,167
Unfunded loan commitments (1)	$	13,974		$	17,268
Principal balance	$	279,987		$	242,899
Unamortized net deferred origination and exit fees	$	232		$	(821)
Carrying value	$	280,219		$	242,078
Weighted average coupon rate	5.70		%	5.76		%
Weighted average all in yield (2)	6.38		%	6.41		%
Weighted average maximum maturity (years) (3)	2.9			3.6
Weighted average LTV (4)	67		%	70		%

(1)    Unfunded loan commitments are primarily used to finance property and building improvements and leasing capital and are generally funded over the term of the loan.

(2)     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.

(3)     Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions.

(4)     LTV represents the initial loan amount divided by the underwritten in-place value at closing.

The table below details our loan activities during the three months ended September 30, 2020:

	Principal Balance		Deferred Fees		Carrying Value
Balance at June 30, 2020	$	278,484	$	(259)	$	278,225
Additional funding	3,592		—		3,592
Repayments	(2,089)		—		(2,089)
Net amortization of deferred fees	—		491		491
Balance at September 30, 2020	$	279,987	$	232	$	280,219

The table below details our loan activities during the nine months ended September 30, 2020:

	Principal Balance		Deferred Fees		Carrying Value
Balance at December 31, 2019	$	242,899	$	(821)	$	242,078
Additional funding	13,051		—		13,051
Originations	26,126		(388)		25,738
Repayments	(2,089)		—		(2,089)
Net amortization of deferred fees	—		1,441		1,441
Balance at September 30, 2020	$	279,987	$	232	$	280,219

The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of September 30, 2020 and December 31, 2019:

	September 30, 2020					December 31, 2019
Property Type	Number of Loans	Carrying Value		Percentage of Value		Number of Loans	Carrying Value		Percentage of Value
Office	5	$	93,480	33	%	4	$	71,446	30	%
Multifamily	3	70,107		25	%	3	68,911		28	%
Industrial	2	48,951		17	%	1	34,838		14	%
Retail	3	43,802		16	%	3	43,782		18	%
Hotel	1	23,879		9	%	1	23,101		10	%
	14	$	280,219	100	%	12	$	242,078	100	%

	September 30, 2020					December 31, 2019
Geographic Location	Number of Loans	Carrying Value		Percentage of Value		Number of Loans	Carrying Value		Percentage of Value
East	5	$	105,099	37	%	4	$	90,047	37	%
South	5	103,958		37	%	5	103,295		43	%
Midwest	3	60,496		22	%	2	39,722		16	%
West	1	10,666		4	%	1	9,014		4	%
	14	$	280,219	100	%	12	$	242,078	100	%

The following table allocates the carrying value of our loan portfolio at September 30, 2020 and December 31, 2019 based on our internal risk rating policy:

	September 30, 2020			December 31, 2019
Risk Rating	Number of Loans	Carrying Value		Number of Loans	Carrying Value
1	—	$	—	—	$	—
2	1	24,589		1	24,462
3	6	128,037		11	217,616
4	7	127,593		—	—
5	—	—		—	—
	14	$	280,219	12	$	242,078

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Debt Agreements (Tables)

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

The table below is an overview of our debt agreements that provided financing for our loans held for investment:

	Debt Obligation
							Weighted Average		Collateral
	Maximum Facility Size		Principal Balance		Carrying Value		Coupon Rate	Remaining Maturity (1)(2) (years)	Principal Balance		Fair Value (3)
September 30, 2020:
Master repurchase facility	$	213,482	$	201,051	$	200,501	L + 2.00%	0.9	$	279,987	$	277,457
December 31, 2019:
Master repurchase facility	$	213,482	$	165,536	$	164,694	L + 1.99%	1.6	$	242,899	$	242,763

(1)The weighted average remaining maturity is determined using the current maturity date of the corresponding loans, assuming no borrower loan extension options have been exercised.

(2)On October 30, 2020, we amended the agreements that govern our Master Repurchase Facility, or collectively, as amended, our Master Repurchase Agreement to, among other things, extend the expiration date by one year to November 6, 2022, subject to early termination as provided for in our Master Repurchase Agreement.

(3)See Note 6 for further discussion of our financial assets and liabilities not carried at fair value.

Schedule of Maturities of Long-term Debt

At September 30, 2020, our outstanding advancements under our Master Repurchase Facility had the following remaining maturities:

Year	Principal Payments (1)
2020	$	29,680
2021	171,371
2022	—
2023	—
2024	—
	$	201,051

(1)The allocation of our outstanding advancements under our Master Repurchase Facility is based on the current maturity date of each loan investment with respect to which the individual borrowing relates assuming no borrower loan extension options have been exercised.

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The table below provides information regarding financial assets and liabilities not carried at fair value on a recurring basis in our condensed consolidated balance sheets:

	September 30, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets
Loans held for investment	$	280,219	$	277,457	$	242,078	$	242,763
Financial liabilities
Master Repurchase Facility	$	200,501	$	200,184	$	164,694	$	165,536

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Shareholders' Equity (Tables)

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Schedule of Shares Repurchased

During the nine months ended September 30, 2020, we purchased our common shares from certain of our officers and certain former and current officers and employees of our Manager and of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares, valued at the closing price of our common shares on Nasdaq on the purchase dates, as follows:

Date Purchased	Number of Shares	Price per Share
January 9, 2020	384	$	5.33
June 30, 2020	390	$	3.08
September 21, 2020	7,182	$	2.77

Dividends Declared

During the nine months ended September 30, 2020, we declared and paid a quarterly distribution to common shareholders as follows:

Record Date	Payment Date	Distribution Per Share		Total Distribution
January 27, 2020	February 20, 2020	$	0.22	$	1,813
April 10, 2020	May 21, 2020	0.01		82
July 27, 2020	August 20, 2020	0.01		83
		$	0.24	$	1,978

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Summary of Significant Accounting Policies (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Accounting Policies [Abstract]
Debt financing costs	$ 550

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Loans Held for Investment - Loan Portfolio Statistics (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020 USD ($) loan	Dec. 31, 2019 USD ($) loan	Jun. 30, 2020 USD ($)
Receivables [Abstract]
Number of Loans | loan	14	12
Total loan commitments	$ 293,961	$ 260,167
Unfunded loan commitments	13,974	17,268
Principal balance	279,987	242,899	$ 278,484
Unamortized net deferred origination and exit fees	232	(821)	(259)
Carrying value	$ 280,219	$ 242,078	$ 278,225
Weighted average coupon rate	5.70%	5.76%
Weighted average all in yield	6.38%	6.41%
Weighted average maximum maturity	2 years 10 months 24 days	3 years 7 months 6 days
Weighted average LTV	0.67	0.70

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Loans Held for Investment - Loan Activity (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward]
Principal, beginning balance	$ 278,484	$ 242,899
Deferred fees, beginning balance	(259)	(821)
Carrying value, beginning balance	278,225	242,078
Additional funding	3,592	13,051
Principal, originations		26,126
Deferred fees, originations		(388)
Carrying value, originations		25,738
Repayments	(2,089)
Repayments, net	(2,089)
Net amortization of deferred fees	491	1,441
Principal, ending balance	279,987	279,987
Deferred fees, ending balance	232	232
Carrying value, ending balance	$ 280,219	$ 280,219

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Loans Held for Investment - Narrative (Details) - USD ($) $ in Thousands	1 Months Ended
	Oct. 31, 2020	Jul. 31, 2020
Coppell, TX
Accounts, Notes, Loans and Financing Receivable [Line Items]
Proceeds from repayment		$ 2,089
Increase to reserve for future debt service obligation payments		100
Portion of repayment used to repay outstanding balance and accrued interest for master repurchase facility		$ 1,358
Paradise Valley, AZ | Subsequent Event
Accounts, Notes, Loans and Financing Receivable [Line Items]
Period of extension	1 year

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Loans Held for Investment - Loan Portfolio (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020 USD ($) loan	Dec. 31, 2019 USD ($) loan	Jun. 30, 2020 USD ($)
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan	14	12
Carrying value | $	$ 280,219	$ 242,078	$ 278,225
Percentage of Value	100.00%	100.00%
East
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan	5	4
Carrying value | $	$ 105,099	$ 90,047
Percentage of Value	37.00%	37.00%
South
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan	5	5
Carrying value | $	$ 103,958	$ 103,295
Percentage of Value	37.00%	43.00%
Midwest
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan	3	2
Carrying value | $	$ 60,496	$ 39,722
Percentage of Value	22.00%	16.00%
West
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan	1	1
Carrying value | $	$ 10,666	$ 9,014
Percentage of Value	4.00%	4.00%
Office
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan	5	4
Carrying value | $	$ 93,480	$ 71,446
Percentage of Value	33.00%	30.00%
Multifamily
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan	3	3
Carrying value | $	$ 70,107	$ 68,911
Percentage of Value	25.00%	28.00%
Industrial
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan	2	1
Carrying value | $	$ 48,951	$ 34,838
Percentage of Value	17.00%	14.00%
Retail
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan	3	3
Carrying value | $	$ 43,802	$ 43,782
Percentage of Value	16.00%	18.00%
Hotel
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan	1	1
Carrying value | $	$ 23,879	$ 23,101
Percentage of Value	9.00%	10.00%

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Loans Held for Investment - Loan Risk Ratings (Details) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Mar. 31, 2020 loan	Sep. 30, 2020 USD ($) loan	Dec. 31, 2019 USD ($) loan	Jun. 30, 2020 USD ($)
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan		14	12
Carrying value | $		$ 280,219	$ 242,078	$ 278,225
Weighted average risk rating		3.4	2.9
Percentage of Value		100.00%	100.00%
Risk Rating, 1
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan		0	0
Carrying value | $		$ 0	$ 0
Risk Rating, 2
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan		1	1
Carrying value | $		$ 24,589	$ 24,462
Risk Rating, 3
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan		6	11
Carrying value | $		$ 128,037	$ 217,616
Risk Rating, 4
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan	6	7	0
Carrying value | $		$ 127,593	$ 0
Percentage of Value		46.00%
Risk Rating, 5
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Number of Loans | loan		0	0
Carrying value | $		$ 0	$ 0

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Debt Agreements - Schedule of Debt (Details) - Master repurchase facility - USD ($) $ in Thousands		9 Months Ended	12 Months Ended
	Oct. 30, 2020	Sep. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Maximum Facility Size		$ 213,482	$ 213,482
Principal Balance		201,051	165,536
Carrying Value		$ 200,501	$ 164,694
Weighted Average, Remaining Maturity (years)		10 months 24 days	1 year 7 months 6 days
Collateral, Principal Balance		$ 279,987	$ 242,899
Collateral, Fair Value		$ 277,457	$ 242,763
Subsequent Event
Debt Instrument [Line Items]
Extension term	1 year
LIBOR
Debt Instrument [Line Items]
Weighted Average, Coupon Rate		20.00%	19.90%

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Debt Agreements - Master Repurchase Facility (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		4 Months Ended	9 Months Ended
	Aug. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	May 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Assets Sold under Agreements to Repurchase [Line Items]
Repayment of note payable					$ 0	$ 31,690
RMR Credit Agreement
Assets Sold under Agreements to Repurchase [Line Items]
Interest expense						39
Proceeds from issuance of long-term debt and capital securities, net				$ 14,220
Notes Payable | TCB Loan
Assets Sold under Agreements to Repurchase [Line Items]
Repayment of note payable	$ 31,790
Interest expense			$ 155			$ 891
Mortgages and Related Assets
Assets Sold under Agreements to Repurchase [Line Items]
Debt, weighted average interest rate		2.17%	4.18%		2.70%	4.38%
Interest expense for repurchase agreement		$ 1,120	$ 1,563		$ 4,003	$ 4,126
Percentage of loan guaranteed		25.00%			25.00%
Citibank, N.A. | Mortgages and Related Assets
Assets Sold under Agreements to Repurchase [Line Items]
Percentage of purchased asset, initial purchase price		75.00%			75.00%
Minimum percentage of margin to advance		75.00%			75.00%
Citibank, N.A. | Mortgages and Related Assets | LIBOR
Assets Sold under Agreements to Repurchase [Line Items]
Variable basis spread					2.00%
Citibank, N.A. | Mortgages and Related Assets | LIBOR | Minimum
Assets Sold under Agreements to Repurchase [Line Items]
Variable basis spread					2.00%
Citibank, N.A. | Mortgages and Related Assets | LIBOR | Maximum
Assets Sold under Agreements to Repurchase [Line Items]
Variable basis spread					2.50%

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Debt Agreements - Debt Maturities (Details) - Mortgages and Related Assets $ in Thousands	Sep. 30, 2020 USD ($)
Debt Instrument [Line Items]
2020	$ 29,680
2021	171,371
2022	0
2023	0
2024	0
Total	$ 201,051

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Fair Value of Financial Instruments (Details) - Level III - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for investment	$ 280,219	$ 242,078
Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for investment	277,457	242,763
Master Repurchase Facility | Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Master Repurchase Facility	200,501	164,694
Master Repurchase Facility | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Master Repurchase Facility	$ 200,184	$ 165,536

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Shareholders' Equity - Narrative (Details) $ / shares in Units, $ in Thousands							3 Months Ended					9 Months Ended
	Oct. 15, 2020 USD ($) $ / shares	Sep. 17, 2020 $ / shares shares	Aug. 20, 2020 USD ($)	May 21, 2020 USD ($)	May 13, 2020 trustee $ / shares shares	Feb. 20, 2020 USD ($)	Sep. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Sep. 30, 2020 USD ($)
Subsequent Event [Line Items]
Number of trustees | trustee					5
Grants awarded (in shares) | shares					3,000
Grants awarded (in dollars per share)					$ 1.92
Distributions | $			$ 83	$ 82		$ 1,813	$ 83	$ 1,895	$ 1,802	$ 702	$ 350	$ 1,978
Subsequent Event
Subsequent Event [Line Items]
Distributions declared (in dollars per share)	$ 0.01
Distributions | $	$ 83
Fully Vested Common Shares
Subsequent Event [Line Items]
Grants awarded (in shares) | shares		56,600
Grants awarded (in dollars per share)		$ 2.92

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Shareholders' Equity - Schedule of Share Repurchases and Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands							3 Months Ended					9 Months Ended
	Sep. 21, 2020	Aug. 20, 2020	Jun. 30, 2020	May 21, 2020	Feb. 20, 2020	Jan. 09, 2020	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020
Equity [Abstract]
Shares repurchased (in shares)	7,182		390			384
Shares repurchased (in dollars per share)	$ 2.77		$ 3.08			$ 5.33
Distributions paid (in dollars per share)		$ 0.01		$ 0.01	$ 0.22							$ 0.24
Distributions		$ 83		$ 82	$ 1,813		$ 83	$ 1,895	$ 1,802	$ 702	$ 350	$ 1,978

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Management Agreement with our Manager (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020 USD ($) employee	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) employee	Sep. 30, 2019 USD ($)
Related Party Transaction [Line Items]
Number of employees | employee	0		0
Management fees, including waived fees	$ 332	$ 322	$ 975	$ 812
Incentive fees, including waived fees	129	0	164	0
Reimbursement of shared services expenses	189	370	752	1,110
Principal Owner | Shared Service Costs
Related Party Transaction [Line Items]
Reimbursement of shared services expenses	$ 218	$ 406	$ 856	$ 1,217

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Related Person Transactions (Details) - Tremont Mortgage Trust - Tremont Realty Advisors LLC	Sep. 30, 2020 shares
Related Party Transaction [Line Items]
Shares owned (in shares)	1,600,100
Noncontrolling ownership interest	19.30%

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Weighted Average Common Shares (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)	63,429	39,024	63,630	15,037

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Commitments and Contingencies (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Other Commitments [Line Items]
Unfunded loan commitments	$ 13,974	$ 17,268
Weighted average maximum maturity	2 years 10 months 24 days	3 years 7 months 6 days
Mortgages and Related Assets
Other Commitments [Line Items]
Borrowings outstanding	$ 201,051
Weighted average maturity	10 months 24 days	1 year 7 months 6 days
Unfunded Commitments
Other Commitments [Line Items]
Weighted average maximum maturity	1 year 2 months 12 days