Debt Agreements

6 Months Ended

Jun. 30, 2020

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⁾(years)	Principal Balance		Fair Value⁽²⁾
June 30, 2020:
Master repurchase facility	$	213,482	$	201,138	$	200,465	L + 2.00%	1.1	$	278,484	$	273,860

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

Under the agreements that govern our Master Repurchase Facility, or collectively, as amended, 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 2.47% and 4.49% for the three months ended June 30, 2020 and 2019, respectively, and 2.97% and 4.52% for the six months ended June 30, 2020 and 2019, respectively. For the three months ended June 30, 2020 and 2019, we recorded interest expense of $1,245 and $1,479, respectively, and $2,883 and $2,563 for the six months ended June 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 June 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 June 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 $368 and $736 of interest expense for the three and six months ended June 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 both the three and six months ended June 30, 2019, in connection with the RMR Credit Agreement.

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



Year	Principal Payments ⁽¹⁾
2020	$	29,680
2021	171,458
2022	—
2023	—
2024	—
	$	201,138

(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.