NEWTON, Mass.--(BUSINESS WIRE)--Tremont Mortgage Trust (Nasdaq: TRMT) today announced that due to the uncertainty and extreme disruption to the U.S. capital markets as a result of the COVID-19 (novel coronavirus) health crisis, and its resulting impact on the U.S. economy, TRMT has reduced its regular quarterly dividend on its common shares for the first quarter to $0.01 per share, in order to preserve cash and liquidity. This distribution will be paid to TRMT’s common shareholders of record as of the close of business on April 10, 2020 and distributed on or about May 21, 2020. TRMT’s Board of Trustees will continue to monitor TRMT’s financial performance and economic outlook as the year progresses to determine a prudent level for any subsequent regular quarterly distributions for 2020 or declare and pay a dividend required to maintain TRMT’s tax status as a real estate investment trust. Depending upon the ultimate distribution requirement in 2020, if any, the reduction of the dividend could preserve up to $5.2 million of capital this year.
As of March 31, 2020, TRMT had approximately $297 million in aggregate loan commitments consisting of a diverse portfolio by asset class and geography of 14 first mortgage whole loans, none of which to date have defaulted or resulted in forbearance. TRMT anticipates, however, that the negative impact from the current market environment and the possibility of further decline could result in our borrowers receiving tenant rent relief requests and therefore, TRMT expects borrowers’ business plans will take longer to execute than initially planned and we may have borrowers unable to pay debt service as scheduled. All the underlying loans in TRMT’s portfolio are structured with risk mechanisms, such as cash flow sweeps or interest reserves, to help mitigate the impact of such requests. TRMT is actively engaging each borrower in discussions on a continuous basis to assess the needs and health of each of the underlying assets while also monitoring TRMT’s own liquidity position. We are also in active dialogue with Citibank, N.A., our sole repurchase agreement lender.
David M. Blackman, TRMT’s President and Chief Executive Officer, made the following statement:
“In the midst of this very uncertain environment, our primary concern continues to be the health and safety of all our stakeholders and business partners. Because of the current challenging market conditions, we think it is prudent for TRMT to take steps to preserve capital and engage in regular dialogue with our borrowers and our lender. Once we have better visibility, our Board of Trustees will revisit the level of our dividend.”
Tremont Mortgage Trust (Nasdaq: TRMT) is a real estate finance company that focuses primarily on originating and investing in first mortgage loans secured by middle market and transitional commercial real estate. TRMT is managed by Tremont Realty Advisors LLC, an SEC registered investment adviser and an indirect subsidiary of The RMR Group Inc.
WARNING REGARDING FORWARD-LOOKING STATEMENTS
This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever TRMT uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, TRMT is making forward-looking statements. These forward-looking statements are based upon TRMT’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by TRMT’s forward-looking statements as a result of various factors. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond TRMT's control. For example:
- This press release states that TRMT has reduced its regular quarterly dividend on its common shares to $0.01 per share per quarter and that the TRMT’s Board of Trustees will continue to monitor TRMT’s financial performance and economic outlook as the year progresses to determine a prudent level for any subsequent regular quarterly distributions for 2020 or required to be made for 2020 in accordance with tax law requirements for real estate investment trusts. An implication of these statements may be that TRMT will increase its regular quarterly distributions in a future period. TRMT may not resume paying regular quarterly distributions at historic levels or at amounts greater than the level announced today or at all in the near future, and the reduced rate announced today may extend for an indefinite period and could be discounted. Moreover, capital market conditions may not improve or TRMT's own financial circumstances may change so that it becomes unable or unwilling to increase its regular quarterly distributions. Also, TRMT's historical rate of distributions on its common shares may be changed because of changes in TRMT's earnings, liquidity, financial leverage or other circumstances.
- This press release references certain risk mechanisms that apply to TRMT’s investments that may help mitigate the impact from TRMT’s borrowers being unable to pay debt service 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 if the tenants’ businesses fail or they default on their debt service obligations.
- This press release references TRMT’s active discussions with its borrowers and lenders, which may imply that those discussions will enable TRMT to maximize its receipt of interest and principal on its investments and minimize any actions that its lender may take if TRMT’s lenders default or the value of TRMT’s collateral declines below required levels. However, these actions may not succeed or, any success they may have, may not avoid TRMT from realizing negative impacts from the current business conditions, including with respect to its liquidity and financial results.
The information contained in TRMT’s filings with the Securities and Exchange Commission, or SEC, including under the caption “Risk Factors” in SVC’s periodic reports or incorporated therein, identifies important factors that could cause TRMT’s actual results to differ materially from those stated or implied by TRMT’s forward-looking statements. TRMT’s filings with the SEC are available at the SEC’s website at www.sec.gov.
You should not place undue reliance upon forward-looking statements.
Except as required by law, TRMT does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq. No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.