Tremont Mortgage Trust : Second Quarter 2021 Press Release

FOR IMMEDIATE RELEASE

Tremont Mortgage Trust Announces Second Quarter 2021 Results

Second Quarter Net Income Per Diluted Share of $0.01

Net Income Includes Merger Related Transaction Expenses of $0.22 per Diluted Share

Second Quarter Adjusted Distributable Earnings Per Diluted Share of $0.25

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Newton, MA(July 27, 2021):Tremont Mortgage Trust (Nasdaq: TRMT)today announced financial results for the quarter and six months ended June 30, 2021.

Tom Lorenzini, President of TRMT, made the following statement:

"TRMT's portfolio continues to perform well as we execute on our business objective of investing capital in first mortgage loans secured by middle market and transitional commercial real estate. All our loans remain current on debt service and our portfolio risk ratings remain stable, which speaks to the strong credit quality of our borrowers and our manager's ability to originate high quality loans. Our deal pipeline remains active with more than $600 million in transactions in various stages of review, underwriting and diligence, and we are focused on reinvesting capital as additional loans repay during the second half of 2021.

Furthermore, we remain on track to complete our merger with RMR Mortgage Trust during the third quarter of 2021. We believe this strategic transaction will provide compelling benefits to TRMT shareholders while creating a larger, more diversified commercial mortgage REIT approaching $1 billion in assets when fully invested."

Quarterly Results

			Three Months Ended
(dollars in thousands, except per share data)	June 30, 2021		June 30, 2020		Change
Net income	$98	$2,362	(95.9%)
Net income per diluted share	$0.01	$0.29	(96.6%)
Adjusted Distributable Earnings	$2,048	$2,433	(15.8%)
Adjusted Distributable Earnings per diluted share	$0.25	$0.30	(16.7%)
Income from investments, net	$3,160	$3,128	1.0%
Book value per share	$10.81	$10.72	0.8%

Additional information and a reconciliation of net income determined in accordance with U.S. generally accepted accounting principles, or GAAP, to Distributable Earnings and Adjusted Distributable Earnings for the quarters and six months ended June 30, 2021 and 2020, appear later in this press release.

Portfolio Summary and Recent Investment Activities

(dollars in thousands)	June 30, 2021		March 31, 2021		December 31, 2020
First mortgage loans	13		13		14
Total loan commitments	$246,029	$268,379	$293,890
Maximum weighted average maturity (years)	2.2	2.4	2.6
Weighted average coupon rate	5.61%	5.73%	5.70%
Weighted average all in yield	6.36%	6.43%	6.39%
Weighted average LIBOR floor	1.94%	2.10%	2.10%
Weighted average risk rating	3.0	2.9	3.2
Weighted average loan to value	65%	67%	67%

• As previously reported, in April 2021, TRMT amended the agreement governing its loan secured by an office property located in Metairie, LA to extend the maturity date of the loan by six months to October 11, 2021 and to eliminate any further borrower extension rights.
• In May 2021, TRMT originated a first mortgage loan of $15.2 million that was used to refinance an office property with 125,000 square feet located in Westminster, CO. This loan requires the borrower to pay interest at the floating rate of LIBOR plus a premium of 375 basis points per annum. This floating rate loan includes an initial funding of $13.5 million and a future funding allowance of $1.7 million for tenant improvements, leasing commissions and capital expenditures and has a three year initial term with two, one-year extension options, subject to the borrower meeting certain conditions.
• Also in May 2021, TRMT received $36.7 million of repayment proceeds from the borrower relating to its loan that was secured by an industrial facility located in Barrington, NJ, which included the $36.2 million principal amount outstanding under the loan, as well as accrued interest, an exit fee and TRMT's associated legal expenses.
• In June 2021, at the borrower's request, TRMT amended the agreement governing its loan secured by an office property located in Houston, TX to extend the maturity date of the loan by 45 days to August 10, 2021. As of June 30, 2021, the outstanding principal amount under this loan was $14.5 million.
• In July 2021, the borrower under TRMT's loan secured by a retail property located in Paradise Valley, AZ notified TRMT that the property is expected to be sold during the third quarter of 2021. Upon sale, TRMT expects to be repaid the principal amount outstanding under the loan, as well as accrued interest, an exit fee and TRMT's associated legal expenses. As of June 30, 2021, the outstanding principal amount under this loan was $11.2 million.
• Also in July 2021, the borrower under TRMT's loan secured by a multifamily property located in Houston, TX notified TRMT that the property is expected to be sold during the third quarter of 2021. Upon sale, TRMT expects to be repaid the principal amount outstanding under the loan, as well as accrued interest, an exit fee and TRMT's associated legal expenses. As of June 30, 2021, the outstanding principal amount under this loan was $27.9 million.
• Also in July 2021, the borrower under TRMT's loan secured by an office property located in Dublin, OH notified TRMT that the property is expected to be refinanced during the third quarter of 2021. Upon refinance, TRMT expects to be repaid the principal amount outstanding under the loan, as well as accrued interest, an exit fee and TRMT's associated legal expenses. As of June 30, 2021, the outstanding principal amount under this loan was $21.6 million.

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Merger with RMR Mortgage Trust

As previously announced, TRMT and RMR Mortgage Trust (Nasdaq: RMRM)entered into a definitive agreement and plan of merger, dated April 26, 2021, or the Merger Agreement, pursuant to which TRMT will merge with and into RMRM, with RMRM continuing as the surviving company, or the Merger. Pursuant to the terms of the Merger Agreement, TRMT's shareholders will receive 0.52 of one newly issued common share of RMRM for each common share of TRMT they hold, with cash paid in lieu of fractional shares. Completion of the Merger will require certain approvals of TRMT's and RMRM's shareholders and the satisfaction or waiver of other conditions. The record date for determining the shareholders entitled to receive notice of, and to vote at, the TRMT and RMRM special meetings of shareholders is July 14, 2021. The special meetings of shareholders of TRMT and RMRM are scheduled to be held on September 17, 2021 and, pending the requisite approval by TRMT and RMRM shareholders, the Merger is expected to close during the third quarter of 2021.

Recent Financing Activities

• During the second quarter of 2021, Citibank, N.A., or Citibank, advanced $13.5 million to TRMT under its master repurchase facility, and TRMT repaid $38.1 million of outstanding balances under its master repurchase facility with Citibank.
• As of June 30, 2021, TRMT had an aggregate $156.2 million outstanding principal balance under, and was in compliance with all covenants and other terms of, its master repurchase facility with Citibank.

Distributions

• On May 20, 2021, TRMT paid a quarterly distribution to common shareholders of record as of April 26, 2021 of $0.10 per common share, or approximately $0.8 million in aggregate.
• On July 15, 2021, TRMT declared a quarterly distribution for the second quarter of 2021 payable on August 19, 2021 to its shareholders of record as of July 26, 2021 of $0.10 per common share, or approximately $0.8 million in aggregate.

Conference Call

At 10:00 a.m. Eastern Time on Wednesday, July 28, 2021, President, Tom Lorenzini, and Chief Financial Officer and Treasurer, Doug Lanois, will host a conference call to discuss TRMT's second quarter 2021 financial results. The conference call telephone number is [phone]. Participants calling from outside the United States and Canada should dial [phone]. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. on Wednesday, August 4, 2021. To access the replay, dial [phone]. The replay pass code is 10157613.

A live audio webcast of the conference call will also be available in a listen-only mode on TRMT's website, which is located at www.trmtreit.com. Participants wanting to access the webcast should visit TRMT's website about five minutes before the call. The archived webcast will be available for replay on TRMT's website after the call. The transcription, recording and retransmission in any way of TRMT's second quarter conference call are strictly prohibited without the prior written consent of TRMT.

Supplemental Data

A copy of TRMT's Second Quarter 2021 Supplemental Operating and Financial Data is available for

download at TRMT's website, www.trmtreit.com. TRMT's website is not incorporated as part of this press release.

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About Tremont Mortgage Trust

TRMT is a real estate finance company that originates and invests in first mortgage loans secured by middle market and transitional commercial real estate. TRMT is managed by an affiliate ofThe RMR Group Inc. (Nasdaq: RMR). Substantially all of RMR's business is conducted by its majority owned subsidiary, The RMR Group LLC, which is an alternative asset management company with $32 billion in assets under management and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. For more information about TRMT, please visit www.trmtreit.com.

Non-GAAP Financial Measures

TRMT presents Distributable Earnings and Adjusted Distributable Earnings, which are considered "non- GAAP financial measures" within the meaning of the applicable rules of the Securities and Exchange Commission, or SEC. Distributable Earnings and Adjusted Distributable Earnings do not represent net income or cash generated from operating activities and should not be considered as alternatives to net income determined in accordance with GAAP or indications of TRMT's cash flows from operations determined in accordance with GAAP, measures of TRMT's liquidity or operating performance or indications of funds available for TRMT's cash needs. In addition, TRMT's methodologies for calculating Distributable Earnings and Adjusted Distributable Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures; therefore, TRMT's reported Distributable Earnings and Adjusted Distributable Earnings may not be comparable to the distributable earnings and adjusted distributable earnings as reported by other companies.

TRMT calculates Distributable Earnings as net income, computed in accordance with GAAP, including realized losses not otherwise included in net income determined in accordance with GAAP, and excluding: (a) the management incentive fees earned by TRMT's manager, if any; (b) depreciation and amortization, if any; (c) non- cash equity compensation expense; (d) unrealized gains, losses and other similar non-cash items that are included in net income for the period of the calculation (regardless of whether such items are included in or deducted from net income or in other comprehensive income under GAAP), if any; and (e) one-time events pursuant to changes in GAAP and certain non-cash items, if any. Distributable Earnings are reduced for realized losses on loan investments when amounts are deemed uncollectable.

TRMT defines Adjusted Distributable Earnings as Distributable Earnings excluding certain non-recurring expenses, such as transaction expenses related to the Merger and the other transactions contemplated by the Merger Agreement.

In order to maintain its qualification for taxation as a REIT, TRMT is generally required to distribute

substantially all of its taxable income, subject to certain adjustments, to its shareholders. TRMT believes that one of the factors that investors consider important in deciding whether to buy or sell securities of a REIT is its distribution rate. Over time, Distributable Earnings has been a useful indicator of distributions to TRMT's shareholders and is a measure that is considered by TRMT's Board of Trustees when determining the amount of such distributions. TRMT believes that Distributable Earnings and Adjusted Distributable Earnings provide meaningful information to consider in addition to net income and cash flows from operating activities determined in accordance with GAAP. These measures help TRMT to evaluate its performance excluding the effects of certain transactions, the variability of any management incentive fees that may be paid or payable and GAAP adjustments that TRMT believes are not necessarily indicative of TRMT's current loan portfolio and operations. In addition, Distributable Earnings is used in determining the amount of base management and management incentive fees payable by TRMT to TRMT's manager under TRMT's management agreement.

Please see the pages attached hereto for a more detailed statement of TRMT's operating results and financial condition and for an explanation of TRMT's calculation of Distributable Earnings and Adjusted Distributable Earnings and a reconciliation of net income determined in accordance with GAAP to those amounts.

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TREMONT MORTGAGE TRUST

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(unaudited)

	Three Months Ended June 30,			Six Months Ended June 30,
		2021			2020			2021			2020
INCOME FROM INVESTMENTS:
Interest income from investments	$	4,148	$	4,496	$	8,634	$	8,780
Less: interest and related expenses		(988)			(1,368)			(2,123)			(3,125)
Income from investments, net		3,160			3,128			6,511			5,655
OTHER EXPENSES:
Base management fees (1)		341			-			682			-
Management incentive fees (1)		-			-			620			-
General and administrative expenses		685			524			1,328			1,064
Reimbursement of shared services expenses		206			242			344			563
Transaction related expenses		1,822			-			1,849			-
Total expenses		3,054			766			4,823			1,627
Income before income tax expense		106			2,362			1,688			4,028
Income tax expense		(8)			-			(15)			-
Net income	$	98		$	2,362		$	1,673		$	4,028
Weighted average common shares outstanding - basic		8,218			8,177			8,215			8,173
Weighted average common shares outstanding - diluted		8,266			8,177			8,253			8,173
Net income per common share - basic and diluted	$	0.01	$	0.29	$	0.20	$	0.49

1. TRMT's manager previously waived any base management or management incentive fees that would have otherwise been due and payable by TRMT under its management agreement for the period beginning July 1, 2018 until December 31, 2020. If TRMT's manager had not waived these base management and management incentive fees, TRMT would have recognized $323 and $643 of base management fees for the three and six months ended June 30, 2020, respectively. Management incentive fees of $36 would have been paid or payable by TRMT for each of the three and six months ended June 30, 2020.

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