Creates a Diversified Commercial Mortgage REIT
with Fully Invested Total Assets Expected to Approach $1
Billion
Expected to be Accretive to 2022 Distributable
Earnings
Increases Financial Strength with Improved
Access to Capital Markets and Expanded Shareholder Liquidity
Conference Call Scheduled for 10:00 a.m.
Eastern Time on April 28, 2021
RMR Mortgage Trust (Nasdaq: RMRM) and Tremont Mortgage Trust
(Nasdaq: TRMT) today announced that they have entered into a
definitive merger agreement pursuant to which TRMT will merge with
and into RMRM, with RMRM continuing as the surviving company. The
merger is expected to create a more diversified commercial mortgage
real estate investment trust, or REIT, focused on middle market
transitional bridge loans with assets expected to approach $1
billion when fully invested. The merger is expected to be accretive
to distributable earnings in 2022 with the potential to realize
annual expense savings of $1.4 million to $1.6 million, or $0.10 to
$0.11 per common share, due to the elimination of certain
duplicative public company costs.
Tom Lorenzini, President of RMRM and TRMT, made the following
statement:
“We are excited to announce this merger of
two highly complementary businesses that will create a larger, more
diversified commercial mortgage REIT. This combination greatly
enhances our financial strength and provides attractive benefits to
the shareholders of both companies. We believe that with increased
scale and an expanded capital base the combined company will be
much better positioned to access capital markets, increase
operating efficiency, and deliver more attractive risk-adjusted
returns for our shareholders.”
Certain Expected Strategic Transaction Benefits
- Enhanced scale with fully invested assets expected to approach
$1 billion
- Accretive to the distributable earnings of both RMRM and
TRMT
- Expanded capital base, float and shareholder liquidity
- Improved access to capital markets with the potential of a
reduced cost of capital
- Increased portfolio diversification among investments and asset
class exposure
- Greater market visibility to drive increased transaction
volume
- Seamless integration, as existing senior management team
remains in place
Under the terms of the merger agreement, each TRMT common share
will be converted into 0.520 of one newly issued RMRM common share.
Based on the closing prices of RMRM’s and TRMT’s common shares on
Friday, April 23, 2021, the implied offer price is approximately
$6.55 per TRMT common share, which represents a premium of 6% and
9% to the closing price and the volume weighted average price,
respectively, for the 30 trading days ending on April 23, 2021.
Upon the closing of the merger, RMRM shareholders are expected to
own approximately 70% of the combined company’s outstanding common
shares, while TRMT shareholders are expected to own approximately
30% of the combined company’s outstanding common shares.
Based on the closing price of RMRM’s common shares on April 23,
2021, the equity market capitalization of the combined company
would be approximately $180 million. Tremont Realty Advisors LLC,
the manager of RMRM and TRMT, or the Manager, will continue to
manage the combined company and has waived any termination fee that
would otherwise be payable by TRMT as a result of the merger.
On a pro forma basis as of today, the combined company will have
a loan portfolio consisting of the following characteristics:
- 22 first mortgage loans with aggregate loan commitments of $519
million;
- Average funded loan size of $21 million;
- Weighted average maximum maturity, which assumes all borrower
extension options have been exercised, of 3.2 years; and
- Weighted average interest rate of LIBOR plus 3.91% and a
weighted average loan-to-value of 66%.
The merger and other transactions contemplated by the merger
agreement and the terms thereof were evaluated, negotiated and
recommended, as applicable to each of RMRM’s and TRMT’s board of
trustees by special committees of each of RMRM’s and TRMT’s board
of trustees, respectively, each comprised solely of RMRM’s and
TRMT’s disinterested, independent trustees, respectively, and were
separately unanimously approved and adopted by RMRM’s and TRMT’s
independent trustees and by RMRM’s and TRMT’s board of trustees,
with independent trustees unanimously approving the merger and
other transactions contemplated by the merger agreement.
The merger is expected to close during the third quarter of
2021, subject to the requisite approvals by RMRM and TRMT
shareholders and other customary closing conditions. RMRM’s greater
than 5% shareholder has agreed to vote in favor of the issuance of
common shares in the merger at RMRM’s special meeting of
shareholders. TRMT’s greater than 5% shareholder has agreed to vote
in favor of the merger and other transactions contemplated by the
merger agreement at TRMT’s special meeting of shareholders.
UBS Investment Bank is acting as exclusive financial adviser to
the RMRM special committee and Skadden, Arps, Slate, Meagher &
Flom LLP is acting as legal advisor to RMRM (acting through the
special committee). Citigroup Global Markets Inc. is acting as
exclusive financial adviser to the TRMT special committee and
Sullivan & Worcester LLP is acting as legal adviser to TRMT
(acting through the special committee).
Conference Call
The companies will host a conference call on Wednesday, April
28, 2021 at 10:00 am Eastern Time to discuss the proposed merger
and for TRMT management to provide an update on TRMT’s financial
results for the quarter ended March 31, 2021. Participants will
include President Tom Lorenzini and Chief Financial Officer Doug
Lanois. The conference call telephone number is (833) 366-1119.
Participants calling from outside the United States and Canada
should dial (412) 902-6771. No pass code is necessary to access the
call from either number.
RMRM and TRMT will also provide a presentation regarding the
merger that will be available at their respective websites at
www.rmrmortgagetrust.com and www.trmtreit.com, and as an exhibit to
each of RMRM’s and TRMT’s Current Report on Form 8-K, furnished
with the Securities and Exchange Commission, or the SEC. RMRM’s and
TRMT’s websites are not incorporated as part of this news
release.
A live audio webcast of the conference call will also be
available in a listen-only mode on RMRM’s and TRMT’s websites.
Participants wanting to access the webcast should visit RMRM’s or
TRMT’s website at least five minutes prior to the call. The
archived webcast will be available for replay on the RMRM and TRMT
websites following the call for approximately one week. The
transcription, recording and retransmission in any way of RMRM’s
and TRMT’s conference call are strictly prohibited without the
prior written consent of RMRM and TRMT, as applicable.
About RMR Mortgage Trust and Tremont Mortgage Trust
RMR Mortgage Trust (Nasdaq: RMRM) and Tremont Mortgage Trust
(Nasdaq: TRMT) are real estate finance companies that originate and
invest in first mortgage loans secured by middle market and
transitional commercial real estate. RMRM and TRMT are managed by
an affiliate of The RMR Group Inc. (Nasdaq: RMR). Substantially all
of RMR’s business is conducted by its majority owned subsidiary,
The RMR Group LLC, which is an alternative asset management company
with $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 RMRM
and TRMT, please visit www.rmrmortgagetrust.com and
www.trmtreit.com.
About Tremont Realty Capital
Tremont Realty Capital, on behalf of its capital sources,
Tremont Mortgage Trust (Nasdaq: TRMT) and RMR Mortgage Trust
(Nasdaq: RMRM), is a direct lender that invests in loans secured by
middle market and transitional commercial real estate. Tremont
Realty Capital is the trade name of Tremont Realty Advisors LLC,
which is an affiliate of The RMR Group Inc. (Nasdaq: RMR). For more
information about Tremont Realty Capital, please visit
www.tremontcapital.com.
WARNING CONCERNING
FORWARD-LOOKING STATEMENTS
This press release contains statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and other securities laws.
Also, whenever RMRM and TRMT use words such as “believe”, “expect”,
“anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and
negatives or derivatives of these or similar expressions, RMRM and
TRMT are making forward-looking statements. These forward-looking
statements are based upon RMRM’s and 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 RMRM’s and 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 RMRM’s
and TRMT’s control. For example:
- RMRM and TRMT have entered into a definitive agreement to
merge. The merger is expected to close in the third quarter of
2021, subject to the satisfaction or waiver of closing conditions,
including the receipt of the requisite approvals by RMRM’s and
TRMT’s shareholders, and RMRM and TRMT cannot be sure that these
conditions will be satisfied or waived. Accordingly, the merger may
not close by the end of the third quarter of 2021 or at all, or the
terms contemplated by the merger agreement may change.
- RMRM and TRMT expect to realize a number of benefits from the
merger, including enhanced scale, earnings accretion, an expanded
capital base, float and shareholder liquidity, improved access to
capital markets and potential reduced cost of capital, increased
portfolio diversification, greater market visibility, increased
transaction volume and a seamless integration. These expectations
are contingent upon the consummation of the merger and may not be
realized as currently expected or at all.
- This press release states that the merger and the other
transactions contemplated by the merger agreement and the terms
thereof were evaluated, negotiated and recommended, as applicable,
to each of RMRM’s and TRMT’s board of trustees by special
committees of RMRM’s and TRMT’s board of trustees, respectively,
each comprised solely of RMRM’s and TRMT’s disinterested,
independent trustees, respectively, and were separately unanimously
approved and adopted by RMRM’s and TRMT’s independent trustees and
by RMRM’s and TRMT’s board of trustees, and that UBS Investment
Bank and Citigroup Global Markets Inc. acted as a financial advisor
to each of the special committees of RMRM’s and TRMT’s board of
trustees, respectively. Despite this process, each of RMRM and TRMT
could be subject to claims challenging the merger or the other
transactions or RMRM’s and TRMT’s entry into the merger and related
agreements because of the multiple relationships among RMRM, TRMT,
the Manager, The RMR Group LLC, The RMR Group Inc. and their
related persons and entities or other reasons, and defending even
meritless claims could be expensive and distracting to
management.
The information contained in RMRM’s “Summary of Principal Risk
Factors” included in its Current Report on Form 8-K filed on March
24, 2021, and the information contained in TRMT’s filings with the
SEC, including under “Risk Factors” in TRMT’s periodic reports or
incorporated therein, identifies other important factors that could
cause RMRM’s and TRMT’s actual results to differ materially from
those stated in or implied by RMRM’s and TRMT’s forward-looking
statements. RMRM’s and TRMT’s filings with the SEC are available on
the SEC’s website at www.sec.gov.
You should not place undue reliance upon forward-looking
statements.
Except as required by law, neither RMRM nor TRMT intends to
update or change any forward-looking statements as a result of new
information, future events or otherwise.
Additional Information about the Merger
In connection with the proposed merger, RMRM expects to file
with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-4, containing a joint proxy
statement/prospectus, and other documents with respect to the
proposed merger and other transactions contemplated by the merger
agreement. The joint proxy/prospectus will contain important
information about the proposed merger and related transactions.
SHAREHOLDERS OF RMRM AND TRMT ARE URGED TO READ THE REGISTRATION
STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL
AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS
FILED BY RMRM AND TRMT WITH THE SEC CAREFULLY IF AND WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT RMRM, TRMT AND THE PROPOSED MERGER AND RELATED
TRANSACTIONS.
Shareholders of RMRM and TRMT may obtain free copies of the
registration statements, the joint proxy statement/prospectus and
other relevant documents filed by RMRM or TRMT with the SEC (if and
when they become available) through the website maintained by the
SEC at www.sec.gov. Copies of the documents filed by RMRM with the
SEC are also available free of charge on RMRM's website at
www.rmrmortgagetrust.com. Copies of the documents filed by TRMT
with the SEC are also available free of charge on TRMT's website at
www.trmtreit.com.
This press release is for informational purposes only and is not
intended to and shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, or the solicitation
of any vote or approval in any jurisdiction pursuant to or in
connection with the proposed transaction or otherwise, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale of securities would be unlawful prior
to registration or qualification under the securities laws of any
such jurisdiction. No offering of securities shall be made except
by means of a prospectus meeting the requirements of Section 10 of
the U.S. Securities Act of 1933, as amended.
Participants in Solicitation Relating to the Merger
RMRM, TRMT and their respective trustees and executive officers,
and Tremont Realty Advisors LLC, The RMR Group LLC, The RMR Group
Inc. and certain of their respective directors, officers and
employees may be deemed to be participants in the solicitation of
proxies from the shareholders of RMRM and TRMT in respect of the
proposed merger. Information regarding RMRM's trustees and
executive officers can be found in RMRM's definitive proxy
statement filed with the SEC on March 24, 2021. Information
regarding TRMT's trustees and executive officers can be found in
TRMT's definitive proxy statement filed with the SEC on March 25,
2021. Additional information regarding the interests of such
potential participants will be included in the joint proxy
statement/prospectus and other relevant documents filed with the
SEC in connection with the proposed merger if and when they become
available. These documents are available free of charge on the
SEC's website and from RMRM or TRMT, as applicable, using the
sources indicated above.
A Maryland 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210426005857/en/
Kevin Barry, Manager, Investor Relations (617) 658-0776
www.rmrmortgagetrust.com
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