Audit Information |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Audit Information [Abstract] | |
| Auditor Firm ID | 34 |
| Auditor Name | Deloitte & Touche LLP |
| Auditor Location | Boston, Massachusetts |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common shares, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
| Common shares issued (in shares) | 14,902,773 | 14,811,410 |
| Common shares outstanding (in shares) | 14,902,773 | 14,811,410 |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands |
Total |
Cumulative Effect, Period of Adoption, Adjustment |
Common Shares |
Additional Paid In Capital |
Cumulative Net Income |
Cumulative Net Income
Cumulative Effect, Period of Adoption, Adjustment
|
Cumulative Distributions |
|---|---|---|---|---|---|---|---|
| Beginning balance (in shares) at Dec. 31, 2022 | 14,709,000 | ||||||
| Beginning balance at Dec. 31, 2022 | $ 271,579 | $ (6,595) | $ 15 | $ 238,505 | $ 52,290 | $ (6,595) | $ (19,231) |
| Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
| Share grants (in shares) | 122,000 | ||||||
| Share grants | $ 1,124 | 1,124 | |||||
| Share repurchases (in shares) | (17,421) | (17,000) | |||||
| Share repurchases | $ (183) | (183) | |||||
| Share forfeitures (in shares) | (3,000) | ||||||
| Share forfeitures | (3) | (3) | |||||
| Net income | 25,965 | 25,965 | |||||
| Distributions | $ (20,639) | (20,639) | |||||
| Ending balance (in shares) at Dec. 31, 2023 | 14,811,410 | 14,811,000 | |||||
| Ending balance at Dec. 31, 2023 | $ 271,248 | $ 15 | 239,443 | 71,660 | (39,870) | ||
| Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
| Share grants (in shares) | 120,000 | ||||||
| Share grants | $ 1,359 | 1,359 | |||||
| Share repurchases (in shares) | (28,165) | (28,000) | |||||
| Share repurchases | $ (377) | (377) | |||||
| Net income | 17,820 | 17,820 | |||||
| Distributions | $ (20,772) | (20,772) | |||||
| Ending balance (in shares) at Dec. 31, 2024 | 14,902,773 | 14,903,000 | |||||
| Ending balance at Dec. 31, 2024 | $ 269,278 | $ 15 | $ 240,425 | $ 89,480 | $ (60,642) |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Parenthetical) |
12 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Statement of Stockholders' Equity [Abstract] | |
| Accounting Standards Update [Extensible List] | Accounting Standards Update 2016-13 [Member] |
Organization |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Organization | OrganizationSeven Hills Realty Trust is a Maryland real estate investment trust, or REIT, that focuses primarily on originating and investing in first mortgage loans secured by middle market and transitional commercial real estate, or CRE. |
Summary of Significant Accounting Policies |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation. These consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, which requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include our allowance for credit losses and the fair value of financial instruments. Consolidation. These consolidated financial statements include the accounts of ours and our subsidiaries, all of which are 100% owned directly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. For each loan investment we make, we evaluate whether we have a controlling financial interest and consolidation of the borrower's financial statements is required under GAAP. Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Secured Financing Agreements. Loans financed through our Secured Financing Agreements (as defined in Note 5) are treated as collateralized financing transactions, unless they meet sales treatment under GAAP. Pursuant to GAAP treatment of collateralized financing transactions, loans financed through our Secured Financing Agreements remain on our consolidated balance sheets as assets and cash received from the purchasers is recorded on our consolidated balance sheets as liabilities. Interest paid in accordance with our Secured Financing 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 fees, accreted exit fees, unamortized premiums and unaccreted discounts, as applicable, that are required to be recognized in the carrying value of the loans in accordance with GAAP, unless the loans are determined to be collateral dependent. Loans that we have a plan to sell or liquidate are held at the lower of cost or fair value less cost to sell. Allowance for Credit Losses. On January 1, 2023, we adopted Accounting Standards Update, or ASU, No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the “incurred loss” model for recognizing credit losses with a forward-looking “expected loss” model that generally will result in the earlier recognition of credit losses. The measurement of current expected credit losses, or CECL, is based upon historical experience, current conditions, and reasonable and supportable forecasts incorporating forward-looking information that affect the collectability of the reported amount. ASU No. 2016-13 is applicable to financial assets measured at amortized cost and off-balance sheet credit exposures, such as unfunded loan commitments. The allowance for credit losses is a valuation account that is deducted from the related loans’ amortized cost basis in our consolidated balance sheets. Our loans typically include commitments to fund incremental proceeds to borrowers over the life of the loan; these future funding commitments are also subject to the CECL model. The allowance for credit losses related to unfunded loan commitments is included in accounts payable, accrued liabilities and other liabilities in our consolidated balance sheets. Given the lack of historical loss data related to our loan portfolio, we estimate our expected losses using an analytical model that considers the likelihood of default and loss given default for each individual loan. This analytical model incorporates data from a third party database with historical loan loss information for commercial mortgage-backed securities, or CMBS, and CRE loans since 1998. We estimate the allowance for credit losses for our portfolio, including unfunded loan commitments, at the individual loan level. Significant inputs to the model include certain loan specific data, such as loan to value, or LTV, property type, geographic location, occupancy, vintage year, remaining loan term, net operating income, expected timing and amounts of future loan fundings and macroeconomic forecast assumptions, including the performance of CRE assets, unemployment rates, interest rates and other factors. We utilize the model to estimate credit losses over a reasonable and supportable economic forecast period of 12 months, followed by a straight-line reversion period of six months to average historical losses. Average historical losses are established using a population of third party historical loss data that approximates our portfolio as of the measurement date. We evaluate the estimated allowance for each of our loans individually and we consider our internal loan risk rating as the primary credit quality indicator underlying our assessment. We have elected to exclude accrued interest receivable from amortized cost and not to measure an allowance for credit losses on accrued interest receivable. Accrued interest receivables are generally written off when payments are 120 days past due. Such amounts are reversed against interest income and no further interest will be recorded until it is collected. If a loan is determined to be collateral dependent (because the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral property) and the borrower is experiencing financial difficulties, but foreclosure is not probable, we may elect to apply a practical expedient to determine the loan's allowance for credit losses by comparing the collateral's fair value to the amortized cost basis of the loan. For collateral-dependent loans for which foreclosure is probable, the related allowance for credit losses is determined using the fair value, less costs to sell, if applicable, of the collateral compared to the loan's amortized cost. Upon adoption of ASU No. 2016-13 using the modified retrospective transition method and, based on our loan portfolio, the then current economic environment and expectations for future conditions, we recorded a cumulative-effect adjustment reducing our cumulative net income in our consolidated balance sheets by $6,595, establishing an allowance for credit losses of $4,893 with respect to our then outstanding loans held for investment and increasing accounts payable, accrued liabilities and other liabilities by $1,702 with respect to our then unfunded loan commitments. No reserve for loan losses or allowance for credit losses was recognized within our consolidated financial statements prior to our adoption of ASU No. 2016-13. We evaluate the credit quality of each of our loans 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 LTV, debt yield, collateral performance, structure, exit plan and sponsorship. Loans are rated “1” (less risk) through “5” (greater risk) 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” 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 3 for further information regarding our allowance for credit losses and our loan portfolio’s assessment under our internal risk rating policy. Real Estate Owned. Real estate owned is property acquired in full or partial settlement of loan obligations generally through foreclosure or by deed in lieu of foreclosure. Upon acquisition, we allocate the fair value of the real estate owned in accordance with ASC 805, Business Combinations. Upon acquisition, real estate owned is recognized at the fair value of the property at the time of acquisition. We allocate the purchase price to land, building and improvements, and acquired in place leases based on determinations of the relative fair values of these assets assuming the properties are vacant. The fair value of the property is determined using Level III inputs and standard industry valuation methods, including discounted cash flow analyses that are based on a number of factors, including capitalization rates and discount rates, among others, and sales comparisons. If the amortized cost of the loan exceeds the fair value of the property the difference is recorded through the allowance for credit losses as a write off. Conversely, if the fair value of the property exceeds the amortized cost of the loan, the difference is recorded through the allowance for credit losses as a recovery, with any excess recorded as a gain. Any related shortfall or excess of previously established allowances for credit losses is recognized in the consolidated statements of operations as a provision for or reversal of credit losses, respectively. Subsequent to acquisition, costs incurred related to improvements to the property are capitalized and depreciated over their estimated useful lives and costs related to the operation of the property are expensed as incurred. We recognize depreciation on a straight line basis over estimated useful lives generally ranging from 7 to 40 years. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of acquisition. We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. We amortize the value of acquired in place leases (included in acquired real estate leases, net in our consolidated balance sheets) over the terms of the associated leases. Such amortization is included in expenses from real estate owned in our consolidated statements of operations. We regularly evaluate real estate owned for indicators of impairment. Impairment indicators may include declining tenant occupancy, lack of progress leasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. We determine the amount of any impairment loss by comparing the carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation methods. See Note 4 for further information regarding our real estate owned. Fair Value of Financial Instruments. We determine the estimated fair value of financial assets and liabilities using the three-tier fair value hierarchy established by GAAP, which prioritizes observable inputs in active markets when measuring fair value. The three levels of inputs that may be used to measure fair value in order of priority 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 fees charged to our borrowers and unamortized or unaccreted balances are reflected as a reduction in loans held for investment, net, in our consolidated balance sheets. These fees are recognized in 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 a reduction to the related liability in our consolidated balance sheets. Deferred financing costs are amortized over the term of the respective financing agreement and are recorded in our consolidated statements of operations as a component of interest and related expenses. Net Income Per Common Share. We calculate net income per common share - basic using the two class method. We calculate net income per common share - diluted using the more dilutive of the two class or treasury stock method. Revenue Recognition. Interest income related to our first mortgage loans secured by 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 until 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. We did not have any non-accrual loans as of December 31, 2024. 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 through our provision for credit losses. Revenue from real estate owned represents rental income from operating leases with tenants and is recognized on a straight line basis over the lease term. Segments. Effective for the fiscal year ended December 31, 2024, we adopted ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, or ASU No. 2023-07, which requires public entities to: i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the Chief Operating Decision Maker, or the CODM, and included in each reported measure of segment profit or loss; ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by ASC 280, Segment Reporting, or ASC 280, in interim periods; and iii) disclose the CODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures. Public entities with a single reportable segment must apply all the disclosure requirements of ASU No. 2023-07, as well as all the existing segment disclosures under ASC 280. The amendments in ASU No. 2023-07 are incremental to the requirements in ASC 280 and do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. As a result, we have included additional information related to the required disclosures within Note 13 to our consolidated financial statements. New Accounting Pronouncements. In November 2024, the Financial Accounting Standards Board issued ASU No. 2024-03, Income Statement (Topic 220): Reporting Comprehensive Income - Expense Disaggregation Disclosures, or ASU No. 2024-03, which requires public entities to provide disaggregated disclosure of certain income statement expense captions within the footnotes to the financial statements. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact ASU No. 2024-03 will have on our consolidated financial statements and disclosures.
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Loans Held for Investment |
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| Loans Held for Investment | Loans Held for Investment, net We originate first mortgage loans secured by middle market and transitional CRE, which are generally to be held as long term investments. The table below provides overall statistics for our loan portfolio as of December 31, 2024 and 2023:
(1)Unfunded loan commitments are primarily used to finance property improvements and leasing capital and are generally funded over the term of the loan. (2)All in yield represents the yield on a loan, including amortization of deferred fees over the initial term of the loan and excluding any purchase discount accretion. (3)Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions. The table below represents our loan activities during 2023 and 2024:
The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of December 31, 2024 and 2023:
Credit Quality Information and Allowance for Credit Losses We evaluate the credit quality of each of our loans 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 higher the number, the greater the risk level. As of December 31, 2024 and 2023, the amortized cost of our loan portfolio within each internal risk rating by year of origination was as follows:
The tables below present the changes to the allowance for credit losses during the years ended December 31, 2024 and 2023:
(1)Write offs for the year ended December 31, 2023 relate to our loan secured by an office property located in Yardley, PA that was originated in 2019. We assumed legal title to the property through a deed in lieu of foreclosure in June 2023. The increase in the allowance for credit losses during the year ended December 31, 2024 is primarily attributable to declining values for CRE and unfavorable CRE pricing forecasts used in our CECL model and increased provisions for our office loans. We may enter into loan modifications that include among other changes, extensions of maturity dates, repurposing or required replenishment of reserves, increases or decreases in loan commitments and required pay downs of principal amounts outstanding. Loan modifications are evaluated to determine whether a modification results in a new loan or a continuation of an existing loan under ASC 310. In August 2024, we amended the agreement governing our loan secured by an office property in Dallas, TX. As part of this amendment, the loan commitment was reduced by $3,189, the borrower was required to contribute $2,900 to cash reserves and the maturity date was extended by two years to August 25, 2026. As of December 31, 2024, this loan had an amortized cost of $43,511 and a risk rating of 4. In August 2024, we amended the agreement governing our loan secured by an office property in Plano, TX. As part of this amendment, the coupon rate was reduced from SOFR + 4.75% to SOFR + 3.75% and the maturity date was extended by two years to July 1, 2026. As of December 31, 2024, this loan had an amortized cost of $26,635 and a risk rating of 4. In November 2024, we amended the agreement governing our loan secured by an office property in Carlsbad, CA. As part of this amendment, the borrower was required to contribute $1,100 to cash reserves and the maturity date was extended by two years to October 27, 2026. As of December 31, 2024, this loan had an amortized cost of $24,412 and a risk rating of 4. In November 2024, we amended the agreement governing our loan secured by an office property in Bellevue, WA. As part of this amendment, the maturity date was extended by 90 days to February 5, 2025. Subsequently, in January 2025, the maturity date was extended by 60 days to April 7, 2025. As of December 31, 2024, this loan had an amortized cost of $19,997 and a risk rating of 4. There were no other modifications to our loan portfolio for borrowers experiencing financial difficulties during the year ended December 31, 2024. We did not have any outstanding past due loans or nonaccrual loans as of December 31, 2024 or 2023. As of December 31, 2024 and February 13, 2025, our borrowers with outstanding loans had paid their debt service obligations owed and due to us.
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Real Estate Owned |
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| Real Estate Owned | Real Estate Owned In June 2023, we assumed legal title to an office property located in Yardley, PA through a deed in lieu of foreclosure. The table below presents the assets and liabilities of real estate owned in our consolidated balance sheets:
(1)Includes $1,094 and $647 of straight line rent receivables as of December 31, 2024 and 2023, respectively. Revenue from real estate owned represents rental income from operating leases with tenants and is recognized on a straight line basis over the lease term. We increased revenue from real estate owned to record revenue on a straight line basis by $447 and $647 for the years ended December 31, 2024 and 2023, respectively. Expenses from real estate owned represents costs related to the acquisition of the property, costs to operate the property and depreciation and amortization expense. We recognized amortization expense related to our acquired real estate leases of $771 and $458 for the years ended December 31, 2024 and 2023, respectively. Future amortization of acquired in place lease values is estimated to be $594 in 2025, $493 in 2026, $493 in 2027, $466 in 2028, $446 in 2029 and $874 thereafter. As of December 31, 2024 and 2023, the weighted average amortization period of acquired real estate leases was 6.9 and 7.4 years, respectively. The following operating lease maturity analysis presents the future contractual lease payments to be received by us through 2034 as of December 31, 2024:
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Secured Financing Agreements |
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| Secured Financing Agreements | Secured Financing Agreements As of December 31, 2024 and 2023, we had secured financing facilities governed by master repurchase agreements with Wells Fargo, National Association, or Wells Fargo, Citibank N.A., or Citibank, and UBS AG, or UBS; and a facility loan program with BMO Harris Bank N.A, or BMO. We refer to the Wells Fargo, Citibank and UBS facilities as our Master Repurchase Facilities and the BMO facility as our BMO Facility. Collectively, we refer to our Master Repurchase Facilities and the BMO Facility as our Secured Financing Facilities. Pursuant to our Master Repurchase Facilities, we may sell to, and later repurchase from the respective lender, the purchased assets related to the applicable facility. The initial purchase price paid under our Master Repurchase Facilities is generally between 75% and 80% of the market value or the unpaid principal balance of such purchased asset. Our Master Repurchase Facilities each contain margin maintenance provisions that provide our lenders with the right, in certain circumstances related to a credit event, to redetermine the value of purchased assets. Where a decline in the value of a purchased asset results in a margin deficit, we may be required to eliminate such a deficit through a combination of purchased asset repurchases and cash transfers. Pursuant to our BMO Facility, BMO advances amounts to fund new mortgage loan originations and/or fund future obligations under existing loans. Advances under the BMO Facility are secured by a security interest and collateral assignment of the underlying loan, are coterminous with the pledged mortgage loans, generally up to an 80% advance rate and are not subject to margin calls. In connection with each of our Secured Financing Facilities, we entered into guarantees that require us to guarantee 25% of the aggregate purchase price of the asset and also contain financial covenants, which require us to maintain a minimum tangible net worth, a minimum liquidity and a minimum interest coverage ratio and to satisfy a total indebtedness to stockholders’ equity ratio. Interest expense under our Secured Financing Facilities accrues at a rate of SOFR plus a premium. In September 2024, we amended our Citibank Master Repurchase Agreement. The amendment to the Citibank Master Repurchase Agreement made certain changes to the agreement and related fee letter, including extending the stated maturity date to September 27, 2026. In October 2024, we amended our Wells Fargo Master Repurchase Agreement. The amendment to the Wells Fargo Master Repurchase Agreement made certain changes to the agreement and related fee letter, including extending the stated maturity date to March 11, 2026. In December 2024, we amended the fee letter to our UBS Master Repurchase Agreement to extend the stated maturity date to February 18, 2026 and increase the maximum facility size to $250,000. As of December 31, 2024, we were in compliance with the covenants and other terms of the agreements that govern our Secured Financing Facilities. The table below summarizes our Secured Financing Facilities as of December 31, 2024 and 2023:
(1)The weighted average coupon rate is determined using SOFR plus a spread ranging from 1.83% to 2.95%, as applicable, for the respective borrowings under our Secured Financing Facilities as of the applicable date. (2)The weighted average remaining maturity of our Master Repurchase Facilities is determined using the earlier of the underlying loan investment maturity date and the respective repurchase agreement maturity date. The weighted average remaining maturity of the BMO Facility is determined using the underlying loan investment maturity date. As of December 31, 2024, our outstanding borrowings under our Secured Financing Facilities had the following remaining maturities:
Based upon the performance and payment history of our commercial mortgage loans, along with our ability to obtain financing under repurchase agreements and success in extending certain of our existing Master Repurchase Agreements, we believe it is probable that we will extend our Master Repurchase Facilities prior to their maturities.
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Fair Value Measurements |
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| Fair Value Measurements | Fair Value Measurements The carrying values of cash and cash equivalents and accounts payable approximate their fair values due to the short term nature of these financial instruments. We estimate the fair values of our loans held for investment and outstanding principal balances under our Secured Financing Facilities by using Level III inputs, including discounted cash flow analyses and currently prevailing market terms as of the measurement date. The table below provides information regarding our financial assets and liabilities not carried at fair value in our consolidated balance sheets:
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Shareholders' Equity |
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| Shareholders' Equity | Shareholders' Equity Common Share Awards We have common shares available for issuance under the terms of our Amended and Restated 2021 Equity Compensation Plan, or the 2021 Plan. During the years ended December 31, 2024 and 2023, we awarded to our officers and certain other employees of Tremont and of RMR annual share awards of 91,118 and 80,000 of our common shares, respectively, valued at $1,236 and $876, in aggregate, respectively. In accordance with our Trustee compensation arrangements, during the years ended December 31, 2024 and 2023, we awarded each of our then Trustees 4,735 and 6,000 of our common shares, respectively, valued at $360 and $387, respectively, as part of their annual compensation. The values of the share awards are based upon the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the dates of awards. The common shares that we award to our Trustees as trustee compensation vest immediately. The common shares we award to our officers and certain other employees of Tremont and of RMR vest in five equal annual installments beginning on the date of award. We recognize any share forfeitures as they occur. We include the value of awarded shares in general and administrative expenses ratably over the vesting period. A summary of shares granted, forfeited, vested and unvested under the terms of the 2021 Plan for the years ended December 31, 2024 and 2023 is as follows:
The 147,062 unvested shares as of December 31, 2024 are scheduled to vest as follows: 53,822 shares in 2025, 43,316 shares in 2026, 31,722 shares in 2027 and 18,202 shares in 2028. As of December 31, 2024, the estimated future compensation expense for the unvested shares was $1,594. The weighted average period over which the compensation expense will be recorded is approximately 22 months. During the years ended December 31, 2024 and 2023, we recorded $1,359 and $1,121, respectively, of compensation expense related to the 2021 Plan. At December 31, 2024, 57,466 of our common shares remained available for issuance under the 2021 Plan. Common Share Purchases During the years ended December 31, 2024 and 2023, we purchased 28,165 and 17,421 of our common shares, respectively, from certain of our current and former officers and current and former officers and employees of Tremont and/or RMR 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 applicable purchase date. The aggregate value of common shares purchased during the years ended December 31, 2024 and 2023 was $377 and $183, respectively. Distributions During the years ended December 31, 2024 and 2023, we declared and paid regular quarterly distributions to common shareholders, using cash on hand, as follows:
On January 16, 2025, we declared a quarterly distribution of $0.35 per common share, or $5,216, to shareholders of record on January 27, 2025, and we expect to pay this distribution on February 20, 2025 using cash on hand.
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Management Agreement with Tremont |
12 Months Ended |
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Dec. 31, 2024 | |
| Related Party Transactions [Abstract] | |
| Management Agreement with Tremont | Management Agreement with Tremont We have no employees. The personnel and various services we require to operate our business are provided to us, pursuant to a management agreement with Tremont, which provides for the day to day management of our operations by Tremont, subject to the oversight and direction of our Board of Trustees. Our management agreement with Tremont provides for an annual base management fee and an incentive fee, payable in cash, among other terms: •Base Management Fee. We are required to pay Tremont the annual base management fee equal to 1.5% of our “Equity”, payable in cash quarterly (0.375% per quarter) in arrears. Under our management agreement, “Equity” means (a) the sum of (i) our net asset value as of January 5, 2021, plus (ii) the net proceeds received by us from any future sale or issuance of shares of beneficial interest, plus (iii) our cumulative “Core Earnings,” as defined below, for the period commencing on January 5, 2021 to the end of the applicable most recent completed calendar quarter, less (b) (i) any distributions previously paid to holders of our common shares, (ii) any incentive fee previously paid to Tremont and (iii) any amount that we may have paid to repurchase our common shares. All items in the foregoing sentence (other than clause (a)(iii)) are calculated on a daily weighted average basis. As a result of our merger with Tremont Mortgage Trust, or TRMT, in 2021, or the Merger, as of September 30, 2021, the net book value of TRMT was included as “Equity” under the management agreement. •Incentive Fee. We are required to pay Tremont quarterly an incentive fee in arrears in cash equal to the difference between: •The product of (i) 20% and (ii) the difference between (A) our Core Earnings for the most recent 12 month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of the incentive fee is being made, and (B) the product of (1) our Equity in the most recent 12 month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of the incentive fee is being made, and (2) 7% per year, and •The sum of any incentive fees paid to Tremont with respect to the first three calendar quarters of the most recent 12 month period (or such lesser number of completed calendar quarters, if applicable). No incentive fee shall be payable with respect to any calendar quarter unless Core Earnings for the 12 most recently completed calendar quarters (or such lesser number of completed calendar quarters, if applicable) in the aggregate is greater than zero. Pursuant to the terms of our management agreement, any management incentive fees are subject to Tremont earning those fees in accordance with the management agreement. For purposes of the calculation of base management fees and incentive fees payable to Tremont under our management agreement, “Core Earnings” is defined as net income (or loss) attributable to our common shareholders, computed in accordance with GAAP, including realized losses not otherwise included in GAAP net income (loss), and excluding: (a) the incentive fees earned by Tremont, (b) depreciation and amortization of real estate owned and related intangible assets (if any); (c) non-cash equity compensation expense (if any); (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 or loss under GAAP); and (e) one-time events pursuant to changes in GAAP and certain material non-cash income or expense items, in each case after discussion between Tremont and our Independent Trustees and approved by a majority of our Independent Trustees. Core Earnings are reduced for realized losses on loan investments when amounts are deemed uncollectable. Pursuant to the terms of our management agreement, the exclusion of depreciation and amortization from the calculation of Core Earnings shall only apply with respect to real property we own. Our shares of beneficial interest that are entitled to a specific periodic distribution or have other debt characteristics will not be included in “Equity” for the purpose of calculating incentive fees payable to Tremont. Instead, the aggregate distribution amount that accrues to such shares during the calendar quarter of such calculation will be subtracted from Core Earnings for purposes of calculating incentive fees, unless such distribution is otherwise already excluded from Core Earnings. Equity and Core Earnings as defined in our management agreement are non-GAAP financial measures and may be different from our shareholders’ equity and our net income calculated according to GAAP. Term. The term of our management agreement ended on December 31, 2024, and the agreement automatically renewed for a successive one year term on January 1, 2025, and will renew for successive one year terms each January 1 thereafter, unless it is sooner terminated as detailed below. Termination Rights. We have the right to terminate our management agreement with Tremont upon written notice delivered no later than 180 days prior to a renewal date by the affirmative vote of at least two-thirds (2/3) of our Independent Trustees based upon a determination that: (a) Tremont’s performance is unsatisfactory and materially detrimental to us or (b) the base management fee and incentive fee, taken as a whole, payable to Tremont under our management agreement are not fair to us (provided that, in the instance of (b), Tremont will be afforded the opportunity to renegotiate the base management fee and incentive fee prior to termination). Our management agreement may be terminated by Tremont before each annual renewal upon written notice delivered to our Board of Trustees no later than 180 days prior to an annual renewal date. We may also terminate our management agreement at any time without the payment of any termination fee, with at least 30 days’ prior written notice from us upon the occurrence of a “cause event,” as defined in the management agreement. Tremont may terminate our management agreement in certain other circumstances, including if we become required to register as an investment company under the 1940 Act for our uncured “material breach,” as defined in our management agreement, we materially reduce Tremont’s duties and responsibilities or scope of its authority under our management agreement or we cease or take steps to cease to conduct the business of originating or investing in CRE loans. Termination Fee. In the event our management agreement is terminated by us without a cause event or by Tremont for a material breach, we will be required to pay Tremont a termination fee equal to: (a) three times the sum of (i) the average annual base management fee and (ii) the average annual incentive fee, in each case paid or payable to Tremont during the 24 month period immediately preceding the most recently completed calendar quarter prior to the date of termination plus (b) $1,600. No termination fee will be payable if our management agreement is terminated by us for a cause event or by Tremont without our material breach. In addition, as described above, in connection with the Merger and the termination of TRMT’s management agreement with Tremont, the initial organizational costs related to TRMT’s formation and the costs of its initial public offering and the concurrent private placement that Tremont had paid pursuant to that management agreement of $6,680 will be included in the “Termination Fee” under and as defined in our management agreement with Tremont. Expense Reimbursement. Tremont, and not us, is responsible for the costs of its employees who provide services to us, including the cost of Tremont’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. Generally, it is the practice of Tremont and RMR to treat individuals who spend 50% or more of their business time providing services to Tremont as employees of Tremont. We are required to pay or to reimburse Tremont and its affiliates for all other costs and expenses of our operations, including but not limited to, the cost of rent, utilities, office furniture, equipment, machinery and other overhead type expenses, the costs of legal, accounting, auditing, tax planning and tax return preparation, consulting services, diligence costs related to our investments, investor relations expenses and other professional services, and other costs and expenses not specifically required under our management agreement to be borne by Tremont. Some of these overhead, professional and other services are provided by RMR pursuant to a shared services agreement between Tremont and RMR. We reimburse Tremont for shared services costs Tremont pays to RMR and its affiliates, and these reimbursements include an allocation of the cost of applicable personnel employed by RMR and our share of RMR’s costs of providing our internal audit function, with such shared services costs being subject to approval by a majority of our Independent Trustees at least annually. Business Opportunities. Under our management agreement, we and Tremont have agreed that for so long as Tremont is managing us, neither Tremont nor any of its affiliates, including RMR, will sponsor or manage any other publicly traded REIT that invests primarily in first mortgage loans secured by middle market and transitional CRE located in the United States, unless such activity is approved by our Independent Trustees. However, our management agreement does not prohibit Tremont or its affiliates (including RMR) or their respective directors, trustees, officers, employees or agents from competing or providing services to other persons, funds and investment vehicles, private REITs or other entities that may compete with us, including, among other things, with respect to the origination, acquisition, making, arranging or managing of first mortgage loans secured by middle market or transitional CRE or other investments like those we intend to make. Because Tremont and RMR will not be prohibited from competing with us in all circumstances, and RMR provides management services to other companies, conflicts of interest exist with regard to the allocation of investment opportunities and for the time and attention of Tremont, RMR and their personnel. Our management agreement acknowledges these conflicts of interest and, in that agreement, we agree that Tremont, RMR and their subsidiaries may resolve such conflicts in good faith in their fair and reasonable discretion. In the case of such a conflict, Tremont, RMR and their subsidiaries will endeavor to allocate such investment opportunities in a fair and reasonable manner, taking into account such factors as they deem appropriate. Our management agreement also provides that if Tremont, its affiliates (including RMR) or any of their respective directors, trustees, officers, employees or agents acquires knowledge of a potential business opportunity, we renounce any potential interest or expectation in, or right to be offered or to participate in, such business opportunity to the maximum extent permitted by Maryland law. Liability and Indemnification. Tremont maintains a contractual as opposed to a fiduciary relationship with us. Pursuant to our management agreement, Tremont does not assume any responsibility other than to render the services called for thereunder in good faith and is not responsible for any action of our Board of Trustees in following or declining to follow its advice or recommendations. Under the terms of our management agreement, Tremont and its affiliates, including RMR, and their respective directors, trustees, officers, shareholders, owners, members, managers, employees and personnel will not be liable to us or any of our Trustees, shareholders or subsidiaries, or any of the trustees, directors or shareholders of any of our subsidiaries, for any acts or omissions related to the provision of services to us under our management agreement, except by reason of acts or omissions that have been determined in a final, non-appealable adjudication to have constituted bad faith, fraud, intentional misconduct, gross negligence or reckless disregard of the duties of Tremont under our management agreement. In addition, under the terms of our management agreement, we agree to indemnify, hold harmless and advance expenses to Tremont and its affiliates, including RMR, and their respective directors, trustees, officers, shareholders, owners, members, managers, employees and personnel from and against any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever, including all reasonable attorneys’, accountants’ and experts’ fees and expenses, arising from any acts or omissions related to the provision of services to us or the performance of any matters pursuant to an instruction by our Board of Trustees, except to the extent there is a final, non-appealable adjudication that such acts or omissions constituted bad faith, fraud, intentional misconduct, gross negligence or reckless disregard of the duties of Tremont under our management agreement. Such persons will also not be liable for trade errors that may result from ordinary negligence, including errors in the investment decision making or trade process.
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Related Person Transactions |
12 Months Ended |
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Dec. 31, 2024 | |
| Related Party Transactions [Abstract] | |
| Related Person Transactions | Related Person Transactions We have relationships and historical and continuing transactions with Tremont, RMR, The RMR Group Inc., or RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. Tremont is a subsidiary of RMR, which is a majority owned subsidiary of RMR Inc., and RMR Inc. is the managing member of RMR. RMR provides certain shared services to Tremont that are applicable to us, and we reimburse Tremont or pay RMR for the amounts Tremont or RMR pays for those services. One of our Managing Trustees and Chair of our Board of Trustees, Adam D. 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 Tremont, the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc., and an officer and employee of RMR. Matthew P. Jordan, our other Managing Trustee, is a director and the president and chief executive officer of Tremont. Mr. Jordan is also an officer of RMR Inc. and an officer and employee of RMR, and our other officers are officers and employees of Tremont and/or RMR. Our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Adam D. Portnoy serves as the chair of the board and as a managing trustee of those companies and other officers of RMR, including Mr. Jordan and certain of our other officers and officers of Tremont, serve as managing trustees or officers of certain of these companies. Our Manager, Tremont Realty Capital LLC. Tremont provides management services to us pursuant to our management agreement. See Note 8 for further information regarding our management agreement. As of December 31, 2024, Tremont owned 1,708,058 of our common shares, or approximately 11.5% of our outstanding common shares, and Mr. Portnoy beneficially owned (including through Tremont and ABP Trust) 13.5% of our outstanding common shares. RMR Inc. and RMR. RMR provides certain shared services to Tremont which are applicable to us, and we reimburse Tremont or pay RMR for the amounts Tremont or RMR pays for those services. See Note 8 for further information regarding this shared services arrangement. Property Management Agreement with RMR. We entered into a property management agreement with RMR in July 2023 with respect to real estate owned in Yardley, PA. Pursuant to this agreement, RMR provides property management services and we pay management fees equal to 3.0% of gross collected rents. Also under the terms of this property management agreement, we pay RMR additional fees for construction supervision services equal to 5.0% of the cost of such construction. Either we or RMR may terminate this agreement upon 30 days' prior notice. No termination fee would be payable as a result of terminating the agreement. We recognized property management and construction supervision fees of $71 and $17 during the years ended December 31, 2024 and 2023, respectively, related to real estate owned.
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Income Taxes |
12 Months Ended |
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Dec. 31, 2024 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income TaxesWe have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. 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 consolidated statements of operations. |
Weighted Average Common Shares |
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| Weighted Average Common Shares | Weighted Average Common Shares We calculate net income per common share - basic using the two class method. We calculate net income per common share - diluted using the more dilutive of the two class or treasury stock method. Unvested share awards are considered participating securities and the related impact on earnings are considered when calculating net income per common share - basic and net income per common share - diluted. The calculation of net income per common share - basic and diluted is as follows (amounts in thousands, except per share data):
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Commitments and Contingencies |
12 Months Ended |
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Dec. 31, 2024 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Commitments and Contingencies As of December 31, 2024, we had unfunded loan commitments of $30,402 related to our loans held for investment that are not reflected in our consolidated balance sheets. These unfunded loan commitments had a weighted average initial maturity of 1.2 years as of December 31, 2024. See Note 3 for further information related to our loans held for investment.
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Segment Reporting |
12 Months Ended |
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Dec. 31, 2024 | |
| Segment Reporting [Abstract] | |
| Segment Reporting | Segment ReportingWe manage our business on a consolidated basis and therefore have one reportable segment: originating and investing in floating rate first mortgage loans secured by CRE properties. The Chief Operating Decision Maker, or CODM, is our President and Chief Investment Officer. The CODM assesses performance, allocates resources and makes strategic decisions based on net income as shown in our Consolidated Statements of Operations. Our significant expense categories are included in our Consolidated Statements of Operations. The accounting policies of our reportable segment are the same as the ones described in Note 2. The measure of segment assets is reported as total assets in our Consolidated Balance Sheets. |
Schedule IV - Mortgage Loans on Real Estate |
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| SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule IV - Mortgage Loans on Real Estate |
(1)Maximum maturity assumes all extension option have been exercised, which options are subject to the borrower meeting certain conditions. (2)I/O = interest only until final maturity. (3)Represents only third party prior liens. (4)As of December 31, 2024, none of our borrowers were delinquent in payment. (5)In January 2025, the maturity date of this loan was extended to January 28, 2026. (6)In January 2025, the maturity date of this loan was extended to April 7, 2025. (7)For further information regarding our allowance for credit losses, see Note 3 to our Consolidated Financial Statements.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
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| Pay vs Performance Disclosure | ||
| Net income | $ 17,820 | $ 25,965 |
Insider Trading Arrangements |
3 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Trading Arrangements, by Individual | |
| Rule 10b5-1 Arrangement Adopted | false |
| Non-Rule 10b5-1 Arrangement Adopted | false |
| Rule 10b5-1 Arrangement Terminated | false |
| Non-Rule 10b5-1 Arrangement Terminated | false |
Insider Trading Policies and Procedures |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Insider Trading Policies and Procedures [Line Items] | |
| Insider Trading Policies and Procedures Adopted | true |
Cybersecurity Risk Management and Strategy Disclosure |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Cybersecurity Risk Management, Strategy, and Governance [Line Items] | |
| Cybersecurity Risk Management Processes for Assessing, Identifying, and Managing Threats [Text Block] | We rely on the information technology and systems maintained by our manager, Tremont, and RMR, and rely on Tremont and RMR to identify and manage material risks from cybersecurity threats. RMR takes various actions, and incurs significant costs, to maintain and protect the operation and security of information technology and systems, including the data maintained in those systems. Our Audit Committee oversees cybersecurity matters, including the material risks related thereto, and regularly receives updates from RMR’s Chief Information Officer regarding the development and advancement of its cybersecurity strategy, as well as the related risks. In the event of a cybersecurity incident, RMR has a detailed incident response plan in place for contacting authorities and informing key stakeholders, including our management. We have not been materially affected and do not believe we are reasonably likely to be materially affected by any risks from cybersecurity threats, including as a result of previous incidents.
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| Cybersecurity Risk Management Processes Integrated [Flag] | true |
| Cybersecurity Risk Management Processes Integrated [Text Block] | We rely on the information technology and systems maintained by our manager, Tremont, and RMR, and rely on Tremont and RMR to identify and manage material risks from cybersecurity threats. RMR takes various actions, and incurs significant costs, to maintain and protect the operation and security of information technology and systems, including the data maintained in those systems. Our Audit Committee oversees cybersecurity matters, including the material risks related thereto, and regularly receives updates from RMR’s Chief Information Officer regarding the development and advancement of its cybersecurity strategy, as well as the related risks. |
| Cybersecurity Risk Materially Affected or Reasonably Likely to Materially Affect Registrant [Flag] | false |
| Cybersecurity Risk Board of Directors Oversight [Text Block] | Our Audit Committee oversees cybersecurity matters, including the material risks related thereto, and regularly receives updates from RMR’s Chief Information Officer regarding the development and advancement of its cybersecurity strategy, as well as the related risks. |
| Cybersecurity Risk Board Committee or Subcommittee Responsible for Oversight [Text Block] | We rely on the information technology and systems maintained by our manager, Tremont, and RMR, and rely on Tremont and RMR to identify and manage material risks from cybersecurity threats. RMR takes various actions, and incurs significant costs, to maintain and protect the operation and security of information technology and systems, including the data maintained in those systems. Our Audit Committee oversees cybersecurity matters, including the material risks related thereto, and regularly receives updates from RMR’s Chief Information Officer regarding the development and advancement of its cybersecurity strategy, as well as the related risks. |
| Cybersecurity Risk Process for Informing Board Committee or Subcommittee Responsible for Oversight [Text Block] | RMR takes various actions, and incurs significant costs, to maintain and protect the operation and security of information technology and systems, including the data maintained in those systems. Our Audit Committee oversees cybersecurity matters, including the material risks related thereto, and regularly receives updates from RMR’s Chief Information Officer regarding the development and advancement of its cybersecurity strategy, as well as the related risks. In the event of a cybersecurity incident, RMR has a detailed incident response plan in place for contacting authorities and informing key stakeholders, including our management. |
| Cybersecurity Risk Role of Management [Text Block] | We rely on the information technology and systems maintained by our manager, Tremont, and RMR, and rely on Tremont and RMR to identify and manage material risks from cybersecurity threats. RMR takes various actions, and incurs significant costs, to maintain and protect the operation and security of information technology and systems, including the data maintained in those systems. Our Audit Committee oversees cybersecurity matters, including the material risks related thereto, and regularly receives updates from RMR’s Chief Information Officer regarding the development and advancement of its cybersecurity strategy, as well as the related risks. |
| Cybersecurity Risk Management Positions or Committees Responsible [Flag] | true |
| Cybersecurity Risk Management Positions or Committees Responsible [Text Block] | Our Audit Committee oversees cybersecurity matters, including the material risks related thereto, and regularly receives updates from RMR’s Chief Information Officer regarding the development and advancement of its cybersecurity strategy, as well as the related risks. |
| Cybersecurity Risk Process for Informing Management or Committees Responsible [Text Block] | Our Audit Committee oversees cybersecurity matters, including the material risks related thereto, and regularly receives updates from RMR’s Chief Information Officer regarding the development and advancement of its cybersecurity strategy, as well as the related risks. |
Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation | Basis of Presentation. These consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, which requires us to make estimates and assumptions that affect reported amounts. |
| Use of Estimates | Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include our allowance for credit losses and the fair value of financial instruments. |
| Consolidation | Consolidation. These consolidated financial statements include the accounts of ours and our subsidiaries, all of which are 100% owned directly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. For each loan investment we make, we evaluate whether we have a controlling financial interest and consolidation of the borrower's financial statements is required under GAAP.
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| Cash and Cash Equivalents | Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.
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| Secured Financing Agreements | Secured Financing Agreements. Loans financed through our Secured Financing Agreements (as defined in Note 5) are treated as collateralized financing transactions, unless they meet sales treatment under GAAP. Pursuant to GAAP treatment of collateralized financing transactions, loans financed through our Secured Financing Agreements remain on our consolidated balance sheets as assets and cash received from the purchasers is recorded on our consolidated balance sheets as liabilities. Interest paid in accordance with our Secured Financing Agreements is recorded as interest expense.
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| 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 fees, accreted exit fees, unamortized premiums and unaccreted discounts, as applicable, that are required to be recognized in the carrying value of the loans in accordance with GAAP, unless the loans are determined to be collateral dependent. Loans that we have a plan to sell or liquidate are held at the lower of cost or fair value less cost to sell.
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| Allowance for Credit Losses | Allowance for Credit Losses. On January 1, 2023, we adopted Accounting Standards Update, or ASU, No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the “incurred loss” model for recognizing credit losses with a forward-looking “expected loss” model that generally will result in the earlier recognition of credit losses. The measurement of current expected credit losses, or CECL, is based upon historical experience, current conditions, and reasonable and supportable forecasts incorporating forward-looking information that affect the collectability of the reported amount. ASU No. 2016-13 is applicable to financial assets measured at amortized cost and off-balance sheet credit exposures, such as unfunded loan commitments. The allowance for credit losses is a valuation account that is deducted from the related loans’ amortized cost basis in our consolidated balance sheets. Our loans typically include commitments to fund incremental proceeds to borrowers over the life of the loan; these future funding commitments are also subject to the CECL model. The allowance for credit losses related to unfunded loan commitments is included in accounts payable, accrued liabilities and other liabilities in our consolidated balance sheets. Given the lack of historical loss data related to our loan portfolio, we estimate our expected losses using an analytical model that considers the likelihood of default and loss given default for each individual loan. This analytical model incorporates data from a third party database with historical loan loss information for commercial mortgage-backed securities, or CMBS, and CRE loans since 1998. We estimate the allowance for credit losses for our portfolio, including unfunded loan commitments, at the individual loan level. Significant inputs to the model include certain loan specific data, such as loan to value, or LTV, property type, geographic location, occupancy, vintage year, remaining loan term, net operating income, expected timing and amounts of future loan fundings and macroeconomic forecast assumptions, including the performance of CRE assets, unemployment rates, interest rates and other factors. We utilize the model to estimate credit losses over a reasonable and supportable economic forecast period of 12 months, followed by a straight-line reversion period of six months to average historical losses. Average historical losses are established using a population of third party historical loss data that approximates our portfolio as of the measurement date. We evaluate the estimated allowance for each of our loans individually and we consider our internal loan risk rating as the primary credit quality indicator underlying our assessment. We have elected to exclude accrued interest receivable from amortized cost and not to measure an allowance for credit losses on accrued interest receivable. Accrued interest receivables are generally written off when payments are 120 days past due. Such amounts are reversed against interest income and no further interest will be recorded until it is collected. If a loan is determined to be collateral dependent (because the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral property) and the borrower is experiencing financial difficulties, but foreclosure is not probable, we may elect to apply a practical expedient to determine the loan's allowance for credit losses by comparing the collateral's fair value to the amortized cost basis of the loan. For collateral-dependent loans for which foreclosure is probable, the related allowance for credit losses is determined using the fair value, less costs to sell, if applicable, of the collateral compared to the loan's amortized cost. Upon adoption of ASU No. 2016-13 using the modified retrospective transition method and, based on our loan portfolio, the then current economic environment and expectations for future conditions, we recorded a cumulative-effect adjustment reducing our cumulative net income in our consolidated balance sheets by $6,595, establishing an allowance for credit losses of $4,893 with respect to our then outstanding loans held for investment and increasing accounts payable, accrued liabilities and other liabilities by $1,702 with respect to our then unfunded loan commitments. No reserve for loan losses or allowance for credit losses was recognized within our consolidated financial statements prior to our adoption of ASU No. 2016-13. We evaluate the credit quality of each of our loans 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 LTV, debt yield, collateral performance, structure, exit plan and sponsorship. Loans are rated “1” (less risk) through “5” (greater risk) 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” 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 3 for further information regarding our allowance for credit losses and our loan portfolio’s assessment under our internal risk rating policy.
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| Real Estate Owned | Real Estate Owned. Real estate owned is property acquired in full or partial settlement of loan obligations generally through foreclosure or by deed in lieu of foreclosure. Upon acquisition, we allocate the fair value of the real estate owned in accordance with ASC 805, Business Combinations. Upon acquisition, real estate owned is recognized at the fair value of the property at the time of acquisition. We allocate the purchase price to land, building and improvements, and acquired in place leases based on determinations of the relative fair values of these assets assuming the properties are vacant. The fair value of the property is determined using Level III inputs and standard industry valuation methods, including discounted cash flow analyses that are based on a number of factors, including capitalization rates and discount rates, among others, and sales comparisons. If the amortized cost of the loan exceeds the fair value of the property the difference is recorded through the allowance for credit losses as a write off. Conversely, if the fair value of the property exceeds the amortized cost of the loan, the difference is recorded through the allowance for credit losses as a recovery, with any excess recorded as a gain. Any related shortfall or excess of previously established allowances for credit losses is recognized in the consolidated statements of operations as a provision for or reversal of credit losses, respectively. Subsequent to acquisition, costs incurred related to improvements to the property are capitalized and depreciated over their estimated useful lives and costs related to the operation of the property are expensed as incurred. We recognize depreciation on a straight line basis over estimated useful lives generally ranging from 7 to 40 years. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of acquisition. We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. We amortize the value of acquired in place leases (included in acquired real estate leases, net in our consolidated balance sheets) over the terms of the associated leases. Such amortization is included in expenses from real estate owned in our consolidated statements of operations. We regularly evaluate real estate owned for indicators of impairment. Impairment indicators may include declining tenant occupancy, lack of progress leasing vacant space, tenant bankruptcies, low long term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. We determine the amount of any impairment loss by comparing the carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation methods.
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| Fair Value of Financial Instruments | Fair Value of Financial Instruments. We determine the estimated fair value of financial assets and liabilities using the three-tier fair value hierarchy established by GAAP, which prioritizes observable inputs in active markets when measuring fair value. The three levels of inputs that may be used to measure fair value in order of priority 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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| Loan Deferred Fees | Loan Deferred Fees. Loan origination and exit fees are fees charged to our borrowers and unamortized or unaccreted balances are reflected as a reduction in loans held for investment, net, in our consolidated balance sheets. These fees are recognized in interest income over the life of the related loans held for investment.
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| Deferred Financing Costs | Deferred Financing Costs. Costs incurred in connection with financings are capitalized and recorded as a reduction to the related liability in our consolidated balance sheets. Deferred financing costs are amortized over the term of the respective financing agreement and are recorded in our consolidated statements of operations as a component of interest and related expenses.
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| Net Income Per Common Share | Net Income Per Common Share. We calculate net income per common share - basic using the two class method. We calculate net income per common share - diluted using the more dilutive of the two class or treasury stock method. |
| Revenue Recognition | Revenue Recognition. Interest income related to our first mortgage loans secured by 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 until 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. We did not have any non-accrual loans as of December 31, 2024. 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 through our provision for credit losses. Revenue from real estate owned represents rental income from operating leases with tenants and is recognized on a straight line basis over the lease term.
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| New Accounting Pronouncements | ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, or ASU No. 2023-07, which requires public entities to: i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the Chief Operating Decision Maker, or the CODM, and included in each reported measure of segment profit or loss; ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by ASC 280, Segment Reporting, or ASC 280, in interim periods; and iii) disclose the CODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures. Public entities with a single reportable segment must apply all the disclosure requirements of ASU No. 2023-07, as well as all the existing segment disclosures under ASC 280. The amendments in ASU No. 2023-07 are incremental to the requirements in ASC 280 and do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. As a result, we have included additional information related to the required disclosures within Note 13 to our consolidated financial statements. New Accounting Pronouncements. In November 2024, the Financial Accounting Standards Board issued ASU No. 2024-03, Income Statement (Topic 220): Reporting Comprehensive Income - Expense Disaggregation Disclosures, or ASU No. 2024-03, which requires public entities to provide disaggregated disclosure of certain income statement expense captions within the footnotes to the financial statements. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact ASU No. 2024-03 will have on our consolidated financial statements and disclosures.
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Loans Held for Investment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Loans | The table below provides overall statistics for our loan portfolio as of December 31, 2024 and 2023:
(1)Unfunded loan commitments are primarily used to finance property improvements and leasing capital and are generally funded over the term of the loan. (2)All in yield represents the yield on a loan, including amortization of deferred fees over the initial term of the loan and excluding any purchase discount accretion. (3)Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions. The table below represents our loan activities during 2023 and 2024:
The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of December 31, 2024 and 2023:
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| Schedule of Carrying Value Excluding Allowance of Credit Losses | As of December 31, 2024 and 2023, the amortized cost of our loan portfolio within each internal risk rating by year of origination was as follows:
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| Schedule of Changes to Allowance for Credit Loss | The tables below present the changes to the allowance for credit losses during the years ended December 31, 2024 and 2023:
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Real Estate Owned (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Banking and Thrift, Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Assets and Liabilities of Real Estate Owned | The table below presents the assets and liabilities of real estate owned in our consolidated balance sheets:
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| Schedule of Operating Lease Maturity | The following operating lease maturity analysis presents the future contractual lease payments to be received by us through 2034 as of December 31, 2024:
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Secured Financing Agreements (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Secured Financing Agreements | The table below summarizes our Secured Financing Facilities as of December 31, 2024 and 2023:
(1)The weighted average coupon rate is determined using SOFR plus a spread ranging from 1.83% to 2.95%, as applicable, for the respective borrowings under our Secured Financing Facilities as of the applicable date. (2)The weighted average remaining maturity of our Master Repurchase Facilities is determined using the earlier of the underlying loan investment maturity date and the respective repurchase agreement maturity date. The weighted average remaining maturity of the BMO Facility is determined using the underlying loan investment maturity date.
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| Schedule of Maturities of Long-term Debt | As of December 31, 2024, our outstanding borrowings under our Secured Financing Facilities had the following remaining maturities:
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Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The table below provides information regarding our financial assets and liabilities not carried at fair value in our consolidated balance sheets:
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Shareholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Unvested Share Activity | A summary of shares granted, forfeited, vested and unvested under the terms of the 2021 Plan for the years ended December 31, 2024 and 2023 is as follows:
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| Schedule of Dividends Declared | During the years ended December 31, 2024 and 2023, we declared and paid regular quarterly distributions to common shareholders, using cash on hand, as follows:
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Weighted Average Common Shares (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Weighted Average Number of Shares | The calculation of net income per common share - basic and diluted is as follows (amounts in thousands, except per share data):
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Loans Held for Investment - Loan Portfolio Statistics (Details) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
|
Dec. 31, 2024
USD ($)
loan
|
Dec. 31, 2023
USD ($)
loan
|
Dec. 31, 2022
USD ($)
|
|
| Receivables [Abstract] | |||
| Number of loans | loan | 21 | 24 | |
| Total loan commitments | $ 641,213 | $ 670,293 | |
| Unfunded loan commitments | 30,402 | 40,401 | |
| Principal balance | 610,811 | 629,892 | $ 678,555 |
| Carrying value | $ 601,842 | $ 622,086 | |
| Weighted average coupon rate | 8.24% | 9.19% | |
| Weighted average all in yield | 8.62% | 9.64% | |
| Weighted average floor | 2.12% | 1.36% | |
| Weighted average maximum maturity (years) | 2 years 7 months 6 days | 3 years | |
| Weighted average risk rating | 3.1 | 3.0 | |
Loans Held for Investment - Loan Activity (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Principal Balance | ||
| Principal, beginning balance | $ 629,892 | $ 678,555 |
| Additional funding | 12,492 | 5,650 |
| Originations | 133,817 | 133,300 |
| Repayments | (165,390) | (171,748) |
| Transfer to real estate owned | (15,865) | |
| Principal, ending balance | 610,811 | 629,892 |
| Deferred Fees and Other Items | ||
| Beginning balance | (3,430) | (8,626) |
| Additional funding | (158) | (14) |
| Originations | (1,757) | (1,621) |
| Repayments | (594) | (535) |
| Transfer to real estate owned | (95) | |
| Net amortization of deferred fees | 2,697 | 3,333 |
| Purchase discount accretion | 2,347 | 4,128 |
| Ending balance | (895) | (3,430) |
| Amortized Cost | ||
| Beginning balance | 626,462 | 669,929 |
| Additional funding | 12,334 | 5,636 |
| Originations | 132,060 | 131,679 |
| Repayments | (165,984) | (172,283) |
| Transfer to real estate owned | (15,960) | |
| Net amortization of deferred fees | 2,697 | 3,333 |
| Purchase discount accretion | 2,347 | 4,128 |
| Ending balance | $ 609,916 | $ 626,462 |
Real Estate Owned - Schedule of Assets and Liabilities of Real Estate Owned (Details) - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Total real estate owned | $ 11,735 | $ 11,393 |
| Less: accumulated depreciation | (548) | (115) |
| Real estate owned, net | 11,187 | 11,278 |
| Acquired real estate leases | 4,352 | 4,595 |
| Less: accumulated amortization | (986) | (458) |
| Acquired real estate leases, net | 3,366 | 4,137 |
| Prepaid expenses and other assets, net | 1,826 | 1,352 |
| Total assets | 16,379 | 16,767 |
| Accounts payable, accrued liabilities and other liabilities | 501 | 517 |
| Total liabilities | 501 | 517 |
| Straight line rent receivables | 1,094 | 647 |
| Land | ||
| Property, Plant and Equipment [Line Items] | ||
| Total real estate owned | 2,880 | 2,880 |
| Building and improvements | ||
| Property, Plant and Equipment [Line Items] | ||
| Total real estate owned | 7,354 | 7,349 |
| Tenant improvements | ||
| Property, Plant and Equipment [Line Items] | ||
| Total real estate owned | $ 1,501 | $ 1,164 |
Real Estate Owned - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Banking and Thrift, Interest [Abstract] | ||
| Straight line rent adjustments | $ 447 | $ 647 |
| Real estate amortization expense | 771 | $ 458 |
| Future amortization of acquired place lease 2025 | 594 | |
| Future amortization of acquired place lease 2026 | 493 | |
| Future amortization of acquired place lease 2027 | 493 | |
| Future amortization of acquired place lease 2028 | 466 | |
| Future amortization of acquired place lease 2029 | 446 | |
| Future amortization of acquired place lease thereafter | $ 874 | |
| Acquired lease term (in years) | 6 years 10 months 24 days | 7 years 4 months 24 days |
Real Estate Owned - Schedule of Operating Lease Maturity (Details) $ in Thousands |
Dec. 31, 2024
USD ($)
|
|---|---|
| Banking and Thrift, Interest [Abstract] | |
| 2025 | $ 2,090 |
| 2026 | 2,034 |
| 2027 | 2,108 |
| 2028 | 2,090 |
| 2029 | 2,052 |
| Thereafter | 4,100 |
| Total | $ 14,474 |
Secured Financing Agreements - Narrative (Details) - Total/weighted average - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Assets Sold under Agreements to Repurchase [Line Items] | ||
| Maximum facility size | $ 740,000 | $ 695,000 |
| Wells Fargo Master Repurchase Facility | Minimum | ||
| Assets Sold under Agreements to Repurchase [Line Items] | ||
| Percent of purchased asset | 75.00% | |
| Wells Fargo Master Repurchase Facility | Maximum | ||
| Assets Sold under Agreements to Repurchase [Line Items] | ||
| Percent of purchased asset | 80.00% | |
| BMO Facility | ||
| Assets Sold under Agreements to Repurchase [Line Items] | ||
| Minimum percentage of margin to advance | 80.00% | |
| Percentage of loan guaranteed | 25.00% | |
| UBS Master Repurchase Facility | ||
| Assets Sold under Agreements to Repurchase [Line Items] | ||
| Maximum facility size | $ 250,000 |
Secured Financing Agreements - Debt Maturities (Details) - Total/weighted average $ in Thousands |
Dec. 31, 2024
USD ($)
|
|---|---|
| Debt Instrument [Line Items] | |
| 2025 | $ 255,765 |
| 2026 | 147,769 |
| 2027 | 16,088 |
| 2028 and thereafter | 0 |
| Total | $ 419,622 |
Fair Value Measurements - Recurring Fair Value (Details) - Level III - USD ($) $ in Thousands |
Dec. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Carrying Value | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Loans held for investment | $ 601,842 | $ 622,086 |
| Secured Financing Facilities | 417,796 | 454,422 |
| Fair Value | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Loans held for investment | 603,558 | 626,079 |
| Secured Financing Facilities | $ 418,492 | $ 454,620 |
Shareholders' Equity - Nonvested Share Activity (Details) - Restricted Unvested Common Shares - 2021 Equity Compensation Plan - $ / shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Number of Shares | ||
| Unvested shares, beginning of year (in shares) | 136,421 | 129,680 |
| Shares granted (in shares) | 119,528 | 122,000 |
| Shares forfeited (in shares) | 0 | (2,334) |
| Shares vested (in shares) | (108,887) | (112,925) |
| Unvested shares, end of year (in shares) | 147,062 | 136,421 |
| Weighted Average Grant Date Fair Value | ||
| Unvested shares, beginning of year (in dollars per share) | $ 10.57 | $ 10.24 |
| Shares granted (in dollars per share) | 0 | 10.35 |
| Shares forfeited (in dollars per share) | 13.35 | 10.19 |
| Shares vested (in dollars per share) | 11.58 | 9.96 |
| Unvested shares, end of year (in dollars per share) | $ 12.07 | $ 10.57 |
Shareholders' Equity - Repurchases and Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Equity [Abstract] | ||
| Annual Per Share Distribution (in dollars per share) | $ 1.40 | $ 1.40 |
| Total Distribution | $ 20,772 | $ 20,639 |
| Return of Capital | 0.00% | 0.00% |
| Ordinary Income | 100.00% | 100.00% |
| Qualified Dividend | 0.00% | 0.00% |
Management Agreement with Tremont (Details) $ in Thousands |
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2024
USD ($)
employee
|
Jan. 05, 2021 |
|
| Related Party Transaction [Line Items] | ||
| Number of employees | employee | 0 | |
| Annualized base management fee | 1.50% | |
| Quarterly base management fee | 0.375% | |
| Incentive fee percentage | 20.00% | |
| Base management fee, percent of equity | 7.00% | |
| Management agreement term | 1 year | |
| Management agreement, termination rights, affirmative vote threshold, percentage | 66.67% | |
| Management agreement terminated upon written notice delivered term | 180 days | |
| Management agreement, terminated upon written notice, cause event term | 30 days | |
| Management agreement termination fee | 3 | |
| Termination fee calculation period | 24 months | |
| Exit fees | $ 1,600 | |
| Formation costs included in termination fee | $ 6,680 | |
| Shared Service Costs | Principal Owner | ||
| Related Party Transaction [Line Items] | ||
| Percent threshold to be considered employee of manager | 50.00% |
Related Person Transactions (Details) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jul. 31, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| The RMR Group Inc | |||
| Related Party Transaction [Line Items] | |||
| Property management agreement, termination notice period | 30 days | ||
| RMR Group | |||
| Related Party Transaction [Line Items] | |||
| Real estate owned, property management and construction supervision fees | $ 71 | $ 17 | |
| Management Services | Tremont Realty Advisors LLC | |||
| Related Party Transaction [Line Items] | |||
| Shares owned by related party (in shares) | 1,708,058 | ||
| Ownership percentage | 11.50% | ||
| Management Services | Affiliated Entity | Diane Portnoy | |||
| Related Party Transaction [Line Items] | |||
| Ownership percentage | 13.50% | ||
| Property Management Services | The RMR Group Inc | |||
| Related Party Transaction [Line Items] | |||
| Property management fee, percent fee | 3.00% | ||
| Construction Supervision Services | The RMR Group Inc | |||
| Related Party Transaction [Line Items] | |||
| Property management fee, percent fee | 5.00% | ||
Weighted Average Common Shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Numerators: | ||
| Net income | $ 17,820 | $ 25,965 |
| Income attributable to unvested share awards | (184) | (219) |
| Net income used in calculating net income per common share, basic | 17,636 | 25,746 |
| Net income used in calculating net income per common share, diluted | $ 17,636 | $ 25,746 |
| Denominators: | ||
| Weighted average common shares outstanding - basic (in shares) | 14,712 | 14,625 |
| Weighted average common shares outstanding - diluted (in shares) | 14,712 | 14,625 |
| Net income per common share, basic (in dollars per share) | $ 1.20 | $ 1.76 |
| Net income per common share, diluted (in dollars per share) | $ 1.20 | $ 1.76 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Loss Contingencies [Line Items] | ||
| Unfunded loan commitments | $ 30,402 | $ 40,401 |
| Weighted average initial maturity | 2 years 7 months 6 days | 3 years |
| Unfunded Commitments | ||
| Loss Contingencies [Line Items] | ||
| Weighted average initial maturity | 1 year 2 months 12 days | |
Segment Reporting (Details) |
12 Months Ended |
|---|---|
|
Dec. 31, 2024
segment
| |
| Segment Reporting [Abstract] | |
| Number of reportable segments | 1 |
Schedule IV - Mortgage Loans on Real Estate - Reconciliation of Mortgage Loans on Real Estate (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2024 |
Dec. 31, 2023 |
|
| Principal Balance | ||
| Beginning balance | $ 622,086 | $ 669,929 |
| Additions during the year: | ||
| Originations | 133,817 | 133,300 |
| Additional funding | 12,334 | 5,636 |
| Purchase discount accretion | 2,347 | 4,128 |
| Net amortization of deferred fees | 2,697 | 3,333 |
| Increase drcrease in allowance for credit losses | (3,698) | 517 |
| Deductions during the year: | ||
| Repayments | (165,984) | (172,283) |
| Transfer to real estate owned | 15,960 | |
| Deferred fees | (2,509) | (1,621) |
| Ending balance | 601,842 | 622,086 |
| Cumulative Effect, Period of Adoption, Adjustment | ||
| Principal Balance | ||
| Beginning balance | $ (4,893) | |
| Deductions during the year: | ||
| Ending balance | $ (4,893) | |