What changed in this filing

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Item 4. Controls and Procedures

2021-08-03 compared with 2021-05-07 · 27 added, 27 removed, 77 unchanged (41% of the section changed)

2 unchanged sentences

Based upon that evaluation, our President and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.

During the first quarter of fiscal 2021, we began to proceed with full implementation of the Business Change, resulting in changes to certain of our existing internal controls over financial reporting.

Reviews have been and will continue to be conducted by management to ensure that internal controls surrounding the implementation of the Business Change are properly designed.

We will continue to evaluate our internal controls over financial reporting as we continue this implementation .

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2021 that

have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Warning Concerning Forward-Looking Statements

5 unchanged sentences

• Our expectation that our shareholders will benefit from the Merger;

• The duration and severity of the economic downturn resulting from the COVID-19 pandemic and its impact on us and our borrowers and their ability and willingness to fund their debt service obligations owed to us,

• The likelihood and extent to which our borrowers will be negatively impacted by the COVID-19 pandemic and its aftermath and be able and willing to fund their debt service obligations owed to us,

• The risks associated with the ability to consummate the Merger and the other Transactions;

• The risk that the anticipated benefits from the Merger may not be realized or may take longer to realize than

expected, including as a result of the failure to obtain the required approvals of our and TRMT’s shareholders;

• Unexpected costs or unexpected liabilities that may arise from the Merger or the other Transactions, whether or not

• The occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement or the failure to satisfy the closing conditions;

• The duration and severity of the COVID-19 pandemic and its impact on us and our borrowers and their ability and willingness to fund their debt service obligations to us;

• Our expectations about our borrowers’ business plans and their abilities to successfully execute them;

• Our expectations regarding the diversity and other characteristics of our loan investment portfolio,

• Our expectations regarding the diversity and other characteristics of our loan portfolio;

• Our ability to carry out our business strategy and take advantage of opportunities for our business that we believe exist;

19 unchanged sentences

• Market trends in our industry or with respect to interest rates, real estate values, the debt securities markets or the economy generally;

• Regulatory requirements and the effect they may have on us or our competitors, and

• Other matters.

• Regulatory requirements and the effect they may have on us or our competitors.

Our actual results may differ materially from those contained in or implied by our forward-looking statements.

Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control.

Risks, uncertainties and other factors that could have a material adverse effect on our forward-looking statements and upon our business, financial condition, liquidity, results of operations, cash flow, prospects and ability to make distributions include, but are not limited to:

Risks, uncertainties and other factors that could have a material adverse effect on our forward-looking statements and upon our business, financial condition, liquidity, results of operations, cash flows, prospects and ability to make distributions include, but are not limited to:

• The impact of conditions in the economy, the CRE industry and the capital markets on us and our borrowers,

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federal income tax purposes,

• Actual and potential conflicts of interest with our related parties, including our Managing Trustees, our Manager, RMR LLC, and others affiliated with them,

• Acts of terrorism, outbreaks of pandemics, including the COVID-19 pandemic, or other manmade or natural disasters beyond our control, and

• Additional factors, including, but not limited to, those set forth in Exhibit 99.1 "Risk Factors" included in our Form 8-K filed on March 24, 2021.

• We have a limited operating history originating and investing in first mortgage whole loans secured by middle market and transitional CRE and we may not be able to operate our business successfully or generate sufficient revenue to make or sustain distributions to our shareholders,

• Actual and potential conflicts of interest with our related parties, including our Managing Trustees, our Manager, RMR LLC, and others affiliated with them, and

• Acts of terrorism, outbreaks of pandemics, including the COVID-19 pandemic, or other manmade or natural disasters beyond our control.

• We have a limited operating history originating and investing in first mortgage loans secured by middle market and transitional CRE and we may not be able to operate our business successfully or generate sufficient revenue to make or sustain distributions to our shareholders,

• To make additional investments and continue to grow our business, we will need to obtain additional cost-effective capital.

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• Our distributions and distribution rate are set from time to time by our Board of Trustees.

The timing, amount and form of future distributions will be determined at the discretion of our Board of Trustees and will depend upon various factors that our Board of Trustees deems relevant, including our historical and projected income, our Distributable Earnings, the then-current and expected needs and availability of cash to pay our obligations and fund our investments, distributions which may be required to be paid by us to qualify for taxation as a REIT, limitations on distributions contained in our financing arrangements and other factors deemed relevant by our Board of Trustees in its discretion.

Accordingly, future distribution rates may be increased or decreased and there is no assurance as to the rate at which future distributions will be paid.

in its discretion.

Accordingly, our future distribution rates may be increased or decreased and we can provide no assurances as to the rate at which future distributions will be paid.

• Competition may limit our ability to identify and make desirable investments,

• Our belief that there will be strong demand for alternative sources of CRE debt capital when the U.S.

economy improves and returns to a more stable state for a sustained period may not be correct,

• Our belief that there will be strong demand for alternative sources of CRE debt capital as the U.S.

economy continues to improve and return to a more stable state may not be correct,

• The value of our loans depends upon our borrowers’ ability to generate cash flows from operating the underlying collateral for our loans.

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• Our failure to qualify for taxation as a REIT could have significant adverse consequences,

• We have entered into a Merger Agreement with TRMT and that the Merger is expected to close in the third quarter of 2021.

The closing of the Merger is subject to the satisfaction or waiver of conditions, including the receipt of requisite approvals by our and TRMT’s shareholders.

We cannot be sure that these conditions will be satisfied or waived.

Accordingly, the Merger may not close by the end of the third quarter of 2021 or at all, or the terms of the Merger and the other Transactions may change,

• The Merger will require approval of TRMT's shareholders and the Merger Share Issuance will require approval of our shareholders.

Such approvals will be solicited by a joint proxy statement/prospectus to be included in the Form S-4 which must be filed with and declared effective by the SEC.

The process of preparing the Form S-4 and related joint proxy statement/prospectus is time consuming and the time before the SEC declares the registration statement effective is beyond our and TRMT’s control.

Accordingly, we cannot be sure that the Merger and the other Transactions will be consummated within a specified time period or at all, and

• This Quarterly Report on Form 10-Q states that the Merger, the Merger Share Issuance and the other Transactions and the terms thereof were evaluated, negotiated and recommended to each of our and TRMT’s board of trustees by special committees of our and TRMT’s board of trustees, respectively, each comprised solely of our and TRMT’s disinterested, independent trustees, respectively, and were separately unanimously approved and adopted by our and TRMT’s independent trustees and by our and TRMT’s board of trustees, and that UBS Securities LLC and Citigroup Global Markets Inc.

• Although we have entered into the Merger Agreement and we expect the Merger to close during the third quarter of 2021, the closing of the Merger is subject to the satisfaction or waiver of conditions, including the receipt of requisite approvals by our and TRMT’s shareholders.

We cannot be sure that any or all of these conditions will be

satisfied or waived.

Accordingly, the Merger may not close when expected or at all, or the terms of the Merger and the other Transactions may change, and

• This Quarterly Report on Form 10-Q states that the Merger, the Merger Share Issuance and the other Transactions and the terms thereof were evaluated, negotiated and recommended to each of our and TRMT’s board of trustees by special committees of our and TRMT’s board of trustees, respectively, each consisting solely of our and TRMT’s disinterested, independent trustees, respectively, and were separately unanimously approved and adopted by our and TRMT’s independent trustees and by our and TRMT’s board of trustees, and that UBS Securities LLC and Citigroup Global Markets Inc.

acted as a financial advisor to each of the special committees of our and TRMT’s board of trustees, respectively.

Despite this process, we could be subject to claims challenging the Merger or the other Transactions or our entry into the Merger and related agreements because of the multiple relationships among us, TRMT, TRA, RMR LLC, RMR Inc.

Despite this process, we have been subject to, and could be subject to additional claims challenging the Merger and the other Transactions or our entry into the Merger Agreement and related agreements because of the multiple relationships among us, TRMT, TRA, RMR LLC, RMR Inc.

and their related persons and entities or other reasons, and defending even meritless claims could be expensive and distracting to management.

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Other Information

Legal Proceedings

Information regarding our legal proceedings and claims is included in Note 13 to our condensed consolidated financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 4. Controls and Procedures