Tremont Realty Capital’s David Ross on REITs and More Under One Roof

By Published On: February 9, 20223.9 min read

To further Leverage.com’s mission of democratizing knowledge about commercial real estate, we started an interview series with all kinds of CREF pros: everyone from multifamily and medical to cannabis and construction. This time we connected with David Ross, Managing Director of Capital Markets at Tremont Realty Capital.

Here’s how the conversation went:

What does Tremont Realty Capital do?

Tremont is the debt arm of The RMR Group and manages Seven Hills Realty Trust, a mortgage REIT focused on first mortgage loans secured by middle market commercial real estate. We originate, underwrite, close and asset manage the SEVN loans.

Can you describe the Tremont loan program?

Tremont’s lending program is focused on senior “light transition” commercial real estate loans from $15M to $75M. Our property focus includes multifamily, industrial, office, retail, self-storage, manufactured housing, hospitality and life sciences real estate. Loan terms are typically 3 to 5 years, interest only and non-recourse. Leverage depends on many factors but is usually in the 65% to 75% range.

When we say light transition loans, we are really looking for deals that either have enough cash flow going in to provide a reasonable debt yield, or the sponsor/borrower has leases in hand to mitigate some of the near term cash flow risk. In exchange for the latter, we aim to provide very competitive pricing and certainty of execution.

A Tremont Realty property in Portland OR.

Image provided by Tremont Realty Capital

Help us understand The RMR Group: how it functions, what its components are and what makes it special. How do Seven Hills Realty Trust and Tremont Realty Capital connect and support each other under the RMR umbrella?

The RMR Group (Nasdaq: RMR) is an alternative asset management company focusing on commercial real estate. RMR manages a number of publicly traded REITs and real estate related operating companies including Service Properties Trust (Nasdaq: SVC), Diversified Healthcare Trust (Nasdaq: DHC), Office Properties Income Trust (Nasdaq: OPI), Industrial Logistics Properties Trust (Nasdaq: ILPT), TravelCenters of America (Nasdaq: TA), AlerisLife Inc. (Nasdaq: ALR), and Sonesta International Hotels Corporation.

Tremont Realty Capital, the commercial real estate finance division of RMR, manages Seven Hills Realty Trust (Nasdaq: SEVN), a mortgage REIT that provides the capital for Tremont’s bridge loans. Tremont has access to and the support of RMR’s vast platform, including more than 600 employees in over 30 offices who manage over $32 billion in assets nationwide, in underwriting and asset managing the SEVN loans.

A Tremont Realty property in Berkley CA.

Image provided by Tremont Realty Capital

What types of deals are you closing these days?

Our recently closed loans have included multifamily, industrial, grocery anchored retail, office, student housing, and life science assets. In many cases, borrowers are seeking bridge financing for stabilized or near stabilized assets in an effort to avoid onerous prepayment penalties associated with CMBS or life company loans in order to have near and mid-term flexibility for their exit.

What differentiates Tremont’s loan program?

Being part of The RMR Group provides Tremont with a lot of real estate expertise and resources. We understand the owner’s perspective because of our experience managing commercial real estate. RMR’s broad geographic ownership and diverse property portfolio allows us to get up to speed on markets and business plan viability very quickly.

We also find that buyers really like our front-end approval process. Our Investment Committee approves loan requests prior to loan application, which provides our borrowers with a higher comfort level than they can get from other lenders who typically may not seek formal approval until after third-party reports are back.

Another big differentiator is that we are a balance sheet lender and we asset manage all our loans. We don’t intend to sell our loans and we do not securitize or use a CLO execution. The closing team assigned to the loan lives with the loan so they are familiar with the borrower, the property and the business plan. This should provide our borrowers with peace of mind, especially if a loan involves draw requests or lease approvals.

A Tremont Realty property in Miami FL.

Image provided by Tremont Realty Capital

What are your goals for 2022?

We are optimistic about 2022. Tremont has plenty of dry powder available to it and is intent on continuing our momentum into 2022. While the entire CRE industry may continue to be impacted with COVID concerns, we remain optimistic. We plan to reach nearly $1 billion in assets by mid-year 2022, which represents substantial growth compared to approximately $525 million in total loan commitments at the end of the third quarter of 2021.[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

Tremont Realty Capital’s David Ross on REITs and More Under One Roof

By Published On: February 9, 20223.9 min read

To further Leverage.com’s mission of democratizing knowledge about commercial real estate, we started an interview series with all kinds of CREF pros: everyone from multifamily and medical to cannabis and construction. This time we connected with David Ross, Managing Director of Capital Markets at Tremont Realty Capital.

Here’s how the conversation went:

What does Tremont Realty Capital do?

Tremont is the debt arm of The RMR Group and manages Seven Hills Realty Trust, a mortgage REIT focused on first mortgage loans secured by middle market commercial real estate. We originate, underwrite, close and asset manage the SEVN loans.

Can you describe the Tremont loan program?

Tremont’s lending program is focused on senior “light transition” commercial real estate loans from $15M to $75M. Our property focus includes multifamily, industrial, office, retail, self-storage, manufactured housing, hospitality and life sciences real estate. Loan terms are typically 3 to 5 years, interest only and non-recourse. Leverage depends on many factors but is usually in the 65% to 75% range.

When we say light transition loans, we are really looking for deals that either have enough cash flow going in to provide a reasonable debt yield, or the sponsor/borrower has leases in hand to mitigate some of the near term cash flow risk. In exchange for the latter, we aim to provide very competitive pricing and certainty of execution.

A Tremont Realty property in Portland OR.

Image provided by Tremont Realty Capital

Help us understand The RMR Group: how it functions, what its components are and what makes it special. How do Seven Hills Realty Trust and Tremont Realty Capital connect and support each other under the RMR umbrella?

The RMR Group (Nasdaq: RMR) is an alternative asset management company focusing on commercial real estate. RMR manages a number of publicly traded REITs and real estate related operating companies including Service Properties Trust (Nasdaq: SVC), Diversified Healthcare Trust (Nasdaq: DHC), Office Properties Income Trust (Nasdaq: OPI), Industrial Logistics Properties Trust (Nasdaq: ILPT), TravelCenters of America (Nasdaq: TA), AlerisLife Inc. (Nasdaq: ALR), and Sonesta International Hotels Corporation.

Tremont Realty Capital, the commercial real estate finance division of RMR, manages Seven Hills Realty Trust (Nasdaq: SEVN), a mortgage REIT that provides the capital for Tremont’s bridge loans. Tremont has access to and the support of RMR’s vast platform, including more than 600 employees in over 30 offices who manage over $32 billion in assets nationwide, in underwriting and asset managing the SEVN loans.

A Tremont Realty property in Berkley CA.

Image provided by Tremont Realty Capital

What types of deals are you closing these days?

Our recently closed loans have included multifamily, industrial, grocery anchored retail, office, student housing, and life science assets. In many cases, borrowers are seeking bridge financing for stabilized or near stabilized assets in an effort to avoid onerous prepayment penalties associated with CMBS or life company loans in order to have near and mid-term flexibility for their exit.

What differentiates Tremont’s loan program?

Being part of The RMR Group provides Tremont with a lot of real estate expertise and resources. We understand the owner’s perspective because of our experience managing commercial real estate. RMR’s broad geographic ownership and diverse property portfolio allows us to get up to speed on markets and business plan viability very quickly.

We also find that buyers really like our front-end approval process. Our Investment Committee approves loan requests prior to loan application, which provides our borrowers with a higher comfort level than they can get from other lenders who typically may not seek formal approval until after third-party reports are back.

Another big differentiator is that we are a balance sheet lender and we asset manage all our loans. We don’t intend to sell our loans and we do not securitize or use a CLO execution. The closing team assigned to the loan lives with the loan so they are familiar with the borrower, the property and the business plan. This should provide our borrowers with peace of mind, especially if a loan involves draw requests or lease approvals.

A Tremont Realty property in Miami FL.

Image provided by Tremont Realty Capital

What are your goals for 2022?

We are optimistic about 2022. Tremont has plenty of dry powder available to it and is intent on continuing our momentum into 2022. While the entire CRE industry may continue to be impacted with COVID concerns, we remain optimistic. We plan to reach nearly $1 billion in assets by mid-year 2022, which represents substantial growth compared to approximately $525 million in total loan commitments at the end of the third quarter of 2021.[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

Tremont Realty Capital’s David Ross on REITs and More Under One Roof

By Published On: February 9, 20223.9 min read

To further Leverage.com’s mission of democratizing knowledge about commercial real estate, we started an interview series with all kinds of CREF pros: everyone from multifamily and medical to cannabis and construction. This time we connected with David Ross, Managing Director of Capital Markets at Tremont Realty Capital.

Here’s how the conversation went:

What does Tremont Realty Capital do?

Tremont is the debt arm of The RMR Group and manages Seven Hills Realty Trust, a mortgage REIT focused on first mortgage loans secured by middle market commercial real estate. We originate, underwrite, close and asset manage the SEVN loans.

Can you describe the Tremont loan program?

Tremont’s lending program is focused on senior “light transition” commercial real estate loans from $15M to $75M. Our property focus includes multifamily, industrial, office, retail, self-storage, manufactured housing, hospitality and life sciences real estate. Loan terms are typically 3 to 5 years, interest only and non-recourse. Leverage depends on many factors but is usually in the 65% to 75% range.

When we say light transition loans, we are really looking for deals that either have enough cash flow going in to provide a reasonable debt yield, or the sponsor/borrower has leases in hand to mitigate some of the near term cash flow risk. In exchange for the latter, we aim to provide very competitive pricing and certainty of execution.

A Tremont Realty property in Portland OR.

Image provided by Tremont Realty Capital

Help us understand The RMR Group: how it functions, what its components are and what makes it special. How do Seven Hills Realty Trust and Tremont Realty Capital connect and support each other under the RMR umbrella?

The RMR Group (Nasdaq: RMR) is an alternative asset management company focusing on commercial real estate. RMR manages a number of publicly traded REITs and real estate related operating companies including Service Properties Trust (Nasdaq: SVC), Diversified Healthcare Trust (Nasdaq: DHC), Office Properties Income Trust (Nasdaq: OPI), Industrial Logistics Properties Trust (Nasdaq: ILPT), TravelCenters of America (Nasdaq: TA), AlerisLife Inc. (Nasdaq: ALR), and Sonesta International Hotels Corporation.

Tremont Realty Capital, the commercial real estate finance division of RMR, manages Seven Hills Realty Trust (Nasdaq: SEVN), a mortgage REIT that provides the capital for Tremont’s bridge loans. Tremont has access to and the support of RMR’s vast platform, including more than 600 employees in over 30 offices who manage over $32 billion in assets nationwide, in underwriting and asset managing the SEVN loans.

A Tremont Realty property in Berkley CA.

Image provided by Tremont Realty Capital

What types of deals are you closing these days?

Our recently closed loans have included multifamily, industrial, grocery anchored retail, office, student housing, and life science assets. In many cases, borrowers are seeking bridge financing for stabilized or near stabilized assets in an effort to avoid onerous prepayment penalties associated with CMBS or life company loans in order to have near and mid-term flexibility for their exit.

What differentiates Tremont’s loan program?

Being part of The RMR Group provides Tremont with a lot of real estate expertise and resources. We understand the owner’s perspective because of our experience managing commercial real estate. RMR’s broad geographic ownership and diverse property portfolio allows us to get up to speed on markets and business plan viability very quickly.

We also find that buyers really like our front-end approval process. Our Investment Committee approves loan requests prior to loan application, which provides our borrowers with a higher comfort level than they can get from other lenders who typically may not seek formal approval until after third-party reports are back.

Another big differentiator is that we are a balance sheet lender and we asset manage all our loans. We don’t intend to sell our loans and we do not securitize or use a CLO execution. The closing team assigned to the loan lives with the loan so they are familiar with the borrower, the property and the business plan. This should provide our borrowers with peace of mind, especially if a loan involves draw requests or lease approvals.

A Tremont Realty property in Miami FL.

Image provided by Tremont Realty Capital

What are your goals for 2022?

We are optimistic about 2022. Tremont has plenty of dry powder available to it and is intent on continuing our momentum into 2022. While the entire CRE industry may continue to be impacted with COVID concerns, we remain optimistic. We plan to reach nearly $1 billion in assets by mid-year 2022, which represents substantial growth compared to approximately $525 million in total loan commitments at the end of the third quarter of 2021.[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

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