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NEWTON, Mass.–(BUSINESS WIRE)–RMR Mortgage Trust (Nasdaq: RMRM) today announced its regular quarterly distribution to common shareholders. The distribution of $0.10 per common share will be paid on or about September 30, 2020 to holders of record of common shares as of the close of business on September 22, 2020. RMRM’s distribution was approved by its Board of Trustees under RMRM’s managed distribution policy in accordance with exemptive relief issued by the Securities and Exchange Commission.

The following table provides RMRM’s estimated distribution sources for the distribution declared today on common shares for the quarter ending September 30, 2020 from the sources indicated pursuant to Section 19(a) of the Investment Company Act of 1940, as amended or the 1940 Act.

 

Quarter to date

 

Year to date

 

Per Share

 

% of

 

Per Share

 

% of

 

Source

Amount

 

Distribution

 

Amount

 

Distribution

Net investment income

$0.10

 

100.00%

 

$0.45

 

84.90%

 

Net realized short term capital gains

$0.00

 

0.00%

 

$0.00

 

0.00%

 

Net realized long term capital gains

$0.00

 

0.00%

 

$0.08

 

15.10%

 

Return of capital

$0.00

 

0.00%

 

$0.00

 

0.00%

 

Total distribution

$0.10

 

100.00%

 

$0.53

 

100.00%

 

 

RMRM’s net investment income is based on an estimate of the excess of cash distributions received from its investments less its operating expenses, interest expense and distributions to preferred shareholders for the periods presented. RMRM has substantial investments in real estate investment trusts, or REITs, which generally will characterize distributions to their shareholders, including RMRM, as ordinary income, net capital gain or return of capital. However, it is not possible for RMRM to characterize distributions received from REITs during interim periods because the REIT issuers do not report the tax characterization of their distributions until subsequent to year end. Therefore, it is likely that some portion of RMRM’s net investment income, and thus RMRM’s distributions to its common shareholders estimated to be from net investment income, will be recharacterized as net capital gain and/or return of capital subsequent to year end.

You should not draw any conclusions about the RMRM’s investment performance from the amount of this distribution or from the terms of RMRM’s managed distribution policy. The amounts and sources of distribution reported in this press release are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon RMRM’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. RMRM will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.

RMRM Performance and Distribution Rate Information Based on Net Asset Value:

RMRM’s year to date cumulative total return for 2020 (January 1, 2020 through August 31, 2020) is set forth below. RMRM’s average annual total return for the five-year period ending August 31, 2020 is also set forth below.

Year to date: January 1, 2020 to August 31, 2020

Cumulative total return1

(26.54%)

Cumulative distribution rate2

3.00%

 

 

Five year period ending August 31, 2020

 

Average annual total return3

1.05%

Current annualized distribution rate4

2.26%

  1. The cumulative total return is the percentage change in net asset value, or NAV, per common share from the last completed fiscal year to the NAV per common share on the last day of the period indicated assuming distributions paid are reinvested at NAV per common share on the ex-dividend dates.
  2. Cumulative distribution rate is the cumulative distribution per common share declared in 2020 as of the date of this press release as a percentage of the NAV per common share as of August 31, 2020.
  3. Average annual total return is the annualized percentage change in the RMRM’s NAV over the five year period ending August 31, 2020, including distributions paid and assuming that the distributions paid are reinvested at NAV on the ex-dividend dates.
  4. The current annualized distribution rate is the current annualized distribution rate as a percentage of the NAV per common share as of August 31, 2020.

Performance results reflect past performance and are no guarantee of future results. Investment return and principal value of shares will fluctuate so that shares, when sold, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted.

RMRM has historically operated as closed end investment company advised by RMR Advisors LLC but is in the process of transitioning to a mortgage REIT. RMR Advisors LLC is a wholly owned subsidiary of The RMR Group LLC, an alternative asset management company that is the majority owned operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), which is headquartered in Newton, MA. On April 16, 2020, shareholders approved RMRM’s conversion from a registered investment company to a commercial mortgage REIT and amended RMRM’s fundamental investment policies and restrictions to permit RMRM to pursue its new business. RMRM is in the process of realigning its portfolio so that it is no longer an “investment company” under the Investment Company Act of 1940 and has filed an application with the SEC for a Deregistration Order. RMRM intends to sell its existing investments and transition its portfolio into commercial mortgages as opportunities within the new investment scope arise, subject to compliance requirements and other business considerations. After deregistration, the Board of Trustees anticipates RMRM would terminate its existing investment advisory agreement and enter into a new management agreement with its Advisor or an affiliate of the Advisor to provide day-to-day management.

WARNINGS REGARDING FORWARD-LOOKING STATEMENTS

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based upon RMRM’s present intent, beliefs and expectations, but forward-looking statements are not guaranteed to occur and may not occur for numerous reasons, some of which are beyond RMRM’s control. For example:

  • This press release describes RMRM’s distribution of $0.10 per common share as a regular quarterly distribution and refers to RMRM’s managed distribution policy. The implications of these statements may be that RMRM will consistently pay a distribution of $0.10 per share for each quarter. In fact, the amount of distributions paid by RMRM in the future will depend primarily upon RMRM’s future earnings. RMRM can provide no assurance that its future earnings will be sufficient to enable RMRM to pay a fixed quarterly distribution of $0.10 per share. The Board of Trustees of RMRM may amend, terminate or suspend the managed distribution policy at any time, which could result in a reduction of the quarterly distribution amount or a complete elimination of the quarterly distribution.
  • On April 16, 2020, RMRM shareholders approved a change in the Fund’s business from a registered investment company to a commercial mortgage REIT and amended the Fund’s fundamental investment policies and restrictions to permit the Fund to pursue its new business. Among other investment policy changes, the Fund’s fundamental investment objectives of earning and paying a high level of current income to common shareholders, with capital appreciation as a secondary objective, have been replaced with a non-fundamental primary objective to balance capital preservation with generating attractive risk adjusted returns. The Fund is in the process of realigning its portfolio so that it is no longer an “investment company” under the Investment Company Act of 1940 and has filed an application with the Securities and Exchange Commission for a deregistration order. The Fund intends to sell its existing investments and transition its portfolio into commercial mortgages as opportunities within its new business mandate arise and subject to applicable compliance requirements and other business considerations. Although RMRM anticipates seeking to maintain a quarterly distribution on its common shares as high as reasonably practicable, RMRM expects its cash flow from earnings and the status and availability of capital gains it realizes from its portfolio to decline during its transition to a commercial mortgage REIT. This decline could result from the rotation out of existing investments, the need to establish income streams from commercial mortgage originations, the potential for holding assets in temporary investments with lower yields such as agency whole pool certificates and the availability or unavailability of realized capital gains to distribute, among other potential variables. The distribution described in this press release represents a continued reduction in the historical amount of RMRM’s quarterly common share distribution in anticipation of these factors and as a result of a decline in income resulting from the impact of the COVID-19 pandemic described below.
  • The current economic situation resulting from the unprecedented measures taken around the world to combat the spread of COVID-19 may continue to contribute to severe market disruptions, volatility and reduced economic activity. Furthermore, measures taken to mitigate the impacts of COVID-19 may have long term negative effects on the U.S. and worldwide financial markets and economies and may cause further economic uncertainties in the United States and worldwide. It is difficult to predict how long the financial markets and economic activity will continue to be impacted by these events and the effects of these or similar events in the future on the U.S. economy and financial markets. In addition to being impacted by these events, RMRM’s ability to pay quarterly common share distributions may also be impacted by a number of other factors, including the availability of capital gains, distributions paid on its preferred shares, interest paid on borrowings, the extent of RMRM’s leverage and the amount of RMRM’s expenses. Additionally, periods of market volatility may continue to occur in response to the pandemic or other events outside of RMRM’s control. These events have had, and may continue to have, a significant negative impact on RMRM’s performance, net asset value, income, operating results and ability to pay distributions, as well as the performance, income, operating results and viability of issuers in which it invests. There is no assurance that RMRM will always be able to pay distributions of a particular size, or that a distribution will consist solely of net investment income and/or realized capital gains.
  • This press release includes various information regarding the estimated sources for the distribution on RMRM common shares that was declared today as well as various RMRM performance, returns and distribution metrics and information. The ultimate sources of RMRM’s distributions will depend on RMRM’s investment performance and experience for 2020 and the sources of the distributions it receives on its investments. For these and other reasons, the estimated sources may subsequently change and prove to be inaccurate. Further, RMRM’s performance returns and distribution metrics for 2020 and other periods may differ significantly from the amounts listed in this press release.

For these and other reasons, investors should not place undue reliance upon forward-looking statements. Except as required by law, RMRM does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

Contacts

Colleen Bilafer, Investor Relations Analyst

(617) 796-8253

www.rmrmortgagetrust.com

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