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Risk factors

Investing in our Shares involves a high degree of risk. You should carefully consider the following risk factors and all other information contained in this prospectus before purchasing our Shares. If any of the following risks occurs, our business, financial condition, liquidity, results of operations or business prospects and ability to pay distributions to our shareholders may be materially and adversely affected, the trading price of our Shares may decline and you may lose some or all of your investment.

RISKS RELATED TO OUR INVESTMENTS

We have not identified any specific investments, and we may use the proceeds of this Offering and the concurrent private placement to make investments with which you may not agree.

We have not identified any specific investments, and you will not be able to evaluate the manner in which the proceeds of this Offering and the concurrent private placement will be invested or the economic merit of our expected investments before purchasing our Shares. We may use these proceeds to make investments with which you may not agree or which are not in our intended focus area. Our shareholders will not have input into our investment decisions. These factors increase the uncertainty, and thus the risk, of investing in our Shares. Our failure to apply the proceeds of this Offering and the concurrent private placement effectively or to find investments that meet our investment criteria within a reasonable time or on acceptable terms could have a material adverse effect on our business, financial condition, results of operations and ability to make distributions to our shareholders, and could cause the value of our Shares to decline.

Until appropriate investments are identified, we expect to invest the proceeds of this Offering and the concurrent private offering in interest or dividend paying, short term investments that are consistent with our intention to qualify for taxation as a REIT and maintain our exemption from registration under the Investment Company Act. These short term investments are expected to provide lower earnings than we will seek to achieve from our target investments.

The lack of liquidity in our investments may adversely affect our business.

Certain investments such as mortgages, B-Notes, mezzanine and other loans (including most loan participations) and preferred equity, in particular, are relatively illiquid investments due to their short life, their potential unsuitability for securitization and the difficulty of recovery in the event of a borrower's default. In addition, certain of our investments may become less liquid after we have made them as a result of delinquencies or defaults, turbulent market conditions or the unavailability to borrowers of refinancing capital, which may make it more difficult for us to dispose of such investments at advantageous prices or in a timely manner. In addition, because most of the loans and securities we invest in will not be registered under the federal securities laws, we will not be able to transfer, sell, pledge or dispose of them except in transactions that are exempt from the registration requirements of, or otherwise in accordance with, those laws. Also, we may face other restrictions on our ability to liquidate an investment in a publicly traded business entity to the extent that we or our Manager has or could be attributed as having material, non-public information regarding such business entity. We expect many of our investments will be illiquid and, if we are required to liquidate or sell all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. Our ability to vary our portfolio in response to changes in economic and other conditions may be relatively limited, which could adversely affect our results of operations and financial condition.

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Our investments may be concentrated.

While we intend to have a diverse portfolio of investments, we are not required to observe specific diversification criteria. Our investments may at times be concentrated in certain property types or in certain borrowers, or secured by properties concentrated in a limited number of geographic locations. To the extent that our portfolio is concentrated in any property type, in certain borrowers or in any geographic region, the risks in our portfolio will be increased if there are adverse developments or greater risks affecting the particular concentration. Adverse market conditions in certain types of properties, affecting specific borrowers or in the areas where the properties securing or otherwise underlying our investments are located and local real estate conditions (such as oversupply or reduced demand in certain local markets) may have an adverse effect on our business, our financial condition or on our ability to pay distributions to our shareholders.

Loans secured by properties in transition involve a greater risk of loss than loans secured by stabilized properties.

We intend to originate or acquire transitional or bridge loans to borrowers who are seeking shorter term capital to be used in acquisitions, construction or repositioning of properties. In a typical transitional loan, the borrower has usually identified a property that the borrower believes has been under-managed or is located in a recovering market. If the borrower fails to improve the quality of the property's management or the market in which the property is located fails to improve as expected, the borrower may not generate sufficient cash flow to make payments on or refinance the transitional loan, and we may not recover some or all of our investment. In addition, borrowers often use the proceeds of a conventional mortgage to repay a transitional loan. Transitional loans therefore are subject to risks of the borrowers' inability to obtain refinancing to repay the transitional loans. Losses we suffer with respect to transitional loans could be material.

Our diligence process for investment opportunities may not reveal all facts that may be relevant for an investment, and if we incorrectly evaluate the risks of our investments, we may experience losses.

Before we make an investment, our Manager will conduct diligence that it considers reasonable based upon the facts and circumstances of the investment. When conducting diligence, our Manager, in consultation with our Board of Trustees, may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. We intend to rely principally upon our Manager's personnel and the third party services which they engage on our behalf in conducting diligence of our investment opportunities. Outside consultants, legal advisors, accountants and investment banks may be involved in the diligence process to varying degrees depending on the investment type. Nonetheless, our diligence may not reveal all of the risks associated with our investments. We will evaluate our potential investments based on criteria our Manager deems appropriate for the relevant investment. Our underwriting assumptions and loss estimates may not prove accurate, and actual results may vary from estimates. If we underestimate the risks and potential losses associated with an investment we make, we may experience losses from the investment.

Prepayment of our loans may adversely affect the value of our investment portfolio and cause us to reduce the distributions we pay to our shareholders.

Prepayment rates on our investments, where contractually permitted, will be influenced by changes in current interest rates, significant changes in the performance of underlying real estate assets and a variety of economic and other factors beyond our control. Prepayment rates cannot be predicted with certainty and no strategy can completely insulate us from increases in such rates. In periods of

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declining interest rates, prepayments on investments generally increase and the proceeds of prepayments received during these periods are likely to be reinvested by us in comparable assets at reduced yields. Conversely, in periods of rising interest rates, prepayments on investments, where contractually permitted, generally decrease, in which case we would not have the prepayment proceeds available to invest in comparable assets at higher yields. We expect to invest in loans and other assets secured or supported by transitional real estate assets; significant improvement in the performance of such assets may result in prepayments as other financing alternatives become available to the borrower. We expect to be entitled to fees upon the prepayment of our mortgage loans, although no assurance can be given that such fees will adequately compensate us as the functional equivalent of a "make whole" payment. Furthermore, we may not be able to structure future investments to impose a make whole obligation upon a borrower in the case of an early prepayment. As a result, our income will be reduced which will have a negative impact on our ability to make distributions to our shareholders.

An economic slowdown, recession or declines in real estate values could impair our investments and our operations.

We believe the risks associated with our business will increase during periods of economic slowdown or recession, especially if these periods are accompanied by declining real estate values. A prolonged economic slowdown, a recession or declining real estate values could impair the performance of our investments, increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. For example, the severe economic downturn that began in 2008 limited the availability of real estate debt financing, made leveraged acquisitions and refinancing of real estate more difficult and caused real estate values generally to decline. Declining real estate values will likely reduce the level of new mortgage and other real estate related loan originations since borrowers often use the appreciation in the value of their existing properties to support the purchase or investment in additional properties. Borrowers may also be less able to pay principal and interest on our loans if the value of their real estate declines. Declining real estate values significantly increase the likelihood that we will incur losses on our loans because the value of our collateral may have decreased to less than our loan investments. Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect our ability to make loans, which would materially and adversely affect our results of operations, financial condition, liquidity and business and our ability to pay distributions to our shareholders.

The value of our loans will depend on our borrowers' ability to generate cash flow from operating the properties that are our collateral. Our borrowers may not have sufficient cash flow to repay our loans according to their terms.

CRE loans and any other investments that we may make will be subject to risks of delinquency and foreclosure. Our investments will typically be nonrecourse and our borrowers' ability to pay interest on and repay principal of loans secured by income producing properties will typically depend upon the successful operation of the collateral properties rather than the existence of independent income or assets of the borrowers. If the income of our collateral properties is reduced, our borrowers' ability to pay amounts owed to us may be impaired. Income of CRE can be adversely affected by, among other things,

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the mix of tenants in the property;

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success of tenant businesses;

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property management decisions;

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property location, condition and design;

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competition from comparable properties;

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changes in national, regional or local economic conditions;

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declines in regional or local real estate values;

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declines in regional or local rental or occupancy rates;

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increases in interest rates, real estate tax rates and other operating expenses;

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costs of remediation and liabilities associated with environmental conditions;

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the potential for uninsured or underinsured property losses;

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changes in laws and regulations, including zoning ordinances and environmental legislation, and the related costs of compliance;

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acts of God, terrorist attacks, social unrest and civil disturbances; and

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general economic conditions.

In the event that any CRE mortgage loans held directly by us default, we would be adversely impacted if the value of the collateral is less than the outstanding loan principal and accrued interest plus our other losses in connection with the default, such as the loss of future interest payments and our costs of collecting amounts owed to us. If a borrower files for bankruptcy, the mortgage loan to such borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under applicable law.

We may need to foreclose on loans that are in default, which could result in losses.

We may find it necessary to foreclose on loans that are in default. Foreclosure processes are often lengthy and expensive. Results of foreclosure processes may be uncertain, as claims may be asserted by borrowers or by other lenders or investors in the borrowers that interfere with enforcement of our rights, such as claims that challenge the validity or enforceability of our loan or the priority or perfection of our mortgage or other security interests. Borrowers may resist foreclosure actions by asserting numerous claims, counterclaims and defenses against us, including, without limitation, lender liability claims and defenses, even when the assertions may have no merit, in an effort to prolong the foreclosure action and seek to force us into a modification of the loan or a buy-out of the loan for less than we are owed. At any time prior to or during the foreclosure proceedings, the borrower may file for bankruptcy, which would have the effect of staying the foreclosure actions and delaying the foreclosure processes and potentially result in reductions or discharges of borrower's debt. Foreclosure may create a negative public perception of the collateral property, resulting in a diminution of its value. Even if we are successful in foreclosing on a mortgage loan, the liquidation proceeds upon sale of the underlying real estate may not be sufficient to recover our investment. Any costs or delays involved in the foreclosure of the loan or a liquidation of the underlying property will reduce the net proceeds realized and, thus, increase the potential for loss.

Our CRE loans and other CRE related debt instruments expose us to risks associated with real estate investments generally.

We seek to originate and selectively acquire CRE loans and other CRE related investments. Any general deterioration of real estate fundamentals in the United States could negatively impact our performance by making it more difficult for borrowers to satisfy their debt payment obligations,

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increasing the default risk applicable to borrowers, and make it difficult for us to generate attractive returns for our shareholders and lower the trading value of our Shares. Real estate investments will be subject to various general risks, including:

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economic and market fluctuations;

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political instability or changes;

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changes in environmental, zoning and other laws;

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casualty or condemnation losses;

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regulatory limitations on rents;

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decreases in property values;

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changes in the appeal of properties to tenants;

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changes in supply and demand for CRE properties and debt resulting from the recent growth in CRE debt funds or otherwise;

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energy supply shortages;

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various uninsured or uninsurable risks;

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natural disasters;

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changes in government regulations, such as rent control;

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changes in the availability of debt financing and/or mortgage funds which may render the sale or refinancing of properties difficult or impracticable;

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increases in mortgage defaults;

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increases in borrowing rates; and

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negative developments in the economy and/or adverse changes in real estate values generally and other risk factors that are beyond our control.

We cannot predict the degree to which economic conditions generally, and the conditions for CRE debt investing in particular, will improve or decline. Any declines in the performance of the U.S. and global economies or in the real estate debt markets could have a material adverse effect on us. Market conditions relating to real estate debt investments have evolved since the global financial crisis, which has resulted in a modification to certain loan structures and/or market terms. Any future changes in loan structures or market terms may make it difficult for us to monitor and value our loans and other investments.

Competition may limit our ability to make desirable investments.

Our profitability will depend, in large part, on our ability to originate or acquire investments on attractive terms. In originating or acquiring our investments, we will compete with a variety of institutional investors, including other REITs, specialty finance companies, public and private funds (including funds or investors that our Manager, RMR or their affiliates may sponsor, advise or manage), banks, credit unions, insurance companies and other financial institutions. Some of these investors have raised, or may raise, significant amounts of capital and may have the same or similar investment objectives as we have. Many of our competitors are significantly larger than we are and have considerably greater financial, technical, marketing and other resources than we have. Some competitors may have a lower cost of capital and access to funding sources that are not available to

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us, such as the U.S. Government or its agencies. Many of our competitors are not subject to the operating constraints associated with REIT tax compliance or maintenance of our exemption from registration as an investment company under the Investment Company Act. In addition, some of our competitors may have higher risk tolerances or make different risk assessments than we do, which may allow them to consider a wider variety of investments or offer more aggressive pricing or other terms, for example higher LTV ratios or lower interest rates than we are willing to offer or accept. In addition, changes in the financial regulatory regime following the 2016 U.S. Presidential and Congressional elections could decrease the current restrictions on banks and other financial institutions and allow them to compete with us for investment opportunities that were previously not available to them. As a result, desirable loans and investments in our target investments may become less available to us than we currently expect. In addition, reduced CRE transaction volume could increase competition for available investment opportunities. The competitive pressures we face may have a material adverse effect on our business, financial condition and results of operations, and we can provide no assurance that we will be able to identify and originate loans or make investments that are consistent with our investment objectives.

Risks of cost overruns and failure to complete renovations of properties in transition may result in significant losses.

The renovation, refurbishment or expansion of a property by a borrower involves risks of cost overruns, construction risks, noncompletion risks and other risks. Estimates of the costs of property improvements may be inaccurate. Other risks may include delays in required approvals and leasing when the property is not completed on the borrower's expected schedule. If there are cost overruns or improvements are not completed in a timely manner, a borrower may experience a loss of cash flow and may not be able to make payments on our loans on a timely basis or at all.

Construction loans involve an increased risk of loss.

We intend to originate or acquire loans which fund the construction of commercial properties. Construction lending generally involves a higher degree of risk than other types of real estate lending due to a variety of factors, including the difficulties in estimating construction costs and anticipating construction delays and, generally, the dependency on timely, successful completion and the leasing of the property to tenants after completion. If our borrowers fail to complete the construction of our collateral properties or experience cost overruns, our loans may be materially impaired. For example, an incomplete development property may have less value than the investment we have funded. In such circumstances, we may decide to fund development completion to reduce our losses or, alternatively, we may suffer a significant loss when we realize on the collateral of an unfinished development property.

Any credit ratings assigned to our investments will be subject to possible revisions, and there can be no assurance that those ratings will not be downgraded.

Some of our investments may be rated by credit rating agencies. Any credit ratings on our investments will be subject to ongoing evaluation by credit rating agencies, and we can provide no assurance that any such ratings will not be changed or withdrawn by a rating agency after they are issued. If a rating agency assigns a lower than expected rating or reduces or withdraws, or indicates that it may reduce or withdraw, its rating of any of our investments, the value of those investments could significantly decline, which could result in losses if we determine to sell these investments or the failure of the affected borrowers to refinance or otherwise satisfy their debt service obligations to us.

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Investments in nonconforming and non-investment-grade rated loans or securities will increase our risk of losses.

We expect that some of our investments will not conform to conventional loan standards applied by traditional lenders and that many of our investments either will not be rated or will be rated as non-investment-grade by rating agencies. The non-investment-grade ratings for these assets typically result from the level of debt compared to the collateral value, the lack of a strong operating history for the properties that constitute the collateral, the borrowers' credit history, the collateral properties' weak cash flow or other factors. As a result, these investments have higher risks of defaults and losses than investment-grade rated assets. There are no limits on the percentage of unrated or non-investment-grade rated investments we may make.

B-Notes are subordinated and have individually negotiated terms, which may result in losses to us.

We may originate or acquire B-Notes. A B-Note is a mortgage loan typically (a) secured by a first mortgage on a single commercial property or group of related properties and (b) subordinated to an A-Note secured by the same first mortgage on the same collateral. The rights associated with the B-Note are subordinated to the rights associated with the A-Note. If the borrower whose mortgage is divided into an A-Note and a B-Note defaults, there may not be sufficient value in the collateral property remaining for B-Note holders after payment to the A-Note holders. Because each transaction is individually negotiated, B-Notes can vary in their structural characteristics and risks. For example, the rights of holders of B-Notes to control the process following a borrower default vary from transaction to transaction. Losses we suffer investing in B-Notes could be material.

Subordinated and mezzanine loans involve greater risks of loss than first mortgage loans.

We may originate or acquire subordinated and mezzanine loans, which are loans secured by junior mortgages on the underlying collateral property or loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests in the entity that owns the interest in the entity owning the property. Subordinated loans have less priority and rights than senior or first mortgages. Mezzanine loans secured by a pledge of ownership interests in an entity are by their nature structurally subordinated to financings that are secured directly by the collateral property. Subordinated and mezzanine loans involve a higher degree of risk than first mortgage loans because they rank behind senior loans and may become unsecured as a result of foreclosure by senior lenders. In the event of a bankruptcy of an entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. If borrowers default on our subordinated loans, mezzanine loans or debt senior to our loans, or in the event of borrowers' bankruptcies, our subordinated loans and mezzanine loans will be satisfied only after the senior debts, and we may not recover some or all of our subordinated loans and mezzanine investments. In addition, subordinated loans and mezzanine loans may have higher LTV ratios than other CRE mortgage loans, resulting in less equity in the collateral properties and increasing the risk of loss of principal. Losses we suffer with respect to our subordinated loans and mezzanine loans could be material.

Any distressed loans or investments we make, or investments that later become non-performing, may subject us to losses and other significant risks.

While it is generally anticipated that our investments will focus primarily on "performing" real estate loans, our investments may include distressed loans and investments from time to time ( e.g. , investments

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in defaulted, out-of-favor or distressed bank loans or debt securities) or some of our investments that become "non-performing" after we make them. From time to time, our investments may be secured by properties that are encumbered by large amounts of debt relative to their values and cash flows and, therefore, involve a high degree of default risk. During an economic downturn or recession, loans or securities of financially or operationally troubled borrowers are more likely to go into default than loans or securities of other borrowers. Investment in the loans secured by highly leveraged properties and loans to operationally troubled borrowers involves a high degree of credit risk.

In certain circumstances ( e.g. , in connection with a workout, restructuring or foreclosing proceedings involving one or more of our investments), the success of our investment strategy will depend on our ability to effectuate loan modifications or restructure and improve the operations of our borrowers. Implementing successful restructuring programs and operating improvements entails a high degree of uncertainty. There can be no assurance that we will be able to implement successful restructuring programs and improvements with respect to any distressed loans or investments we may have from time to time. Distressed loans may become subject to bankruptcy or other similar legal proceedings. In such proceedings, there is a possibility that we may incur substantial costs and total losses on our investments and, in certain circumstances, become subject to liabilities that may exceed the value of our original investments. For example, under certain circumstances, a lender that has inappropriately exercised control over the management and policies of a debtor may have its claims legally subordinated or disallowed or may be found liable for damages suffered by the debtor and its related parties as a result of such actions. Bankruptcy and similar laws may delay our ability to realize on collateral for our loans, may adversely affect the economic terms and priority of our loans through legal doctrines such as equitable subordination or may result in a restructuring of our loans through principles such as the "cramdown" provisions of the bankruptcy laws. In any reorganization or liquidation proceeding relating to our investments, we may lose our entire investment, may be required to accept cash or securities with a value less than our original investment and/or may be required to accept terms different than our original loan terms, including payment over an extended period of time. In addition, in certain circumstances, payments we have received may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance, preferential payment, or similar transaction under applicable bankruptcy and insolvency laws.

We may not have control over certain of our loans and investments.

Our ability to manage our investments may be limited by the form in which they are made. In certain situations, we may:

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acquire or retain investments subject to rights of senior classes and servicers under inter-creditor or servicing agreements;

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acquire or retain only a minority and/or a non-controlling participation in an underlying investment;

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pledge our investments as collateral for financing arrangements;

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co-invest with others through partnerships, joint ventures or other entities, thereby acquiring non-controlling interests; or

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rely on independent third party management or servicing with respect to the management of a particular investment.

We may not be able to exercise control over all aspects of our investments. For example, our right to control the process following a borrower default may be subject to the rights of senior or junior creditors or servicers whose interests may not be aligned with ours. A partner or co-venturer may have economic or business interests or goals that are inconsistent with ours, or may take action contrary to

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our investment objectives. In addition, in certain circumstances we may be liable for the actions of our partners or co-venturers.

Interest rate fluctuations could adversely affect our investments and may cause losses.

Changes in interest rates may affect our net interest income, which is the difference between the interest income we earn on our interest earning investments and the interest expense we incur in financing our investments. Changes in interest rates also may affect our ability to make investments as well as borrower default rates. In a period of rising interest rates, our interest expense could increase, while the interest we earn on any fixed rate debt investments would not change, adversely affecting our profitability. Our operating results depend in large part on differences between the income from our investments, net of credit losses, and our financing costs. Even when our investments and borrowings are match funded, the income from our investments may respond more slowly to interest rate fluctuations than the cost of our borrowings.

We are subject to risks from litigation filed against or by us.

We may become subject to legal proceedings brought by or on behalf of our shareholders or third parties. Also, our efforts to collect our loans may include activities that are hostile in nature and our collection activities may increase our risk of becoming involved in litigation. The expense of defending claims against us and paying any amounts pursuant to settlements or judgments could be substantial. We have agreed to indemnify our Trustees and officers and our Manager for their costs and liabilities in connection with legal proceedings. Similarly, we may from time to time institute legal proceedings. The expense of such proceedings could be substantial and we may not succeed in recovering the remedies we seek.

We may be subject to lender liability claims and, if we are held liable under such claims, we could be subject to material losses.

A number of judicial decisions have created and upheld the rights of borrowers to sue lending institutions on the basis of various evolving legal theories, collectively termed "lender liability". Generally, lender liability is founded on the premise that a lender has either violated a duty, whether implied or contractual, of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or shareholders. We cannot assure our shareholders or other investors that such claims will not arise or that we will not be subject to significant liability and losses if claims of this type arise.

If the loans that we originate or acquire do not comply with applicable laws, we may be subject to material penalties.

Loans that we originate or acquire may be subject to U.S. federal, state or local laws. Real estate lenders and borrowers may be responsible for compliance with a wide range of laws intended to protect the public interest, including, without limitation, the Americans with Disabilities Act and local zoning laws. If we or our Manager fail to comply with such laws in relation to a loan that we have originated or acquired, legal penalties may be imposed, which could materially and adversely affect us. Jurisdictions with "one action," "security first" and/or "antideficiency rules" may limit our ability to foreclose on a collateral property or to realize on obligations secured by a collateral property. In the future, new laws may be enacted or imposed by U.S. federal, state or local governmental entities, and such laws could have a material adverse effect on us and our operations.

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Real estate valuation is inherently subjective and uncertain.

The valuation of real estate and, therefore, the valuation of collateral underlying CRE loans made by us, is inherently subjective due to, among other factors, the individual nature of each property, its location, its expected future rental revenues and the valuation methodology adopted. The valuations of our real estate assets may not be precise and may be based on assumptions and methodologies that are inaccurate. Our valuations of our collateral properties may be wrong and we may incur losses.

Insurance on real estate collateral may not be adequate to cover all losses.

There are certain types of losses, generally of a catastrophic nature, such as earthquakes, floods, hurricanes, terrorism or acts of war, which may be uninsurable or not economically insurable. Inflation, changes in zoning and building codes and ordinances, environmental considerations and other factors also might result in insurance proceeds insufficient to repair or replace a property if it is damaged or destroyed. The insurance proceeds we receive as a result of losses to our collateral properties may not be adequate to restore our economic position after losses affecting our investments. Any uninsured or underinsured loss could result in the loss of cash flow from and reduce the value of our investments related to such properties and the ability of the borrowers under such investments to satisfy their obligations to us.

Liability relating to environmental matters may adversely impact the value of our investments.

Under various U.S. federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on such property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances. The presence of hazardous substances may adversely affect our borrowers' ability to refinance or sell, and the value of, our collateral. If an owner of property underlying one of our investments becomes liable for costs of removal of hazardous substances, the ability of the owner to make payments to us may be reduced. If we foreclose on a property underlying our investments, the presence of hazardous substances on the property may adversely affect our ability to sell the property and we may incur substantial remediation costs, causing us to experience losses.

Investments in CMBS and other structured finance investments pose additional risks, including the sensitivity of such investments to economic downturns, the illiquidity of such investments, the risk that the servicer or manager may take actions that could adversely affect our interests and the possibility that the CMBS market will be significantly affected by current or future regulation.

We generally do not expect to make investments in senior CMBS classes, but we may invest in CMBS and similar structured finance investments which are subordinated classes of securities in a structure of securities secured by a pool of mortgages or loans. Such subordinated securities are the first, or among the first, to bear the loss upon a restructuring or liquidation of the underlying collateral and the last to receive payment of interest and principal. There is generally only a nominal amount of equity or other debt securities junior to such positions, if any, issued in such structures. The values of such subordinated interests tend to be much more sensitive to adverse economic downturns and underlying borrower developments than more senior securities. A projection of an economic downturn, for example, could cause a decline in the price of lower status CMBS or other similar securities because the ability of borrowers to make principal and interest payments on the mortgages or loans underlying such securities may be expected to become impaired.

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Subordinate CMBS classes are generally not actively traded and are relatively illiquid investments, and volatility in the trading markets for those investments may cause their value to decline materially and fast. In addition, if the underlying mortgage portfolio has been overvalued by the originator, or if the values subsequently decline and, as a result, less collateral value is available to satisfy interest and principal payments and any other fees in connection with the trust or other conduit arrangement for such securities, we may incur significant losses. Also, with respect to the CMBS and similar structured finance investments in which we may invest, control over the related underlying loans will be exercised through a special servicer or collateral manager designated by a "directing certificateholder" or a "controlling class representative," or otherwise pursuant to the related securitization documents. We may not have the right to appoint the directing certificateholder or otherwise direct the special servicing or collateral management of classes of existing series of CMBS or similar structured finance investments that we acquire. With respect to the management and servicing of these loans, the related special servicers or collateral managers may take actions that could adversely affect our interests.

The CMBS market may be significantly affected by current or future regulation. The risk retention rules under the Dodd-Frank Act, which generally require a sponsor of a CMBS transaction to retain, directly or indirectly, at least 5% of the credit risk of the securitized assets collateralizing the CMBS, went into effect in December 2016. There remains general uncertainty as to how these requirements will be implemented and what their implementation will mean in practice. The impact of these requirements on the CMBS securitization market generally are uncertain and may result in many CMBS market participants ceasing origination of and investment in CMBS, a lack of liquidity in the CMBS market and increased costs in CMBS transactions. There may be little or no CMBS investment opportunities available to us and any opportunities that are available may be less attractive than CMBS opportunities previously available in the market.

RISKS RELATED TO OUR COMPANY

We have no operating history, and we may not be able to operate our business successfully or generate sufficient revenue to make or sustain distributions to our shareholders.

We were organized in June 2017 and have no operating history. We have no assets and will commence operations upon completion of this Offering. Our ability to achieve our investment objectives depends on our ability to make investments that generate attractive, risk adjusted returns, as well as on our access to financing on acceptable terms. In general, the availability of favorable investment opportunities will be affected by the level and volatility of interest rates in the market generally, the availability of adequate short and long term real estate financing and the competition for investment opportunities. There can be no assurance that we will be successful in making investments that satisfy our rate of return or other investment objectives or that we will be able to operate our business successfully, implement our operating policies and investment strategies as described in this prospectus or generate sufficient revenue to make or sustain distributions to our shareholders.

Our operating and investment guidelines, investment and financing strategies and leverage and hedging policies may be changed without shareholder approval.

Our Manager will be authorized to follow broad operating and investment guidelines. These guidelines, as well as our investment and financing strategies, leverage and hedging policies with respect to investments, originations, acquisitions, operations, indebtedness, capitalization and distributions, may be changed at any time without our shareholders' approval. Changes in our investment strategies may increase our exposure to interest rate risks, default risks and real estate market fluctuations. Such changes could result in the types of investments we make being different

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from those described in this prospectus. These changes could adversely affect our financial condition, results of operations, the market price of our Shares and our ability to make distributions to our shareholders.

State licensing requirements will cause us to incur expenses and our failure to be properly licensed may have a material adverse effect on our operations.

We or our Manager may be required to hold licenses in a number of U.S. states to conduct lending activities. State licensing statutes vary from state to state and may prescribe or impose, among other things:

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various recordkeeping requirements;

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restrictions on loan origination and servicing practices, including limits on finance charges and the type, amount and manner of charging fees;

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disclosure requirements;

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requirements that licensees submit to periodic examination;

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surety bond and minimum specified net worth requirements;

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periodic financial reporting requirements;

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notification requirements for changes in principal officers, stock ownership or corporate control;

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restrictions on advertising; and

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requirements that loan forms be submitted for review.

There is no guarantee that we or our Manager will be able to obtain these licenses, and efforts to obtain and maintain such licenses may cause us to incur significant expenses. Any failure to be properly licensed under state law or otherwise may have a material adverse effect on us and our operations.

Changes in laws or regulations could increase competition for CRE debt financing or require changes to our business practices and adversely affect us.

Various laws and regulations currently exist that restrict the investment activities of banks and certain other financial institutions but do not apply to us. We believe this regulatory difference may create opportunities for us to successfully grow our business. However, following the U.S. Presidential and Congressional elections in November 2016, there are indications that the new administration will seek to decrease regulation of the financial industry, including by amending the Dodd-Frank Act, which may decrease the restrictions on banks and other financial institutions and allow them to compete more effectively with us for investment opportunities.

The laws and regulations governing our operations, as well as their interpretation, may change from time to time, and new laws and regulations may be enacted. Such changes or new laws or regulations could require changes to certain of our business practices, negatively impact our operations, impose additional costs on us or otherwise adversely affect our business. There has been increasing commentary amongst regulators and intergovernmental institutions on the role of nonbank institutions in providing credit and, particularly, so-called "shadow banking," a term generally taken to refer to credit intermediation involving entities and activities outside the regulated banking system. For example, in August 2013, the Financial Stability Board issued a policy framework for strengthening oversight and regulation of "shadow banking" entities. That report outlined initial steps to define the

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scope of the shadow banking system and proposed governing principles for a regulatory framework. A number of other regulators and international organizations are studying the shadow banking system. At this time, it is too early to assess whether any new rules or regulations will be adopted or what impact such rules or regulations will have on us, if any. In an extreme eventuality, it is possible that such regulations could cause us to cease operations.

Any material failure, inadequacy, interruption or security failure of the information technology networks and systems on which we rely could materially and adversely affect us.

The information technology networks and related systems of our Manager and RMR are essential to our Manager's ability to perform our day to day operations. As a result, we face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to emails, persons who access our systems or those of our Manager from inside or outside the RMR organization and other significant disruptions of our Manager's or RMR's information technology networks and related systems. A security breach or other significant disruption involving our Manager's or RMR's information technology networks and related systems could: disrupt our operations; result in the unauthorized access to, and the destruction, loss, theft, misappropriation or release of, proprietary, personally identifiable, confidential, sensitive or otherwise valuable information, which others could use to compete against us or which could expose us to claims by third parties; require significant management attention and resources to remedy any damages that result; subject us to claims for breach of contract, damages, credits, penalties or termination of agreements; or damage our business relationships or reputation generally.

Although our Manager and RMR take various actions to maintain the security and integrity of their information technology networks and related systems, and have implemented various measures to manage the risk of a security breach or disruption, we cannot be sure that their security efforts and measures will be effective or that any attempted security breaches or disruptions would not be successful and damaging to us. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, our Manager and RMR may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures. It is not possible for this risk to be entirely mitigated.

If we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accurately.

As a public company, we will be required to provide reliable financial statements and reports to our shareholders and others. If we fail to implement and comply with proper internal controls, we could fail to meet our reporting obligations or fail to detect fraud. In addition, the existence of a material weakness or significant deficiency in our internal control over financial reporting could result in errors in our financial statements that could require restatements, result in increased costs to remediate, attract regulatory scrutiny or lawsuits, cause investors to lose confidence in our reported financial information, lead to a substantial decline in the market price of our Shares or result in investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities.

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Terrorist attacks and other acts of violence or war may affect the real estate industry generally and our business, financial condition and results of operations.

Terrorist attacks, the anticipation of any such attacks, the consequences of any military or other response by the United States and its allies, and other armed conflicts may have an adverse impact on the U.S. financial markets and the economy in general. The economic impact of these events could also adversely affect the credit quality of some of our borrowers and the value of our loans, investments and collateral properties. We may suffer losses as a result of the adverse impact of any future terrorist attacks, and these losses may adversely impact our results of operations and may cause the market value of our Shares to decline or be more volatile. We cannot predict the severity of the effect that potential future terrorist attacks would have on us. Also, losses resulting from these types of events may not be fully insurable.

The events of September 11, 2001 created significant uncertainty regarding the ability of real estate owners of high profile assets to obtain insurance coverage protecting against terrorist attacks at commercially reasonable rates, if at all. With the enactment of the Terrorism Risk Insurance Act of 2002, or the TRIA, and the subsequent enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007 and the Terrorism Risk Insurance Program Reauthorization Act of 2015, which extended the TRIA through 2020, insurers must make terrorism insurance available under their property and casualty insurance policies, but this legislation does not regulate the pricing of such insurance. The absence of affordable insurance coverage may adversely affect the general real estate lending market, lending volume and the market's overall liquidity, and may reduce the number of suitable investment opportunities available to us and the pace at which we are able to make investments. If our borrowers are unable to obtain affordable insurance coverage, the value of our investments could decline, and in the event of an uninsured loss, we could lose all or a portion of our investments.

We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Shares less attractive to investors.

We are an "emerging growth company" as defined in the JOBS Act. We may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. In addition, as permitted for an "emerging growth company," we are electing to delay the adoption of new or revised accounting standards, and, as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements.

We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if we have more than $1.07 billion in annual revenues as of the end of our fiscal year, we have more than $700.0 million in market value of our stock held by non-affiliates as of the end of our second fiscal quarter or we issue more than $1.0 billion of non-convertible debt over a three year period. We cannot predict if investors will find our Shares less attractive because we may rely on these exemptions. If some investors find our Shares less attractive as a result, there may be a less active trading market for our Shares and our per Share trading price may be adversely affected and more volatile.

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RISKS RELATED TO FINANCING

We may incur significant debt, and our governing documents contain no limit on the amount of debt we may incur.

Subject to market conditions and availability, we may incur significant debt through repurchase agreements, bank credit facilities (including term loans and revolving facilities), warehouse facilities and structured financing arrangements, public and private debt issuances or otherwise. The amount of leverage we use will vary depending on our available investment opportunities, our available capital, our ability to obtain and access financing arrangements with lenders and the lenders' and our estimate of the stability of our investment portfolio's cash flow. Our governing documents contain no limit on the amount of debt we may incur, and we may significantly increase the amount of leverage we utilize at any time without approval of our shareholders. The amount of leverage on individual assets may vary, with leverage on some assets substantially higher than others. Leverage can enhance our potential returns but can also exacerbate our losses.

Incurring substantial debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that:

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our cash flow from operations may be insufficient to make required payments of principal of and interest on the debt or we may fail to comply with covenants contained in our debt instruments, which would likely result in (a) acceleration of such debt (and any other debt containing a cross default or cross acceleration provision) that we may be unable to repay from internal funds or to refinance on favorable terms, or at all, (b) our inability to borrow undrawn amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements and/or (c) the loss of some or all of our assets to foreclosures or forced sales;

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our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that our investment yields will increase to match our higher financing costs;

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we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, shareholder distributions or other purposes; and

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we may not be able to refinance our maturing debts.

There can be no assurance that our leverage strategies will be successful.

Our future access to capital is not assured.

Our future access to capital will depend upon a number of factors over which we have little or no control, including:

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general economic or market conditions;

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the market's view of the quality of our assets;

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the market's perception of our growth potential;

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our current and potential future earnings and cash distributions; and

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the market price of our Shares.

If regulatory capital requirements imposed on our lenders change, they may be required to limit, or increase the cost of, financing they provide to us. This could potentially increase our financing costs and reduce our liquidity or require us to sell assets at an inopportune time or price.

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We may have to rely on additional equity issuances, which may be dilutive to our shareholders, or on costly debt financing that require a large portion of our cash flow from operations, thereby reducing funds available for our operations, future business opportunities, cash distributions to our shareholders and other purposes. There can be no assurance that we will have access to such equity or debt capital on favorable terms at the desired times, or at all, which may cause us to curtail our investing activities or dispose of assets at an inopportune time or price, which could negatively affect our results of operations.

We intend to pay regular distributions to our shareholders after we have completed investment of the proceeds of this Offering in CRE loans and other CRE related investments. We expect that our first quarterly distribution to our shareholders likely will be paid following the first full calendar quarter after the closing of this Offering, and that our regular quarterly distribution rate will not be established and paid until after completion of two full calendar quarters following the closing of this Offering. The market values of shares, like our Shares, which pay regular distributions depend, in part, on the yields ( i.e. , the distribution amounts in relation to the market prices of the shares) available by purchasing such shares compared to the yields available from other available investments. Generally when market interest rates decline, the market prices of shares whose holders receive regular distributions increase; conversely, when market interest rates increase, the market prices of such shares decline. If market interest rates rise because of government actions or otherwise, the market value of our Shares may decline. A decline in the market value of our Shares may cause our shareholders to experience a loss; and, if the market value of our Shares declines, our cost of equity capital will increase and we may not be able to raise equity capital by issuing additional Shares.

The duration of our debt leverage and our investments may not match.

We generally intend to structure our debt leverage so that we minimize the difference between the term of our investments and the term of the leverage we use to finance some of our investments. However, we may not be able to do so. In the event that our leverage is for a shorter term than our investments, we may not be able to extend or find appropriate replacement leverage, which could require us to sell certain investments before we might otherwise prefer to do so. In the event that our leverage is for a longer term than our investments, we may not be able to replace our investments as they mature with new investments or at all, which will negatively impact our earnings. The risks of a duration mismatch are magnified by the potential for the extension of loans in order to maximize the likelihood and magnitude of their recovery value in the event the loans experience credit or performance challenges; use of this asset management practice would effectively extend the duration of our investments, while our liabilities may have set maturity dates.

We intend to structure our leverage so that we minimize the difference between the index of our investments and the index of our debt leverage, by financing variable rate investments with variable rate leverage and fixed rate investments with fixed rate leverage. If such a variable rate or fixed rate product is not available to us on reasonable terms, we may use hedging instruments to create such a match. Our attempts to mitigate the risk of a mismatch with the duration or index of our investments and leverage will be subject to factors outside of our control, such as the availability to us of favorable financing and hedging options, and may not be successful. The risks of a duration mismatch are magnified by the potential for the extension of loans in order to maximize the likelihood and magnitude of their recovery value in the event the loans experience credit or performance challenges. Employment of this asset management practice would effectively extend the duration of our investments, while our liabilities may have set maturity dates.

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Lenders may require us to enter into restrictive covenants that adversely impact our operations.

When we obtain debt financing, lenders (especially in the case of bank credit facilities) may impose restrictions on us that would affect our ability to incur additional debt, make certain investments, reduce liquidity below certain levels, make distributions to our shareholders, redeem debt or equity securities and impact our flexibility to determine our operating and investment strategies. For example, our loan documents may contain negative covenants that limit, among other things, our ability to repurchase our Shares, distribute more than a certain amount of our net income or funds from operations to our shareholders, use leverage beyond certain amounts, sell assets, engage in mergers or consolidations, grant liens or enter into transactions with affiliates. If we fail to meet or satisfy any of these covenants, we may be in default under these agreements, and our lenders could elect to declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral and enforce their rights against existing collateral. We may also be subject to cross default and acceleration rights and, with respect to collateralized debt, the posting of additional collateral or foreclosure upon default. These covenants and restrictions could also make it difficult for us to satisfy the qualification requirements necessary to maintain our status as a REIT for U.S. federal income tax purposes.

Any repurchase agreements or bank credit facilities that we may enter will likely include the requirement to provide additional collateral or pay down debt.

We expect that that we may utilize repurchase agreements and bank credit facilities (including term loans and revolving facilities) to finance some of our investments. Such financing arrangements would involve the risk that the value of the loans sold by us or pledged to the provider of the repurchase agreement or bank credit facility may decline, and, in such circumstances, likely would require us to provide additional collateral or to repay all or a portion of the funds advanced. Posting additional collateral would reduce our liquidity and limit our ability to leverage our assets. If we cannot meet our lender's requirements, the lender might accelerate our indebtedness, increase the interest rate on advanced funds or terminate our ability to borrow additional funds, which could materially and adversely affect our financial condition and ability to implement our investment strategy. The providers of repurchase agreement financing and bank credit facilities may also require us to maintain a certain amount of cash or set aside assets sufficient to maintain a specified liquidity position that would allow us to satisfy our collateral obligations. Currently, we have no repurchase agreements or bank credit facilities in place, and there can be no assurance that we will be able to obtain one or more such financing arrangements on favorable terms, or at all.

Any default in a repurchase agreement will likely cause us to experience a loss.

If any counterparty to a repurchase transaction defaults on its obligation to resell the underlying security back to us at the end of the transaction term, or if the value of the underlying security has declined as of the end of that term, or if we default on our obligations under the repurchase agreement, we will likely incur a loss on such repurchase transactions.

Any warehouse facilities that we enter may limit our ability to originate or acquire assets, and we may incur losses if the collateral is liquidated.

If securitization financings become available to us, we may utilize warehouse facilities pursuant to which we would accumulate CRE mortgage loans in anticipation of a securitization financing, which assets would be pledged as collateral for such facilities until the securitization transaction is consummated. In order to borrow funds to originate or acquire assets under any future warehouse

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facilities, we expect that our lenders would have the right to review the potential assets for which we are seeking financing. We may be unable to obtain the consent of a lender to originate or acquire assets that we believe would be beneficial to us, and we may be unable to obtain alternate financing for such assets. In addition, no assurance can be given that a securitization transaction would be consummated with respect to the assets being warehoused. If the securitization is not consummated, we expect that the lender would demand repayment of the facility, and in the event that we are unable to timely repay such facility, the lender would liquidate the warehoused collateral and we would then be required to pay to the lender any amount by which our borrowings to purchase the collateral assets exceeds their sale price, subject in some instances to negotiated caps on our exposure. In addition, regardless of whether the securitization is consummated, if any of the warehoused collateral is sold before the completion, we generally would have to bear any resulting loss to our lender from such sale. No assurance can be given that we would be able to obtain one or more warehouse facilities on favorable terms, or at all.

Hedging against interest rate exposure may adversely affect our earnings, reduce our cash available for distribution to our shareholders, expose us to contingent liabilities in the future or subject us to counterparty risk.

Subject to maintaining our qualification for taxation as a REIT, we may pursue various hedging strategies to seek to reduce our exposure to adverse changes in interest rates. Our hedging activity will vary based on the type of our assets held and changing market conditions. Interest rate hedging may fail to protect or could adversely affect us because, among other things:

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Interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates.

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Available interest rate hedges may not correspond directly with the interest rate risk for which protection is sought.

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In the event of prepayments or credit losses, the duration of hedges may not match the duration of our related assets or liabilities.

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The amount of income that a REIT may earn from hedging transactions (other than hedging transactions that satisfy certain requirements of the IRC or that are done through a taxable REIT subsidiary, or TRS) to offset interest rate losses is limited by U.S. federal income tax provisions governing REITs.

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The credit quality of the hedging counterparty owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction.

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The hedging counterparty owing money in the hedging transaction may default on its obligation to pay.

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We may fail to recalculate, readjust or execute hedges in an efficient manner.

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Legal, tax and regulatory changes could occur and may adversely affect our ability to pursue our hedging strategies or may increase the costs of executing such strategies.

Hedging transactions could require us to fund cash payments in the future under certain circumstances (such as the early termination of the hedging instrument caused by an event of default or other early termination event, or the decision by a counterparty to request margin securities it is contractually owed under the terms of such instrument). Typically, amounts due would be equal to the unrealized losses of the open swap positions with the respective counterparties and could also include other fees and charges. These losses would be reflected in our results of operations, and our ability to fund these obligations would depend on the liquidity of our assets or our access to capital at the time.

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We will be subject to credit risk with respect to the counterparties to any hedging instruments we enter, and if a counterparty becomes bankrupt or otherwise fails to perform its obligations under such an instrument due to financial difficulties, we may experience significant delays in obtaining any recovery. In addition, in the event of the insolvency of a counterparty to a hedging instrument, the transaction would typically be terminated at its fair market value. If we are owed this fair market value in the termination of the hedging instruments and our claim is unsecured, we will be treated as a general creditor of the counterparty. In such circumstances, we may obtain only a limited or no recovery.

At present, we do not intend to make extensive use of hedging strategies; however, our intent may change. Any hedging activity in which we engage may materially and adversely affect our results of operations, cash flows and financial condition.

RISKS RELATED TO OUR RELATIONSHIP WITH OUR MANAGER AND ITS AFFILIATES

Neither our Manager nor RMR has experience managing a mortgage REIT.

Neither our Manager nor RMR has experience managing a REIT with our investment objectives. The historical returns of the Managed REITs and RIF, including the historical performance disclosed under "Our Manager and our Management Agreement—Prior performance of certain real estate companies managed by RMR LLC," are not indicative of our future results or of any returns expected on an investment in our Shares. Each of the Managed REITs is an equity REIT, and RIF is a closed end investment company, with significantly different investment objectives than ours. Investors in this Offering are not acquiring any interest in any of the Managed REITs or RIF and will not benefit from the performance of the Managed REITs or RIF. Our investment returns may be substantially lower than the returns achieved by the Managed REITs and RIF.

We are dependent on our Manager, its affiliates and their personnel. We may be unable to find suitable replacements if our Management Agreement is terminated.

We do not have an office separate from our Manager and do not have any employees. Our executive officers also serve as officers of our Manager and its affiliates, including RMR. Our Manager itself has limited resources and is dependent upon facilities and services available to our Manager under its shared services agreement with RMR. Our Manager is not obligated to dedicate any specific personnel exclusively to us. Our officers are not obligated to dedicate any specific portion of their time to our business. Several of our officers have significant responsibilities for RMR managed companies. As a result, these individuals may not always be able to devote sufficient time to the management of our business, and we may not receive the level of support and assistance that we would receive if we were internally managed or if we had different management arrangements. In addition, the initial term of our Management Agreement extends only until December 31, 2020. If our Management Agreement or our Manager's shared services agreement with RMR is terminated and no suitable replacements are found, we may not be able to continue in business.

There are various conflicts of interest in our relationship with our Manager, RMR and their affiliates that could result in decisions that are not in the best interests of our shareholders. Our policies, procedures and governance guidelines may not adequately address or mitigate all of the conflicts of interest that may arise in our operations.

We are subject to conflicts of interest arising out of our relationship with our Manager, RMR, their affiliates and entities to which they provide management services. Each of our Managing Trustees (as defined below) is a managing director, officer, employee and controlling shareholder of RMR and a

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managing director or managing trustee of other public companies to which RMR provides management services. Each of our executive officers also is an officer and employee of our Manager or RMR LLC, and some of our executive officers are also officers of other entities to which RMR provides management services. As a result, our Managing Trustees and officers may have conflicts between their responsibilities to us and their responsibilities to, and interests in, our Manager, RMR, their affiliates and other entities to which they provide management services. These conflicts include, among other things, competition for the time and attention of our Manager, RMR, their affiliates and their personnel.

While we will be the only publicly owned REIT managed by our Manager, RMR or their affiliates that invests primarily in first mortgage loans secured by middle market and transitional CRE located in the United States, our Manager, RMR, their affiliates and the entities to which they provide management services are generally not prohibited from competing with us. Our Manager currently originates and manages certain real estate mortgage investments for a group of related credit funds and manages certain real estate and mortgage investments for a union sponsored pension plan which combined, as of March 31, 2017, represented approximately $158.4 million in assets under management. Our Manager also has had discussions with other institutional investors about originating and managing real estate mortgage investments for them, and our Manager may undertake such activities in the future. Also, our Manager and certain of its affiliates also regularly provide mortgage brokerage services, originating and arranging CRE loans between borrowers and other lenders. In addition, our Manager, RMR and their affiliates may sponsor or manage other funds, REITs or other entities, including entities that make investments like the investments we intend to make. As a result, conflicts of interests exist with respect to the allocation of investment opportunities. In our Management Agreement, we will specifically acknowledge these conflicts of interest and agree that our Manager, RMR and their affiliates may resolve such conflicts in good faith and in their fair and reasonable discretion and may allocate investments, including those within our investment objectives, to RMR and its other clients. Accordingly, we may lose investment opportunities to, and may compete for investment opportunities with, other businesses managed by our Manager, RMR or their affiliates.

In addition, we may in the future enter into additional transactions with our Manager, RMR, their affiliates, or entities managed by them. In particular, we may provide financing to entities managed by our Manager, RMR and their affiliates or co-invest with, purchase assets from, sell assets to or arrange financing from any such entities. In addition to their investments in RMR, our Managing Trustees hold equity investments in other entities managed by our Manager, RMR and their affiliates, and some of these entities have significant cross ownership interests, including, for example, as of March 31, 2017: our Managing Trustees owned, directly or indirectly, in aggregate 36.7% of FVE's outstanding common stock, 1.4% of HPT's outstanding common shares, 2.5% of GOV's outstanding common shares, 1.9% of SIR's outstanding common shares and 1.3% of SNH's outstanding common shares; SNH owned 8.5% of FVE's outstanding common stock; GOV owned 27.9% of SIR's outstanding common shares; and HPT owned 8.7% of TA's outstanding common shares. Our executive officers and RMR's executive officers may also own equity investments in other entities to which our Manager, RMR and their affiliates provide management services. Such equity ownership or positions could create, or appear to create, conflicts of interest with respect to matters involving us, our Manager, RMR, their affiliates or entities managed by them.

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In addition to the fees payable to our Manager under our Management Agreement, our Manager and its affiliates may benefit from other fees paid to it in respect of our investments. For example, if we seek to securitize some of our CRE loans, our Manager or its affiliates may act as the collateral manager for such securitizations. In any of these or other capacities, our Manager and its affiliates may receive fees for their services if approved by a majority of our Independent Trustees.

There can be no assurance that our code of business conduct and ethics, or our Code of Conduct, governance guidelines, or our Governance Guidelines, or other procedural protections we adopt will be sufficient to enable us to identify, adequately address or mitigate actual or alleged conflicts of interest or ensure that our transactions with related persons are made on terms that are at least as favorable to us as those that would have been obtained in an arm's length transaction with an unrelated person. Conflicts of interest or the perception of conflicts of interest could have a material adverse impact on our reputation and business and the market price of our Shares and other securities.

In addition, our Manager may sell the Shares it owns at any time following the expiration of its applicable lock-up period or prior thereto with the approval of UBS Securities LLC. To the extent our Manager sells some of these Shares, its interests may be less aligned with our interests.

Conflicts of interest as a result of our management structure may provoke dissident shareholder activities that result in significant costs.

In the past, in particular following periods of volatility in the overall market for publicly traded securities or declines in the market price of a company's securities, shareholder litigation, dissident trustee nominations and dissident proposals have often been instituted against companies alleging conflicts of interest in business dealings with affiliated persons and entities. Our relationship with our Manager and its affiliates, with the other businesses and entities to which RMR provides management services and with our Managing Trustees may precipitate such activities. These activities, if instituted against us, could result in substantial costs and a diversion of our management's attention, even if such actions are without merit.

Our Manager will have broad discretion in operating our day to day business.

Our Manager will be authorized to follow broad operating and investment guidelines and, therefore, will have broad discretion in implementing our business plan and day to day activities. Our Board of Trustees will periodically review our operating and investment guidelines and our operating activities, investments and financing arrangements, but it will not review or approve each decision made by our Manager on our behalf. In addition, in conducting periodic reviews, our Board of Trustees will rely primarily on information provided to it by our Manager. Our Manager may exercise its discretion in a manner that results in investment returns that are substantially below expectations or that result in losses.

Our Management Agreement's fee structure may not create proper incentives for our Manager, which may increase the risk of an investment in our Shares.

We will pay our Manager substantial base management fees regardless of the performance of our portfolio. Our Manager's entitlement to a base management fee, which is not based upon our performance or results, might reduce its incentive to devote its time and effort to seeking investments that provide attractive, risk adjusted returns for us. Because the base management fees are also based in part on our outstanding equity, our Manager may be incentivized to advance strategies that increase our equity. Our increasing our equity capital by selling Shares will usually be dilutive to existing shareholders and may not improve returns for our shareholders or the market price of our Shares. Because the calculation of the base management fee takes into account the proceeds that we receive

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from this Offering, our Manager's payment to the underwriters of the underwriting discounts and commissions in connection with this Offering will result in a slightly increased base management fee. In addition, our Manager has the ability to earn incentive fees each quarter based on our Core Earnings, which, generally stated, are our earnings in a specified period in excess of a specified return. This may create an incentive for our Manager to invest in assets with higher yield potential, which are generally riskier or more speculative, or to sell an asset prematurely for a gain in an effort to increase our near term net income and thereby increase the incentive fees to which our Manager is entitled. This incentive fee formula may encourage our Manager to recommend investments or take other actions which cause us losses.

Our Management Agreement will be between related parties and may be less favorable to us than if it had been negotiated on an arm's length basis with an unrelated party.

Our Management Agreement will be entered between related parties and its terms, including fees payable to our Manager, may be less favorable to us than if they had been negotiated on an arm's length basis between unrelated parties. Pursuant to the terms of our Management Agreement, we will agree to reimburse our Manager for the fees and other costs it pays to RMR. If our cash flows are insufficient to pay reimbursements owed to our Manager, we may pay them from the proceeds of this Offering and the concurrent private placement, which would reduce the amount of cash we have available for investing and other purposes. Because of the relationships among us, our Manager and RMR, the terms of our Management Agreement were not negotiated on an arm's length basis, and we can provide no assurance that these terms are as favorable to us as they would have been if our Management Agreement was negotiated on an arm's length basis between unrelated parties.

Terminating our Management Agreement may be difficult and will require our payment of a substantial termination fee.

Termination of our Management Agreement without a cause event will be difficult and costly. We may not terminate our Management Agreement during its initial term through December 31, 2020, except upon a cause event. Our Independent Trustees will review our Manager's performance and the management fees annually and, following the initial term ending December 31, 2020, our Management Agreement may be terminated annually without a cause event upon the affirmative vote of at least two-thirds (2/3) of our Independent Trustees based upon a determination that (a) our Manager's performance is unsatisfactory and materially detrimental to us or (b) the base management fee and incentive fee, taken as a whole, payable to our Manager are not fair to us (provided that in the instance of (b), our Manager will be afforded the opportunity to renegotiate the base management fee and incentive fee prior to termination). We will be required to provide our Manager with 180 days' prior written notice of any such termination. Additionally, in the event our Management Agreement is terminated by us without a cause event or by our Manager for a material breach, we will be required to pay our Manager 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 our Manager during the 24 month period immediately preceding the most recently completed calendar quarter prior to the date of termination or, if such termination occurs within 24 months of its initial commencement, the base management fee and the incentive fee will be annualized for such 24 month period based on such fees earned by our Manager during such period, plus (b) an amount equal to the initial organizational costs related to our formation and the costs of this Offering and the concurrent private placement paid by our Manager. These provisions will increase the cost to us of terminating our Management Agreement and adversely affect our ability to terminate our Manager or not renew our Management Agreement without a cause event. These terms of our Management Agreement may

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discourage a change in our control, including a change of control which might result in payment of a premium for our Shares.

Our Manager does not guaranty our performance; moreover, we could experience poor performance or losses for which our Manager would not be liable. Our Manager's liability is limited under our Management Agreement, and we will agree to indemnify our Manager against certain liabilities.

Our Manager maintains a contractual as opposed to a fiduciary relationship with us. Our Manager does not guaranty our performance. Pursuant to our Management Agreement, our Manager 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. We could experience poor performance or losses for which our Manager would not be liable. Under the terms of our Management Agreement, our Manager 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 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 are proved to constitute bad faith, fraud, intentional misconduct, gross negligence or reckless disregard of the duties of our Manager under our Management Agreement. In addition, under the terms of our Management Agreement, we agree to indemnify, hold harmless and advance expenses to our Manager and its affiliates, including RMR, and their respective directors, trustees, officers, shareholders, owners, members, managers, employees and personnel from and against 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 acts or omissions related to the provision of services to us or the performance of any matter pursuant to an instruction by our Board of Trustees, except to the extent it is proved that such acts or omissions constituted bad faith, fraud, intentional misconduct, gross negligence or reckless disregard of the duties of our Manager 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.

Our Manager may change its processes for identifying, evaluating and managing investments and the personnel performing those functions for us without our or our shareholders' consent at any time.

Our Manager may change its personnel and processes for identifying, evaluating and managing investments for us without our or our shareholders' consent at any time. In addition, there can be no assurance that our Manager will follow its processes. Changes in our Manager's personnel and processes may result in fewer investment opportunities for us, inferior diligence and underwriting standards or adversely affect the collection of payments on, and the preservation of our rights with respect to, our investments, any of which may adversely affect our operating results.

Our Declaration of Trust and Management Agreement permit our Trustees and officers, our Manager, its affiliates and their respective directors, trustees, officers, employees and agents to retain business opportunities for their own benefit and to compete with us.

In recognition of the fact that our Trustees and officers and our Manager, its affiliates and their respective directors, trustees, officers, employees and agents may engage in other activities or lines of business similar to those in which we engage, our Declaration of Trust and Management Agreement provide that if such a person acquires knowledge of a potential business opportunity, we renounce any

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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. Accordingly, to the maximum extent permitted by Maryland law (a) no such person is required to present, communicate or offer any business opportunity to us and (b) such persons, on their own behalf and on behalf of our Manager, any affiliate of such person or our Manager and any other person to which such person, RMR or any of their affiliates provide management services, will have the right to hold and exploit any business opportunity, or to direct, recommend, offer, sell, assign or otherwise transfer such business opportunity to any person other than us. Consequently, our Declaration of Trust and Management Agreement permit our Trustees and officers and our Manager and its affiliates, including RMR, to engage in activities that compete with us.

Disputes with our Manager may be referred to binding arbitration.

Our Management Agreement provides that any dispute arising thereunder may be referred to binding arbitration. As a result, we and our shareholders may not be able to pursue litigation in courts against our Manager for such disputes. In addition, the ability to collect attorneys' fees or other damages may be limited in the arbitration proceedings, which may discourage attorneys from agreeing to represent parties wishing to bring such litigation.

Our Manager is subject to extensive regulation as an investment adviser, which could adversely affect its ability to manage our business.

Our Manager is subject to regulation as an investment adviser by various regulatory authorities that are charged with protecting the interests of its clients, including us. Our Manager could be subject to civil liability, criminal liability, or sanction, including revocation of its registration as an investment adviser, censures, fines, or temporary suspension or permanent bar from conducting business, if it is found to have violated any of the laws or regulations governing investment advisers. Any such liability or sanction could adversely affect our Manager's ability to manage our business. Our Manager must continually address conflicts between its interests and those of its clients, including us. In addition, the SEC and other regulators have increased their scrutiny of conflicts of interest. Our Manager has procedures and controls that are reasonably designed to address these issues. However, appropriately dealing with conflicts of interest is complex and difficult and if our Manager fails, or appears to fail, to deal appropriately with conflicts of interest, it could face litigation or regulatory proceedings or penalties, any of which could adversely affect its ability to manage our business.

RISKS RELATED TO OUR SHARES

There is no public market for our Shares, and a market may never develop.

At the time of the closing of this Offering, there will be no established trading market for our Shares. We have applied to have our Shares approved for listing on the Nasdaq under the trading symbol "TRMT". However, there can be no assurance that our application will be approved or, if our application is approved and our Shares are listed on the Nasdaq, that an active trading market for our Shares will develop, or if one develops, be maintained. Accordingly, no assurance can be given as to the ability of our shareholders to sell their Shares or as to the price that our shareholders may obtain for their Shares.

Our Manager is paying the costs of this Offering, but it does not intend to pay the costs of any future offerings of our Shares.

Our Manager has agreed to pay 100% of the initial organizational costs related to our formation and the costs of this Offering, including the underwriting discounts and commissions. However, our

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Manager has not agreed, and does not currently expect, to pay the costs of any future offerings of Shares by us or future organizational costs.

The market price of and liquidity of the market for our Shares may be significantly affected by numerous factors, some of which are beyond our control.

The market price of and liquidity of the market for our Shares may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. Some of the factors that could negatively affect the market for our Shares include:

➤

our actual or projected operating results, financial condition, cash flows and liquidity, or changes in business strategy or prospects;

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publication of research reports about us or the real estate industry;

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actual or perceived conflicts of interest with our Manager, RMR, their affiliates or other individuals, including our Managing Trustees and executive officers;

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equity issuances by us, or Share resales by our Manager or other large shareholders, or the perception that such issuances or resales may occur;

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loss of a major funding source;

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actual or anticipated accounting problems;

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changes in market valuations of similar companies;

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adverse market reactions to investments we make in the future;

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adverse market reaction to any increased indebtedness we incur;

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additions to or departures of personnel of our Manager or its affiliates;

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speculation in the press or investment community;

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increases in market interest rates, which may lead investors to demand a higher distribution yield as a percentage of market price for our Shares, if we have begun to make distributions to our shareholders;

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increases in market interest rates, which would result in increased interest expenses on our debt;

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our failure to maintain our qualification for taxation as a REIT;

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our failure to maintain our exemption from registration under the Investment Company Act;

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price and volume fluctuations in the overall stock market from time to time;

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general market and economic conditions and trends, including inflationary concerns and the current state of the credit and capital markets;

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significant volatility in the market price and trading volume of securities of publicly owned REITs or other companies in the business of making CRE loans;

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changes in law, regulatory policies or tax guidelines, or interpretation thereof, particularly with respect to REITs or the relative tax advantages that REITs have compared to other businesses;

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changes in the value of our portfolio;

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any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;

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➤

operating performance of companies comparable to us; and

➤

short selling pressure with respect to our Shares.

As noted above, market factors unrelated to our performance could also negatively impact the market for our Shares. One of the important factors that investors may consider in deciding whether to buy or sell our Shares is our distribution rate as a percentage of our Share price relative to market interest rates. If market interest rates increase, prospective investors may demand a higher distribution rate by offering a lower price to buy our Shares. If interest rates rise, it is likely that the market price of our Shares will decrease as market rates on interest bearing securities increase.

We may use a portion of the proceeds of this Offering, the concurrent private placement or future debt leverage we incur to make quarterly distributions.

Prior to the time we have fully invested the proceeds of this Offering and the concurrent private placement in our target investments, we may fund some or all of our quarterly distributions out of the proceeds of these offerings, which would reduce the amount of cash we have available for investing and other purposes. Also, even after we have invested the proceeds of this Offering and the concurrent private placement, if our earnings are insufficient to fund our distributions to shareholders at the level established by our Board of Trustees, we may pay distributions to our shareholders with the proceeds of borrowings or other leverage that we may establish or from sales of our assets. The use of these proceeds for distributions could be dilutive to our shareholders' ownership interests in us. In addition, funding our distributions from the proceeds of this Offering and the concurrent private placement or from our future borrowings or from asset sales, may constitute a return of capital to our investors, which would have the effect of reducing our shareholders' bases in their Shares.

Shares eligible for future sale may have adverse effects on our Share price.

We are offering                           Shares in this Offering (excluding the underwriters' overallotment option to purchase up to an additional                            Shares). Concurrently with the completion of this Offering, our Manager will acquire $              million in Shares in a private placement at the same price per Share as the initial public offering price in this Offering. Our Manager will agree that, for a period of 180 days after the date of this prospectus, it will not, without the prior written consent of UBS Securities LLC, dispose of or hedge any of the Shares it purchases in the concurrent private placement, subject to certain exceptions and extension in certain circumstances. Assuming no exercise of the underwriters' overallotment option to purchase additional Shares, approximately         % of our Shares outstanding upon completion of this Offering will be subject to the lock-up agreement. When this lock-up period expires, these Shares will become eligible for sale, subject to the requirements of Rule 144, or Rule 144, under the Securities Act of 1933, as amended, or the Securities Act.

After the completion of this Offering, we may issue equity-based awards under our 2017 Equity Compensation Plan, or our Equity Compensation Plan. Also, we may issue additional Shares in subsequent public offerings or private placements to make new investments or for other purposes. We are not required to offer any such Shares to existing shareholders on a preemptive basis. Therefore, it may not be possible for existing shareholders to participate in such future issuances, which may dilute the existing shareholders' interests in us.

We cannot predict the effect, if any, of future sales of our Shares, or the availability of Shares for future sale, on the market price of our Shares. Sales of substantial amounts of our Shares or the perception that such sales could occur may adversely affect the prevailing market price for our Shares.

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We have not established a minimum distribution payment level and we may be unable to make distributions to our shareholders at any time in the future.

We are generally required to distribute annually to our shareholders at least 90% of our REIT taxable income (which may be different than our income calculated according to GAAP), determined without regard to the deduction for dividends paid and excluding net capital gains, for us to qualify for taxation as a REIT, which requirement we currently intend to satisfy through quarterly distributions in amounts equal to our REIT taxable income in each year, subject to certain adjustments. We have not established a minimum distribution payment level, and our ability to pay distributions may be adversely affected by a number of factors, including the risk factors described in this prospectus. All distributions will be made at the discretion of our Board of Trustees and will depend on our earnings, financial condition, debt covenants, maintenance of our qualification for taxation as a REIT and other factors as our Board of Trustees may deem relevant from time to time. We believe that a change in any one of the following factors could adversely affect our results of operations and impair our ability to pay distributions to our shareholders:

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the profitability of the investments we make with the proceeds of this Offering and the concurrent private placement;

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our ability to obtain debt leverage at a cost less than the returns we realize on our investments made with the proceeds of such debt leverage;

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our ability to make profitable additional investments in the future;

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defaults by our borrowers and decreases in the value of and income from our collateral properties; and

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the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.

No assurance can be given that we will be able to make distributions to our shareholders at any time in the future, that the level of any distributions we do make to our shareholders will achieve a market yield relative to the price paid for our Shares in this Offering, or that we will be able to increase or even maintain our distribution level over time.

Distributions that we make to our shareholders will generally be taxable to our shareholders as ordinary income. However, a portion of our distributions may be designated by us as long term capital gains to the extent that they are attributable to capital gain income recognized by us or may constitute a return of capital to the extent that they exceed our earnings and profits as determined for tax purposes. A return of capital is not taxable, but has the effect of reducing the basis of a shareholder's investment in our Shares.

Investing in our Shares involves a high degree of risk.

The investments that we make in accordance with our investment objectives may result in a high amount of risk when compared to alternative investment options. Our investments may be highly speculative and aggressive, and therefore an investment in our Shares may not be suitable for someone with low risk tolerance.

Our future offerings of debt or equity securities that rank senior to our Shares may adversely affect you.

If we decide in the future to issue debt or equity securities that rank senior to our Shares, it is likely that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Also, any convertible or exchangeable securities that we issue in the future may

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have rights, preferences and privileges more favorable than those of our Shares and may result in dilution to our shareholders. We and, indirectly, our shareholders, will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or even estimate the amount, timing or nature of our future capital offerings. Thus our shareholders will bear the risk of our future offerings reducing the market price of our Shares and diluting the value of their Shares.

RISKS RELATED TO OUR ORGANIZATION AND STRUCTURE

Ownership limitations and takeover defense provisions in our Declaration of Trust and Bylaws, as well as certain provisions of Maryland law, may inhibit a change in our control and prevent our shareholders from receiving a takeover premium.

Our Declaration of Trust prohibits any shareholder other than our Manager, RMR and their affiliates from owning (directly and by attribution) more than 9.8% in value or number, whichever is more restrictive, of any class or series of our shares of beneficial interest, including our Shares. This provision of our Declaration of Trust is intended to, among other purposes, assist with our REIT compliance under the IRC and otherwise to promote our orderly governance. However, this provision also inhibits acquisitions of a significant stake in us and may prevent a change in our control. Additionally, many provisions contained in our governing documents, described below under the caption "Material Provisions of Maryland Law and of Our Declaration of Trust and Bylaws", may further deter persons from attempting to acquire control of us and implement changes that may be beneficial to our shareholders, including, for example, provisions relating to:

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the division of our Trustees into three classes, with the term of one class expiring each year, which could delay a change in our control;

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shareholder voting rights and standards for the election of Trustees and approval of other business;

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required qualifications for individuals to serve as Trustees including requirements that certain of our Trustees be "Managing Trustees" and other Trustees be "Independent Trustees";

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limitations on the ability of our shareholders to propose nominees for election as Trustees and propose other business to be considered at a meeting of our shareholders, which provisions require, among other things, that one or more shareholders desiring to propose nominees for election as Trustees or other business must have continuously owned in aggregate for at least three years (or, if prior to                           , 2020, since                           , 2017) at least one percent (1%) of our shares of beneficial interest;

➤

limitations on the ability of our shareholders to remove our Trustees, which provide that a Trustee may only be removed for cause by the affirmative vote of the holders of not less than two-thirds (2/3) of the outstanding shares of each class or series of our shares entitled to be cast in the election of such Trustee at a properly called shareholders meeting;

➤

the authority of our Board of Trustees, and not our shareholders, to adopt, amend or repeal our bylaws that will be in effect upon the completion of this Offering, or our Bylaws.

Certain provisions of the Maryland General Corporation Law, or the MGCL, applicable to Maryland REITs, may have the effect of inhibiting a third party from acquiring us or of impeding a change of control of us under circumstances that otherwise could provide our shareholders with the opportunity

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to realize a premium over the then-prevailing market price of such shares or otherwise be in the best interest of shareholders, including:

➤

"Business combination" provisions that, subject to limitations, prohibit certain business combinations (including a merger, consolidation, share exchange, or, in circumstances specified in the MGCL, an asset transfer or issuance or reclassification of equity securities) between us and an "interested shareholder" (defined generally as any person who beneficially owns 10% or more of our then outstanding voting shares of beneficial interest or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of our then outstanding voting shares) or an affiliate thereof for five years after the most recent date on which the shareholder becomes an interested shareholder. After the five-year prohibition, any business combination between us and an interested shareholder generally must be recommended by our Board of Trustees and, if shareholders do not receive the minimum price for their shares prescribed by the MGCL in the business combination, such business combination must be approved by a specified supermajority vote of our shareholders. Our Board of Trustees has adopted a resolution that any business combination between us and any other person is exempted from the business combination provisions of the MGCL, provided that the business combination is first approved by the Board of Trustees, including the approval of a majority of the members of the Board of Trustees who are not affiliates or associates of the interested shareholder.

➤

"Control share" provisions that provide that, subject to certain exceptions, holders of "control shares" of ours (defined as voting shares that, if aggregated with all other shares owned or controlled by the acquirer, would entitle the acquirer to exercise one of three increasing ranges of voting power in electing trustees) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of issued and outstanding "control shares") have no voting rights with respect to the control shares except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all of the votes entitled to be cast on the matter, excluding all interested shares. Our Bylaws contain a provision opting out of the Maryland control share acquisition act.

➤

Additionally, Title 3, Subtitle 8 of the MGCL permits our Board of Trustees, without shareholder approval and regardless of what is currently provided in our Declaration of Trust or Bylaws, to implement certain takeover defenses.

These provisions may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change in our control under circumstances that otherwise could provide our shareholders with the opportunity to realize a premium over the then current market price.

Our Board of Trustees has the power to cause us to issue an unlimited number of additional Shares, preferred shares or any other class or series of our shares of beneficial interest without shareholder approval.

Our Declaration of Trust authorizes us to issue additional authorized but unissued Shares. In addition, our Board of Trustees may, without shareholder approval, (a) amend our Declaration of Trust to increase or decrease the aggregate number of Shares or the number of shares of beneficial interest of any class or series that we have authority to issue and (b) classify or reclassify any unissued Shares, preferred shares or any other class of our shares of beneficial interest and set the preferences, rights and other terms of the classified or reclassified shares. As a result, our Board of Trustees may establish and we may issue a class or series of our Shares, preferred shares or other shares of beneficial interest that could delay or prevent a merger, third party tender offer or similar transaction or a change in incumbent management that might involve a premium price for our Shares or which some shareholders may believe to be in the best interest of our shareholders.

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Our Declaration of Trust contains provisions that limit the liability of our Trustees and officers to us and our shareholders. We are required to indemnify our Trustees and officers in connection with certain proceedings.

Our Declaration of Trust contains provisions that limit the liability of our Trustees and officers to us and our shareholders to the maximum extent permitted by Maryland law. Under current Maryland law, our Trustees and officers will not have any liability to us and our shareholders for money damages other than liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty by the Trustee or officer that was established by a final judgment as being material to the cause of action adjudicated.

Our Declaration of Trust requires us to indemnify any present or former Trustee or officer, to the maximum extent permitted by Maryland law, who is made or threatened to be made a party to or witness in a proceeding by reason of his or her service in those or certain other capacities, from and against any claim or liability to which such person may become subject or which such person may incur by reason of his or her status as a present or former Trustee or officer of us or serving in such other capacities. However, except with respect to proceedings to enforce rights to indemnification, we are required to indemnify any such person in connection with a proceeding initiated by such person against us only if such proceeding was authorized by our Board of Trustees. In addition, we may be obligated to pay or reimburse the expenses incurred by our present and former Trustees and officers without requiring a preliminary determination of their ultimate entitlement to indemnification. We will enter into indemnification agreements with our Trustees and officers providing for procedures for indemnification by us and advancements by us of certain expenses and costs relating to claims, suits or proceedings arising from their service to us, in each case, to the maximum extent permitted by Maryland law.

As a result, we and our shareholders will have more limited rights to recover money damages from our Trustees and officers than might otherwise exist absent these provisions in our Declaration of Trust or that might exist with other companies, which could limit your recourse in the event of actions that are not in our best interests.

Our Bylaws designate the Circuit Court for Baltimore City, Maryland as the exclusive forum for certain actions and proceedings that may be initiated by our shareholders against us or any of our Trustees or officers or our Manager or any of its affiliates.

Our Bylaws provide that the Circuit Court for Baltimore City, Maryland will be the sole and exclusive forum for: (a) any derivative action or proceeding brought on our behalf; (b) any action asserting a claim for breach of a duty owed by any of our Trustees or officers or our Manager or any of its affiliates to us or our shareholders; (c) any action asserting a claim against us or any of our Trustees or officers or our Manager or any of its affiliates arising pursuant to applicable law, our Declaration of Trust or Bylaws brought by or on behalf of a shareholder; or (d) any action asserting a claim against us or any of our Trustees or officers or our Manager or any of its affiliates that is governed by the internal affairs doctrine. These choice of forum provisions may limit a shareholder's ability to bring a claim in a judicial forum that the shareholder believes is favorable for such disputes and may discourage lawsuits against us and our Trustees and officers and our Manager and its affiliates.

Our intention to remain exempt from registration under the Investment Company Act imposes limits on our operations.

As discussed below under "Business—Regulatory issues and limitation on Share ownership—Investment Company Act Exemption," we intend to conduct our operations so that neither we nor any of our subsidiaries is required to register as an investment company under the Investment Company Act. We

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believe we will not be considered an investment company under Section 3(a)(1)(A) of the Investment Company Act because we will not engage primarily, or hold ourselves out as being engaged primarily, in the business of investing, reinvesting or trading in securities. We may conduct our business, in whole or in part, through wholly or majority owned subsidiaries. Under Section 3(a)(1)(C) of the Investment Company Act, the securities issued by these subsidiaries that are excepted from the definition of "investment company" under Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act, together with any other investment securities we may own, may not have a combined value in excess of 40% of the value of our total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis. This requirement limits the types of businesses in which we may engage through subsidiaries. In addition, the assets we may originate or acquire are limited by the provisions of the Investment Company Act and the rules and regulations promulgated under the Investment Company Act, which may adversely affect our business.

If the value of securities issued by our subsidiaries that are excepted from the definition of "investment company" by Section 3(c)(1) or 3(c)(7) of the Investment Company Act, together with any other investment securities we own, exceeds 40% of our total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis, or if one or more of such subsidiaries fails to maintain an exception or exemption from the Investment Company Act, we could, among other things, be required to either (a) substantially change the manner in which we conduct our operations to avoid being required to register as an investment company or (b) register as an investment company under the Investment Company Act, either of which could have an adverse effect on us and the market price of our Shares. If we or any of our subsidiaries were required to register as an investment company under the Investment Company Act, the registered entity would become subject to substantial regulation with respect to capital structure (including the ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), portfolio composition, including restrictions with respect to diversification and industry concentration, compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly change our operations.

Failure to maintain our exemption from registration under the Investment Company Act also would require us to significantly restructure our investment strategy. For example, because affiliate transactions are generally prohibited under the Investment Company Act, we would not be able to enter into transactions with any of our affiliates if we were required to register as an investment company, and we might be required to terminate our Management Agreement and any other agreements with affiliates, which could have a material adverse effect on our ability to operate our business and pay distributions. If we were required to register as an investment company but failed to do so, we would be prohibited from engaging in our business, and criminal and civil actions could be brought against us. In addition, our contracts might be unenforceable unless a court required enforcement, and a court could appoint a receiver to take control of us and liquidate our business.

We expect that we and certain subsidiaries that we may form in the future will rely upon the exemption from registration as an investment company under the Investment Company Act pursuant to Section 3(c)(5)(C) of the Investment Company Act, which is available for entities "primarily engaged" in the business of "purchasing or otherwise acquiring mortgages and other liens on and interests in real estate". This exemption generally requires that at least 55% of our or our applicable subsidiaries' assets must be comprised of qualifying real estate assets and at least 80% of our or each of our applicable subsidiaries' portfolios must be comprised of qualifying real estate assets and real estate related assets under the Investment Company Act. To the extent that we or any of our subsidiaries rely on Section 3(c)(5)(C) of the Investment Company Act, we expect to rely on guidance published by the SEC staff or on our analyses of such guidance to determine which assets are qualifying real estate assets and real estate related assets. However, the SEC's guidance was issued in

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accordance with factual situations that may be different from the factual situations we face, and much of the guidance was issued more than 25 years ago. No assurance can be given that the SEC staff will concur with our classification of our assets. In addition, the SEC staff may, in the future, issue further guidance that may require us to re-classify our assets for purposes of qualifying for an exemption from registration under the Investment Company Act. If we are required to re-classify our assets, we may no longer be in compliance with the exclusion from the definition of an "investment company" provided by Section 3(c)(5)(C) of the Investment Company Act. To the extent that the SEC staff publishes new or different guidance with respect to any assets we have determined to be qualifying real estate assets, we may be required to adjust our strategy accordingly. In addition, we may be limited in our ability to make certain investments, and these limitations could result in a subsidiary holding assets we might wish to sell or selling assets we might wish to hold.

The SEC has not published guidance with respect to the treatment of CMBS for purposes of the Section 3(c)(5)(C) exemption. Unless we receive further guidance from the SEC or its staff with respect to CMBS, we intend to treat CMBS as a real estate related asset.

We or certain of our subsidiaries may also rely on the exemption provided by Section 3(c)(6) of the Investment Company Act. The SEC staff has issued little interpretive guidance with respect to Section 3(c)(6) of the Investment Company Act and any guidance published by the staff may require us to adjust our strategy accordingly. We intend to structure and conduct our business in a manner that does not require our or our subsidiaries' registration under the Investment Company Act and, in so structuring and conducting our business, we may rely on any available exemption from registration, or exclusion from the definition of "investment company," under the Investment Company Act.

We determine whether an entity is one of our majority owned subsidiaries. The Investment Company Act defines a majority owned subsidiary of a person as a company 50% or more of the outstanding voting securities of which are owned by such person, or by another company which is a majority owned subsidiary of such person. The Investment Company Act further defines voting securities as any security presently entitling the owner or holder thereof to vote for the election of directors of a company. We treat companies in which we own at least a majority of the outstanding voting securities as majority owned subsidiaries for purposes of the 40% test described above. We have not requested the SEC to approve our treatment of any company as a majority owned subsidiary and the SEC has not done so. If the SEC were to disagree with our treatment of one or more companies as majority owned subsidiaries, we might need to adjust our strategy and our assets in order to continue to pass the 40% test. Any such adjustment in our strategy could have a material adverse effect on us.

There can be no assurance that the laws and regulations governing the Investment Company Act status of REITs, including the SEC or its staff providing more specific or different guidance regarding these exemptions, will not change in a manner that adversely affects our operations. If we or our subsidiaries fail to maintain an exception or exemption from the Investment Company Act, we could, among other things, be required either to (a) change the manner in which we conduct our operations to avoid being required to register as an investment company, (b) sell our assets in a manner that, or at a time when, we would not otherwise choose to do so or (c) register as an investment company, any of which could negatively affect the value of our Shares, the sustainability of our business, and our ability to make distributions, which could have an adverse effect on our business and the market price for our Shares.

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Rapid and steep declines in the values of our qualifying real estate or real estate related investments may make it more difficult for us to maintain our qualification for taxation as a REIT or exemption from the Investment Company Act.

If the market value or income potential of our qualifying real estate or real estate related investments declines as a result of increased interest rates or other factors, we may need to increase our qualifying real estate or real estate related investments and income and/or liquidate our nonqualifying assets in order to maintain our qualification for taxation as a REIT or our exemption from registration under the Investment Company Act. If the decline in real estate asset values and/or income occurs quickly, this may be especially difficult to accomplish. This difficulty may be exacerbated by the illiquid nature of any nonqualifying assets that we may own. We may have to make investment decisions that we otherwise would not make absent the REIT and Investment Company Act considerations, and those decisions may cause us to experience losses and reduce the market trading price of our Shares.

RISKS RELATED TO OUR TAXATION

Our failure to qualify or remain qualified for taxation as a REIT could have significant adverse consequences.

We intend to elect and qualify for taxation as a REIT under the IRC commencing with our taxable year ending December 31, 2017 and to maintain that qualification thereafter. As a REIT, we generally will not pay U.S. federal or most state income taxes as long as we distribute all of our REIT taxable income and meet other qualifications set forth in the IRC. However, actual qualification for taxation as a REIT depends on our satisfying complex statutory requirements, for which there are only limited judicial and administrative interpretations. We expect that upon the completion of this Offering we will be organized, and that we will continue to be organized and will operate, in a manner that will allow us to qualify for taxation as a REIT under the IRC, pursuant to our timely election with our first REIT income tax return. However, we cannot be sure that, upon review or audit, the U.S. Internal Revenue Service, or the IRS, will agree with this conclusion. Furthermore, we cannot be sure that the federal government, or any state or other taxation authority, will continue to afford favorable income tax treatment to REITs and their shareholders.

Maintaining our qualification for taxation as a REIT will require us to continue to satisfy tests concerning, among other things, the nature of our assets, the sources of our income and the amounts we distribute to our shareholders. If we fail to qualify or remain qualified for taxation as a REIT, then our ability to raise capital might be adversely affected, we may be subject to material amounts of U.S. federal and state income taxes, and the value of our Shares will likely decline. In addition, if we lose or revoke our qualification as a REIT for a taxable year, we will generally be prevented from requalifying for taxation as a REIT for the next four taxable years.

Complying with REIT requirements may cause us to forgo otherwise attractive opportunities or to liquidate otherwise attractive investments.

To qualify for taxation as a REIT, we must satisfy ongoing REIT qualification tests, as mentioned above. As a result, we may be unable to pursue investments that would otherwise be advantageous to us in order to satisfy the source of income or asset diversification requirements for qualifying for taxation as a REIT. Thus, compliance with the REIT requirements may hinder our ability to make, and in some cases to maintain ownership of, otherwise attractive investments.

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REIT distribution requirements could adversely affect our ability to execute our business plan.

We generally must distribute annually at least 90% of our REIT taxable income, subject to specified adjustments and excluding any net capital gain, in order to maintain our qualification for taxation as a REIT. To the extent that we satisfy this distribution requirement, federal corporate income tax will not apply to the earnings that we distribute, but if we distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on our undistributed taxable income. We intend to make distributions to our shareholders to comply with the REIT requirements of the IRC. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our shareholders in a calendar year is less than a minimum amount specified under federal tax laws.

We may generate taxable income greater than our income for financial reporting purposes prepared in accordance with GAAP. In addition, we may experience timing and other differences, for example on account of income and expense accrual principles under U.S. federal income tax laws, or on account of repaying outstanding indebtedness, whereby our available cash is less than, or does not otherwise correspond to, our taxable income. As a result, from time to time we may not have sufficient cash to meet our REIT distribution requirements. If we do not have other funds available in these situations, we may decide to borrow funds on unfavorable terms, sell investments at disadvantageous prices or distribute amounts that would otherwise be invested in future acquisitions in order to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our shareholders' equity. Thus, compliance with the REIT requirements may hinder our ability to grow, which could adversely affect the value of our Shares.

We may be required to report taxable income from particular investments in excess of the economic income we ultimately realize from them.

We may acquire debt instruments in the secondary market for less than their face amount. The discount at which such debt instruments are acquired may reflect doubts about their ultimate collectability rather than current market interest rates. The amount of such discount will nevertheless generally be treated as "market discount" for U.S. federal income tax purposes. Accrued market discount is generally reported as income when, and to the extent that, any payment of principal of the debt instrument is made. Payments on commercial mortgage loans are ordinarily made monthly, and consequently accrued market discount may have to be included in income each month as if the debt instrument were assured of ultimately being collected in full. If we collect less on the debt instrument than our purchase price plus the market discount we had previously reported as income, we may not be able to benefit from any offsetting loss deductions.

Moreover, some of the CMBS that we acquire may have been issued with original issue discount. We will be required to report such original issue discount based on a constant yield method and will be taxed based on the assumption that all future projected payments due on such CMBS will be made. If such CMBS turns out not to be fully collectible, an offsetting loss deduction will become available only in the later year that uncollectibility is provable.

Finally, in the event that any debt instruments or CMBS acquired by us are delinquent as to mandatory principal and interest payments, or in the event payments with respect to a particular debt instrument are not made when due, we may nonetheless be required to continue to recognize the unpaid interest as taxable income as it accrues, despite doubt as to its ultimate collectability. Similarly, we may be required to accrue interest income with respect to subordinate CMBS at its stated rate

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regardless of whether corresponding cash payments are received or are ultimately collectible. In each case, while we would in general ultimately have an offsetting loss deduction available to us when such interest was determined to be uncollectible, the utility of that deduction could depend on our having taxable income in that later year or thereafter.

We may in the future choose to pay dividends in our own Shares, in which case you may be required to pay income taxes in excess of the cash dividends that you receive.

We may in the future distribute taxable dividends that are payable in part in our Shares. Taxable shareholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits for federal income tax purposes. As a result, shareholders may be required to pay income taxes with respect to these dividends in excess of the cash dividends received. If a shareholder sells the Shares that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our Shares at the time of the sale. Furthermore, with respect to some non-U.S. shareholders, we may be required to withhold U.S. federal income tax with respect to these dividends, including in respect of all or a part of the dividend that is payable in our Shares. In addition, if a significant number of our shareholders determine to sell our Shares in order to pay taxes owed on dividends paid in Shares, that may put downward pressure on the trading price of our Shares.

Distributions to shareholders generally will not qualify for reduced tax rates.

Dividends payable by U.S. corporations to noncorporate shareholders, such as individuals, trusts and estates, are generally eligible for reduced U.S. federal income tax rates. However, we expect to qualify for taxation as a REIT for federal income tax purposes, and distributions paid by REITs generally are not eligible for these reduced rates. The more favorable rates for corporate dividends may cause some investors to perceive that an investment in a REIT is less attractive than an investment in a non-REIT entity that pays dividends, thereby reducing the demand and market price of our Shares.

Even if we qualify and remain qualified for taxation as a REIT, we may face other tax liabilities that reduce our cash flow.

Even if we qualify and remain qualified for taxation as a REIT, we may be subject to federal, state and local taxes on our income and assets, including taxes on any undistributed income, excise taxes, state or local income, property and transfer taxes, such as mortgage recording taxes, and other taxes. See "Material United States federal income tax considerations—Taxation as a REIT". Also, some state jurisdictions may in the future limit or eliminate favorable income tax deductions, including the dividends paid deduction, which could increase our income tax expense. In addition, in order to meet the requirements for qualification and taxation as a REIT, prevent the recognition of particular types of non-cash income, or avert the imposition of a 100% tax that applies to specified gains derived by a REIT from dealer property or inventory, we may hold some of our assets and conduct some of our operations through our TRSs or other subsidiary corporations that will be subject to corporate level income tax at regular rates. In addition, the TRS rules also impose a 100% excise tax on certain transactions between a TRS and its affiliated REIT that are not conducted on an arm's length basis. Any of these taxes would decrease cash available for distribution to our shareholders.

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Legislative or other actions affecting REITs could materially and adversely affect us and our shareholders.

The rules dealing with federal, state, and local taxation are constantly under review by persons involved in the legislative process and by the IRS, the U.S. Department of the Treasury, and other taxation authorities. Changes to the tax laws, with or without retroactive application, could materially and adversely affect us and our shareholders. We cannot predict how changes in the tax laws might affect us or our shareholders. New legislation, U.S. Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify for taxation as a REIT or the tax consequences of such qualification or could eliminate REIT tax status.

Our investments in construction loans require us to make estimates about the fair value of land improvements that may be challenged by the IRS.

We may invest in construction loans, the interest from which would be qualifying income for purposes of the gross income tests applicable to REITs, provided that the loan value of the real property securing the construction loan was equal to or greater than the highest outstanding principal amount of the construction loan during any taxable year. For purposes of construction loans, the loan value of the real property is generally the fair value of the land plus the reasonably estimated cost of the improvements or developments that secure the loan and that are to be constructed from the proceeds of the loan. There can be no assurance that the IRS will not challenge our estimates of the loan values of the real property related to any construction loans in which we invest.

The failure of a mezzanine loan to qualify as a real estate asset could adversely affect our ability to remain qualified for taxation as a REIT.

We may originate or acquire mezzanine loans, for which the IRS has provided a safe harbor but not rules of substantive law. Pursuant to the safe harbor, if a mezzanine loan meets specified requirements, it will be treated by the IRS as a real estate asset for purposes of the REIT asset tests, and interest derived from the mezzanine loan will be treated as qualifying mortgage interest for purposes of the 75% gross income test applicable to REITs. We may originate or acquire mezzanine loans that do not meet all of the requirements of this safe harbor. In the event we own a mezzanine loan that does not meet the safe harbor requirements and the IRS successfully challenges the loan's treatment as a real estate asset for purposes of the REIT asset and income tests, then we could fail to qualify for taxation as a REIT.

We may fail to qualify for taxation as a REIT if the IRS successfully challenges the treatment of our mezzanine loans as debt for federal income tax purposes or successfully challenges the treatment of our preferred equity investments as equity for federal income tax purposes.

There is limited case law or administrative guidance addressing the treatment of mezzanine loans and preferred equity investments as debt or equity for federal income tax purposes. We expect that our mezzanine loans generally will be treated as debt for federal income tax purposes, and our preferred equity investments generally will be treated as equity for federal income tax purposes, but we do not anticipate obtaining private letter rulings from the IRS or opinions of counsel on the characterization of those investments for federal income tax purposes. If a mezzanine loan is treated as equity for federal income tax purposes, we will be treated as owning the assets held by the partnership or limited liability company that issued the mezzanine loan and we will be treated as receiving our proportionate share of the income of that entity. If that partnership or limited liability company owns nonqualifying assets or earns nonqualifying income, we may not be able to satisfy all of the REIT gross income and

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asset tests. Alternatively, if the IRS successfully asserts a preferred equity investment is debt for federal income tax purposes, then that investment may be treated as a nonqualifying asset for purposes of the 75% asset test and as producing nonqualifying income for the 75% gross income test. In addition, such an investment may be subject to the 10% value test and the 5% asset test, and it is possible that a preferred equity investment that is treated as debt for federal income tax purposes could cause us to fail one or more of the foregoing tests. Accordingly, we could fail to qualify for taxation as a REIT if the IRS does not respect our classification of our mezzanine loans or preferred equity for federal income tax purposes.

The failure of assets subject to repurchase agreements to qualify as real estate assets could adversely affect our ability to qualify for taxation as a REIT.

We may enter into financing arrangements that are structured as sale and repurchase agreements pursuant to which we nominally sell assets to a counterparty and simultaneously enter into an agreement to repurchase these assets at a later date in exchange for a purchase price. Economically, these agreements are financings that are secured by the assets sold pursuant to those agreements. We believe that we will be treated for REIT asset and income test purposes as the owner of the assets that are the subject of any such sale and repurchase agreement notwithstanding that such agreement may transfer record ownership of the assets to the counterparty during the term of the agreement. It is possible, however, that the IRS may assert that we did not own the assets during the term of the sale and repurchase agreement, in which case our qualification for taxation as a REIT may be jeopardized.

Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.

The REIT provisions of the IRC substantially limit our ability to hedge our assets and liabilities. Any income from a hedging transaction that we enter into to manage risk of interest rate changes with respect to borrowings made or to be made to acquire or carry real estate assets does not constitute "gross income" for purposes of the 75% or 95% gross income tests that we must satisfy in order to maintain our qualification for taxation as a REIT. As a result, a qualifying hedge transaction will neither assist nor hinder our compliance with the 75% and 95% gross income tests. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of both of these gross income tests. As a result of these rules, we may limit our use of advantageous hedging techniques or implement some hedges through a TRS. This could increase the cost of our hedging activities because our TRS would be subject to tax on gains or expose us to greater risks associated with changes in the hedged items than we would otherwise want to bear. In addition, losses in our TRS will generally not provide any tax benefit, except for being carried forward against future taxable income in the TRS.

If we own assets or conduct operations that generate "excess inclusion income" outside of a TRS, our doing so could adversely affect our shareholders' taxation and could cause our Shares to become ineligible for inclusion in leading market indexes.

Some leading market indexes exclude companies whose dividends to shareholders constitute "unrelated business taxable income" as defined by Section 512 of the IRC, or UBTI. For purposes of the IRC, shareholder dividends attributable to a REIT's "excess inclusion income" are treated as UBTI to specified investors, and thus REITs that generate excess inclusion income are generally not eligible for inclusion in these market indexes. Furthermore, REIT dividends attributable to excess inclusion income cause both the REIT and its shareholders to experience a range of disruptive and adverse U.S. federal income tax consequences, including the recognition of UBTI by specified tax-exempt shareholders, the

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unavailability of treaty benefits to non-U.S. shareholders and the unavailability of net operating losses to offset such income with respect to U.S. taxable shareholders. See "Material United States federal income tax considerations—Taxation as a REIT". We do not intend to acquire assets or enter into financing or other arrangements that will produce excess inclusion income for our shareholders. As a result, we may forgo investment or financing opportunities that we would otherwise have considered attractive. Furthermore, our analysis regarding our investments' or activities' potential for generating excess inclusion income could be subject to challenge or we could affirmatively modify our position regarding the generation of excess inclusion income in the future. In either case, our shareholders could suffer adverse tax consequences through the recognition of UBTI or the other adverse consequences that flow from excess inclusion income. Furthermore, in such an event, our Shares could become ineligible for inclusion in those market indexes that exclude UBTI-generating stock, which could adversely affect demand for our Shares and their market price.

The tax on prohibited transactions will limit our ability to engage in transactions, including some methods of securitizing mortgage loans, which would be treated as sales for U.S. federal income tax purposes.

A REIT's net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions at a gain of property, other than foreclosure property, but including mortgage loans, held primarily for sale to customers in the ordinary course of business. If we were to dispose of or securitize loans in a manner that was treated as a sale of the loans for U.S. federal income tax purposes, those sales could be viewed as sales to customers in the ordinary course of business and to that extent subject to the 100% tax. Therefore, in order to avoid the prohibited transactions tax, we may choose not to engage in particular sales of loans, or may limit the structures we utilize for our dispositions or securitization transactions, even though the sales or structures might otherwise be beneficial to us.

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Cautionary note regarding forward looking statements

This prospectus contains forward looking statements. You can identify forward looking statements by the use of forward looking terminology such as "believes," "expects," "may," "will," "would," "could," "should," "seeks," "intends," "plans," "projects," "estimates," "anticipates," "predicts" or "potential", by the negative of these words and phrases, or by similar words or phrases. You can also identify forward looking statements by discussions of strategy, plans or intentions. Forward looking statements may be impacted by a number of risks and uncertainties which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by our forward looking statements. The forward looking statements in this prospectus include statements related to:

➤

our use of proceeds of this Offering;

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our business and investment strategy;

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the ability of our Manager to locate suitable investments for us, monitor, service and administer our investments and implement our investment strategy;

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the origination, extension, exit, prepayment or other fees we may earn;

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yields that may be available to us from mortgages on specialized real estate;

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the length of our loan terms and the other terms of our loans;

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our projected operating results;

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the amount and timing of our cash flows, if any, from our investments;

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estimates relating to our payment of distributions to our shareholders and the timing thereof;

➤

our expected leverage;

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our ability to obtain financing to enable us to use leverage to make additional investments that may increase our potential returns;

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the state of the U.S. economy generally or in specific geographic regions;

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changes in interest rates and impacts of such changes on our financial results;

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the volatility of the markets;

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defaults by borrowers on our loans;

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allocation of investment opportunities to us by our Manager;

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the retention of business opportunities by our Trustees and officers, our Manager and its affiliates and entities to which they provide management services for their own benefit;

➤

effects of hedging instruments on our returns;

➤

the extent to which our hedging strategies may or may not protect us from interest rate volatility;

➤

changes in governmental regulations, tax laws and rates, and similar matters (including interpretation thereof);

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our ability to maintain our qualification for taxation as a REIT;

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our ability to maintain our exemption from registration under the Investment Company Act;

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our understanding of our competition; and

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➤

market trends in our industry, interest rates, real estate values, the debt securities markets or the general economy.

The forward looking statements contained in this prospectus reflect our beliefs, assumptions and expectations of our future performance and actions, taking into account the information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties, not all of which are known to us, and can change as a result of future events. If any such changes occur, our business, financial condition, liquidity and results of operations may vary materially from those expressed in or implied by our forward looking statements. You should carefully consider these risks before you make an investment decision with respect to our Shares.

For more information regarding risks that may cause our actual results to differ materially from any forward looking statements, see "Risk factors". Except as required by applicable law, we disclaim any obligation to publicly update or revise any forward looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

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Use of proceeds

We are offering                           Shares at the initial public offering price of $             per Share. Our Manager will pay all of the initial organizational costs related to our formation and the costs of this Offering, including underwriting discounts and commissions of $             per Share. As a result, all Shares will be purchased by the underwriters from us at $             per Share, and the proceeds we will receive from selling Shares in this Offering will be $              million ($              million if the underwriters' overallotment option is exercised in full). Concurrently with the completion of this Offering, our Manager will acquire $              million in Shares in a private placement at the same price per Share as the initial public offering price in this Offering. The proceeds we will receive in the concurrent private placement of Shares will be $              million.

We plan to use all the proceeds of this Offering and the concurrent private placement as described above to make investments in accordance with our objectives and strategies described in this prospectus. Although we expect our primary focus will be originating and investing in floating rate first mortgage loans of less than $50.0 million, our target investments will also include subordinated mortgages, mezzanine loans, or preferred equity interests in entities that own middle market and transitional CRE. From time to time, we may also invest in other CRE related investments, including CMBS. We have not yet identified any specific investments. Until appropriate investments are identified, we expect to invest the proceeds of this Offering and the concurrent private offering in interest or dividend paying, short term investments that are consistent with our intention to qualify for taxation as a REIT and maintain our exemption from registration under the Investment Company Act. These investments are expected to provide lower earnings than we expect to achieve from our target investments. Prior to the time we have fully used the proceeds of this Offering and the concurrent private placement to make investments in our target investments, we may fund some or all of our quarterly distributions out of the proceeds of this Offering. Also, even after we have invested the proceeds of this Offering and the concurrent private placement, if our earnings are insufficient to fund our distributions to shareholders at the level established by our Board of Trustees, we may pay distributions to our shareholders with the proceeds of borrowings or other leverage that we may establish or from sales of our assets.

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Distribution policy

We intend to pay regular quarterly distributions to our shareholders. To qualify for taxation as a REIT, U.S. federal income tax law generally requires that we distribute annually at least 90% of our REIT taxable income (which may be different than our income calculated according to GAAP), determined without regard to the deduction for dividends paid and excluding net capital gains, and that we pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our net taxable income. We generally intend to pay distributions in amounts equal to our REIT taxable income. Because we have not yet identified any specific mortgage loans or other investments, we expect that our near term use of proceeds will produce little, if any, net income. Accordingly, we believe that our first distribution to our shareholders will likely be made following the first full calendar quarter after the closing of this Offering and that our regular quarterly distribution rate likely will not be established and paid until after completion of two full calendar quarters following the closing of this Offering.

To the extent our cash available for distribution in any calendar year is less than our taxable income, we could be required to sell assets or borrow funds to make cash distributions or make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities. In addition, prior to the time we have fully invested the proceeds of this Offering and the concurrent private placement in our target investments, we may fund some or all of our quarterly distributions out of the proceeds of this Offering, which would reduce the amount of cash we have available for investing and other purposes. Also, even after we have invested the proceeds of this Offering and the concurrent private placement, if our earnings are insufficient to fund our distributions to shareholders at the level established by our Board of Trustees, we may pay distributions to our shareholders with the proceeds of borrowings or other leverage that we may establish or from sales of our assets. The use of the proceeds of this Offering, borrowings or assets sales for distributions could result in dilution to the financial results available to our shareholders. Funding our distributions from the proceeds of this Offering, borrowings or asset sales may constitute a return of capital to our investors, which would have the effect of reducing our shareholders' bases in their Shares. We will generally not be required to make distributions with respect to activities conducted through any TRS that we form following the completion of this Offering. For more information about our distribution requirements under the IRC, see "Material United States federal income tax considerations—REIT qualification requirements—Annual Distribution Requirements".

Any distributions we make to our shareholders will be at the discretion of our Board of Trustees and will depend upon our earnings, financial condition, liquidity, debt covenants, maintenance of our qualification for taxation as a REIT, applicable provisions of our Declaration of Trust and Bylaws and Maryland law and such other factors as our Board of Trustees deems relevant. Also, our ability to pay distributions will be affected by various factors, including the net interest and other income from our investments, our operating expenses and any other expenditures. For more information about matters that may impact our future earnings and our ability to pay distributions to our shareholders, see "Risk factors".

We anticipate that our distributions generally will be taxable as ordinary income to our shareholders, although a portion of the distributions may be designated by us as qualified dividend income or capital gain, or may constitute a return of capital. We will furnish annually to each of our shareholders a statement setting forth distributions paid during the preceding year and their characterization as ordinary income, return of capital, qualified dividend income or capital gain. For more information about the characterization of our distributions under the IRC, see "Material United States federal income tax considerations—Taxation as a REIT".

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