[Federal Register Volume 85, Number 239 (Friday, December 11, 2020)]
[Notices]
[Pages 80199-80200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27206]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34130; 811-22260]


RMR Mortgage Trust

December 7, 2020.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of application for deregistration under Section 8(f) of the 
Investment Company Act of 1940 (the ``Act'').
    Summary of Application: RMR Mortgage Trust requests an order 
declaring that it has ceased to be an investment company.
    Applicant: RMR Mortgage Trust.
    Filing Dates: The application was filed on May 27, 2020 and was 
amended on August 17, 2020, November 18, 2020 and December 1, 2020.
    Hearing or Notification of Hearing: An order granting the request 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by emailing the Commission's Secretary at 
Secretarys-Office@sec.gov and serving Applicant with a copy of the 
request by email. Hearing requests should be received by the Commission 
by 5:30 p.m. on January 4, 2021 and should be accompanied by proof of 
service on Applicant, in the form of an affidavit, or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by emailing to the 
Commission's Secretary at Secretarys-Office@sec.gov.

ADDRESSES: The Commission: Secretarys-Office@sec.gov. Applicants: 
jclark@rmrgroupadvisors.com.

FOR FURTHER INFORMATION CONTACT: Marc Mehrespand, Senior Counsel; Trace 
Rakestraw, Branch Chief, at (202) 551-6825 (Division of Investment 
Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's website by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.
    Applicant's Representations:
    1. Applicant is a Maryland statutory trust and is a non-
diversified, closed-end management investment company registered under 
the Act. Prior to the Special Meeting (as defined below), Applicant was 
named ``RMR Real Estate Income Fund'' and its primary investment 
objective was to earn and pay to its common shareholders a high level 
of current income by investing in real estate companies. Capital 
appreciation was Applicant's secondary objective.
    2. At a special meeting of Applicant's shareholders on April 16, 
2020 (``the Special Meeting''), Applicant's shareholders approved a 
proposal (the ``Business Change Proposal'') to change Applicant's 
business from a registered investment company to a commercial mortgage 
real estate investment trust (``REIT'') that focuses primarily on 
originating and investing in first mortgage whole loans secured by 
middle market and transitional commercial real estate (``CRE''). 
Notably, the proxy statement in connection with the Business Change 
Proposal stated that, if approved, Applicant would realign its 
portfolio so that it will not be considered an investment company under 
the Act and apply to the Commission for an order declaring that 
Applicant has ceased to be an investment company. Applicant represents 
that it has operated during its 2020 taxable year so that it may 
qualify for taxation as a REIT for federal tax purposes.
    3. Applicant states that, following the Special Meeting, it has 
taken various steps to implement the Business Proposal, including 
changing its name to ``RMR Mortgage Trust,'' divesting legacy portfolio 
assets and reorienting its portfolio to originating and investing in 
first mortgage whole loans secured by middle market and transitional 
CRE. Applicant states that it also holds itself out in its periodic 
reports to shareholders, press releases and website as a company that 
focuses primarily on originating and investing in first mortgage whole 
loans secured by middle market and transitional CRE.
    4. Applicant's investment advisory agreement (``IAA'') with RMR 
Advisors LLC (the ``Adviser''), Applicant's investment adviser, remains 
in effect but Applicant anticipates that, if Applicant receives the 
order, the IAA would be terminated and Applicant would enter into a new 
management agreement with the Adviser, or an affiliate of the Adviser. 
Applicant represents that its officers devote significant time to 
Applicant's new business strategy, including in connection with the 
formation of business objectives, plans and strategies and sourcing of 
mortgage origination opportunities. In addition, the Adviser has 
established an investment committee (the ``Investment Committee'') 
responsible for evaluating mortgage loan origination opportunities and 
making determinations as to whether or not to fund such loan 
opportunities, in each case, taking into account Applicant's investment 
guidelines and considerations, subject to any required approvals by 
Applicant's Board of Trustees (``Board''). Two of Applicant's Board 
members serve as members of the Investment Committee.
    5. Applicant states that it currently originates commercial 
mortgage loans through a wholly-owned subsidiary, RMTG Lender LLC (the 
``Real Estate Subsidiary''). As of November 30, 2020, 100% of the 
assets of the Real Estate Subsidiary consisted of commercial mortgage 
loans fully secured by real estate. Applicant represents that it may 
establish other wholly-owned subsidiaries to carry out specific 
activities, consistent with Applicant's business of originating and 
investing in first mortgage whole loans secured by middle market and 
transitional CRE.
    6. Applicant represents that the Real Estate Subsidiary is excluded 
from the definition of ``investment company'' by section 3(c)(5)(C) of 
the Act and, therefore, securities issued by the Real Estate Subsidiary 
are not ``investment securities'' as defined in section 3(a)(2) of the 
Act. Applicant states that, as of November 30, 2020, the value of 
investment securities owned by Applicant represents approximately 35.1% 
of Applicant's total assets, exclusive of Government securities and 
cash items, on an unconsolidated basis (``Adjusted Total Assets'').
    7. For the nine months ended September 30, 2020, Applicant states 
that it derived approximately 100% of its gross income from securities 
(other than investments that qualify as ``mortgages and other liens on 
and interests in real estate'' for purposes of section 3(c)(5)(C) of 
the Act (``Qualifying Real Estate Assets'')) and approximately 0% of 
its gross income from Qualifying Real Estate Assets, and for the period 
from October 1, 2020 through November

[[Page 80200]]

30, 2020, Applicant derived approximately 82% of its gross income from 
securities (other than Qualifying Real Estate Assets) and approximately 
18% of its gross income from Qualifying Real Estate Assets. Applicant 
expects its income from securities (other than Qualifying Real Estate 
Assets and other assets that are not Qualifying Real Estate Assets but 
which are real estate-related assets (``Real Estate-Related Assets'') 
to continue to decrease, and its income from Qualifying Real Estate 
Assets and Real Estate-Related Assets to continue to increase, as it 
continues to divest its legacy portfolio assets and reinvest in 
Qualifying Real Estate Assets and Real-Estate Related Assets. Applicant 
represents that currently it derives no material portion of its gross 
income from securities that are not Qualifying Real Estate Assets or 
Real Estate-Related Assets.
    8. Upon deregistering as an investment company, which will be the 
final step in implementing the Business Change Proposal, Applicant 
represents that it will issue a press release to shareholders 
indicating that it is no longer a registered investment company and 
will cease indicating in its financial statements that it is a 
registered investment company.
    9. Applicant states that it is not currently a party to any 
litigation or administrative proceeding and has timely complied with 
its obligations to file annual and other reports with the Commission.
    10. Applicant represents that, if the requested order is granted, 
its common shares will continue to be traded on The Nasdaq Stock Market 
LLC.
    Applicant's Legal Analysis:
    1. Section 8(f) of the Act provides that whenever the Commission, 
upon application or its own motion, finds that a registered investment 
company has ceased to be an investment company, the Commission shall so 
declare by order and upon the taking effect of such order, the 
registration of such company shall cease to be in effect.
    2. Section 3(a)(1)(A) of the Act defines an ``investment company'' 
as any issuer which ``is or holds itself out as being engaged 
primarily, or proposes to engage primarily, in the business of 
investing, reinvesting, or trading in securities.'' Section 3(a)(1)(B) 
of the Act defines an ``investment company'' as any issuer which ``is 
engaged or proposes to engage in the business of issuing face-amount 
certificates of the installment type, or has been engaged in such 
business and has any such certificate outstanding.''
    3. Section 3(a)(1)(C) of the Act defines an ``investment company'' 
as any issuer which ``is engaged or proposes to engage in the business 
of investing, reinvesting, owning, holding, or trading in securities, 
and owns or proposes to acquire investment securities having a value 
exceeding 40 per centum of the value of such issuer's total assets 
(exclusive of Government securities and cash items) on an 
unconsolidated basis.'' Section 3(a)(2) of the Act defines ``investment 
securities'' as ``all securities except (A) Government securities, (B) 
securities issued by employees' securities companies, and (C) 
securities issued by majority-owned subsidiaries of the owner which (i) 
are not investment companies, and (ii) are not relying on the exception 
from the definition of investment company in paragraph (1) or (7) of 
subsection (c).''
    4. Applicant states that it is no longer an investment company as 
defined in section 3(a)(1)(A), 3(a)(1)(B) or section 3(a)(1)(C). With 
regard to section 3(a)(1)(A), Applicant represents that it now operates 
as a commercial mortgage REIT, and argues that its historical 
development, its public representations, the activities of its 
directors and officers, the nature of its present assets and the 
sources of its present income support this assertion.
    5. With regard to section 3(a)(1)(B), Applicant represents that it 
is not engaged, and does not propose to engage, in the business of 
issuing face-amount certificates of the installment type, has not been 
engaged in such business and does not have any such certificate 
outstanding.
    6. With regard to section 3(a)(1)(C), Applicant represents that, as 
discussed in greater detail below, the Real Estate Subsidiary is 
excluded from the definition of investment company by virtue of section 
3(c)(5)(C) of the Act and that, as a result, securities issued by the 
Real Estate Subsidiary are not ``investment securities'' within the 
meaning of section 3(a)(2) of the Act. Because the value of Applicant's 
interest in the Real Estate Subsidiary exceeds 60% of the value of 
Applicant's Adjusted Total Assets, the value of any ``investment 
securities'' owned by Applicant is less than 40% of the value of 
Applicant's Adjusted Total Assets. Applicant, therefore, states that it 
is not an investment company within the meaning of section 3(a)(1)(C) 
of the Act.
    7. Section 3(c)(5)(C) of the Act excludes from the definition of an 
investment company ``any person who is not engaged in the business of 
issuing redeemable securities, face-amount certificates of the 
installment type or periodic payment plan certificates, and who is 
primarily engaged in one or more of the following businesses: . . . (C) 
purchasing or otherwise acquiring mortgages and other liens on and 
interests in real estate.''
    8. Applicant represents that, as of November 30, 2020, the only 
assets of the Real Estate Subsidiary were mortgage loans fully secured 
by real estate and, as a result, the Real Estate Subsidiary meets the 
exclusion from the definition of investment company in section 
3(c)(5)(C).
    9. Applicant states that it is thus qualified for an order of the 
Commission pursuant to section 8(f) of the Act.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-27206 Filed 12-10-20; 8:45 am]
BILLING CODE 8011-01-P


