Financial Data and Key Metrics Changes - Distributable earnings for Q3 2025 were $4.2 million or $0.29 per share, at the high end of guidance [4][12] - A regular quarterly dividend of $0.28 per share was declared, equating to an annualized yield of 11% [4] - The portfolio consisted of $642 million in floating-rate first mortgage commitments across 22 loans with a weighted average all-in yield of 8.2% and a weighted average loan-to-value of 67% [5][6] Business Line Data and Key Metrics Changes - Recent transaction activity included a $34.5 million first mortgage loan secured by a mixed-use property and a $37.3 million loan application for a student housing property [5] - The company received full repayment of two loans totaling $53.8 million during the quarter [6] Market Data and Key Metrics Changes - Market sentiment improved following the Federal Reserve's rate cut in September, driving new financing activity [9] - Demand for floating-rate bridge financing remains strong, particularly due to 2021 and 2022 vintage floating-rate multifamily loan maturities [9][10] Company Strategy and Development Direction - The company aims to deploy capital into opportunities that offer the best relative value, focusing on industrial, necessity-based retail, hospitality, and student housing [10][11] - The composition of the pipeline has shifted towards a higher proportion of acquisition financing, indicating renewed market confidence [11] Management's Comments on Operating Environment and Future Outlook - Management noted that competition remains elevated but believes their disciplined approach and strong sponsor relationships will continue to generate attractive risk-adjusted returns [8] - Expectations of further rate cuts before year-end are anticipated to enhance borrower engagement and transaction volume [6][9] Other Important Information - The company ended the quarter with $77 million in cash and $310 million in capacity on secured financing facilities [14] - The CECL reserve remains modest at 150 basis points of total loan commitments, unchanged from the previous quarter [15] Q&A Session Summary Question: Repayments expected for the remainder of the year - Management confirmed that the only expected repayment before year-end is $15.3 million, with the majority of repayments occurring in 2026 [17][18] Question: Sourcing of loans and competition - The majority of transactions come from traditional mortgage banking channels, with a solid reputation helping to win loans [19][20] Question: CECL reserve and its relation to SOFR - Management indicated that while lower SOFR could impact the CECL reserve, many factors influence it, and they maintain a conservative reserve [24][25] Question: Demand for multifamily equity - There is ongoing demand for equity capital in the multifamily sector, driven by loan maturities and the need for additional equity in refinancing [26][27] Question: Participation of banks in multifamily debt markets - Larger banks are active in the multifamily space, while smaller regional banks are more selective due to concerns over balance sheets [28][29] Question: Cash balance increase - The increase in cash balance was driven by loan repayments and timing, allowing for additional originations [31] Question: NIM compression outlook - Management believes they are at the trough of NIM compression and expects to identify appropriate transactions for investment [33]

Financial Performance - Seven Hills Realty Trust (SEVN) reported Distributable Earnings of $029 per share for the third quarter of 2025, reaching the high end of their guidance[2],[10] - SEVN declared a quarterly distribution of $028 per common share, totaling approximately $42 million, to shareholders[4] - Net income for the quarter was $34 million, or $023 per diluted share[8] - The quarterly distributable earnings payout ratio was 97%[10] Loan Portfolio and Investment Activity - SEVN closed a $345 million loan secured by a mixed-use property in Manhattan during the quarter[2],[8] - In October 2025, SEVN executed a $373 million loan application for a student housing property[2],[8] - The company received $538 million in repayment proceeds in July, including $295 million from a multifamily property and $243 million from an industrial property[8] - The total loan commitments were $6419 million as of September 30, 2025, with a weighted average coupon rate of 785% and All In Yield of 821%[19] Liquidity and Capitalization - SEVN had $775 million in cash on hand and $3096 million in unused financing capacity under its Secured Financing Facilities[8] - The weighted average coupon on borrowings under the Secured Financing Facilities was S + 215%[8] - The company's debt to equity ratio was 16x[7]

Loan Commitments and Portfolio - As of September 30, 2025, the total loan commitments amounted to $641,901,000, with a principal balance of $614,347,000, reflecting a slight increase from $610,811,000 as of December 31, 2024[92] - The number of loans in the portfolio increased to 22 as of September 30, 2025, compared to 21 at the end of 2024[92] - Unfunded loan commitments as of September 30, 2025, were $27,554,000, down from $30,402,000 at the end of 2024, indicating a reduction in available financing for property improvements[92] - As of September 30, 2025, the company had $641,901 in aggregate loan commitments, with 22 first mortgage loans in its portfolio[96] - The company had five loans rated "4" or higher risk, representing approximately 23% of the amortized cost of the loan portfolio[96] Financial Performance - Total revenue for the three months ended September 30, 2025, was $7,092, a decrease of 4.1% from $7,393 in the previous quarter[108] - Net income for the three months ended September 30, 2025, was $3,430, an increase of 28.1% compared to $2,678 in the previous quarter[108] - Income from investments decreased to $22,079,000 for the nine months ended September 30, 2025, down 20.0% from $27,599,000 in 2024[118] - Interest and related income fell to $42,123,000, a decrease of 13.1% from $48,467,000, primarily due to lower weighted average coupon rates[118] - Net income decreased to $10,640,000, down 17.8% from $12,941,000 in the previous year[128] - Total other expenses decreased by 21.9% to $11,433,000 from $14,631,000[118] - Distributable Earnings for the nine months ended September 30, 2025, were $13,772,000, compared to $16,417,000 in 2024[134] Interest Rates and Yield - The weighted average coupon rate decreased to 7.85% from 8.24% in the previous period, while the weighted average all-in yield also declined to 8.21% from 8.62%[92] - The weighted average coupon rate for loan investments decreased to 7.85% as of September 30, 2025, from 8.03% as of June 30, 2025[108] - The weighted average interest rate on outstanding advancements under Secured Financing Facilities was 6.30% per annum as of September 30, 2025[105] - The weighted average coupon rate for loan investments was 7.85% as of September 30, 2025, compared to 8.89% in 2024[118] Risk and Compliance - The weighted average risk rating of the loan portfolio improved to 2.9 from 3.1, indicating a better credit quality assessment[92] - The company faces prepayment risk, which may reduce returns on loans if repayments occur earlier than expected[90] - The provision for credit losses decreased significantly by 95.9% to $37 for the three months ended September 30, 2025, compared to $912 in the previous quarter[108] - Provision for credit losses decreased significantly by 77.5% to $796,000 from $3,530,000[125] - The company had no outstanding past due loans or nonaccrual loans as of September 30, 2025[103] - The company was in compliance with all covenants and other terms under its Secured Financing Facilities as of September 30, 2025[106] - The company was in compliance with all covenants and other terms under its Secured Financing Facilities as of September 30, 2025[151] Cash Flow and Distributions - Cash and cash equivalents at the end of the nine months ended September 30, 2025, were $77,495, compared to $82,197 for the same period in 2024, reflecting a decrease of 5.2%[140] - Net cash provided by operating activities decreased to $11,828 in 2025 from $16,269 in 2024, a decline of 27.3% primarily due to lower net interest income[140] - Total distributions declared and paid to common shareholders during the nine months ended September 30, 2025, amounted to $14,617, or $0.98 per common share[141] - The company expects to pay the declared quarterly distribution of $0.28 per common share on or about November 13, 2025[141] Market Outlook - The Federal Open Market Committee cut interest rates by 25 basis points in September 2025, lowering the targeted Federal Funds Rate range to 4.00% to 4.25%[84] - The company anticipates that the relative risk versus reward in commercial real estate (CRE) debt investments will continue to drive demand from various lenders, potentially increasing transaction volume into 2026[85] Expenses - General and administrative expenses rose by 19.1% to $3,639,000, primarily due to increased share-based compensation[123] - The decrease in cash used in financing activities was primarily due to increased proceeds from Secured Financing Facilities in 2025[140] - Revenue from real estate owned increased by 16.1% to $648 for the three months ended September 30, 2025, compared to $558 in the previous quarter[108] - Revenue from real estate owned increased by 11.5% to $1,915,000, up from $1,718,000[121] Financing Facilities - As of September 30, 2025, the aggregate outstanding principal balance under Master Repurchase Facilities was $353,165[149] - The company had a $77,258 aggregate outstanding principal balance under the BMO Facility as of September 30, 2025[150] - Interest payments on Secured Financing Facilities projected at $18,505, with $17,677 due in the next year[143]

Financial Performance - Seven Hills Realty Trust reported Distributable Earnings of $4.2 million, or $0.29 per diluted share, at the high end of guidance [3]. - The company generated net income of $3.4 million, or $0.23 per diluted share, for the third quarter of 2025 [10]. - A quarterly distribution of $0.28 per common share, totaling approximately $4.2 million, was declared on October 9, 2025 [5]. - Net income for the three months ended September 30, 2025, was $3,430,000, compared to $3,479,000 for the same period in 2024, reflecting a decrease of about 1.4% [53]. - Total revenue for the nine months ended September 30, 2025, was $22,079,000, down from $27,599,000 in 2024, indicating a decline of approximately 20.1% [53]. - Distributable Earnings for the three months ended September 30, 2025, were $4,232,000, compared to $5,285,000 in the same period of 2024, a decrease of approximately 20% [54]. - Book value per common share decreased to $17.68 as of September 30, 2025, down from $18.08 on September 30, 2024, reflecting a decline of about 2.2% [54]. - Adjusted Book Value per common share was $18.33 as of September 30, 2025, compared to $18.71 on September 30, 2024, indicating a decrease of approximately 2.0% [54]. Loan Portfolio and Financing - The loan portfolio as of September 30, 2025, totaled $641.9 million, with a weighted average loan-to-value (LTV) of 67% [22]. - In Q3 2025, Seven Hills closed a new loan of $34.5 million secured by a mixed-use property in Manhattan [10]. - The company executed a loan application for $37.3 million for a student housing property in October 2025, expected to close in Q4 [10]. - Cash on hand was reported at $77.5 million, with unused financing capacity of $309.6 million [10]. - The weighted average coupon rate for the loan portfolio was 7.85% as of September 30, 2025 [22]. - The total principal balance of secured financing facilities is $430,423,000, with an unused capacity of $309,577,000, representing approximately 72% of the total facility size [37]. - The weighted average coupon rate across secured financing facilities is 6.30%, with a weighted average advance rate of 70.1% [37]. - The company has a total of 22 loans with a principal balance of $614,347,000, and a weighted average loan-to-value (LTV) ratio of 67% [46][47]. - The average interest rate floor across loan agreements is 2.59%, with provisions ranging from 0.25% to 4.00% [51]. - The company has no active interest rate floors on its loans, which may expose it to interest rate fluctuations [51]. - The weighted average remaining maturity of the Master Repurchase Facilities is 0.7 years, indicating a relatively short-term financing structure [37]. Asset and Liability Management - The total assets of Seven Hills Realty Trust were reported at $700.8 million, with total liabilities of $434.4 million [14]. - Total assets increased to $700,844,000 as of September 30, 2025, up from $692,808,000 on December 31, 2024, representing a growth of approximately 1.5% [52]. - Total liabilities rose to $434,363,000 as of September 30, 2025, compared to $423,530,000 on December 31, 2024, an increase of about 2.0% [52]. - The allowance for credit losses increased to $9,704,000 as of September 30, 2025, compared to $9,358,000 on September 30, 2024, marking an increase of about 3.7% [54]. - The provision for credit losses for the three months ended September 30, 2025, was $37,000, significantly lower than $1,518,000 in the same period of 2024, a decrease of approximately 97.6% [53]. Market and Operational Risks - The company experienced ongoing pressure on net interest income due to compressed spreads across the market [3]. - SEVN's forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expected outcomes [73]. - The company's ability to manage and stabilize its loan portfolio is crucial for achieving expected returns [73]. - Fluctuations in interest rates and credit spreads may reduce returns on investments and increase borrowing costs for SEVN [73]. - SEVN's ability to maintain a favorable net interest spread is essential for its financial performance [73]. - The company must successfully execute its investment strategy and manage its existing loan agreements to ensure timely repayments from borrowers [73]. - SEVN's diversification of its investment portfolio is influenced by industry and market conditions [73]. - The company faces potential conflicts of interest with related parties, which could impact its operations [74]. - SEVN's qualification for taxation as a REIT is critical for its financial strategy and compliance [74]. - The impact of external factors such as economic downturns, pandemics, and climate change poses risks to SEVN's business [73]. - SEVN does not intend to update or change any forward-looking statements unless required by law [75]. Management and Strategy - The company is managed by Tremont, which has approximately $39 billion in assets under management, providing significant market knowledge and investment opportunities [41]. - The company has a diverse loan portfolio, including multifamily, industrial, office, hotel, and retail properties across various states [46][47].

Core Insights - Seven Hills Realty Trust (Nasdaq: SEVN) announced its financial results for the third quarter and nine months ended September 30, 2025 [1] - A conference call to discuss these results is scheduled for October 28, 2025, at 11:00 a.m. Eastern Time [2][7] - The company declared a regular cash distribution of $0.28 per share, amounting to $1.12 per share annually, to be paid on or about November 13, 2025 [6] Company Overview - Seven Hills Realty Trust is a real estate investment trust (REIT) that focuses on originating and investing in first mortgage loans secured by middle market transitional commercial real estate [3] - The company is managed by Tremont Realty Capital, an affiliate of The RMR Group, which has approximately $39 billion in assets under management [3] Recent Transactions - Seven Hills Realty Trust closed a $34.5 million floating rate first mortgage loan to refinance a mixed-use property located on Manhattan's Upper West Side [8]

Summary of Philippine Seven Corporation Investor Day Company Overview - Philippine Seven Corporation operates the largest convenience store chain in the Philippines, Seven Eleven, with 4,268 stores as of June 30, 2025, and ranks as the sixth largest operator globally among 20 countries [1][2] Key Financial Highlights - System-wide sales reached 25.41 billion pesos, a 6.3% increase, while operating revenue grew by 9.3% to 24.79 billion pesos [10] - Operating income rose by 8.2% to 2.77 billion pesos, with net income slightly up by 0.7% to 1.78 billion pesos [12] - Merchandise sales increased by 7.1% to 41.1 billion pesos, driven by strong demand for nonalcoholic beverages [11] - Cash reserves increased by 27.74% year-on-year to 9.97 billion pesos, and total assets grew by 22.13% to 43.59 billion pesos [12] - Equity surged by over 53% to 10.85 billion pesos, with a book value per share of 7.2 pesos [13] Expansion Plans - The company plans to open at least 500 new stores by the end of 2025, with 70% of these in the Visayas and Mindanao regions [18] - As of now, 218 stores have been opened, with a pipeline of over 200 stores in various stages of construction [6] Market Position and Competition - The company faces competition from mini-marts and hard discounters, but maintains advantages such as 24-hour operations, fast food offerings, and dining spaces [23] - The company aims to secure prime locations to prevent competition from establishing nearby [25] Product and Service Innovations - New product offerings include City Cafe blind cups collectibles and enhanced flavored syrup options [7] - The company is focusing on improving its assortment in non-core categories like grocery and health and beauty items [19] - The ready-to-eat offerings contribute significantly to sales, with a focus on maintaining product quality through satellite kitchens [44] Challenges and Market Trends - Same-store sales growth was impacted by a shift in consumer behavior towards essentials, with a slight negative growth of 0.5% in Q2 due to specific challenges [10][19] - Recent weather events, including typhoons, affected sales performance in July, but recovery was noted in August [20] Leadership Changes - A leadership transition occurred with Victor Paterno becoming chairman and Richard Lee appointed as president [5][34] - The transition is expected to have minimal impact on operations as established processes remain in place [33] Financial Strategy - The company announced a capital expenditure of 5.5 billion pesos for 2025, primarily for growth initiatives [45] - A focus on internal funding for capital expenditures, with minimal debt levels [46] - Plans to maintain a regular cash dividend payout corresponding to 40% of net income [62] Customer Engagement and Technology - The company is enhancing customer convenience through the rollout of 3,620 ATMs, covering 85% of stores [13] - A new payment switch has been implemented to improve transaction reliability and expand payment options [27][49] Conclusion - Philippine Seven Corporation is positioned for growth with a strong financial foundation, strategic expansion plans, and a focus on customer engagement and product innovation, despite facing competitive pressures and market challenges.

Financial Data and Key Metrics Changes - Distributable earnings for Q2 2025 were reported at $0.31 per share, at the high end of the guidance range [5][18] - Total commitments across first mortgage loans stood at $665 million, with a weighted average coupon of SOFR plus 3.64% and an all-in yield of 8.37% [6][15] - The quarterly dividend was reduced to $0.28 per share, reflecting a 20% decrease from the previous level [7][17] Business Line Data and Key Metrics Changes - The company originated two new first mortgage loans totaling $46 million during the quarter [6] - All loans in the portfolio remained current on debt service, with a weighted average risk rating of 2.9, unchanged from the previous quarter [6][17] - The company anticipates positive year-over-year portfolio growth, expecting to end 2025 with approximately $700 million in outstanding commitments [9][18] Market Data and Key Metrics Changes - Transaction activity slowed due to tariff announcements and global trade negotiations, causing uncertainty in the market [11] - Despite macro headwinds, the company averaged over $1 billion in monthly loan registrations, indicating strong demand for flexible, floating-rate debt solutions [11][12] - Competition among lenders remains elevated, particularly in the multifamily sector, with demand for securitized products supporting the debt markets [12][13] Company Strategy and Development Direction - The company is focused on smaller, middle-market transactions to earn more attractive yields by providing creative financing terms [13] - The strategy includes being selective in capital deployment, particularly in sectors where the company has a competitive advantage, such as industrial and medical office sectors [13] - The company is currently in diligence on a $34 million loan for a mixed-use retail and medical office property, indicating ongoing investment activity [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current environment, emphasizing strong sponsor relationships and liquidity [10][15] - The company expects to see two to three additional loans totaling approximately $100 million repaid in the latter half of the year [9] - Management anticipates that if the Fed cuts interest rates, there will be a meaningful increase in acquisition activity [13][39] Other Important Information - The CECL reserve increased to 150 basis points of total loan commitments, reflecting macroeconomic factors and loan extensions [15] - The company has no collateral-dependent loans or loans with specific reserves, indicating a strong credit performance [15][17] Q&A Session Summary Question: Expected year-end portfolio size and originations - Management indicated an expected year-end portfolio size of around $700 million, with originations for the second half potentially exceeding $200 million, dependent on repayments [20][21] Question: Stability of the new dividend level - Management expressed confidence that the new dividend level of $0.28 per share is sustainable for at least the next twelve months, contingent on loan repayments [24][25] Question: Attractive opportunities and competitive environment - Management noted significant activity in the multifamily and industrial sectors, with many borrowers needing additional time to optimize properties before refinancing or selling [27][28] Question: Leverage expectations for the second half of the year - Management expects leverage to remain consistent at 1.6 times debt to equity until office loans recycle out of the system [33] Question: NIM compression factors - Management explained that NIM compression is primarily driven by aggressive pricing in the multifamily sector, influenced by the CRE CLO market [34][35] Question: Impact of potential Fed cuts on NIM - Management indicated that Fed cuts would likely lower overall borrowing costs and stimulate transaction activity in the market [38][39]

Financial Performance - SEVN generated distributable earnings of $0.31 per diluted share, which was at the high end of their guidance[2,9] - Net income for the quarter was $2.7 million, or $0.18 per diluted share[9] - A quarterly distribution of $0.28 per common share, totaling approximately $4.2 million, was declared[5] - The quarterly distributable earnings payout ratio was 90%[11] Loan Portfolio - The fully performing loan portfolio totaled $665 million[2] - Two new loans were closed during the quarter, totaling $46 million[2,9] - $70.6 million of repayment proceeds were received during the quarter[9] - In July 2025, $53.8 million of repayment proceeds were received[9] - The company has $46 million in cash on hand and $322.8 million in unused financing capacity[8,9] Loan Portfolio Details - The weighted average coupon rate for the loan portfolio is S + 3.64%, with an All In Yield of 3.98%[9] - The weighted average LTV (loan-to-value) is 68%[8,18] - The weighted average risk rating of the loan portfolio is 2.9, with an allowance for credit losses representing 1.5% of total loan commitments[9]

PART I Financial Information [Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The company's unaudited financial statements show total assets of $687.4 million and a net income of $2.7 million for the quarter ended June 30, 2025 Condensed Consolidated Balance Sheets (unaudited) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$687,383** | **$692,808** | | Loans held for investment, net | $621,943 | $601,842 | | Cash and cash equivalents | $45,951 | $70,750 | | **Total Liabilities** | **$420,363** | **$423,530** | | Secured financing facilities, net | $415,999 | $417,796 | | **Total Shareholders' Equity** | **$267,020** | **$269,278** | Condensed Consolidated Statements of Operations (unaudited) | (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $7,393 | $9,380 | $14,987 | $18,742 | | **Net income** | **$2,678** | **$4,229** | **$7,210** | **$9,462** | | **Net income per common share - basic and diluted** | **$0.18** | **$0.28** | **$0.48** | **$0.64** | Condensed Consolidated Statements of Cash Flows (unaudited) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,663 | $8,969 | | Net cash (used in) provided by investing activities | ($20,421) | $20,415 | | Net cash used in financing activities | ($13,041) | ($47,636) | | **Decrease in cash and cash equivalents** | **($24,799)** | **($18,252)** | | Cash and cash equivalents at end of period | $45,951 | $69,603 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes support the financial statements, covering the loan portfolio, credit loss allowance, and financing facilities Loan Portfolio Statistics | | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Number of loans | 23 | 21 | | Total loan commitments | $665,421 | $641,213 | | Principal balance | $632,826 | $610,811 | | Carrying value | $621,943 | $601,842 | | Weighted average coupon rate | 8.03% | 8.24% | | Weighted average risk rating | 2.9 | 3.1 | Allowance for Credit Losses Activity (Six Months Ended June 30, 2025) | (in thousands) | Loans Held for Investment, net | Unfunded Loan Commitments | Total | | :--- | :--- | :--- | :--- | | **Balance at Dec 31, 2024** | **$8,074** | **$834** | **$8,908** | | Provision for (reversal of) credit losses | $1,301 | ($542) | $759 | | **Balance at June 30, 2025** | **$9,375** | **$292** | **$9,667** | - The increase in the allowance for credit losses during the first six months of 2025 was primarily due to **unfavorable CRE pricing forecasts and loan extensions**, partially offset by loan repayments[36](index=36&type=chunk) Secured Financing Facilities Summary (as of June 30, 2025) | (in thousands) | Maximum Facility Size | Principal Balance | Carrying Value | | :--- | :--- | :--- | :--- | | UBS Master Repurchase Facility | $250,000 | $156,929 | $156,663 | | Citibank Master Repurchase Facility | $215,000 | $108,113 | $107,642 | | BMO Facility | $150,000 | $72,205 | $72,065 | | Wells Fargo Master Repurchase Facility | $125,000 | $79,968 | $79,629 | | **Total** | **$740,000** | **$417,215** | **$415,999** | - For the six months ended June 30, 2025, the company declared and paid distributions of **$0.70 per common share**, totaling $10.4 million[60](index=60&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses its transitional CRE lending strategy, performance drivers, and financial results, including non-GAAP reconciliations [Overview and Factors Affecting Operating Results](index=17&type=section&id=Overview%20and%20Factors%20Affecting%20Operating%20Results) The company operates as a REIT focused on floating-rate first mortgage loans for transitional CRE, influenced by credit and interest rate risks - The business strategy is focused on originating and investing in **floating rate first mortgage loans** ranging from $15,000 to $75,000, secured by middle market transitional CRE properties[74](index=74&type=chunk) - Key factors affecting operating results include **credit risk, availability of leverage, market conditions, changes in interest rates, portfolio size, and prepayment risk**[77](index=77&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk) - As of June 30, 2025, SOFR was 4.32%, resulting in one loan investment having an active interest rate floor, and the company's **net interest income generally increases as benchmark rates rise**[85](index=85&type=chunk) [Our Loan Portfolio](index=19&type=section&id=Our%20Loan%20Portfolio) The loan portfolio grew to 23 first mortgage loans totaling $632.8 million, with all borrowers current on debt service payments Loan Portfolio Overview | | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Number of loans | 23 | 21 | | Principal balance | $632,826 | $610,811 | | Weighted average all in yield | 8.37% | 8.62% | | Weighted average risk rating | 2.9 | 3.1 | | Weighted average LTV | 68% | 67% | - As of June 30, 2025, the company had five loans with a risk rating of '4' or 'higher risk', representing approximately **22% of the amortized cost** of the loan portfolio, with **no '5' or 'loss likely' rated loans**[92](index=92&type=chunk) - All borrowers had paid their debt service obligations owed and due as of June 30, 2025, and July 24, 2025, and the company had **no outstanding past due or nonaccrual loans**[98](index=98&type=chunk)[99](index=99&type=chunk) [Financing Activities](index=21&type=section&id=Financing%20Activities) The company utilizes four secured financing facilities totaling $740 million, with $417.2 million outstanding as of June 30, 2025 Secured Financing Facilities Overview (as of June 30, 2025) | (in thousands) | Principal Balance | Unused Capacity | Maximum Facility Size | | :--- | :--- | :--- | :--- | | **Total** | **$417,215** | **$322,785** | **$740,000** | Secured Financing Facilities Activity (Q2 2025) | (in thousands) | Amount | | :--- | :--- | | Balance at March 31, 2025 | $440,474 | | Borrowings | $31,900 | | Repayments | ($56,711) | | **Balance at June 30, 2025** | **$415,999** | [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Net income decreased to $2.7 million in Q2 2025 and $7.2 million for H1 2025, driven by lower interest income and credit loss provisions Q2 2025 vs. Q1 2025 Performance | (in thousands, except per share) | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Net income | $2,678 | $4,532 | ($1,854) | | Net income per share | $0.18 | $0.30 | ($0.12) | - The decrease in net income from Q1 to Q2 2025 was mainly driven by a **$1.1 million negative swing in the provision for credit losses** and a $0.4 million increase in G&A expenses[104](index=104&type=chunk)[109](index=109&type=chunk)[108](index=108&type=chunk) H1 2025 vs. H1 2024 Performance | (in thousands, except per share) | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net income | $7,210 | $9,462 | ($2,252) | | Net income per share | $0.48 | $0.64 | ($0.16) | - The YoY decrease in H1 2025 net income was primarily due to a **$4.0 million decrease in interest and related income** and the absence of a $1.9 million purchase discount accretion[113](index=113&type=chunk)[114](index=114&type=chunk)[120](index=120&type=chunk) [Non-GAAP Financial Measures](index=26&type=section&id=Non-GAAP%20Financial%20Measures) The company reports non-GAAP measures, including an Adjusted Book Value of $18.51 per share and Distributable Earnings of $0.31 per share Adjusted Book Value per Common Share | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Book value per common share | $17.87 | $18.07 | | Allowance for credit losses per common share | $0.64 | $0.60 | | **Adjusted Book Value per common share** | **$18.51** | **$18.67** | Reconciliation of Net Income to Distributable Earnings (Q2 2025) | (in thousands, except per share) | Amount | | :--- | :--- | | Net income | $2,678 | | Non-cash equity compensation expense | $677 | | Provision for credit losses | $912 | | Depreciation and amortization of REO | $269 | | **Distributable Earnings** | **$4,536** | | Net income per share | $0.18 | | **Distributable Earnings per share** | **$0.31** | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity through cash and financing facilities to meet obligations for the next 12 months - The company believes its sources of funds will be **sufficient to meet operating expenses, debt service, and distributions for the next 12 months**[130](index=130&type=chunk) - On July 10, 2025, the company declared a **reduced regular quarterly distribution of $0.28 per common share**, down from $0.35, reflecting expectations of lower future net interest margins[137](index=137&type=chunk) Contractual Obligations and Commitments (as of June 30, 2025) | (in thousands) | Total | Less than 1 Year | 1 - 3 Years | | :--- | :--- | :--- | :--- | | Unfunded loan commitments | $32,595 | $9,638 | $22,957 | | Principal payments on Secured Financing Facilities | $417,215 | $293,013 | $124,202 | | Interest payments on Secured Financing Facilities | $19,105 | $16,562 | $2,543 | | **Total** | **$469,057** | **$319,355** | **$149,702** | [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable for the current reporting period - Not applicable[152](index=152&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls during the quarter - Management, including the Managing Trustees, President, and CFO, concluded that the company's **disclosure controls and procedures are effective** as of the end of the period covered by the report[153](index=153&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[154](index=154&type=chunk) PART II Other Information [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the 2024 Annual Report - There have been **no material changes** to the risk factors previously disclosed in our 2024 Annual Report[163](index=163&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 5,234 common shares during the quarter to satisfy employee tax withholding obligations Issuer Purchases of Equity Securities (Quarter Ended June 30, 2025) | Calendar Month | Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 1,376 | $13.00 | | May 2025 | 3,858 | $11.73 | | **Total/weighted average** | **5,234** | **$12.06** | - The share purchases were made to **satisfy tax withholding and payment obligations** of certain current and former officers and employees of Tremont and/or RMR related to the vesting of share awards[165](index=165&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including governance documents and required certifications - The report includes a list of filed exhibits, such as corporate governance documents, equity compensation plans, and **required CEO/CFO certifications**[166](index=166&type=chunk)

[Financial Results and Company Overview](index=2&type=section&id=Financial%20Results%20and%20Company%20Overview) [Second Quarter 2025 Highlights and Financial Summary](index=2&type=section&id=Second%20Quarter%202025%20Highlights%20and%20Financial%20Summary) In Q2 2025, Seven Hills Realty Trust reported a net income of $2.7 million, or $0.18 per share, and Distributable Earnings of $4.5 million, or $0.31 per share, which was at the high end of guidance. The company closed two new loans totaling $46.0 million while receiving $70.6 million in repayment proceeds. A quarterly dividend of $0.28 per share was declared Q2 2025 Financial Performance | Metric | Value | Per Share | | :--- | :--- | :--- | | Net Income | $2.7 million | $0.18 | | Distributable Earnings | $4.5 million | $0.31 | | Quarterly Distribution | $4.2 million | $0.28 | - Investment activity for the quarter included originating two new loans and receiving significant repayments, resulting in a net decrease in loan principal[11](index=11&type=chunk) Q2 2025 Investment Activity (in millions) | Activity | Amount | Details | | :--- | :--- | :--- | | New Loans Closed | $46.0 | Two loans (Industrial & Multifamily) with a weighted average All In Yield of S + 4.04% (calculated) | | Repayment Proceeds | $70.6 | From two loans (Retail & Multifamily) and one paydown (Office) | - As of June 30, 2025, the company's book value per common share was **$17.87**, and the adjusted book value per common share was **$18.51**[15](index=15&type=chunk) [Company Snapshot and Earnings Trend](index=3&type=section&id=Company%20Snapshot%20and%20Earnings%20Trend) As of June 30, 2025, SEVN maintains a $665 million floating-rate first mortgage loan portfolio with a conservative debt-to-equity ratio of 1.6x. The company has significant liquidity with $46 million in cash and over $322 million in unused financing capacity. However, recent earnings face headwinds from prior declines in the SOFR index and compression of net interest margins Company Snapshot as of June 30, 2025 | Category | Metric | Value | | :--- | :--- | :--- | | **Loan Portfolio** | Total Commitments | $665 million | | | Weighted Average LTV | 68% | | | Weighted Average All-In Yield | 8.4% | | **Leverage & Liquidity** | Debt to Equity Ratio | 1.6x | | | Unused Financing Capacity | $323 million | | | Cash on Hand | $46 million | - SEVN is managed by Tremont Realty Capital, an affiliate of The RMR Group, which has approximately **$40 billion** in assets under management, providing extensive market knowledge and network access[8](index=8&type=chunk) - Despite a well-performing portfolio, earnings are under pressure due to declining SOFR, compressed margins on new loans, and lower overall portfolio leverage. Annualized Distributable Earnings per share have trended downward from 2023 to the first half of 2025[17](index=17&type=chunk)[18](index=18&type=chunk) [Loan Portfolio Analysis](index=7&type=section&id=Loan%20Portfolio%20Analysis) [Portfolio Summary and Quarterly Activity](index=7&type=section&id=Portfolio%20Summary%20and%20Quarterly%20Activity) As of June 30, 2025, the loan portfolio consisted of 23 first mortgage loans with total commitments of $665.4 million and a principal balance of $632.8 million. The portfolio has a weighted average All-In Yield of 8.37% and a risk rating of 2.9. During Q2, loan originations and fundings were outpaced by repayments, leading to a net decrease in the portfolio's principal balance Loan Portfolio Characteristics (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Number of Loans | 23 | | Total Loan Commitments | $665.4 million | | Principal Balance | $632.8 million | | Weighted Average LTV | 68% | | Weighted Average All-In Yield | 8.37% | | Weighted Average Risk Rating | 2.9 | - In Q2 2025, the total loan commitments decreased from **$690.9 million** to **$665.4 million**, and the principal balance decreased from **$661.4 million** to **$632.8 million**, primarily due to **$70.6 million** in repayments exceeding the **$40.8 million** in new originations[22](index=22&type=chunk) [Portfolio Composition and Origination Trends](index=8&type=section&id=Portfolio%20Composition%20and%20Origination%20Trends) The loan portfolio is geographically diversified, with the largest concentration in the South (41%). By property type, the portfolio is led by Multifamily (33%), followed by Industrial (26%) and Office (26%). Loan originations have been inconsistent over the past year, with $46.0 million in new commitments during Q2 2025, following a stronger Q1 2025 - Based on principal balance, the portfolio's primary concentrations are: - **Geography:** South (**41%**), West (**22%**), Midwest (**21%**), East (**16%**) - **Property Type:** Multifamily (**33%**), Industrial (**26%**), Office (**26%**), Hotel (**13%**), Retail (**2%**)[26](index=26&type=chunk)[27](index=27&type=chunk) Loan Originations by Quarter (Total Commitments) | Quarter | Amount (millions) | | :--- | :--- | | Q3 2023 | $49.7 | | Q4 2023 | $0.0 | | Q1 2024 | $54.3 | | Q2 2024 | $87.0 | | Q1 2025 | $41.6 | | Q2 2025 | $46.0 | [Credit Quality and Office Loan Exposure](index=9&type=section&id=Credit%20Quality%20and%20Office%20Loan%20Exposure) The portfolio maintains a weighted average risk rating of 2.9, with 71% of loans rated 'Acceptable Risk' (3) or 'Lower Risk' (1-2). The weighted average LTV is 68%. The office loan segment, representing 26% of the portfolio, consists entirely of suburban properties with no exposure to urban or CBD markets. While 86% of the office portfolio carries a 'Higher Risk' (4) rating, all borrowers were current on debt service payments as of quarter-end - The portfolio's credit risk profile is concentrated in the middle of the risk spectrum: - **Risk Rating:** **49%** of the portfolio is rated 'Acceptable Risk' (3), **22%** is 'Average Risk' (2), and **23%** is 'Higher Risk' (4) - **LTV:** **67%** of the portfolio has an LTV of **70%** or lower[31](index=31&type=chunk) - The office portfolio (**26%** of total) is entirely in suburban markets. All office borrowers were current on debt service payments as of June 30, 2025[33](index=33&type=chunk)[35](index=35&type=chunk) - Within the office portfolio, **86%** of the principal balance is rated 'Higher Risk' (4), while **14%** is rated 'Acceptable Risk' (3). Sponsors have shown commitment through recent equity contributions and loan modifications on several of these assets[33](index=33&type=chunk)[34](index=34&type=chunk) [Capitalization and Liquidity](index=11&type=section&id=Capitalization%20and%20Liquidity) [Secured Financing Facilities](index=11&type=section&id=Secured%20Financing%20Facilities) As of June 30, 2025, SEVN had total secured financing capacity of $740 million across four facilities with UBS, Citibank, BMO, and Wells Fargo. The company had an outstanding principal balance of $417.2 million, leaving $322.8 million in unused capacity. The weighted average coupon rate on this debt was 6.51% Secured Financing Facilities Summary (as of June 30, 2025) | Metric | Total/Weighted Average | | :--- | :--- | | Maximum Facility Size | $740.0 million | | Principal Balance | $417.2 million | | Unused Capacity | $322.8 million | | Weighted Average Coupon Rate | 6.51% | | Weighted Average Advance Rate | 67.9% | | Weighted Average Remaining Maturity | 0.7 years | [Appendix](index=12&type=section&id=Appendix) [Detailed Financial Statements](index=17&type=section&id=Detailed%20Financial%20Statements) The appendix provides the condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, and the condensed consolidated statements of operations for the three and six months ended June 30, 2025, and 2024. Total assets stood at $687.4 million, with total shareholders' equity at $267.0 million as of quarter-end Condensed Balance Sheet (June 30, 2025) | Category | Amount (in thousands) | | :--- | :--- | | Loans held for investment, net | $621,943 | | Cash and cash equivalents | $45,951 | | **Total Assets** | **$687,383** | | Secured financing facilities, net | $415,999 | | **Total Liabilities** | **$420,363** | | **Total Shareholders' Equity** | **$267,020** | Condensed Statement of Operations (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Income from loan investments, net | $6,835 | $8,812 | | Total Revenue | $7,393 | $9,380 | | Provision for credit losses | $912 | $1,315 | | **Net Income** | **$2,678** | **$4,229** | [Non-GAAP Reconciliations](index=19&type=section&id=Non-GAAP%20Reconciliations) This section reconciles GAAP Net Income to the non-GAAP measure of Distributable Earnings, and GAAP Shareholders' Equity to Adjusted Book Value. For Q2 2025, Distributable Earnings were $4.5 million, adjusted from a Net Income of $2.7 million primarily by adding back non-cash items like the provision for credit losses ($0.9 million) and non-cash equity compensation ($0.7 million) Reconciliation of Net Income to Distributable Earnings (Q2 2025) | Item | Amount (in thousands) | | :--- | :--- | | **Net Income (GAAP)** | **$2,678** | | Non-cash equity compensation expense | $677 | | Provision for credit losses | $912 | | Depreciation and amortization | $269 | | **Distributable Earnings (Non-GAAP)** | **$4,536** | Reconciliation of Book Value to Adjusted Book Value (June 30, 2025) | Item | Amount (in thousands) | Per Share | | :--- | :--- | :--- | | **Shareholders' Equity (GAAP)** | **$267,020** | **$17.87** | | Allowance for credit losses | $9,667 | - | | **Adjusted Book Value (Non-GAAP)** | **$276,687** | **$18.51** | [Detailed Loan Portfolio Investments](index=14&type=section&id=Detailed%20Loan%20Portfolio%20Investments) The appendix provides a detailed schedule of all 23 first mortgage loans held as of June 30, 2025. The list includes location, property type, origination date, committed and principal amounts, coupon rates, maturity dates, LTV, and risk rating for each individual loan - The portfolio's largest single loan commitment is **$54.6 million** for a multifamily property in Olmsted Falls, OH. The smallest is **$16.0 million** for a hotel in Lake Mary, FL[45](index=45&type=chunk)[46](index=46&type=chunk) - The loans have floating coupon rates, typically expressed as SOFR plus a spread (e.g., S + 3.00% to S + 5.00%). The weighted average coupon for the total portfolio is **S + 3.64%**[45](index=45&type=chunk)[46](index=46&type=chunk) [Interest Rate Sensitivity](index=16&type=section&id=Interest%20Rate%20Sensitivity) The company's net interest income is sensitive to changes in the SOFR index. A hypothetical immediate 100 basis point increase in interest rates would increase annualized net interest income by approximately $0.13 per share. Conversely, a 100 basis point decrease would reduce it by $0.07 per share. This sensitivity is mitigated by interest rate floors on nearly all loans - The company's earnings have an asymmetrical sensitivity to interest rate changes. A +100 bps change in SOFR results in a **+$0.13 per share** impact, while a -100 bps change results in a **-$0.07 per share** impact[48](index=48&type=chunk) - All but one loan agreement contains an interest rate floor, with a weighted average floor of **2.56%**. However, only one loan currently has an active floor. The company's secured financing facilities have no interest rate floors[50](index=50&type=chunk) [Corporate Information and Definitions](index=13&type=section&id=Corporate%20Information%20and%20Definitions) This section provides details on the company's management team and Board of Trustees, equity research coverage, and investor relations contacts. It also includes definitions for key terms used throughout the presentation, such as 'All In Yield', 'LTV', and 'Distributable Earnings' - SEVN is managed by Tremont Realty Capital, a subsidiary of The RMR Group, which provides access to a large real estate platform and network[40](index=40&type=chunk) - The company is covered by equity research analysts from JMP Securities, Janney Montgomery Scott, and Jones Trading Institutional Services, LLC[41](index=41&type=chunk)[42](index=42&type=chunk) - Key definitions provided include: - **All In Yield:** Loan yield including amortization of deferred fees - **LTV (Loan to value ratio):** Initial loan amount divided by underwritten in-place value - **Maximum Maturity:** Assumes all borrower loan extension options are exercised[61](index=61&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk)