Seven Hills Realty Trust · NASDAQ:SEVN
Seven Hills Realty Trust — Investor Presentation (August 2023)
24 slides from Seven Hills Realty Trust's investor presentation, Aug 16, 2023
Slide 1: August 2023 Investor Presentation
August 2023 INVESTOR PRESENTATION
Slide 2: Forward-looking statements and notes
2 SEVEN HILLS REALTY TRUST This presentation contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Whenever Seven Hills Realty Trust, or SEVN, uses words such as believe, expect, anticipate
Slide 3: Business at a Glance
3 SEVEN HILLS REALTY TRUST BUSINESS AT A GLANCE Seven Hills Realty Trust is a real estate investment trust that originates and invests in floating rate first mortgage loans secured by middle market and transitional commercial real estate, or CRE. 3 1.7x Debt to Equity Ratio 106% Dividend Coverage Ra
Slide 4: Investment highlights
4 SEVEN HILLS REALTY TRUST • 100% invested in floating rate first mortgage loans. • Diversified across geographies, sponsors and property types. • Emphasis on strong credit, visible cash flow and moderate LTV. High Quality Portfolio • Total shareholder returns have significantly outperformed the FTS
Slide 5: Loan Portfolio Overview
5 SEVEN HILLS REALTY TRUST LOAN PORTFOLIO OVERVIEW Portfolio Statistics Number of Loans 24 Average Loan Commitment $28M Total Loan Commitments $678M Principal Balance $635M Weighted Average Coupon Rate 9.01% Weighted Average All In Yield 9.47% Weighted Average LTV 67% Weighted Average Floor 0.87% We
Slide 6: Attractive Market Opportunity
6 SEVEN HILLS REALTY TRUST $15 million - $75 million 80% >$75 million 20% ATTRACTIVE MARKET OPPORTUNITY Demand for CRE debt capital in the underserved middle market is expected to remain strong as alternative lenders like SEVN increase their presence in the marketplace. • ~80% of CRE asset sales tra
Slide 7: Managed by Tremont Realty Capital
7 SEVEN HILLS REALTY TRUST MANAGED BY TREMONT REALTY CAPITAL Impressive track record with deep experience originating and actively managing middle market and transitional CRE loans. • ~$6 billion of loan originations completed since inception in 2000. • Seasoned underwriting, asset management and or
Slide 8: Rigorous Screening Process
8 SEVEN HILLS REALTY TRUST RIGOROUS SCREENING PROCESS Term Sheets Issued 40 Loans $1.4 billion 8 Loans $225 million 3 Loans $109 million Tremont employs a rigorous investment screening process with a multidisciplinary review to select the most compelling loan opportunities. • Screened over $1 billio
Slide 9: Stable Portfolio
9 SEVEN HILLS REALTY TRUST STABLE PORTFOLIO SEVN anticipates deal volume to grow during the second half of 2023 driven by improving market sentiment and favorable competitive conditions for alternative lenders. $682.3 $705.5 $678.6 $628.7 $634.9 $52.7 $57.7 $49.0 $45.8 $42.9 $734.9 $763.1 $727.6 $67
Slide 10: Representative Loan Originations
10 SEVEN HILLS REALTY TRUST Loan Fountain Inn, SC Auburn, AL Fontana, CA Type First Mortgage Loan First Mortgage Loan First Mortgage Loan Size $27.5 million $37.5 million $24.4 million Term Two-year initial term; One 12-month extension option 30-month initial term; One 12-month extension option Two-
Slide 11: Second Quarter Performance
11 SEVEN HILLS REALTY TRUST SECOND QUARTER PERFORMANCE • Grew second quarter Adjusted Distributable Earnings per common share more than 50% over the prior year period. • Closed one loan during the quarter and another just after quarter end for total commitments of $65 million dollars. • Received $18
Slide 12: Focused on Creating Value
12 SEVEN HILLS REALTY TRUST 12 Dividends per Common Share $0.15 $0.25 $0.25 $0.25 $0.25 $0.35 $0.35 $0.35 Sep 2021 Feb 2022 May 2022 Aug 2022 Nov 2022 Feb 2023 May 2023 Aug 2023 1 FOCUSED ON CREATING VALUE Distributable Earnings growth has resulted in meaningful dividend increases and significant ou
Slide 13: Second Quarter Capitalization
13 SEVEN HILLS REALTY TRUST SECOND QUARTER CAPITALIZATION $150 $124 $85 $96 $65 $68 $65 $29 $215 $192 $150 $125 Citibank UBS BMO Wells Fargo Advanced Unused Capacity Secured Financing Facilities (Dollars in millions) Strong relationships with Secured Financing Providers continue to support SEVN’s ca
Slide 14: Interest Rate Sensitivity
14 SEVEN HILLS REALTY TRUST INTEREST RATE SENSITIVITY Annualized Impact to Net Interest Income per Share1 As of June 30, 2023 Increases in interest rates benefit SEVN's 100% floating rate loan portfolio, while floors in SEVN's loan portfolio help to protect it from interest rate declines. 1. The abo
Slide 15: The RMR Group national investment platform
15 SEVEN HILLS REALTY TRUST RMR’s Operations Include: National Multi-Sector Investment Platform INDUSTRIAL GOVERNMENT MEDICAL LIFE SCIENCE OFFICE SENIOR LIVING HOTELS RETAIL RMR Managed Companies More than 20,000 Employees Over 2,000 Properties Over $5 Billion in Annual Revenues Approximately $36 Bi
Slide 16: Appendix
APPENDIX
Slide 17: Target Investments
17 SEVEN HILLS REALTY TRUST TARGET INVESTMENTS Selective origination strategy focused on providing borrowers flexible capital solutions for middle market CRE properties nationwide. Loan Size Principal balances typically $15 million to $75 million. Collateral First lien mortgages on middle market tra
Slide 18: Key Underwriting Criteria
18 SEVEN HILLS REALTY TRUST KEY UNDERWRITING CRITERIA Primary investment objective of balancing capital preservation with the generation of attractive risk adjusted returns. SPONSORSHIP Meaningful skin in the game History of performance High character Well capitalized COLLATERAL First mortgage secur
Slide 19: Loan Investment Details
19 SEVEN HILLS REALTY TRUST LOAN INVESTMENT DETAILS (1) (Dollars in thousands) First mortgage loans as of June 30, 2023: # Location Property Type Origination Date Committed Principal Amount Principal Balance Coupon Rate All in Yield Maturity Date Maximum Maturity Date LTV Risk Rating 1 Olmsted Falls
Slide 20: Loan Investment Details (Continued)
20 SEVEN HILLS REALTY TRUST LOAN INVESTMENT DETAILS (Continued) (Dollars in thousands) (1) First mortgage loans as of June 30, 2023: # Location Property Type Origination Date Committed Principal Amount Principal Balance Coupon Rate All in Yield Maturity Date Maximum Maturity Date LTV Risk Rating 15
Slide 21: Reconciliation of Net Income to Distributable Earnings
21 SEVEN HILLS REALTY TRUST RECONCILIATION OF NET INCOME TO DISTRIBUTABLE EARNINGS AND ADJUSTED DISTRIBUTABLE EARNINGS Three Months Ended June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 Distributable Earnings and Adjusted Distributable Earnings Net income $ 4,644 $ 7,
Slide 22: Non-GAAP Financial Measures and Certain Definitions
22 SEVEN HILLS REALTY TRUST NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS We present Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share, which are considered non-GAAP financial measures within th
Slide 23: Non-GAAP Financial Measures and Certain Definitions
23 SEVEN HILLS REALTY TRUST NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS All In Yield: All In Yield represents the yield on a loan, including amortization of deferred fees over the initial term of the loan and excluding any purchase discount accretion. CLO: CLO refers to collateralized loan o
Slide 24: Two Newton Place, Newton, Massachusetts
TWO NEWTON PLACE | 255 WASHINGTON STREET, SUITE 300 | NEWTON, MASSACHUSETTS 02458 SEVNREIT.COM
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