Seven Hills Realty Trust · NASDAQ:SEVN
Seven Hills Realty Trust — Investor Presentation (May 2023)
25 slides from Seven Hills Realty Trust's investor presentation, May 18, 2023
Slide 1: May 2023 Investor Presentation
May 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 1.6x Debt to Book Equity 0.6x Price to Book Value P
Slide 4: Business Strategy Focused on Driving Growth
4 SEVEN HILLS REALTY TRUST BUSINESS STRATEGY FOCUSED ON DRIVING GROWTH Well positioned alternative lender focused on opportunistically reinvesting capital in floating rate loans on transitional real estate to support attractive returns for our shareholders. Key Priorities • Identify investments that
Slide 5: Investment highlights
5 SEVEN HILLS REALTY TRUST • All loans current on debt service. • 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 FTSE Nareit / Mortgag
Slide 6: Loan Portfolio Overview
6 SEVEN HILLS REALTY TRUST LOAN PORTFOLIO OVERVIEW Portfolio Statistics Number of Loans 25 Average Loan Commitment $27M Total Loan Commitments $674M Principal Balance $629M Weighted Average Coupon Rate 8.57% Weighted Average All In Yield 9.06% Weighted Average LTV 67% Weighted Average Floor 0.65% Lo
Slide 7: Attractive Market Opportunity
7 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 8: Managed by Tremont Realty Capital
8 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 9: Strong Origination Pipeline
9 SEVEN HILLS REALTY TRUST STRONG ORIGINATION PIPELINE Term Sheets Issued 46 Loans $1.6 billion 7 Loans $203 million 4 Loans $132 million Production Statistics Tremont employs a rigorous screening process with a multidisciplinary review to select the most compelling loan opportunities. • Screened lo
Slide 10: Loan Production
10 SEVEN HILLS REALTY TRUST LOAN PRODUCTION Maintaining a selective approach to loan origination activities while focusing on opportunities in SEVN’s pipeline with high quality sponsors and accretive pricing. $55.5 $77.0 $128.4 $157.3 $91.2 $51.6 $38.4 $22.0 $0.0 $10.0 $11.8 $11.1 $7.4 $4.6 $8.9 $8.
Slide 11: Representative Loan Originations
11 SEVEN HILLS REALTY TRUST Loan Fontana, CA Passaic, NJ Las Vegas, NV Type First Mortgage Loan First Mortgage Loan First Mortgage Loan Size $24.4 million $47.0 million $29.0 million Term Two-year initial term; Two one-year extension options Three-year initial term; Two one-year extension options Th
Slide 12: First Quarter Financial Performance
12 SEVEN HILLS REALTY TRUST FIRST QUARTER FINANCIAL PERFORMANCE • Drove sequential quarter growth in Adjusted Distributable Earnings per common share over the past year. • Received $51 million of loan repayments, demonstrating strong underwriting and sponsors achieving their business plans. • Ended
Slide 13: Dividend Growth
13 SEVEN HILLS REALTY TRUST 13 Dividends per Common Share $0.15 $0.15 $0.25 $0.25 $0.25 $0.25 $0.35 $0.35 Aug 2021 Sep 2021 Feb 2022 May 2022 Aug 2022 Nov 2022 Feb 2023 May 2023 (1) DIVIDEND GROWTH Distributable Earnings growth has resulted in meaningful dividend increases and higher returns to shar
Slide 14: First Quarter Capitalization
14 SEVEN HILLS REALTY TRUST FIRST QUARTER CAPITALIZATION $435 $247 Q1 2023 Advanced Unused Capacity Secured Financing Facilities (Dollars in millions) Strong relationships with Secured Financing Facilities continue to support SEVN’s capacity to invest in additional loan opportunities. Highlights • U
Slide 15: Interest Rate Sensitivity
15 SEVEN HILLS REALTY TRUST INTEREST RATE SENSITIVITY Annualized Impact to Net Interest Income per Share1 As of March 31, 2023 SEVN’s portfolio of 100% floating rate loans benefits from increases in interest rates. 1. The above table illustrates the incremental impact on SEVN’s annual income from in
Slide 16: The RMR Group national investment platform
16 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 Approximately 38,000 Employees Nearly 2,100 Properties Over $16 Billion in Annual Revenues Over $37 Bill
Slide 17: Appendix
APPENDIX
Slide 18: Target Investments
18 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 19: Key Underwriting Criteria
19 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 20: Loan Investment Details
20 SEVEN HILLS REALTY TRUST LOAN INVESTMENT DETAILS (1) (Dollars in thousands) First mortgage loans as of March 31, 2023: # Location Property Type Origination Date Committed Principal Amount Principal Balance (1) Coupon Rate All in Yield Maturity Date Maximum Maturity Date LTV Risk Rating 1 Olmsted
Slide 21: Loan Investment Details (Continued)
21 SEVEN HILLS REALTY TRUST LOAN INVESTMENT DETAILS (Continued) (Dollars in thousands) (1) 1. The principal balance excludes the impact of the $5,519 unaccreted purchase discount related to the Merger. First mortgage loans as of March 31, 2023: # Location Property Type Origination Date Committed Pri
Slide 22: Reconciliation of Net Income to Distributable Earnings
22 SEVEN HILLS REALTY TRUST RECONCILIATION OF NET INCOME TO DISTRIBUTABLE EARNINGS AND ADJUSTED DISTRIBUTABLE EARNINGS 1. SEVN adopted Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2023.
Slide 23: Non-GAAP Financial Measures and Certain Definitions
23 SEVEN HILLS REALTY TRUST NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS Non-GAAP Financial Measures: We present Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings, Adjusted Distributable Earnings per common share and Adjusted Book Value per commo
Slide 24: Non-GAAP Financial Measures and Certain Definitions
24 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 25: Two Newton Place, Newton, Massachusetts
TWO NEWTON PLACE | 255 WASHINGTON STREET, SUITE 300 | NEWTON, MASSACHUSETTS 02458 SEVNREIT.COM
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