Seven Hills Realty Trust · NASDAQ:SEVN
Seven Hills Realty Trust — Investor Presentation (May 2024)
25 slides from Seven Hills Realty Trust's investor presentation, May 20, 2024
Slide 1: May 2024 Investor Presentation
May 2024 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 Li tigation Reform Act of 1995 and other securities laws. Whenever Seven Hills Realty Trust, or SEVN, uses words such as “believe”, “expect” , “a
Slide 3: Business at a Glance
3 SEVEN HILLS REALTY TRUST BUSINESS AT A GLANCE 3 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 Equity Ratio 12% Manager Ownership i
Slide 4: • 100% invested in floating rate first mortgage loans. • Diversified across geographies, sponsors
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 21 Average Loan Commitment $30M Total Loan Commitments $629M Principal Balance $591M Weighted Average Coupon Rate 9.1% Weighted Average All In Yield 9.6% Weighted Average LTV 68% Weighted Average Floor 1.4% Weigh
Slide 6: Reducing Office Exposure
6 SEVEN HILLS REALTY TRUST REDUCING OFFICE EXPOSURE 6 During the first quarter, SEVN’s office exposure declined to 28%, consisting of six loans with a weighted average risk rating of 3.5. 1. Based on principal balance of loans held for investment as of period end. Office 40% Office 36% Office 34% Of
Slide 7: Attractive Market Opportunity
7 SEVEN HILLS REALTY TRUST $15 million - $100 million 84% >$100 million 16% 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. • ~84% of CRE asset sales t
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: Rigorous Screening Process
9 SEVEN HILLS REALTY TRUST RIGOROUS SCREENING PROCESS Term Sheets Issued 41 Loans $1.5 billion 7 Loans $178 million 5 Loans $137 million Tremont employs a rigorous investment screening process with a multidisciplinary review to select the most compelling loan opportunities. • Screened loans with an
Slide 10: Stable Portfolio
10 SEVEN HILLS REALTY TRUST STABLE PORTFOLIO SEVN anticipates loan production to grow during 2024 driven by improving market sentiment and favorable competitive conditions for alternative lenders. $628.7 $634.9 $675.2 $629.9 $590.6 $45.8 $42.9 $45.2 $40.4 $38.3 $674.5 $677.8 $720.4 $670.3 $628.9 Q1
Slide 11: Representative Loan Originations
11 SEVEN HILLS REALTY TRUST Loan Newport News, VA Anaheim, CA Atlanta & Fayetteville, GA Type First Mortgage Loan First Mortgage Loan First Mortgage Loan Size $17.8 million $29.0 million $25.3 million Term Three - year initial term; Two 12 - month extension option Two - year initial term; Three 12 -
Slide 12: Portfolio Performance
12 SEVEN HILLS REALTY TRUST PORTFOLIO PERFORMANCE 12 • Generated Distributable Earnings of $0.38 per share, more than fully covering quarterly dividend. • Closed one loan for $17.8 million subsequent to quarter end. • Received $40.4 million of loan repayments during the first quarter, including $15.
Slide 13: Focused on Creating Value
13 SEVEN HILLS REALTY TRUST $0.15 $0.25 $0.25 $0.25 $0.25 $0.35 $0.35 $0.35 $0.35 $0.35 Dividends per Common Share FOCUSED ON CREATING VALUE Distributable Earnings growth has resulted in meaningful dividend increases and significant outperformance relative to the industry benchmark. 1. Paid fourth q
Slide 14: First Quarter Capitalization
14 SEVEN HILLS REALTY TRUST FIRST QUARTER CAPITALIZATION $58 $181 $88 $96 $157 $24 $62 $29 $215 $205 $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 cap
Slide 15: Interest Rate Sensitivity
15 SEVEN HILLS REALTY TRUST INTEREST RATE SENSITIVITY Annualized Impact to Net Interest Income per Share 1 As of March 31, 2024 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 a
Slide 16: The RMR Group national investment platform
16 SEVEN HILLS REALTY TRUST RMR’s Operations Include: National Multi - Sector Investment Platform OFFICE INDUSTRIAL RESIDENTIAL MEDICAL LIFE SCIENCE SENIOR LIVING HOTELS RETAIL RMR Managed Companies Over 20,000 Employees Approximately 2,100 Properties More than $5 Billion in Annual Revenues More tha
Slide 17: Appendix
SEVEN HILLS REALTY TRUST APPENDIX Student Housing Refinancing Auburn, AL
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 x Meaningful “skin” in the game x History of performance x High character x Well capitalized COLLATERAL x First mo
Slide 20: Loan Investment Details
20 SEVEN HILLS REALTY TRUST LOAN INVESTMENT DETAILS ( D ollars in thousands) First mortgage loans as of March 31, 2024: # 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 21: Loan Investment Details (Continued)
21 SEVEN HILLS REALTY TRUST LOAN INVESTMENT DETAILS (Continued) ( D ollars in thousands) First mortgage loans as of March 31, 2024: # Location Property Type Origination Date Committed Principal Amount Principal Balance Coupon Rate All in Yield Maturity Date Maximum Maturity Date LTV Risk Rating 14 C
Slide 22: Reconciliation of Net Income to Distributable Earnings
22 SEVEN HILLS REALTY TRUST Three Months Ended March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 Distributable Earnings Net income $ 5,233 $ 6,045 $ 7,473 $ 4,644 $ 7,803 Non - cash equity compensation expense 336 151 271 579 120 Non - cash accretion of purchase discou
Slide 23: Non-GAAP Financial Measures and Certain Definitions
23 SEVEN HILLS REALTY TRUST NON - GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS We present Distributable Earnings and Distributable Earnings per common share, which are considered “non - GAAP financial measures” within the meaning of the applicable SEC rules. These non - GAAP financial measures do
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 ex clu ding any purchase discount accretion. AUM: AUM refers to assets under mana
Slide 25: TWO NEWTON PLACE | WASHINGTON STREET, SUITE | NEWTON, MASSACHUSETTS 02458 SEVNREIT.COM
TWO NEWTON PLACE | 255 WASHINGTON STREET, SUITE 300 | NEWTON, MASSACHUSETTS 02458 SEVNREIT.COM
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