Seven Hills Realty Trust · NASDAQ:SEVN
Seven Hills Realty Trust — Q3 2022 Earnings Presentation
25 slides from Seven Hills Realty Trust's earnings presentation, Nov 10, 2022
Slide 1: Q3 2022 Investor Presentation
Q3 2022 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 SEVN Nasdaq Listed 28 Floating - Rate First Mortgage Loans $763M Total Loan Commitments 100% Loans Current on Debt Service 68% Weighted Average Loan to Value $682M Total Debt Capacity 1.9x Debt to Book Equity 0.5x Price to Book Value Per Share 3 Seven
Slide 4: Investment highlights
4 SEVEN HILLS REALTY TRUST • All loans current on debt service and no loans in default. • Diversified across geographies, sponsors and property types. • Emphasis on strong credit, visible cash flow and moderate LTV. High Quality Portfolio • Strong earnings growth tailwind in the current rising inter
Slide 5: Loan Portfolio Overview
5 SEVEN HILLS REALTY TRUST LOAN PORTFOLIO OVERVIEW Portfolio Statistics Number of Loans 28 Average Loan Commitment $27M Total Loan Commitments $763M Principal Balance $705M Weighted Average Coupon Rate 6.59% Weighted Average All In Yield 7.10% Weighted Average LTV 68% Weighted Average Floor 0.55% Lo
Slide 6: Business Strategy Focused on Driving Growth
6 SEVEN HILLS REALTY TRUST BUSINESS STRATEGY FOCUSED ON DRIVING GROWTH Attractively positioned to enhance shareholder value as SEVN continues to execute its business plan and demonstrates the strength of its portfolio to the investment community. Key Priorities • Identify investments that meet our d
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. • Team of professionals with an average of over
Slide 9: Strong Origination Pipeline
9 SEVEN HILLS REALTY TRUST STRONG ORIGINATION PIPELINE Term Sheets Issued 50 Loans $1.7 billion 14 Loans $406 million 12 Loans $368 million September 2022 Trailing Twelve Months Production Statistics Tremont Realty Capital employs a rigorous screening process with multidisciplinary review to select
Slide 10: Recent Loan Production
10 SEVEN HILLS REALTY TRUST RECENT LOAN PRODUCTION Tremont Realty Capital closed more than $200 million of new loans thus far in 2022, increasing total committed capital to $763 million. $55.5 $77.0 $128.4 $157.3 $91.2 $51.6 $38.4 $10.0 $11.8 $11.1 $7.4 $4.6 $8.9 $8.6 $65.5 $88.8 $139.5 $164.7 $95.8
Slide 11: Recent Loan Originations
11 SEVEN HILLS REALTY TRUST Loan Passaic, New Jersey Las Vegas, NV Farmington Hills, MI Type First Mortgage Loan First Mortgage Loan First Mortgage Loan Size $47.0 million $29.0 million $31.5 million Term Three - year initial term; Two one - year extension options Three - year initial term; Two one
Slide 12: Third Quarter Financial Performance
12 SEVEN HILLS REALTY TRUST $0.15 $0.15 $0.25 $0.25 $0.25 $0.25 Aug 2021 Sep 2021 Feb 2022 May 2022 Aug 2022 Nov 2022 THIRD QUARTER FINANCIAL PERFORMANCE 12 • Delivered solid earnings growth supported by continued investment activity and the positive impact of rising interest rates. • Increased Adju
Slide 13: Third Quarter Portfolio Activity
13 SEVEN HILLS REALTY TRUST THIRD QUARTER PORTFOLIO ACTIVITY 13 SEVN’s loan portfolio increased to $763 million of committed capital, representing a 45% increase compared to a year ago. $682.3 $682.3 $720.7 $705.5 $705.5 $38.4 $4.3 $19.5 $52.7 $57.7 Q2 2022 Portfolio Originations Fundings Repayments
Slide 14: Third Quarter Capitalization
14 SEVEN HILLS REALTY TRUST THIRD QUARTER CAPITALIZATION Equity 35% Secured Financing Facilities 65% $506 $176 $682 Q3 2022 Advanced Unused Capacity Capital Structure Secured Financing Facilities (Dollars in millions) Focused on expanding and diversifying capital base with competitive sources of fin
Slide 15: Interest Rate Sensitivity
15 SEVEN HILLS REALTY TRUST INTEREST RATE SENSITIVITY Estimated Annual Increase in Net Interest Income Per Share 1 As of September 30, 2022 Strong earnings growth tailwind in the current rising interest rate environment as 100% of investment portfolio is floating rate loans. • A 150 - basis point in
Slide 16: RMR National Multi-Sector Investment Platform
16 SEVEN HILLS REALTY TRUST RMR’s Operations Include: National Multi - Sector Investment Platform OFFICE INDUSTRIAL GOVERNMENT MEDICAL OFFICE LIFE SCIENCE SENIOR LIVING HOTELS RETAIL RMR Managed Companies Over 38,000 Employees 2,100 Properties Approximately $12 Billion in Annual Revenues More than $
Slide 17: Appendix
Multifamily Aquisition Financing Seattle, WA 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 m
Slide 20: Loan Investment Details
20 SEVEN HILLS REALTY TRUST LOAN INVESTMENT DETAILS (1) ( D ollars in thousands) First mortgage loans as of September 30, 2022: Location Property Type Origination Date Committed Principal Amount Principal Balance 1 Coupon Rate All in Yield Maturity Date Maximum Maturity Date LTV Risk Rating St. Loui
Slide 21: Loan Investment Details (Continued)
21 SEVEN HILLS REALTY TRUST LOAN INVESTMENT DETAILS (Continued) (1) ( D ollars in thousands) 1. The principal balance excludes the impact of the $8,224 unaccreted purchase discount related to the Merger. 2. This loan was repaid in October 2022. First mortgage loans as of September 30, 2022: Location
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. Exit fees collected on loans acquired in the Merger represent fees collected upon repayment of loans for which no income has pre viously been recognized in Distributable Earnings
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 Distrib uta ble Earnings per common share and Adjusted Book Value per
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. BMO: BMO refers to BMO Harris Bank N
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
Seven Hills Realty Trust — Q3 2022 Earnings Presentation on 6ix