Seven Hills Realty Trust · NASDAQ:SEVN
Seven Hills Realty Trust — Q3 2023 Earnings Presentation
20 slides from Seven Hills Realty Trust's earnings presentation, Oct 31, 2023
Slide 1: Seven Hills Realty Trust Third Quarter 2023 Financial Results
Exhibit 99.2 Seven Hills Realty Trust Third Quarter 2023 Financial Results
Slide 2: Seven Hills Realty Trust Announces Third Quarter 2023 Results
Seven Hills Realty Trust Announces Third Quarter 2023 Results "Our third quarter results once again Newton, MA (October 31, 2023). Seven Hills Realty Trust (Nasdaq: SEVN) today announced financial results for the quarter and nine months ended September 30, 2023. underscore the quality of our loan po
Slide 3: Company Snapshot
Company Snapshot (As of September 30, 2023, unless otherwise noted) Strong Loan Portfolio Conservative Leverage Integrated with RMR Real Estate Platform $720 million 1.8x 12% Floating rate Debt to equity ratio Ownership of SEVN first mortgage loan commitments $28 million $695 million ~$36 billion Av
Slide 4: Third Quarter 2023 Highlights
Third Quarter 2023 Highlights (As of and for the three months ended September 30, 2023, unless otherwise noted) • Generated net income of $7.5 million, or $0.51 per diluted share, Distributable Earnings of $5.6 million, or $0.38 per diluted share, Financial and Adjusted Distributable Earnings of $5.
Slide 5: Loan Portfolio Summary
Loan Portfolio Summary As of Third Quarter September 30, (dollars in thousands) Originations 2023 Number of loans 2 26 Third Quarter 2023 Loan Portfolio Activity Average loan commitment $22,375 $27,708 (dollars in millions) Total loan commitments $44,750 $720,397 $720.4 Total Loan Commitments $677.8
Slide 6: Loan Portfolio Originations and Diversity
Loan Portfolio Originations and Diversity (1) Geographic Region (2) Loan Originations by Quarter East (dollars in millions) 13% $164.7 Midwest $7.4 34% West 23% $139.5 $11.1 South 30% $95.8 Property Type (2) $4.6 Hotel Retail $157.3 Industrial 2% 14% $128.4 $60.5 $8.9 $47.0 $37.5 Office $44.8 Total
Slide 7: Loan Portfolio Credit Quality
Loan Portfolio Credit Quality Loan to Value (1) % of Portfolio Weighted Average LTV: 67% 31% 28% 17% 13% 11% 30% - 60% 61% - 65% 66% - 70% 71% - 75% 76% - 80% Loan Count 5 2 7 9 3 Risk Rating Distribution (1) % of Portfolio Weighted Average Risk Rating: 2.9 62% 22% 16% —% —% Lower Risk (1) Average R
Slide 8: Office Loans
Office Loans (1) • No office loans in urban or CBD markets in our portfolio. • While 9 office loans make up 34% of our portfolio, office loans have a weighted average risk rating of 2.9. • As of September 30, 2023, all of our borrowers with outstanding loans had paid their debt service obligations o
Slide 9: Secured Financing Facilities
Secured Financing Facilities (As of September 30, 2023) Total/Weighted Citibank UBS (1) BMO Wells Fargo Average (dollars in thousands) Maximum facility size $ 215,000 $ 205,000 $ 150,000 $ 125,000 $ 695,000 Principal balance $ 136,730 $ 141,558 $ 101,027 $ 95,551 $ 474,866 Unused capacity $ 78,270 $
Slide 10: Interest Rate Sensitivity
Interest Rate Sensitivity (As of September 30, 2023) Annualized Impact to Net Interest Income per Share $0.20 $0.17 $0.15 $0.14 $0.10 $0.10 $0.07 $0.05 $0.03 $— $0.00 $-0.05 $(0.03) $(0.05) $-0.10 $(0.08) $(0.10) $-0.15 $(0.12) $-0.20 -125 bps -100 bps -75 bps -50 bps -25 bps 0 bps +25 bps +50 bps +
Slide 11: Appendix
SEVEN HILLS REALTY TRUST Appendix a eo Ph ... ) _—— "
Slide 12: Company Profile, Governance and Research Coverage
Company Profile, Governance and Research Coverage Management Equity Research Coverage Our manager, Tremont, is registered with the Securities and Exchange Commission, or SEC, as an JMP Securities investment adviser and is owned by RMR. As of September 30, 2023, RMR had approximately $36 Chris Muller
Slide 13: Loan Investment Details
Loan Investment Details (dollars in thousands) First mortgage loans as of September 30, 2023: Committed Maximum Origination Principal Principal Coupon All in Maturity Maturity Risk # Location Property Type Date Amount Balance Rate Yield Date Date LTV Rating 1 Olmsted Falls, OH Multifamily 01/28/2021
Slide 14: Loan Investment Details (Continued)
Loan Investment Details (Continued) (dollars in thousands) First mortgage loans as of September 30, 2023: Committed Maximum Origination Principal Principal Coupon All in Maturity Maturity Risk # Location Property Type Date Amount Balance Rate Yield Date Date LTV Rating 15 St. Louis, MO (1) Office 12
Slide 15: Financial Summary
Condensed Consolidated Balance Sheets (dollars in thousands, except per share data) September 30, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 60,391 $ 71,057 Restricted cash 139 10 Loans held for investment 671,129 669,929 Allowance for credit losses (1) (3,281) — Loans held for invest
Slide 16: Condensed Consolidated Statements of Operations
Condensed Consolidated Statements of Operations (amounts in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 INCOME FROM INVESTMENTS: Interest and related income $ 17,137 $ 11,650 $ 48,814 $ 30,098 Purchase discount accretion 1,07
Slide 17: Non-GAAP Financial Measures
Non-GAAP Financial Measures (amounts in thousands, except per share data) Three Months Ended September 30, June 30, March 31, December 31, September 30, 2023 2023 2023 2022 2022 Net income $ 7,473 $ 4,644 $ 7,803 $ 6,760 $ 5,176 Non-cash equity compensation expense 271 579 120 129 259 Non-cash accre
Slide 18: Non-GAAP Financial Measures (Continued)
Non-GAAP Financial Measures (Continued) We present Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings, Adjusted Distributable Earnings per common share and Adjusted Book Value per common share, which are considered “non-GAAP financial measures” within th
Slide 19: Other Measures and Definitions
Other Measures and 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. BMO Facility: Amounts advanced under the facility loan agreement and security agreement w
Slide 20: Warning Concerning Forward-Looking Statements
Warning Concerning Forward-Looking Statements 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. These statements include words such as “believe”, “expect”, “anticipate
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