Seven Hills Realty Trust · NASDAQ:SEVN
Seven Hills Realty Trust — Q4 2022 Earnings Presentation
26 slides from Seven Hills Realty Trust's earnings presentation, Feb 28, 2023
Slide 1: Q4 2022 Investor Presentation
Q4 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 Litigation Reform Act of 1995 and other securities laws. Whenever Seven Hills Realty Trust, or SEVN, uses words such as “believe”, “expect”, “antic
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 Book Equity 0.5x Price to Book Value P
Slide 4: Business Strategy Focused on Driving Growth
4 SEVEN HILLS REALTY TRUST BUSINESS STRATEGY FOCUSED ON DRIVING GROWTH Attractively positioned to enhance shareholder value as SEVN further executes its business plan and demonstrates the strength of its portfolio to the investment community. Key Priorities • Identify investments that meet our disci
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 • Strong earnings growth tailwind in the current rising interest rate environment as
Slide 6: Loan Portfolio Overview
6 SEVEN HILLS REALTY TRUST LOAN PORTFOLIO OVERVIEW Portfolio Statistics Number of Loans 27 Average Loan Commitment $27M Total Loan Commitments $728M Principal Balance $679M Weighted Average Coupon Rate 8.07% Weighted Average All In Yield 8.57% Weighted Average LTV 68% Weighted Average Floor 0.62% 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 LLC
8 SEVEN HILLS REALTY TRUST MANAGED BY TREMONT REALTY CAPITAL LLC 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 o
Slide 9: Strong Origination Pipeline
9 SEVEN HILLS REALTY TRUST STRONG ORIGINATION PIPELINE Term Sheets Issued 41 Loans $1.5 billion 10 Loans $299 million 7 Loans $228 million Full Year 2022 Production Statistics Tremont employs a rigorous screening process with multidisciplinary review to select the most compelling loan opportunities.
Slide 10: Loan Production
10 SEVEN HILLS REALTY TRUST LOAN PRODUCTION Tremont closed more than $220 million of new loans in 2022, increasing total committed capital to $728 million. $55.5 $77.0 $128.4 $157.3 $91.2 $51.6 $38.4 $22.0 $10.0 $11.8 $11.1 $7.4 $4.6 $8.9 $8.6 $2.4 $65.5 $88.8 $139.5 $164.7 $95.8 $60.5 $47.0 $24.4 Q
Slide 11: Recent 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: Fourth Quarter Financial Performance
12 SEVEN HILLS REALTY TRUST FOURTH QUARTER FINANCIAL PERFORMANCE • Delivered solid earnings growth supported by the positive impact of rising interest rates. • Increased Adjusted Distributable Earnings per common share by 37% on a sequential quarter basis. • Grew interest income from investments by
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 Aug 2021 Sep 2021 Feb 2022 May 2022 Aug 2022 Nov 2022 Feb 2023 1 DIVIDEND GROWTH Dividend increases supported by strength of loan portfolio and the favorable impact of rising interest rates. 1. Paid f
Slide 14: Fourth Quarter Portfolio Activity
14 SEVEN HILLS REALTY TRUST FOURTH QUARTER PORTFOLIO ACTIVITY SEVN closed one new loan and realized two loan repayments during Q4 2022. $705.5 $705.5 $727.5 $678.6 $678.6 $22.0 $4.8 $53.7 $57.7 $49.0 Q3 2022 Portfolio Originations Fundings Repayments Q4 2022 Portfolio $763.1 $727.6 Total Commitments
Slide 15: Fourth Quarter Capitalization
15 SEVEN HILLS REALTY TRUST FOURTH QUARTER CAPITALIZATION Equity Secured 37% Financing Facilities 63% $474 $208 Q4 2022 Advanced Unused Capacity Capital Structure Secured Financing Facilities (Dollars in millions) Strong relationships with Secured Financing Facilities continue to support SEVN’s capa
Slide 16: Interest Rate Sensitivity
16 SEVEN HILLS REALTY TRUST INTEREST RATE SENSITIVITY Annualized Impact to Net Interest Income Per Share1 As of December 31, 2022 Strong earnings growth tailwind in the current rising interest rate environment as 100% of investment portfolio is floating rate loans. • Expect earnings to continue to b
Slide 17: RMR National Multi-Sector Investment Platform
17 SEVEN HILLS REALTY TRUST RMR’s Operations Include: National Multi-Sector Investment Platform INDUSTRIAL GOVERNMENT MEDICAL OFFICE LIFE SCIENCE OFFICE SENIOR LIVING HOTELS RETAIL RMR Managed Companies Over 38,000 Employees Nearly 2,100 Properties Over $16 Billion in Annual Revenues Over $37 Billio
Slide 18: Appendix
APPENDIX
Slide 19: Target Investments
19 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 20: Key Underwriting Criteria
20 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 sec
Slide 21: Loan Investment Details
21 SEVEN HILLS REALTY TRUST LOAN INVESTMENT DETAILS (1) (Dollars in thousands) First mortgage loans as of December 31, 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 1 Olmst
Slide 22: Loan Investment Details (Continued)
22 SEVEN HILLS REALTY TRUST LOAN INVESTMENT DETAILS (Continued) (Dollars in thousands) (1) 1. The principal balance excludes the impact of the $6,703 unaccreted purchase discount related to the Merger. First mortgage loans as of December 31, 2022: # Location Property Type Origination Date Committed
Slide 23: Reconciliation of Net Income to Distributable Earnings and Adjusted Distributable Earnings
23 SEVEN HILLS REALTY TRUST RECONCILIATION OF NET INCOME TO DISTRIBUTABLE EARNINGS AND ADJUSTED DISTRIBUTABLE EARNINGS 1. Exit fees collected for loans acquired in the Merger represent fees collected upon repayment of loans for which no income relating to those exit fees has previously been recogniz
Slide 24: Non-GAAP Financial Measures and Certain Definitions
24 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 25: Non-GAAP Financial Measures and Certain Definitions
25 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. BMO: BMO refers to BMO Harris Bank N.A.
Slide 26: Two Newton Place, Newton, Massachusetts
TWO NEWTON PLACE | 255 WASHINGTON STREET, SUITE 300 | NEWTON, MASSACHUSETTS 02458 SEVNREIT.COM
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