Seven Hills Realty Trust · NASDAQ:SEVN
Seven Hills Realty Trust — Investor Presentation (November 2023)
25 slides from Seven Hills Realty Trust's investor presentation, Nov 9, 2023
Slide 1: November 2023 Investor Presentation
November 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”, “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 1.8x Debt to Equity Ratio 12% Manager Ownership in
Slide 4: Investment highlights
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 26 Average Loan Commitment $28M Total Loan Commitments $720M Principal Balance $675M Weighted Average Coupon Rate 9.2% Weighted Average All In Yield 9.7% Weighted Average LTV 67% Weighted Average Floor 1.1% Weigh
Slide 6: Reducing Office Exposure
6 SEVEN HILLS REALTY TRUST REDUCING OFFICE EXPOSURE In October 2023, SEVN’s office exposure declined to 29%, consisting of 7 loans with a weighted average risk rating of 3.1. 1. Based on principal balance of loans held for investment as of period end. Office 40% Office 36% Office 34% Office 29% Mult
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 42 Loans $1.5 billion 7 Loans $181 million 4 Loans $107 million Tremont employs a rigorous investment screening process with a multidisciplinary review to select the most compelling loan opportunities. • Screened over $1 billio
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. $705.5 $678.6 $628.7 $634.9 $675.2 $57.7 $49.0 $45.8 $42.9 $45.2 $763.1 $727.6 $674.5 $677.8 $720.4 Q3
Slide 11: Representative Loan Originations
11 SEVEN HILLS REALTY TRUST Loan Atlanta & Fayetteville, GA Scottsdale, AZ Fountain Inn, SC Type First Mortgage Loan First Mortgage Loan First Mortgage Loan Size $25.3 million $17.3 million $27.5 million Term Three-year initial term; Two 12-month extension option Three-year initial term; Two 12-mont
Slide 12: Third Quarter Performance
12 SEVEN HILLS REALTY TRUST THIRD QUARTER PERFORMANCE • Generated Adjusted Distributable Earnings of $0.36 per share, more than fully covering quarterly dividend. • Closed two loans during the quarter and one subsequent to quarter end for total commitments of $70.1 million dollars. • Ended the quart
Slide 13: Focused on Creating Value
13 SEVEN HILLS REALTY TRUST 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 quarter dividend of $0.15 per common share in September 2021
Slide 14: Third Quarter Capitalization
14 SEVEN HILLS REALTY TRUST THIRD QUARTER CAPITALIZATION $137 $142 $101 $96 $78 $63 $49 $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 ca
Slide 15: Interest Rate Sensitivity
15 SEVEN HILLS REALTY TRUST INTEREST RATE SENSITIVITY Annualized Impact to Net Interest Income per Share1 As of September 30, 2023 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. Th
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 Over 20,000 Employees Over 2,000 Properties More than $5 Billion in Annual Revenues Approximately $36 Bi
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 Meaningful “skin” in the game History of performance High character Well capitalized COLLATERAL First mortgage sec
Slide 20: Loan Investment Details
20 SEVEN HILLS REALTY TRUST LOAN INVESTMENT DETAILS (1) (Dollars in thousands) First mortgage loans as of September 30, 2023: # 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
Slide 21: Loan Investment Details (Continued)
21 SEVEN HILLS REALTY TRUST LOAN INVESTMENT DETAILS (Continued) (Dollars in thousands) (1) First mortgage loans as of September 30, 2023: # Location Property Type Origination Date Committed Principal Amount Principal Balance Coupon Rate All in Yield Maturity Date Maximum Maturity Date LTV Risk Ratin
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 Three Months Ended September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Distributable Earnings and Adjusted Distributable Earnings Net income $ 7,473
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, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share, which are considered “non-GAAP financial measures” within
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. AUM: AUM refers to assets under manageme
Slide 25: Contact: Two Newton Place, Newton, Massachusetts
TWO NEWTON PLACE | 255 WASHINGTON STREET, SUITE 300 | NEWTON, MASSACHUSETTS 02458 SEVNREIT.COM
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