On Wednesday, Seven Hills Realty Trust (NASDAQ:SEVN) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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View the webcast at https://event.choruscall.com/mediaframe/webcast.html?webcastid=m6CKm8dC
Summary
Seven Hills Realty Trust reported first quarter distributable earnings of $5.3 million, or $0.24 per share, at the high end of their guidance, driven by the strength of their loan portfolio and disciplined underwriting.
The company originated three new loans totaling $67.5 million, increasing total outstanding loan commitments to approximately $776 million, and has three additional loans in process totaling $78 million.
Management remains focused on senior secured commercial real estate lending, emphasizing disciplined execution and generating compelling risk-adjusted returns, despite recent geopolitical and market volatility.
The company maintains strong liquidity with $110 million of cash on hand and $400 million of available capacity under secured financing facilities, and expects second-quarter distributable earnings to be between $0.23 and $0.25 per share.
Management highlighted their ability to source opportunities across various property types and geographies, and noted a strong loan pipeline of over $125 million in term sheets for new loan opportunities.
Full Transcript
OPERATOR
Good morning and welcome to Seven Hills Realty Trust’s first quarter 2026 financial results conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the call over to Matt Murphy, Manager of Investor Relations. Please go ahead.
Matt Murphy (Manager of Investor Relations)
Good morning. Joining me on today’s call are Tom Lorenzini, President and Chief Investment Officer, Matt Brown, Chief Financial Officer and Treasurer and Jared Lewis, Vice President. Today’s call includes a presentation by management followed by a question and answer session with analysts. Please note that the recording, broadcast and transcription of today’s conference call is prohibited without the prior written consent of the Company. Also note that today’s conference call contains forward looking statements within the meaning of the Private Securities Litigation Reform act of 1995 and other securities laws. These forward looking statements are based on Seven Hills beliefs and expectations as of today, April 29, 2026 and actual results may differ materially from those that we project. The Company undertakes no obligation to revise or publicly release the results of any revision to the forward looking statements made in today’s conference call. Additional information concerning factors that could cause those differences is contained in our filings with the securities and Exchange Commission or SEC, which can be accessed from the SEC’s website. Investors are cautioned not to place undue reliance upon any forward looking statements. In addition, we will be discussing non GAAP financial numbers during this call including distributable earnings and distributable earnings per share. A reconciliation of GAAP to non GAAP financial measures can be found in our earnings release presentation which can be found on our website@7REIT.com with that, I will now turn the call over to Tom.
Tom Lorenzini (President and Chief Investment Officer)
Thank you Matt and good morning everyone. On our call today, I will start by providing an update on our first quarter performance and recent investment activity followed by an overview of our loan portfolio. Then Jared will discuss current market conditions in our pipeline before Matt reviews our financial results and guidance. Yesterday we reported solid first quarter results reflecting the continued strength of our fully performing loan portfolio and our disciplined underwriting approach. Distributable earnings for the quarter came in at $5.3 million or $0.24 per share, which was at the high end of our guidance. We reached a new high water mark with approximately $776 million in total outstanding loan commitments after originating three new loans totaling $67.5 million during the quarter, reflecting our continued progress in deploying the capital raised from our December rates offering. First quarter closings included a $30.5 million loan secured by a medical office property In Atlanta, a $19.5 million loan secured by a grocery anchored retail property in Palm Desert, California, and a $17.5 million loan secured by a Select Service Hotel in Scottsdale, Arizona. We also have three additional loans in process that we expect to close in the near term totaling approximately $78 million, which Jared will speak to in more detail. These originations reflect our ability to source opportunities across property types and geographies while maintaining disciplined underwriting. Importantly, we remain selective in deploying capital and continue to focus on opportunities that meet our return thresholds. Originations so far in 2026 have been executed at a net interest margin of approximately 195 basis points, representing the highest level we have achieved over the past four years when, including the impact of exit fees, total returns are incrementally higher. We believe this reflects both the strength of our platform and an improved first quarter transaction environment. Turning to our loan portfolio, as of March 31st we had total loan commitments of approximately $776 million across 26 floating rate first mortgage loans. Our portfolio continues to demonstrate strong credit performance with a weighted average risk rating of 2.8. No realized losses in all loans current on debt service. Our weighted average all in yield at quarter end was 7.8% and our weighted average loan to value at origination remained conservative at 66%. During the quarter we received the full repayment of a $16 million loan secured by a hotel in Lake Mary, Florida, and subsequent to quarter end we received an additional $54.6 million from the repayment of a multifamily loan in Ohio. We are also expecting the repayment of a $26.5 million loan secured by an office building in suburban Chicago as early as this week upon payoff. This will reduce our overall office exposure to approximately 21% of the current portfolio. This repayment activity meaningfully increases our available capital and supports continued deployment into new investments. With recent loan repayments, we currently have approximately $110 million of cash on hand and nearly $400 million of available capacity under our secured financing facilities. As previously announced, we extended the maturities of our UBS and Wells Fargo financing facilities to 2028 and doubled the capacity of the Wells Fargo facility to $250 million, further enhancing our ability to deploy capital and continue growing the portfolio. In summary, we believe Seven Hills is well positioned to capitalize on an active pipeline of middle market lending opportunities. While recent headlines have raised concerns around private credit, it is important to note that Seven Hills remains narrowly focused on senior secured commercial real estate lending. This approach is reinforced by RMR’s multi decade track record managing and operating commercial real estate, providing deep asset level insight, disciplined underwriting and proven experience across market cycles. With strong liquidity expectations of improving transaction activity and attractive lending spreads, we remain focused on disciplined execution and generating compelling risk adjusted returns for our shareholders. With that, I’ll turn the call over to Jared.
Jared Lewis (Vice President)
Thanks Tom. Since our last call, we’ve seen increased volatility across the capital markets, driven in part by the ongoing conflict in Iran and its impact on investor sentiment. Interest rates have also moved higher, with the 10 year treasury rate increasing from approximately 3.95% at the end of February to 4.39% today and the expectation is that the FOMC will maintain its target range for the federal funds rate at 3.5% to 3.75% later this afternoon. While the year began with strong transaction activity, continuing the momentum we saw at the end of 2025, recent market volatility has started to have an impact on owners decision making. Over the past month we have seen some moderation in acquisition and sales activity as market participants …
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