Yahoo Finance

• Distributable Earnings: $0.34 per share, exceeding guidance range.

• Quarterly Dividend: $0.35 per share declared and paid.

• Portfolio Commitments: $691 million in commitments, comprised of 23 first mortgage loans.

• Weighted Average Yield: 8.5% on the loan portfolio.

• Cash on Hand: $42 million as of quarter-end.

• Unused Financing Capacity: $298 million.

• Office Exposure: Reduced to 25% of the portfolio, down from 27% at year-end.

• Weighted Average Risk Rating: Improved to 2.9% from 3.1% last quarter.

• New Loan Production: Two new student housing loans totaling approximately $50 million.

• Debt to Equity Ratio: 1.6 times.

• Second Quarter Earnings Guidance: Expected to be in the range of $0.29 to $0.31 per share.

• Warning! GuruFocus has detected 4 Warning Signs with SEVN.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Seven Hills Realty Trust (NASDAQ:SEVN) reported distributable earnings of $0.34 per share, exceeding the high end of their guidance range.

• The company declared and paid a quarterly dividend of $0.35 per share.

• All loans in the portfolio remain current and performing with no non-accrual loans, indicating strong portfolio health.

• The weighted average risk rating improved to 2.9%, down from 3.1% last quarter, showing an enhanced risk profile.

• SEVN closed two new student housing loans totaling approximately $50 million, aligning with their focus on resilient sectors.

Negative Points

• The company anticipates pressure on earnings due to a lower rate environment and expected loan repayments.

• Several loans expected to be repaid in 2025 were originated at spreads above current market pricing, potentially impacting future earnings.

• The office exposure, although reduced, still constitutes 25% of the portfolio, which may pose risks given market conditions.

• Declining benchmark interest rates and compressed net interest margins on loan originations could further pressure earnings.

• The company is cautious about the macroeconomic environment, which could affect their ability to maintain current performance levels.

Q & A Highlights

Q: Can you comment on any discussions with your lenders and any sense of trepidation there? A: Jared Lewis, Vice President: We've had great conversations with our lenders, who have been supportive of our business. We've evaluated many new opportunities, and our lenders have been helpful in pricing credit. While market spreads are widening, our borrowing costs have remained steady.

Q: Has the all-in borrowing cost remained consistent? A: Jared Lewis, Vice President: The borrowing cost reflects the overall portfolio, but recently, borrowing costs have come down. We are targeting and underwriting borrowing costs in the range of SOFR plus 2%.