Seven Hills Realty Trust

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 a touch-tone phone. 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.

Good morning. Joining me on today's call are Tom Lorenzini, President and Chief Investment Officer, Fernando Diaz, 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, retransmission, 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, February 19, 2025, 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 at 7reed.com. With that, I will now turn the call over to Tom.

Thanks, Matt, and good morning, everyone. On our call today, I will start with an update on our fourth quarter activities and performance, followed by an overview of our loan portfolio before turning it over to Jared to discuss the macro perspective and the opportunities that we are seeing in this competitive environment as it relates to our pipeline. Fernando will then review our financial results before opening the call to questions from sell-side analysts. Before jumping into our quarterly results, I would like to highlight that for the full year, Seven Hills soundly outperformed our benchmark index, the Nareit Mortgage Commercial Financing Index, by more than 20%. This is the second consecutive year that we have outperformed this index, allowing us to deliver meaningful shareholder returns, which is a testament to the quality of our borrowers, as well as our underwriting and portfolio asset management. Turning to our fourth quarter results, last evening we reported distributable earnings per share of 33 cents, which met the high end of our guidance range. We further strengthened and diversified our portfolio by increasing our total loan commitments during the quarter to 641 million from 594 million at the end of Q3. Our average loan commitment also increased quarter over quarter from 30 million to $31 million. A loan portfolio continues to perform well and currently has a weighted average risk rating of 3.1. We have no five-rated loans, no loans in default, and no non-accrual loans. We ended the quarter $70 million in cash and ample borrowing capacity after receiving eight loan repayments totaling $165 million during the year, positioning us to further grow our portfolio by strategically taking advantage of opportunities in our pipeline to generate attractive risk-adjusted returns. Prior to our recycling, any capital generated through future loan repayments, we would expect to grow our portfolio by approximately $100 million in 2025. Turning to a few additional highlights from the fourth quarter. We were active during the quarter, closing two loans totaling $87 million. The first loan was a fully funded $42 million refinance of a student housing property serving the University of Mississippi. And the second loan was a $45 million commitment to finance the acquisition of 178 room hotel located here in Boston. Also, during the quarter, we received one loan repayment, our Starkville, Mississippi loan, which totaled $37 million. Then in early January, we closed on a $31 million bridge loan to finance the acquisition of another student housing property, this one located at Texas State University in San Marcos. Looking forward, we are not anticipating any first quarter repayments, but do expect six to seven loans totaling approximately $200 million being repaid in the back half of 2025. which should position us well as the markets continue to improve. Turning to our loan book as of December 31st, Seven Hills Portfolio remained 100% invested in floating rate loans, which consisted of 21 first mortgages with an average loan size of $31 million and total commitments of $641 million, an increase of approximately 8% or $47 million from last quarter. Future fundings decreased modestly to 5% of total commitments, and our investments have a weighted average coupon of 8.2% and an all-in yield of 8.6%. In aggregate, the portfolio has a weighted average maximum maturity of 2.6 years when including extension options and a stable overall credit profile with an average risk rating of 3.1 and a weighted average loan-to-value at close of 67%. We continue to thoughtfully diversify our loan book. As of today, our office exposure has been reduced to 26% of our total outstanding loan dollars, down from 30% at the end of Q3. But more importantly, all of our office loans are secured by well-leased properties, remain current at debt service, and continue to be actively supported by our borrowers. In addition, 52% of today's portfolio consists of multifamily and industrial loans, followed by select service hospitality and grocery anchored retail loans. Geographically, we continue to be well diversified across the country. From a capital perspective, our lending partners remain incredibly supportive of our business. We amended our UBS master repurchase agreement by extending the maturity date to February of 2026, while also increasing the maximum facility size by $45 million to $250 million. Secondly, we extended the maturity date of our $125 million Wells Fargo master repurchase facility from February 2025 to March of 2026. Before I turn the call to Jared, I would like to mention that in December, Seven Hills elected Ann Danner to our board as an independent trustee. Ann brings more than 40 years of real estate industry experience and her strong background in residential and multifamily development investment and operations will be a significant asset to Seven Hills going forward. With that, I will now turn the call over to Jared.