Seven Hills Realty Trust

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.

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, 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, April 29th, 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 7REIT.com. With that, I will now turn the call over to Tom.

Thank you, Matt, and good morning, everyone. On today's call, I will begin with an overview of our first quarter performance and portfolio positioning results. followed by some thoughts on the evolving rate environment and how it is impacting our outlook. I will then turn the call over to Jared to discuss our pipeline and broader market conditions, after which we will hear from Matt Brown, who I'm happy to introduce as our new Chief Financial Officer and Treasurer. Matt currently serves as a Senior Vice President at the RMR Group and brings nearly 20 years of accounting and commercial real estate finance experience to the team. Matt will review our financial results before we open the line for questions. For the first quarter, we reported distributable earnings of 34 cents per share, exceeding the high end of our guidance range. These results reflect the continued strength and ongoing performance of our loan portfolio, supported by new loan production that helped mitigate the impact of lower interest rates on our loan book. We also declared and paid a quarterly dividend of 35 cents per share. As of March 31st, all loans in our portfolio remain current and performing with no non-accrual loans. Our weighted average risk rating improved to 2.9 down from 3.1 last quarter. This improvement, coupled with the fact that we have no loans in default, reinforces the strong health of our portfolio and our borrowers' ability to execute on their business plans. As of quarter end, our portfolio totaled $691 million in commitments, comprised of 23 first mortgage loans with a weighted average all-in yield of 8.5%, a weighted average coupon of SOFR plus 3.69%, and a weighted average loan-to-value of 67% at close. The portfolio had a weighted average maximum maturity of 2.6 years when including extension options and an average loan size of approximately $30 million. We ended the quarter with approximately $42 million in cash and $298 million in unused financing capacity, providing us with significant flexibility as we evaluate new investment opportunities. During the quarter, we closed two new student housing loans totaling approximately $50 million, a $31.2 million loan in San Marcos, Texas, and an $18.5 million loan in Waco, Texas. Both loans are secured by well-located, university-adjacent assets with experienced sponsors. These investments align with our focus on resilient sectors and disciplined credit selection, particularly in student housing, where we continue to see durable demand drivers and well-capitalized sponsors. Office exposure has declined to 25% of the portfolio in the first quarter, down from 27% at year end. While all our office loans remain current and supported by committed sponsors, we continue to actively reduce exposure to this sector in favor of asset classes such as multifamily, student housing, industrial, and necessity-based retail, which we believe offer stronger fundamentals and greater durability through various economic cycles. While our floating rate portfolio has benefited from elevated interest rates over the past several quarters, we acknowledge that a lower rate environment going forward, combined with anticipated repayments, could put pressure on earnings over the balance of the year. In particular, several of the loans we expect to be repaid in 2025 were originated at spreads above today's market pricing. And as those proceeds are redeployed, we anticipate a more normalized earnings profile to emerge. However, it is important to note that the timing and nature of redeployment activity may influence how this transition plays out. From our perspective, there are three key factors that will influence earnings throughout the balance of the year. First, the direction of interest rates. Any movement from the Fed will impact our whole loan returns and proportionately our borrowing costs, so this is something we're watching closely. Second, the pace at which we're able to originate new loans. We're seeing good pipeline activity, but timing can vary and competitive dynamics are influencing how those opportunities are being priced. And third, our ability to structure deals that meet our underwriting standards and still deliver attractive risk-adjusted returns. While these variables remain largely market-driven, there are also factors within our control that may help offset earnings pressure. We have capacity to deploy capital efficiently, and as volatility causes some lenders to pause, we are beginning to see increased opportunities to originate high-quality loans at favorable pricing. Our business model is well positioned to respond to shifting market conditions, and our disciplined credit approach continues to earn the trust of sponsors seeking reliable execution. To summarize, while the environment remains uncertain, it is important to note that our more cautious outlook reflects the macro backdrop and not a deterioration in our portfolio's quality. Our loans remain fully performing, supported by stable property fundamentals and an improved risk profile. We remain confident that our selective approach, strong sponsor relationships, and current liquidity position us to navigate this evolving landscape and capitalize on opportunities as they arise. With that, I will now turn the call over to Jared for an overview of our pipeline and further insights into the current macro environment. Thanks, Tom.