Seven Hills Realty Trust

Good morning, and welcome to the Seven Hills Realty Trust Second Quarter 2025 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, and to withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Matt Murphy, Manager of Investor Relations. Please go ahead, sir.

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, July 29, 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. Good morning, everyone. On today's call, I will provide an overview of our second quarter performance and recent developments. I will then turn the call over to Jared for an update on our pipeline and insights into current market conditions Followed by Matt Brown, who will review our financial results before we open the line for questions. We are pleased to report strong second quarter results marked by solid portfolio performance and disciplined capital deployment. Distributable earnings came in at 31 cents per share, which was at the high end of our guidance range. We also originated two new first mortgage loans totaling $46 million. The first was a $28 million loan to refinance a newly constructed Class A industrial distribution facility in San Antonio, Texas. And the second was an $18 million loan to refinance a fully renovated 112-unit multifamily property in Boise, Idaho. Both transactions reflect our selective approach to lending and draw upon our internal multifamily and industrial expertise here at the RMR Group. As of quarter end, all loans in our portfolio remain current on debt service and are performing with a weighted average risk rating of 2.9 unchanged from last quarter. We had $665 million in total commitments across 23 first mortgage loans with a weighted average coupon of SOFR plus 3.64%, an all-in yield of 8.37%, and a loan-to-value at close of 68%. We ended the quarter with approximately $46 million in cash and $323 million in excess borrowing capacity. Now, turning to the dividend. As announced earlier this month, the Board decided to reduce the quarterly dividend to $0.28 per share. This adjustment reflects our expectation that recycled capital from near-term loan repayments may be redeployed at lower net interest margins in a declining interest rate environment. I would like to emphasize that this change does not reflect any weakness in our loan portfolio. Credit performance remains strong. All loans are fully performing, and we have no five-rated loans or non-accrual loans. We believe the new dividend better aligns our payout with anticipated earnings and supports long-term value creation by preserving our ability to deploy capital into attractive investment opportunities as they emerge. While this decision was not taken lightly, we believe that the new quarterly dividend, which annualizes the 10.5% yield based on yesterday's closing price, provides an attractive return to shareholders while giving us the flexibility to continue executing our strategy in this uncertain environment. Looking ahead, we could see two to three additional loans totaling approximately $100 million repaid in the back half of this year. This is in addition to the four loans that paid off in the quarter or just after for approximately $120 million. We anticipate positive year-over-year portfolio growth ending 2025 with approximately $700 million in outstanding commitments. While redeployment spreads may trend lower relative to assets being repaid, we believe our selective approach, strong sponsor relationships, and current liquidity Position us well to navigate this environment while optimizing for long-term value creation. With that, I will turn the call over to Jared to discuss current market conditions and our pipeline.