Seven Hills Realty Trust (SEVN) Bundle
A Brief History of Seven Hills Realty Trust
Company Formation and Structure
Seven Hills Realty Trust (SEVN) was established to focus on investments in commercial real estate loans. The company operates as a real estate investment trust (REIT), primarily engaged in originating loans secured by multifamily and commercial properties. As of 2024, SEVN has a diversified loan portfolio across various property types and geographic locations.
Financial Performance Overview
As of September 30, 2024, Seven Hills Realty Trust reported total assets of $652.576 million, a decrease from $731.525 million as of December 31, 2023. The company’s liabilities stood at $383.070 million, compared to $460.277 million in the previous year, reflecting a strategic effort to manage debt levels effectively.
Loan Portfolio Details
Seven Hills Realty Trust's loan portfolio as of September 30, 2024, consisted of 20 loans with a principal balance of $557.545 million. The weighted average coupon rate was 8.89%, and the weighted average all-in yield was 9.27%.
| Statistic | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| Number of Loans | 20 | 24 |
| Total Loan Commitments | $594,421 | $670,293 |
| Unfunded Loan Commitments | $36,876 | $40,401 |
| Principal Balance | $557,545 | $629,892 |
| Carrying Value | $549,944 | $622,086 |
| Weighted Average Coupon Rate | 8.89% | 9.19% |
| Weighted Average All-in Yield | 9.27% | 9.64% |
| Weighted Average LTV | 68% | 68% |
Income and Expenses
For the nine months ended September 30, 2024, Seven Hills Realty Trust reported net income of $12.941 million, down from $19.920 million during the same period in 2023. The decrease in net income was attributed to higher provisions for credit losses and changes in revenue streams.
| Financial Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income | $12,941 | $19,920 |
| Total Revenue | $27,599 | $28,235 |
| General and Administrative Expenses | $3,055 | $3,018 |
| Provision for Credit Losses | $3,530 | ($1,299) |
Market Position and Strategic Moves
In 2024, SEVN has focused on enhancing its market position by amending existing financing agreements to extend maturity dates and reduce overall financing costs. In September 2024, the company amended its master repurchase agreement with Citibank, extending the maturity date to September 27, 2026, which reflects its strategy to manage liquidity and financial flexibility.
Shareholder Information
As of September 30, 2024, Seven Hills Realty Trust had 14,906,453 shares outstanding, with a book value per share of $18.08. The cumulative net income reported was $84.601 million, and cumulative distributions amounted to $55.426 million.
| Shareholder Metrics | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| Total Shares Outstanding | 14,906,453 | 14,811,410 |
| Book Value per Share | $18.08 | $18.31 |
| Cumulative Net Income | $84,601 | $71,660 |
| Cumulative Distributions | ($55,426) | ($39,870) |
A Who Owns Seven Hills Realty Trust (SEVN)
Current Ownership Structure
As of September 30, 2024, Seven Hills Realty Trust (SEVN) has a total of 14,906 common shares outstanding. The company's shareholders' equity is reported at $269,506,000.
| Common Shares | Additional Paid In Capital | Cumulative Net Income | Cumulative Distributions | Total |
|---|---|---|---|---|
| 14,906 | $240,316,000 | $84,601,000 | $(55,426,000) | $269,506,000 |
Major Shareholders
The ownership of SEVN is characterized by a mixture of institutional and retail investors. Key institutional shareholders include:
- BlackRock, Inc.: 9.5% ownership
- The Vanguard Group, Inc.: 7.8% ownership
- State Street Corporation: 5.2% ownership
Recent Shareholder Changes
During the first three quarters of 2024, SEVN experienced several changes in its shareholder structure:
- Share repurchases totaled 327 shares.
- Share grants issued amounted to 91 shares.
Financial Performance Indicators
For the three months ending September 30, 2024, SEVN reported a net income of $3,479,000. The net income per common share was $0.23.
| Financial Metric | Value |
|---|---|
| Net Income (Q3 2024) | $3,479,000 |
| Net Income per Common Share | $0.23 |
| Weighted Average Common Shares Outstanding | 14,723 |
Debt and Financing
SEVN's outstanding borrowings under its Secured Financing Facilities as of September 30, 2024, include:
| Facility | Principal Balance | Unused Capacity | Maximum Facility Size |
|---|---|---|---|
| Citibank Master Repurchase Facility | $59,714,000 | $155,286,000 | $215,000,000 |
| UBS Master Repurchase Facility | $146,339,000 | $58,661,000 | $205,000,000 |
| BMO Facility | $103,855,000 | $46,145,000 | $150,000,000 |
| Wells Fargo Master Repurchase Facility | $67,426,000 | $57,574,000 | $125,000,000 |
Conclusion of Ownership Analysis
As of the latest reporting, SEVN maintains a diversified ownership structure, with significant institutional investment. The company's financial performance indicators reflect a stable income stream, supported by its secured financing arrangements.
Seven Hills Realty Trust (SEVN) Mission Statement
Mission Statement Overview
The mission of Seven Hills Realty Trust is to deliver attractive risk-adjusted returns to its shareholders through a disciplined investment strategy focused on first mortgage loans secured by middle-market and transitional commercial real estate (CRE). The company emphasizes a commitment to prudent risk management, operational excellence, and the enhancement of shareholder value through consistent performance.
Financial Performance
As of September 30, 2024, Seven Hills Realty Trust reported the following key financial metrics:
| Metric | Value (as of September 30, 2024) | Value (as of December 31, 2023) |
|---|---|---|
| Number of Loans | 20 | 24 |
| Total Loan Commitments | $594,421,000 | $670,293,000 |
| Unfunded Loan Commitments | $36,876,000 | $40,401,000 |
| Principal Balance | $557,545,000 | $629,892,000 |
| Carrying Value | $549,944,000 | $622,086,000 |
| Weighted Average Coupon Rate | 8.89% | 9.19% |
| Weighted Average All-in Yield | 9.27% | 9.64% |
| Weighted Average Maximum Maturity (years) | 2.5 | 3.0 |
| Weighted Average Risk Rating | 3.1 | 3.0 |
| Weighted Average Loan-to-Value (LTV) | 68% | 68% |
Recent Developments
In the third quarter of 2024, Seven Hills Realty Trust experienced a net income of $3,479,000, a decrease from $4,229,000 in the same quarter of the previous year. The net income per common share decreased to $0.23 from $0.28. The company declared and paid regular quarterly distributions totaling $15,556,000, or $1.05 per common share during the nine months ended September 30, 2024.
Loan Portfolio Details
The following table summarizes the loan portfolio as of September 30, 2024:
| Location | Property Type | Committed Principal Amount | Principal Balance | Coupon Rate | All-in Yield | Maximum Maturity | LTV | Risk Rating |
|---|---|---|---|---|---|---|---|---|
| Olmsted Falls, OH | Multifamily | $54,575,000 | $46,083,000 | S + 4.00% | S + 4.33% | 01/28/2026 | 63% | 3 |
| Dallas, TX | Office | $46,811,000 | $43,511,000 | S + 3.25% | S + 3.27% | 08/25/2026 | 72% | 4 |
| Passaic, NJ | Industrial | $47,000,000 | $41,711,000 | S + 3.85% | S + 4.24% | 09/08/2027 | 69% | 3 |
| Brandywine, MD | Retail | $42,500,000 | $42,200,000 | S + 3.85% | S + 4.27% | 03/29/2027 | 62% | 3 |
| Starkville, MS | Multifamily | $37,250,000 | $37,250,000 | S + 4.00% | S + 4.33% | 03/22/2027 | 70% | 2 |
| Farmington Hills, MI | Multifamily | $30,520,000 | $29,345,000 | S + 3.15% | S + 3.52% | 05/24/2027 | 75% | 3 |
| Downers Grove, IL | Office | $30,000,000 | $29,500,000 | S + 4.25% | S + 4.64% | 11/25/2024 | 67% | 4 |
Shareholder Equity
As of September 30, 2024, the shareholders' equity stood at $269,506,000, reflecting a slight decrease from $271,248,000 at the end of the previous year. The cumulative net income increased to $84,601,000 compared to $71,660,000 as of December 31, 2023.
Credit Losses
The allowance for credit losses increased to $9,358,000 as of September 30, 2024, compared to $5,828,000 as of December 31, 2023. This increase reflects the company's proactive approach to managing potential credit risks associated with its loan portfolio.
How Seven Hills Realty Trust (SEVN) Works
Overview of Operations
Seven Hills Realty Trust (SEVN) primarily operates by originating first mortgage loans secured by middle market and transitional commercial real estate (CRE). As of September 30, 2024, the company had a total of 20 loans in its portfolio, with a principal balance of $557,545 thousand.
Financial Performance
The financial performance of SEVN for the nine months ending September 30, 2024, is summarized as follows:
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Net Income | $3,479 | $4,229 | $7,473 |
| Total Revenue | $8,857 | $9,798 | $9,798 |
| Distributable Earnings | $5,285 | $5,564 | $16,589 |
| Net Income per Share | $0.23 | $0.28 | $0.51 |
| Distributable Earnings per Share | $0.36 | $0.38 | $1.14 |
Loan Portfolio Details
As of September 30, 2024, the loan portfolio of SEVN includes various types of properties distributed across different geographic locations. The statistics are as follows:
| Property Type | Number of Loans | Amortized Cost ($) (2024) | Percentage of Value (%) |
|---|---|---|---|
| Office | 6 | 167,798 | 30% |
| Multifamily | 5 | 153,160 | 28% |
| Industrial | 5 | 134,172 | 24% |
| Retail | 2 | 36,000 | 6% |
| Hotel | 2 | 44,643 | 8% |
Loan Commitments and Financial Metrics
The following table reflects key financial metrics and loan commitments as of September 30, 2024:
| Metric | Value ($ thousands) |
|---|---|
| Total Loan Commitments | $594,421 |
| Unfunded Loan Commitments | $36,876 |
| Principal Balance | $557,545 |
| Carrying Value | $549,944 |
| Weighted Average Coupon Rate | 8.89% |
| Weighted Average All-in Yield | 9.27% |
| Weighted Average LTV | 68% |
Secured Financing Facilities
As of September 30, 2024, SEVN's outstanding borrowings under secured financing facilities were as follows:
| Facility | Principal Amount ($ thousands) | Weighted Average Coupon Rate (%) | Maturity Date |
|---|---|---|---|
| Citibank Master Repurchase Facility | 215,000 | 7.47% | March 15, 2025 |
| UBS Master Repurchase Facility | 205,000 | 7.41% | February 18, 2025 |
| BMO Facility | 150,000 | 7.09% | Various |
| Wells Fargo Master Repurchase Facility | 125,000 | 7.01% | March 11, 2025 |
Credit Quality and Allowance for Credit Losses
The allowance for credit losses for SEVN as of September 30, 2024 is detailed below:
| Category | Amount ($ thousands) |
|---|---|
| Loans Held for Investment | 7,282 |
| Unfunded Loan Commitments | 2,076 |
| Total Allowance for Credit Losses | 9,358 |
Distributions to Shareholders
During the nine months ended September 30, 2024, SEVN declared and paid regular quarterly distributions to shareholders totaling $15,556, or $1.05 per common share.
How Seven Hills Realty Trust (SEVN) Makes Money
Income from Loan Investments
Seven Hills Realty Trust primarily generates income through investments in loans. As of September 30, 2024, the net income from loan investments amounted to $25,881,000 for the nine months ended, with a total revenue of $48,467,000 during the same period. The interest and related income for the three months ended September 30, 2024, was $15,741,000, which represented a decrease compared to $17,137,000 for the same period in 2023.
| Category | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| Interest and Related Income | $15,741,000 | $17,137,000 | $48,467,000 | $48,814,000 |
| Net Income from Loan Investments | $8,286,000 | $9,233,000 | $25,881,000 | $27,521,000 |
Revenue from Real Estate Owned
The company also derives revenue from its owned real estate properties. For the three months ended September 30, 2024, revenue from real estate owned was $571,000, slightly up from $565,000 in the previous year. For the nine months ending September 30, 2024, this revenue totaled $1,718,000 compared to $714,000 in the same period a year prior.
Management Fees and Incentive Fees
Seven Hills Realty Trust incurs management fees and incentive fees. For the three months ended September 30, 2024, base management fees were $1,083,000 and incentive fees were $486,000. In comparison, the base management fees for the same period in 2023 were $1,077,000, with incentive fees at $469,000. For the nine months ending September 30, 2024, the total other expenses, including management and incentive fees, were $14,631,000, compared to $8,250,000 in the same period the previous year.
| Category | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| Base Management Fees | $1,083,000 | $1,077,000 | $3,245,000 | $3,223,000 |
| Incentive Fees | $486,000 | $469,000 | $906,000 | $661,000 |
Expenses Overview
The total other expenses for the three months ended September 30, 2024, amounted to $5,367,000, an increase from $2,307,000 in the same period the previous year. This increase reflects higher expenses from real estate owned, which totaled $634,000 in Q3 2024 compared to $516,000 in Q3 2023. The provision for credit losses was $1,518,000 for the three months ended September 30, 2024, compared to a reversal of $1,338,000 in the prior year, indicating a shift in credit quality assessments.
| Expense Category | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 |
|---|---|---|
| Total Other Expenses | $5,367,000 | $2,307,000 |
| Expenses from Real Estate Owned | $634,000 | $516,000 |
| Provision for Credit Losses | $1,518,000 | $(1,338,000) |
Financial Performance Metrics
For the nine months ended September 30, 2024, Seven Hills Realty Trust reported a net income of $12,941,000, down from $19,920,000 in the same period in 2023. The net income per common share for the nine months ended September 30, 2024, was $0.87 compared to $1.35 in 2023. The weighted average common shares outstanding were 14,697,000 for 2024 and 14,609,000 for 2023.
| Financial Metric | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|
| Net Income | $12,941,000 | $19,920,000 |
| Net Income per Common Share | $0.87 | $1.35 |
| Weighted Average Common Shares Outstanding | 14,697,000 | 14,609,000 |
Loan Portfolio Details
As of September 30, 2024, Seven Hills Realty Trust had a total of 20 loans with a principal balance of $557,545,000 and total loan commitments of $594,421,000. The weighted average coupon rate was 8.89%, and the weighted average all-in yield was 9.27%.
| Portfolio Detail | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| Number of Loans | 20 | 24 |
| Total Loan Commitments | $594,421,000 | $670,293,000 |
| Principal Balance | $557,545,000 | $629,892,000 |
| Weighted Average Coupon Rate | 8.89% | 9.19% |
Credit Quality and Allowance for Credit Losses
As of September 30, 2024, the allowance for credit losses was $9,358,000, an increase from $5,828,000 as of December 31, 2023. This reflects the company's ongoing assessments of credit risk associated with its loan portfolio.
| Credit Quality Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Allowance for Credit Losses | $9,358,000 | $5,828,000 |
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Article updated on 8 Nov 2024
Resources:
- Seven Hills Realty Trust (SEVN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Seven Hills Realty Trust (SEVN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Seven Hills Realty Trust (SEVN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.