Seven Hills Realty Trust (NASDAQ:SEVN) management said fourth-quarter results were supported by a fully performing loan portfolio and increased capital deployment following the completion of a December rights offering, while also outlining a near-term pipeline that spans multiple property types and geographies.
Fourth-quarter performance and rights offering
President and Chief Investment Officer Tom Lorenzini said the company delivered “strong fourth quarter results,” reporting distributable earnings of $4.6 million, or $0.28 per share. Lorenzini attributed performance to a fully performing portfolio and ongoing capital deployment.
Portfolio activity and pipeline update
During the fourth quarter, Seven Hills invested in three new loans with total commitments of $101.3 million:
- $37.3 million loan secured by a student housing property in College Park, Maryland
- Acquisition of a $37 million loan secured by a hotel in Boston
- Acquisition of a $27 million loan secured by an industrial property in Wayne, Pennsylvania
The company also received full repayment of a $15.3 million loan secured by a retail property in Sandy Springs, Georgia, which Lorenzini said was redeployed into new originations consistent with underwriting and return objectives.
Entering the first quarter of 2026, Lorenzini said Seven Hills had “significant available capacity” due to the rights offering. He added that the company had already closed an additional $30.5 million loan on a medical office property in Atlanta, had two loans scheduled to close within roughly a week totaling another $37 million, and had two additional loans in diligence for approximately $39 million that were expected to close at the end of the first quarter or shortly thereafter.
Loan portfolio metrics and repayment outlook
As of Dec. 31, 2025, Seven Hills had total loan commitments of $724.5 million across 24 floating-rate first mortgage loans, including $36.9 million of unfunded commitments. Lorenzini said the portfolio increased by $83 million year over year, or about 13%.
Management highlighted several portfolio characteristics at year-end:
- Weighted average all-in yield of 7.92%
- Weighted average risk rating of 2.8 (improved versus prior levels, according to management)
- Weighted average loan-to-value at origination of 66%
- All loans current on debt service, with no past due or non-accrual loans
Lorenzini also said all but one loan is covered by SOFR floors, which he said can support earnings in a declining rate environment.
Looking ahead, Lorenzini said the company expected limited repayments over the next several months—“perhaps one or two loans”—followed by almost $300 million of maturing loans beginning in the second half of 2026. He added that many of the maturing loans are secured by office properties with conservative leverage, which he said could increase investment capacity and support further portfolio growth as loans roll off.
Market backdrop: improving activity, competitive spreads
Vice President Jared Lewis said market conditions improved during the fourth quarter, citing “abundant debt liquidity” and “greater visibility around interest rates.” Lewis noted that the market saw two additional 25-basis-point rate cuts during the quarter, bringing the target fed funds rate to a range of 350-375 basis points, which he said helped drive higher financing activity and investment volume.
Lewis said refinancing remained a key driver of originations, but he also described a “meaningful increase” in sales volume across property types, calling it the most active period for the industry since the third quarter of 2019. While multifamily and industrial accounted for much of the activity, he said retail and hospitality also grew, and office transaction volume increased 25% year over year.
At the same time, Lewis said lender demand for loan collateral continued to exceed supply, with competition putting downward pressure on credit spreads, particularly in industrial and multifamily. He said Seven Hills is seeing attractive risk-adjusted opportunities beyond those sectors, including medical office, necessity-based retail, self-storage, and selectively in hospitality. Lewis also said demand for short-term floating-rate bridge loans remained strong as borrowers seek flexibility amid expectations for a more accommodative rate environment later in the year.
Lewis told analysts the company was evaluating “over $1 million of loan opportunities” in the first quarter of 2026.
Dividend, guidance, financing capacity, and credit
Chief Financial Officer and Treasurer Matt Brown reiterated fourth-quarter distributable earnings of $0.28 per share, noting it included $0.03 of dilution related to the shares issued in the rights offering. The board declared a regular quarterly dividend of $0.28 per share, which Brown said equated to an annualized yield of approximately 14% based on the prior day’s closing price.
Adjusted for the rights offering impact, Brown said fourth-quarter distributable earnings would have been $0.31 per share, at the high end of guidance. For full-year 2025, distributable earnings were $1.21 per share; Brown said the run-rate annual dividend of $1.12 per share represented a 93% payout ratio based on those earnings.
Brown also discussed rate floors, noting that seven loans had floors become active during the fourth quarter, providing earnings protection of $0.01 for the quarter based on SOFR as of Dec. 31. He said all but one loan contains interest rate floors ranging from 25 basis points to 4.34%, with a weighted average floor of 2.81%, and added that none of the company’s secured financing facilities contain floors.
For the first quarter, Brown guided distributable earnings to a range of $0.22 to $0.24 per share, reflecting what he described as a temporary impact from the higher share count before rights offering proceeds are fully invested. In Q&A, Brown said the guidance did not assume the rights offering capital was fully levered and deployed by quarter-end, while emphasizing management’s expectation that earnings would recover as capital is deployed and repayments in the second half of the year are redeployed.
On credit, Brown said the CECL reserve was 130 basis points of total loan commitments, down 20 basis points from the prior quarter. He also said the company had no 5-rated loans, no collateral-dependent loans, and no loans with specific reserves.
Seven Hills ended the quarter with $123 million of cash on hand. Brown said that since quarter end, the company extended the maturities of two secured financing facilities and increased the maximum size of one facility by $125 million. Pro forma for the increased size, Brown said the company had $377 million of capacity on its secured financing facilities. In response to an analyst question, Brown said there were no specific changes to advance rates.
In Q&A, management also said it remains focused on senior secured positions, rather than expanding into mezzanine or preferred equity. The company also confirmed commitment to the $0.28 per quarter dividend, despite what it called a temporary earnings drag during deployment of rights offering proceeds.
On growth expectations, management said it anticipated roughly $100 million of production in the first quarter depending on timing, and said it was “hopeful” for about $200 million per quarter of new originations in subsequent quarters, supported in part by expected repayments in the back half of the year. Management said it expected to end the year close to about $1 billion of total loan portfolio size, subject to the timing of repayments.
About Seven Hills Realty Trust (NASDAQ:SEVN)
Seven Hills Realty Trust is a real estate investment trust that focuses on the ownership and operation of grocery-anchored neighborhood and community shopping centers. Established in October 2018 and trading on the NASDAQ under the symbol SEVN, the company targets retail properties that are anchored by essential retailers, including leading grocery chains and national discount operators. Its strategy centers on acquiring assets with strong tenant credit profiles and stable, long-term lease agreements.
The company’s portfolio spans multiple Sun Belt and Southeastern markets, with properties located in states such as Florida, Texas, North Carolina and Georgia.
