What changed in this filing

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Item 1. Financial Statements

2022-07-27 compared with 2022-04-27 · 125 added, 87 removed, 311 unchanged (41% of the section changed)

3 unchanged sentences

(dollars in thousands, except per share data)

March 31, December 31,

June 30, December 31,

Cash and cash equivalents $ 48,230 $ 26,197

10 unchanged sentences

Shareholders' equity:

Common shares of beneficial interest, $ 0.001 par value per share;

25,000,000 shares authorized;

14,597,079 shares issued and outstanding

Common shares of beneficial interest, $ 0.001 par value, 25,000,000 shares authorized;

14,638,063 and 14,597,079 shares issued and outstanding, respectively

Additional paid in capital 238,254 237,624

7 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

INCOME FROM INVESTMENTS:

9 unchanged sentences

Total other expenses 2,881 1,710 5,487 3,343

Income before income tax expense 11,171 368

Income tax expense ( 45 ) ( 18 )

Income before income taxes 4,617 1,153 15,788 1,521

Income tax (expense) benefit ( 39 ) 7 ( 84 ) ( 11 )

Net income $ 4,578 $ 1,160 $ 15,704 $ 1,510

Weighted average common shares outstanding - basic 14,505 10,202

Weighted average common shares outstanding - diluted 14,519 10,202

Weighted average common shares outstanding - basic and diluted 14,521 10,208 14,514 10,205

Net income per common share - basic and diluted $ 0.31 $ 0.11 $ 1.08 $ 0.15

11 unchanged sentences

Balance at March 31, 2022 14,597 15 237,706 35,776 ( 8,244 ) 265,253

Share grants 42 — 548 — — 548

Share forfeitures ( 1 ) — — — — —

Net income — — — 4,578 — 4,578

Distributions — — — — ( 3,649 ) ( 3,649 )

Balance at June 30, 2022 14,638 $ 15 $ 238,254 $ 40,354 $ ( 11,893 ) $ 266,730

Net assets at December 31, 2020 10,202 $ 10 $ 192,884 $ — $ — $ 192,894

1 unchanged sentence

Balance at March 31, 2021 10,202 10 192,884 350 — 193,244

Share grants 15 — 181 — — 181

Net income — — — 1,160 — 1,160

Distributions — — — — ( 1,530 ) ( 1,530 )

Balance at June 30, 2021 10,217 $ 10 $ 193,065 $ 1,510 $ ( 1,530 ) $ 193,055

See accompanying notes.

2 unchanged sentences

(dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

20 unchanged sentences

Distributions ( 7,298 ) ( 1,530 )

Net cash provided by (used in) financing activities 24,194 ( 76 )

Decrease in cash, cash equivalents and restricted cash ( 17,333 ) ( 56,505 )

Net cash provided by financing activities 105,306 47,211

Increase (decrease) in cash, cash equivalents and restricted cash 22,101 ( 72,957 )

Cash, cash equivalents and restricted cash at beginning of period 26,295 103,564

5 unchanged sentences

The table below provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:

As of March 31,

As of June 30,

Cash and cash equivalents $ 48,230 $ 30,402

22 unchanged sentences

The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

As a smaller reporting company, we expect to adopt ASU No.

As a smaller reporting company, we will adopt ASU No.

2016-13 on January 1, 2023.

We are currently assessing the potential impact the adoption of ASU No.

2016-13 will have on our condensed consolidated financial statements.

The effect of the adoption of ASU No.

2016-13, if material, will be presented as a cumulative-effect adjustment to equity as of the date of adoption.

The amount of the allowance for credit losses established as a result of the adoption, will be presented as a cumulative-effect adjustment to reduce equity as of the date of adoption.

We are currently assessing the amount of the allowance for credit losses that will be established as a result of the adoption of ASU No.

In March 2022, the FASB issued ASU No.

4 unchanged sentences

2022-02 also amended the guidance on vintage disclosures to require disclosure of current period gross write-offs by year of origination.

We expect to adopt ASU No.

We will adopt ASU No.

2022-02 prospectively on January 1, 2023, concurrently with the adoption of ASU No.

We are currently assessing the potential impact the adoption of ASU No.

2022-02 will have on our condensed consolidated financial statements.

As of June 30, 2022, we have not recognized any troubled debt restructurings and do not expect the adoption of ASU No.

2022-02 to have a material impact on our condensed consolidated financial statements.

Loans Held for Investment

We originate first mortgage loans secured by middle market and transitional commercial real estate, or CRE, which are generally to be held as long term investments.

We funded our loan portfolio using cash on hand and advancements under our secured financing facilities.

Additionally, we acquired the loan portfolio of Tremont Mortgage Trust, or TRMT, in the merger of TRMT with and into us on September 30, 2021, or the Merger, with our common shares.

We funded our loan portfolio using cash on hand and advancements under our Secured Financing Facilities, as defined in Note 4.

Additionally, we acquired the loan portfolio of Tremont Mortgage Trust, or TRMT, in the merger of TRMT with and into us on September 30, 2021, or the Merger.

See Note 4 for further information regarding our secured financing agreements.

2 unchanged sentences

(dollars in thousands, except per share data)

The table below provides overall statistics for our loan portfolio as of March 31, 2022 and December 31, 2021:

As of March 31, 2022 As of December 31, 2021

The table below provides overall statistics for our loan portfolio as of June 30, 2022 and December 31, 2021:

As of June 30, 2022 As of December 31, 2021

Number of loans 28 26

13 unchanged sentences

(3) Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions.

The tables below represent our loan activities during the three months ended March 31, 2022 and 2021:

The tables below represent our loan activities during the three months ended June 30, 2022 and 2021:

Principal Balance Deferred Fees and Other Items Carrying Value

Balance at December 31, 2021 $ 590,590 $ ( 19,810 ) $ 570,780

Balance at March 31, 2022 $ 636,831 $ ( 14,121 ) $ 622,710

Additional funding 4,926 — 4,926

3 unchanged sentences

Net purchase discount accretion — 1,636 1,636

Balance at March 31, 2022 $ 636,831 $ ( 14,121 ) $ 622,710

Balance at June 30, 2022 $ 682,285 $ ( 12,100 ) $ 670,185

Principal Balance Deferred Fees and Other Items Carrying Value

Balance at December 31, 2020 $ 92,863 $ ( 984 ) $ 91,879

Balance at March 31, 2021 $ 148,652 $ ( 1,405 ) $ 147,247

Additional funding 693 — 693

1 unchanged sentence

Net amortization of deferred fees — 387 387

Balance at March 31, 2021 $ 148,652 $ ( 1,405 ) $ 147,247

Balance at June 30, 2021 $ 212,515 $ ( 1,773 ) $ 210,742

SEVEN HILLS REALTY TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

The tables below represent our loan activities during the six months ended June 30, 2022 and 2021:

Principal Balance Deferred Fees and Other Items Carrying Value

Balance at December 31, 2021 $ 590,590 $ ( 19,810 ) $ 570,780

Additional funding 8,230 — 8,230

Originations 142,804 ( 1,469 ) 141,335

Repayments ( 59,339 ) ( 504 ) ( 59,843 )

Net amortization of deferred fees — 2,112 2,112

Net purchase discount accretion — 7,571 7,571

Balance at June 30, 2022 $ 682,285 $ ( 12,100 ) $ 670,185

Principal Balance Deferred Fees and Other Items Carrying Value

Balance at December 31, 2020 $ 92,863 $ ( 984 ) $ 91,879

Additional funding 967 — 967

Originations 118,685 ( 1,430 ) 117,255

Net amortization of deferred fees — 641 641

Balance at June 30, 2021 $ 212,515 $ ( 1,773 ) $ 210,742

The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of June 30, 2022 and December 31, 2021:

June 30, 2022 December 31, 2021

Property Type Number of Loans

10 unchanged sentences

28 $ 670,185 100 % 26 $ 570,780 100 %

(1) Two loan investments secured by mixed use properties consisting of office space and an industrial warehouse in Aurora, IL and Colorado Springs, CO are classified as office for the purpose of counting the number of loans in our portfolio because the majority of the square footage of the properties consists of office space.

The carrying value of these loan investments is reflected in office and industrial based on the fair value of the buildings at the time of origination relative to the total fair value of the properties.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Geographic Location Number of Loans

6 unchanged sentences

28 $ 670,185 100 % 26 $ 570,780 100 %

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Loan Credit Quality

2 unchanged sentences

See our 2021 Annual Report for more information regarding our loan risk ratings.

The following table allocates the carrying value of our loan portfolio at March 31, 2022 and December 31, 2021 based on our internal risk rating policy:

March 31, 2022 December 31, 2021

The following table allocates the carrying value of our loan portfolio at June 30, 2022 and December 31, 2021 based on our internal risk rating policy:

June 30, 2022 December 31, 2021

Risk Rating Number of Loans Carrying Value Number of Loans Carrying Value

4 unchanged sentences

28 $ 670,185 26 $ 570,780

The weighted average risk rating of our loans by carrying value was 2.8 and 2.9 as of March 31, 2022 and December 31, 2021, respectively.

The COVID-19 pandemic has negatively impacted some of our borrowers’ business operations or tenants, particularly in the cases of our retail and hospitality collateral, some of which are the types of properties that have been most negatively impacted by the pandemic.

The weighted average risk rating of our loans by carrying value was 2.7 and 2.9 as of June 30, 2022 and December 31, 2021, respectively.

The COVID-19 pandemic has negatively impacted some of our borrowers’ business operations or tenants, particularly in the cases of certain of our office and retail collateral, some of which are the types of properties that have been most negatively impacted by the pandemic.

We expect that those negative impacts may continue and may apply to other borrowers and/or their tenants.

Further, although economic activity in the U.S.

has improved significantly from the low points during the pandemic to date, certain industries have not recovered to their pre-pandemic positions.

has improved significantly from the low points during the pandemic to date, certain industries have not recovered to their pre-pandemic positions, and current inflationary pressures and the possibility that the U.S.

economy may now be in, or will soon enter into, a recession or downturn may amplify those, or introduce additional, negative impacts.

Therefore, certain of our borrowers’ business plans will likely take longer to execute than initially expected and certain of our borrowers may be unable to pay their debt service obligations owed and due to us as currently scheduled or at all.

As of March 31, 2022, we had two loans representing approximately 4 % of the carrying value of our loan portfolio with a loan risk rating of “4” or “higher risk".

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

As of June 30, 2022, we had two loans representing approximately 4 % of the carrying value of our loan portfolio with a loan risk rating of “4” or “higher risk".

We may enter into loan modifications that include among other changes, extensions of maturity dates, repurposing or required replenishment of reserves, increases or decreases in loan commitments and required pay downs of principal amounts outstanding.

3 unchanged sentences

For purposes of calculating interest due to us for this loan, the Additional Advance is deemed to be outstanding as of the date of the amendment, regardless of whether such amounts have been advanced, at the London Interbank Offered Rate, or LIBOR, or a replacement base rate determined by us if LIBOR is no longer available, plus 12.0 %.

As of March 31, 2022, this loan had a risk rating of 4.

As of June 30, 2022, this loan had a risk rating of 4 and an outstanding principal balance of $ 14,972 .

The modification of this loan resulting from the amendment was determined not to be a troubled debt restructuring.

However, we accounted for this modification as an extinguishment in accordance with ASC Topic 310, Receivables , because the changes to the terms were determined to be more than minor.

As such, we recognized the related unaccreted purchase discount of $ 1,748 as interest income from investments in our condensed consolidated statements of income.

There were no other material modifications to our loan portfolio during the three months ended March 31, 2022.

We did not have any impaired loans or nonaccrual loans as of March 31, 2022 or December 31, 2021.

As of March 31, 2022 and April 25, 2022, all of our borrowers had paid all of their debt service obligations owed and due to us and none of the loans included in our investment portfolio were in default.

As such, we recognized the related unaccreted purchase discount of $ 1,748 as interest income from investments in our condensed consolidated statements of income during the first quarter of 2022.

There were no other material modifications to our loan portfolio during the six months ended June 30, 2022.

We did not have any impaired loans or nonaccrual loans as of June 30, 2022 or December 31, 2021.

As of June 30, 2022 and July 25, 2022, all of our borrowers had paid all of their debt service obligations owed and due to us and none of the loans included in our investment portfolio were in default.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Secured Financing Agreements

Our secured financing agreements at March 31, 2022 consisted of agreements that govern:

our master repurchase facility with UBS AG, or UBS, or the UBS Master Repurchase Facility;

Our secured financing agreements at June 30, 2022 consisted of agreements that govern:

our master repurchase facility with Wells Fargo, National Association, or Wells Fargo, or the Wells Fargo Master Repurchase Facility;

our master repurchase facility with Citibank, N.A., or Citibank, or the Citibank Master Repurchase Facility;

our facility loan program with BMO Harris Bank N.A., or BMO, or the BMO Facility, and our master repurchase facility with Wells Fargo, National Association, or Wells Fargo, or the Wells Fargo Master Repurchase Facility.

We refer to the UBS Master Repurchase Facility, the Citibank Master Repurchase Facility and the Wells Fargo Master Repurchase Facility, collectively, as our Master Repurchase Facilities.

our facility loan program with BMO Harris Bank N.A., or BMO, or the BMO Facility, and our master repurchase facility with UBS AG, or UBS, or the UBS Master Repurchase Facility.

We refer to the Wells Fargo Master Repurchase Facility, Citibank Master Repurchase Facility and UBS Master Repurchase Facility, collectively, as our Master Repurchase Facilities.

We refer to the Master Repurchase Facilities and the BMO Facility, collectively, as our Secured Financing Facilities.

9 unchanged sentences

Interest on advancements under the Wells Fargo Master Repurchase Facility will be calculated at the Secured Overnight Financing Rate, or SOFR, plus a premium.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

In connection with our Wells Fargo Master Repurchase Agreement, we entered into a guaranty, or the Wells Fargo Guaranty, which requires us to guarantee 25 % of the aggregate repurchase price, and 100 % of losses in the event of certain bad acts as well as any costs and expenses of Wells Fargo related to our Wells Fargo Master Repurchase Agreement.

6 unchanged sentences

The amended and restated Citibank Master Repurchase Agreement increased the maximum amount of available advancements under our Citibank Master Repurchase Facility to $ 215,000 , extended the stated maturity date to March 15, 2025, and made certain other changes to the agreement and related fee letter, including replacing LIBOR with SOFR, for interest rate calculations on advancements under the Citibank Master Repurchase Facility and modifying certain pricing terms.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

On April 25, 2022, we amended our facility loan program agreement and the security agreement with BMO, or the BMO Loan Program Agreement, to increase the maximum principal amount available under our BMO Facility, from $ 100,000 to $ 150,000 .

The weighted average interest rate for advancements under our Citibank Master Repurchase Facility, BMO Facility and UBS Master Repurchase Facility were 2.1 %, 2.0 % and 2.1 %, respectively, for the quarter ended March 31, 2022.

As of March 31, 2022, we were in compliance with the covenants and other terms of the agreements that govern our Secured Financing Facilities.

As of March 31, 2022 and April 25, 2022, we had a $ 369,432 and a $ 378,905 , respectively, aggregate outstanding principal balance under our Secured Financing Facilities.

As of March 31, 2022, our outstanding borrowings under our Secured Financing Facilities had the following remaining maturities:

UBS Master Repurchase Facility

On May 4, 2022, we amended and restated our master repurchase agreement with UBS, or the UBS Master Repurchase Agreement.

The amended and restated UBS Master Repurchase Agreement, which was effective March 9, 2022, made certain changes to the agreement and related fee letter, including replacing LIBOR with SOFR for interest rate calculations on advancements under the UBS Master Repurchase Facility and modifying certain pricing terms.

As of June 30, 2022, we were in compliance with the covenants and other terms of the agreements that govern our Secured Financing Facilities.

As of June 30, 2022 and July 25, 2022, we had a $ 455,044 and a $ 469,810 , respectively, aggregate outstanding principal balance under our Secured Financing Facilities.

As of June 30, 2022, our outstanding borrowings under our Secured Financing Facilities had the following remaining maturities:

Principal Payments on

1 unchanged sentence

2022 $ 31,448

2026 and thereafter —

SEVEN HILLS REALTY TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

The table below summarizes our Secured Financing Facilities as of March 31, 2022 and December 31, 2021:

The table below summarizes our Secured Financing Facilities as of June 30, 2022 and December 31, 2021:

Debt Obligation

3 unchanged sentences

Principal Balance

March 31, 2022:

UBS Master Repurchase Facility $ 192,000 $ 127,278 $ 126,475 2.40 % 1.8 $ 192,044

June 30, 2022:

Citibank Master Repurchase Facility $ 215,000 $ 170,338 $ 170,013 3.32 % 1.4 $ 237,917

UBS Master Repurchase Facility 192,000 135,003 134,300 3.57 % 1.6 182,198

Wells Fargo Master Repurchase Facility 125,000 67,427 66,694 3.34 % 2.7 88,446

6 unchanged sentences

Total/weighted average $ 505,482 $ 340,869 $ 339,627 2.06 % 1.4 $ 462,818

(1) The weighted average coupon rate is determined using LIBOR or SOFR plus a spread ranging from 1.80 % to 2.30 %, as applicable, for the respective borrowings under our Secured Financing Facilities.

(2) The weighted average remaining maturity is determined using the current maturity date of the corresponding loans, assuming no borrower loan extension options have been exercised.

As of March 31, 2022, our UBS Master Repurchase Facility, Citibank Master Repurchase Facility and Wells Fargo Master Repurchase Facility mature on February 18, 2024, March 15, 2025 and March 11, 2025, respectively.

As of June 30, 2022, our Citibank Master Repurchase Facility, UBS Master Repurchase Facility and Wells Fargo Master Repurchase Facility mature on March 15, 2025, February 18, 2024 and March 11, 2025, respectively.

Our BMO Facility matures at various dates based on the respective underlying loans held for investment.

10 unchanged sentences

The table below provides information regarding financial assets and liabilities not carried at fair value on a recurring basis in our condensed consolidated balance sheets:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Carrying Value Fair Value Carrying Value Fair Value

3 unchanged sentences

Secured Financing Facilities $ 452,705 $ 452,585 $ 339,627 $ 341,679

There were no transfers of financial assets or liabilities within the fair value hierarchy during the three months ended March 31, 2022.

There were no transfers of financial assets or liabilities within the fair value hierarchy during the six months ended June 30, 2022.

Shareholders' Equity

Common Share Awards

We have common shares available for issuance under the terms of our 2021 Equity Compensation Plan, or the 2021 Plan.

The values of the share awards are based upon the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the date of award.

The common shares that we have awarded to our Trustees vested immediately.

The awards of common shares that we award to our officers and other employees of Tremont and of RMR vest in five equal annual installments beginning on the date of award.

We recognize the value of awarded shares in general and administrative expenses ratably over the vesting period.

We recognize any share forfeitures as they occur.

On May 26, 2022, in accordance with our Trustee compensation arrangements, we awarded to each of our seven Trustees 6,000 of our common shares, valued at $ 10.66 per common share, the closing price of our common shares on the Nasdaq that day.

Distributions

For the three months ended March 31, 2022, we declared and paid a distribution to common shareholders, using cash on hand, as follows:

For the six months ended June 30, 2022, we declared and paid a distribution to common shareholders, using cash on hand, as follows:

Record Date Payment Date Distribution per Share Total Distribution

January 24, 2022 February 17, 2022 $ 0.25 $ 3,649

On April 14, 2022, we declared a quarterly distribution of $ 0.25 per common share, or $ 3,649 , to shareholders of record on April 25, 2022.

We expect to pay this distribution on May 19, 2022, using cash on hand.

April 25, 2022 May 19, 2022 0.25 3,649

$ 0.50 $ 7,298

On July 14, 2022, we declared a quarterly distribution of $ 0.25 per common share, or $ 3,660 , to shareholders of record on July 25, 2022.

We expect to pay this distribution on August 18, 2022, using cash on hand.

Management Agreement with Tremont

2 unchanged sentences

We pay Tremont an annual base management fee payable quarterly ( 0.375 % per quarter) in arrears equal to 1.5 % of our “Equity,” as defined under our management agreement.

We recognized base management fees of $ 1,063 for the three months ended March 31, 2022 and base management and advisory fees of $ 737 for the three months ended March 31, 2021.

We recognized base management fees of $ 1,063 and $ 721 for the three months ended June 30, 2022 and 2021, respectively, and $ 2,126 and $ 1,414 for the six months ended June 30, 2022 and 2021, respectively.

Pursuant to the terms of our management agreement, management incentive fees became payable by us beginning with the quarter ended June 30, 2021, subject to Tremont earning those fees in accordance with the management agreement.

We did no t incur any management incentive fees for the three months ended March 31, 2022.

We did no t incur any management incentive fees for the three and six months ended June 30, 2022 and 2021.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Tremont, and not us, is responsible for the costs of its employees who provide services to us, unless any such payment or reimbursement is specifically approved by a majority of our Independent Trustees, is a shared services cost or relates to awards made under any equity compensation plan adopted by us.

We are required to pay or to reimburse Tremont and its affiliates for all other costs and expenses of our operations.

2 unchanged sentences

These shared services costs are subject to approval by a majority of our Independent Trustees at least annually.

We incurred shared services costs of $ 634 and $ 352 payable to Tremont for the three months ended March 31, 2022 and March 31, 2021, respectively.

We incurred shared services costs of $ 514 and $ 312 payable to Tremont for the three months ended June 30, 2022 and 2021, respectively, and $ 1,148 and $ 664 for the six months ended June 30, 2022 and 2021, respectively.

We include these amounts in reimbursement of shared services expenses or general and administrative expenses, as applicable, in our condensed consolidated statements of operations.

2 unchanged sentences

See our 2021 Annual Report for further information regarding this waiver and change to the "Termination Fee" and the Merger.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Related Person Transactions

15 unchanged sentences

Tremont also provided management services to TRMT until the Merger.

On May 11, 2022, Tremont purchased 882,407 of our common shares from Diane Portnoy, the mother of Adam D.

Tremont paid an aggregate purchase price of $ 9,469 for these shares, which represents a per share price based upon the average of the 90 day volume weighted average closing price per share and the 90 day straight average closing price per share of our common shares.

As of June 30, 2022, Tremont owned 1,708,058 of our common shares, and Mr.

Portnoy beneficially owned (including through Tremont) 13.5 % of our outstanding common shares.

Tremont Mortgage Trust.

13 unchanged sentences

For further information about these and other such relationships and certain other related person transactions, refer to our definitive Proxy Statement for our 2022 Annual Meeting of Shareholders and to our 2021 Annual Report.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

We have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the IRC.

3 unchanged sentences

Weighted Average Common Shares

We calculate net income per common share - basic, using the two class method, by dividing net income by the weighted average number of common shares outstanding during the period.

We calculate net income per common share - basic using the two class method.

We calculate net income per common share - diluted using the more dilutive of the two class or treasury stock method.

Unvested share awards and the related impact on earnings are considered when calculating net income per common share - basic and net income per common share - diluted.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

The table below provides a reconciliation of the weighted average number of common shares used in the calculations of net income per common share (amounts in thousands):

For the Three Months Ended March 31,

Weighted average common shares for net income per common share - basic 14,505 10,202

Effect of dilutive securities:

unvested share awards 14 —

Weighted average common shares for net income per common share - diluted 14,519 10,202

For both the three and six months ended June 30, 2022 and 2021, the weighted averages shares - diluted was equal to the weighted average shares - basic.

Commitments and Contingencies

As of March 31, 2022, we had unfunded loan commitments of $ 47,812 related to our loans held for investment that are not reflected in our condensed consolidated balance sheets.

These unfunded loan commitments had a weighted average initial maturity of 2.1 years as of March 31, 2022.

As of June 30, 2022, we had unfunded loan commitments of $ 52,694 related to our loans held for investment that are not reflected in our condensed consolidated balance sheets.

These unfunded loan commitments had a weighted average initial maturity of 1.9 years as of June 30, 2022.

See Note 3 for further information related to our loans held for investment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements