What changed in this filing

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Item 1. Financial Statements

2025-04-28 compared with 2024-10-28 · 102 added, 177 removed, 334 unchanged (46% of the section changed)

3 unchanged sentences

(dollars in thousands, except per share data)

September 30, December 31,

March 31, December 31,

Cash and cash equivalents $ 41,637 $ 70,750

26 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

INCOME FROM INVESTMENTS:

10 unchanged sentences

Reimbursement of shared services expenses 550 691

Provision for (reversal of) credit losses 1,518 ( 1,338 ) 3,530 ( 1,299 )

(Reversal of) provision for credit losses ( 153 ) 697

Expenses from real estate owned 594 645

16 unchanged sentences

Balance at March 31, 2025 14,907 $ 15 $ 240,776 $ 94,012 $ ( 65,858 ) $ 268,945

Share grants 29 — 497 — — 497

Share repurchases ( 1 ) — ( 13 ) — — ( 13 )

Net income — — — 4,229 — 4,229

Distributions — — — — ( 5,182 ) ( 5,182 )

Balance at June 30, 2024 14,833 15 240,188 81,122 ( 50,236 ) 271,089

Share grants 91 — 367 — — 367

Share repurchases ( 18 ) — ( 239 ) — — ( 239 )

Net income — — — 3,479 — 3,479

Distributions — — — — ( 5,190 ) ( 5,190 )

Balance at September 30, 2024 14,906 $ 15 $ 240,316 $ 84,601 $ ( 55,426 ) $ 269,506

Balance at December 31, 2023 14,811 $ 15 $ 239,443 $ 71,660 $ ( 39,870 ) $ 271,248

Cumulative-effect adjustment upon adoption of credit loss accounting standard — — — ( 6,595 ) — ( 6,595 )

Share grants — — 336 — — 336

Share repurchases ( 6 ) — ( 75 ) — — ( 75 )

Share forfeitures ( 1 ) — ( 1 ) — — ( 1 )

Net income — — — 5,233 — 5,233

1 unchanged sentence

Balance at March 31, 2024 14,805 $ 15 $ 239,704 $ 76,893 $ ( 45,054 ) $ 271,558

Share grants 42 — 579 — — 579

Share repurchases ( 3 ) — ( 24 ) — — ( 24 )

Share forfeitures ( 1 ) — — — — —

Net income — — — 4,644 — 4,644

Distributions — — — — ( 5,148 ) ( 5,148 )

Balance at June 30, 2023 14,745 15 239,167 58,142 ( 29,526 ) 267,798

Share grants 80 — 273 — — 273

Share repurchases ( 8 ) — ( 101 ) — — ( 101 )

Share forfeitures ( 1 ) — ( 2 ) — — ( 2 )

Net income — — — 7,473 — 7,473

Distributions — — — — ( 5,160 ) ( 5,160 )

Balance at September 30, 2023 14,816 $ 15 $ 239,337 $ 65,615 $ ( 34,686 ) $ 270,281

See accompanying notes.

2 unchanged sentences

(dollars in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

2 unchanged sentences

Accretion of purchase discount — ( 1,145 )

Provision for (reversal of) credit losses 3,530 ( 1,299 )

(Reversal of) provision for credit losses ( 153 ) 697

Amortization of loan origination and exit fees ( 513 ) ( 582 )

13 unchanged sentences

Repayment of loans held for investment — 40,440

Cash assumed from transfer of loans held for investment to real estate owned — 1,742

Real estate owned improvements ( 93 ) —

Net cash provided by (used in) investing activities 73,540 ( 10,702 )

Net cash (used in) provided by investing activities ( 49,901 ) 39,554

CASH FLOWS FROM FINANCING ACTIVITIES:

4 unchanged sentences

Distributions ( 5,216 ) ( 5,184 )

Net cash used in financing activities

( 95,467 ) ( 14,779 )

Net cash provided by (used in) financing activities 17,102 ( 38,835 )

(Decrease) increase in cash and cash equivalents ( 29,113 ) 5,443

3 unchanged sentences

Interest paid $ 7,002 $ 8,421

Income taxes (refunded) paid $ ( 22 ) $ 133

NON-CASH INVESTING ACTIVITIES:

Transfer of loans held for investment to real estate owned $ — $ 14,800

Income taxes refunded $ — $ ( 64 )

SEVEN HILLS REALTY TRUST

14 unchanged sentences

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires public entities, including those with a single reportable segment to:

(i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the chief operating decision maker, or the CODM, and included in each reported measure of segment profit or loss;

(ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Accounting Standards Codification, or ASC, 280, Segment Reporting , in interim periods;

and (iii) disclose the CODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures.

ASU 2023-07 does not change how a public entity identifies its operating segments, aggregates those operating segments or applies the quantitative thresholds to determine its reportable segments.

ASU 2023-07 is required to be applied retrospectively and is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We expect to include additional disclosures as a result of the implementation ASU 2023-07, however, these changes are not expected to have a material effect on our consolidated financial statements .

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update, or ASU, No.

2024-03, Income Statement (Topic 220):

Reporting Comprehensive Income - Expense Disaggregation Disclosures , or ASU No.

2024-03, which requires public entities to provide disaggregated disclosure of certain income statement expense captions within the footnotes to the financial statements.

2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

We are currently evaluating the impact ASU No.

2024-03 will have on our consolidated financial statements and disclosures.

Loans Held for Investment, net

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

We fund our loan portfolio using cash on hand and advancements under our Secured Financing Facilities, as defined in Note 5.

See Note 5 for further information regarding our secured financing agreements.

The table below provides overall statistics for our loan portfolio as of September 30, 2024 and December 31, 2023:

As of September 30, 2024 As of December 31, 2023

The table below provides overall statistics for our loan portfolio as of March 31, 2025 and December 31, 2024:

As of March 31, 2025 As of December 31, 2024

Number of loans 23 21

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 September 30, 2024 and 2023:

Principal Balance Deferred Fees and Other Items Amortized Cost

Balance at June 30, 2024 $ 610,210 $ ( 960 ) $ 609,250

Additional funding 1,922 — 1,922

Originations 16,000 ( 215 ) 15,785

Repayments ( 70,587 ) ( 458 ) ( 71,045 )

Net amortization of deferred fees — 894 894

Purchase discount accretion — 420 420

Balance at September 30, 2024 $ 557,545 $ ( 319 ) $ 557,226

Principal Balance Deferred Fees and Other Items Amortized Cost

Balance at June 30, 2023 $ 634,920 $ ( 5,395 ) $ 629,525

Additional funding 919 — 919

Originations 41,550 ( 528 ) 41,022

Repayments ( 2,174 ) — ( 2,174 )

Net amortization of deferred fees — 762 762

Purchase discount accretion — 1,075 1,075

Balance at September 30, 2023 $ 675,215 $ ( 4,086 ) $ 671,129

SEVEN HILLS REALTY TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

The tables below represent our loan activities during the nine months ended September 30, 2024 and 2023:

The tables below represent our loan activities during the three months ended March 31, 2025 and 2024:

Principal Balance Deferred Fees and Other Items Amortized Cost

2 unchanged sentences

Originations 46,505 ( 770 ) 45,735

Repayments ( 128,141 ) ( 594 ) ( 128,735 )

Net amortization of deferred fees — 513 513

Purchase discount accretion — 2,347 2,347

Balance at September 30, 2024 $ 557,545 $ ( 319 ) $ 557,226

Balance at March 31, 2025 $ 661,389 $ ( 1,152 ) $ 660,237

Principal Balance Deferred Fees and Other Items Amortized Cost

1 unchanged sentence

Additional funding 1,044 ( 158 ) 886

Originations 79,050 ( 1,012 ) 78,038

Repayments ( 40,304 ) ( 136 ) ( 40,440 )

Transfer to real estate owned ( 15,865 ) ( 95 ) ( 15,960 )

Net amortization of deferred fees — 582 582

Purchase discount accretion — 1,145 1,145

Balance at September 30, 2023 $ 675,215 $ ( 4,086 ) $ 671,129

The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

Balance at March 31, 2024 $ 590,632 $ ( 1,997 ) $ 588,635

The tables below detail the property type and geographic location of the properties securing the loans in our portfolio as of March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

Property Type Number of Loans

3 unchanged sentences

Percentage of Value

Office 6 $ 167,798 30 % 7 $ 181,268 29 %

Multifamily 7 $ 212,840 32 % 5 $ 163,987 27 %

Office 6 167,805 25 % 6 167,749 28 %

Industrial 5 138,012 21 % 5 136,646 22 %

Retail 2 57,453 10 % 3 72,962 12 %

Hotel 3 84,110 13 % 3 84,028 14 %

Retail 2 57,470 9 % 2 57,506 9 %

23 $ 660,237 100 % 21 $ 609,916 100 %

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Geographic Location Number of Loans

3 unchanged sentences

West 6 142,962 22 % 6 142,560 23 %

Midwest 4 129,284 23 % 4 128,876 20 %

East 4 141,155 21 % 4 139,899 23 %

Midwest 4 137,907 21 % 4 135,349 22 %

23 $ 660,237 100 % 21 $ 609,916 100 %

6 unchanged sentences

See our 2024 Annual Report for more information regarding our loan risk ratings.

As of September 30, 2024 and December 31, 2023, the amortized cost of our loan portfolio within each internal risk rating by year of origination was as follows:

September 30, 2024

As of March 31, 2025 and December 31, 2024, the amortized cost of our loan portfolio within each internal risk rating by year of origination was as follows:

March 31, 2025

Risk Rating Number of Loans Percentage of Portfolio 2025 2024 2023 2022 2021 Prior Total

19 unchanged sentences

The allowance for credit losses related to unfunded loan commitments is included in accounts payable, accrued liabilities and other liabilities in our condensed consolidated balance sheets.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Given the lack of historical loss data related to our loan portfolio, we estimate our expected losses using an analytical model that considers the likelihood of default and loss given default for each individual loan.

This analytical model incorporates data from a third party database with historical loan loss information for commercial mortgage-backed securities, or CMBS, and CRE loans since 1998.

We estimate the allowance for credit losses for our portfolio, including unfunded loan commitments, at the individual loan level.

Significant inputs to the model include certain loan specific data, such as loan to value, or LTV, property type, geographic location, occupancy, vintage year, remaining loan term, net operating income, expected timing and amounts of future loan fundings and macroeconomic forecast assumptions, including the performance of CRE assets, unemployment rates, interest rates and other factors.

We utilize the model to estimate credit losses over a reasonable and supportable economic forecast period of 12 months, followed by a straight-line reversion period of six months to average historical losses.

We utilize the model to estimate credit losses over a reasonable and supportable economic forecast period of 12 months, followed by a straight-line reversion period of 12 months to average historical losses.

Average historical losses are established using a population of third party historical loss data that approximates our portfolio as of the measurement date.

We evaluate the estimated allowance for each of our loans individually and we consider our internal loan risk rating as the primary credit quality indicator underlying our assessment.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

We have elected to exclude accrued interest receivable from amortized cost and not to measure an allowance for credit losses on accrued interest receivable.

1 unchanged sentence

Such amounts are reversed against interest income and no further interest will be recorded until it is collected.

If a loan is determined to be collateral dependent (because the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral property) and the borrower is experiencing financial difficulties, but foreclosure is not probable, we may elect to apply a practical expedient to determine the loan's allowance for credit losses by comparing the collateral's fair value, less costs to sell, if applicable, to the amortized cost basis of the loan.

For collateral-dependent loans for which foreclosure is probable, the related allowance for credit losses is determined using the fair value, less costs to sell, if applicable, of the collateral compared to the loan's amortized cost.

For collateral-dependent loans for which foreclosure is probable, the related allowance for credit losses is determined using the fair value of the collateral compared to the loan's amortized cost.

See Note 2 to our Consolidated Financial Statements included in Part IV, Item 15 of our 2024 Annual Report for further information regarding our measurement of our allowance for credit losses.

The tables below represent the changes to the allowance for credit losses during the three months ended September 30, 2024 and 2023.

Loans Held for Investment, net Unfunded Loan Commitments Total

Balance at June 30, 2024 $ 5,723 $ 2,117 $ 7,840

Provision for (reversal of) credit losses 1,559 ( 41 ) 1,518

Balance at September 30, 2024 $ 7,282 $ 2,076 $ 9,358

Loans Held for Investment, net Unfunded Loan Commitments Total

Balance at June 30, 2023 $ 4,201 $ 1,725 $ 5,926

(Reversal of) provision for credit losses ( 1,660 ) 322 ( 1,338 )

Recoveries 740 — 740

Balance at September 30, 2023 $ 3,281 $ 2,047 $ 5,328

The tables below represent the changes to the allowance for credit losses during the nine months ended September 30, 2024 and 2023:

The tables below represent the changes to the allowance for credit losses during the three months ended March 31, 2025 and 2024.

Loans Held for Investment, net Unfunded Loan Commitments Total

Balance at December 31, 2024 $ 8,074 $ 834 $ 8,908

Provision for credit losses 2,906 624 3,530

Balance at September 30, 2024 $ 7,282 $ 2,076 $ 9,358

(Reversal of) provision for credit losses ( 426 ) 273 ( 153 )

Balance at March 31, 2025 $ 7,648 $ 1,107 $ 8,755

Loans Held for Investment, net Unfunded Loan Commitments Total

Balance at December 31, 2023 $ 4,376 $ 1,452 $ 5,828

Cumulative effect adjustment upon adoption of ASU No.

2016-13 4,893 1,702 6,595

(Reversal of) provision for credit losses ( 1,644 ) 345 ( 1,299 )

Write offs ( 708 ) — ( 708 )

Recoveries 740 — 740

Balance at September 30, 2023 $ 3,281 $ 2,047 $ 5,328

The increase in the allowance for credit losses during the three and nine months ended September 30, 2024 is primarily attributable to declining values for CRE and unfavorable CRE pricing forecasts used in our CECL model and increased provisions for our office loans.

Provision for (reversal of) credit losses 773 ( 76 ) 697

Balance at March 31, 2024 $ 5,149 $ 1,376 $ 6,525

The decrease in the allowance for credit losses during the three months ended March 31, 2025 was primarily attributable to certain of our loans nearing maturity and improved performance at certain of the collateral properties underlying our loans, partially offset by higher total loan commitments as of March 31, 2025, including future funding of our unfunded loan commitments.

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.

Loan modifications are evaluated to determine whether a modification results in a new loan or a continuation of an existing loan under ASC 310.

SEVEN HILLS REALTY TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

Loan modifications are evaluated to determine whether a modification results in a new loan or a continuation of an existing loan under ASC 310.

In August 2024, we amended the agreement governing our loan secured by an office property in Dallas, TX.

As part of this amendment, the loan commitment was reduced by $ 3,189 , the borrower was required to contribute $ 2,900 to cash reserves and the maturity date was extended by two years to August 25, 2026.

As of September 30, 2024, this loan had an amortized cost of $ 43,511 and a risk rating of 4.

As of March 31, 2025, this loan had an amortized cost of $ 43,511 and a risk rating of 4.

In August 2024, we amended the agreement governing our loan secured by an office property in Plano, TX.

As part of this amendment, the coupon rate was reduced from SOFR + 4.75 % to SOFR + 3.75 % and the maturity date was extended by two years to July 1, 2026.

As of September 30, 2024, this loan had an amortized cost of $ 26,634 and a risk rating of 4.

There were no other modifications to our loan portfolio for borrowers experiencing financial difficulties during the nine months ended September 30, 2024.

We did not have any outstanding past due loans or nonaccrual loans as of September 30, 2024 or December 31, 2023.

As of September 30, 2024 and October 24, 2024, all of our borrowers had paid their debt service obligations owed and due to us.

As part of this amendment, the coupon rate was reduced from the Secured Overnight Financing Rate, or SOFR, + 4.75 % to SOFR + 3.75 % and the maturity date was extended by two years to July 1, 2026.

As of March 31, 2025, this loan had an amortized cost of $ 26,635 and a risk rating of 4.

In November 2024, we amended the agreement governing our loan secured by an office property in Carlsbad, CA.

As part of this amendment, the borrower was required to contribute $ 1,100 to cash reserves and the maturity date was extended by two years to October 27, 2026.

As of March 31, 2025, this loan had an amortized cost of $ 24,413 and a risk rating of 4.

In February 2025, we amended the agreement governing our loan secured by an office property in Downers Grove, IL, which extended the term of the loan by 60 days to April 25, 2025 with an option to extend the loan for an additional 30 days.

In April 2025, the borrower exercised its option to extend the loan by 30 days to May 23, 2025.

As of March 31, 2025, this loan had an amortized cost of $ 29,642 and a risk rating of 4.

In April 2025, we amended the agreement governing our loan secured by an office property in Bellevue, WA.

As part of this amendment, the borrower was required to contribute $ 1,625 to cash reserves, the coupon rate was reduced from SOFR + 3.85 % to SOFR + 2.85 % and the maturity date was extended by three years to April 7, 2028.

As of March 31, 2025, this loan had an amortized cost of $ 19,999 and a risk rating of 4.

We did not have any outstanding past due loans or nonaccrual loans as of March 31, 2025 or December 31, 2024.

As of March 31, 2025 and April 24, 2025, all of our borrowers had paid their debt service obligations owed and due to us.

See our 2024 Annual Report for more information regarding our nonaccrual policy.

As of March 31, 2025, we had unfunded loan commitments of $ 29,524 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 1.2 years as of March 31, 2025.

Real Estate Owned

4 unchanged sentences

The table below presents the assets and liabilities of real estate owned in our condensed consolidated balance sheets:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Land, building and improvements $ 11,733 $ 11,735

$ 11,635 $ 11,393

accumulated depreciation ( 648 ) ( 548 )

( 453 ) ( 115 )

Real estate owned, net 11,085 11,187

4 unchanged sentences

Total liabilities

(1) As of September 30, 2024, the weighted average amortization period of acquired real estate leases was 7.0 years.

(2) Includes $ 1,077 and $ 647 of straight line rent receivables as of September 30, 2024 and December 31, 2023, respectively.

Revenue from real estate owned represents rental income from operating leases with tenants and is recognized on a straight line basis over the lease term.

We increased revenue from real estate owned to record revenue on a straight line basis by $ 45 and $ 430 for the three and nine months ended September 30, 2024.

Expenses from real estate owned represents costs related to the acquisition of the property, costs to operate the property and depreciation and amortization expense.

(1) Includes $ 1,110 and $ 1,094 of straight line rent receivables as of March 31, 2025 and December 31, 2024, respectively.

SEVEN HILLS REALTY TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

Revenue from real estate owned represents rental income from operating leases with tenants and is recognized on a straight line basis over the lease term.

We increased revenue from real estate owned to record revenue on a straight line basis by $ 16 and $ 278 for the three months ended March 31, 2025 and 2024, respectively.

Expenses from real estate owned represents costs to operate the property and depreciation and amortization expense.

We regularly evaluate real estate owned for indicators of impairment.

5 unchanged sentences

Secured Financing Agreements

Our secured financing agreements at September 30, 2024 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 master repurchase facility with UBS AG, or UBS, or the UBS Master Repurchase Facility, and our facility loan program with BMO Harris Bank N.A., or BMO, or the BMO 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.

As of March 31, 2025, we had secured financing facilities governed by master repurchase agreements with Wells Fargo, National Association, or Wells Fargo, Citibank, N.A., or Citibank, and UBS AG, or UBS;

and a facility loan program with BMO Harris Bank N.A., or BMO.

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

Collectively, we refer to our Master Repurchase Facilities and the BMO Facility as our Secured Financing Facilities.

See our 2024 Annual Report for more information regarding our Secured Financing Facilities.

The table below summarizes our Secured Financing Facilities as of September 30, 2024 and December 31, 2023:

The table below summarizes our Secured Financing Facilities as of March 31, 2025 and December 31, 2024:

Debt Obligation

4 unchanged sentences

Principal Balance

September 30, 2024:

Citibank Master Repurchase Facility $ 215,000 $ 59,714 $ 59,017 7.43 % 1.6 9/27/2026 $ 103,390

March 31, 2025:

UBS Master Repurchase Facility $ 250,000 $ 181,989 $ 181,619 6.77 % 0.6 2/18/2026 $ 269,609

Citibank Master Repurchase Facility 215,000 93,314 92,783 6.49 % 1.3 9/27/2026 145,773

BMO Facility 150,000 103,855 103,660 6.30 % 0.7 Various 146,471

2 unchanged sentences

December 31, 2024:

Citibank Master Repurchase Facility $ 215,000 $ 91,115 $ 90,811 7.47 % 0.7 3/15/2025 $ 142,465

UBS Master Repurchase Facility $ 250,000 $ 181,989 $ 181,566 6.85 % 0.7 2/18/2026 $ 267,084

Citibank Master Repurchase Facility 215,000 93,314 92,700 6.57 % 1.5 9/27/2026 145,520

BMO Facility 150,000 103,855 103,622 6.39 % 0.9 Various 145,234

1 unchanged sentence

Total/weighted average $ 740,000 $ 419,622 $ 417,796 6.62 % 0.9 $ 610,811

(1) The weighted average coupon rate is determined using the Secured Overnight Financing Rate, or SOFR, plus a spread ranging from 1.83 % to 2.90 %, as applicable, for the respective borrowings under our Secured Financing Facilities as of the applicable date.

(1) The weighted average coupon rate is determined using SOFR plus a spread ranging from 1.83 % to 2.95 %, as applicable, for the respective borrowings under our Secured Financing Facilities as of the applicable date.

(2) The weighted average remaining maturity of our Master Repurchase Facilities is determined using the earlier of the underlying loan investment maturity date and the respective repurchase agreement maturity date.

The weighted average remaining maturity of the BMO Facility is determined using the underlying loan investment maturity date.

As of September 30, 2024, we were in compliance with the covenants and other terms of the agreements that govern our Secured Financing Facilities.

As of March 31, 2025, we were in compliance with the covenants and other terms of the agreements that govern our Secured Financing Facilities.

SEVEN HILLS REALTY TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

As of September 30, 2024, our outstanding borrowings under our Secured Financing Facilities had the following remaining maturities:

As of March 31, 2025, our outstanding borrowings under our Secured Financing Facilities had the following remaining maturities:

Year Principal Payments on

2 unchanged sentences

2028 and thereafter —

In September 2024, we amended our amended and restated master repurchase agreement with Citibank, or the Citibank Master Repurchase Agreement.

The amendment to the amended and restated Citibank Master Repurchase Agreement made certain changes to the agreement and related fee letter, including extending the stated maturity date to September 27, 2026.

In October 2024, we amended our master repurchase and securities contract with Wells Fargo, or the Wells Fargo Master Repurchase Agreement.

The amendment to the Wells Fargo Master Repurchase Agreement made certain changes to the agreement and related fee letter, including extending the stated maturity date to March 11, 2026.

Based upon the performance and payment history of our commercial mortgage loans, along with our ability to obtain financing under repurchase agreements and success in extending certain of our existing Master Repurchase Agreements, we believe it is probable that we will extend our Master Repurchase Facilities prior to their maturities.

4 unchanged sentences

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Carrying Value Fair Value Carrying Value Fair Value

3 unchanged sentences

Secured Financing Facilities $ 440,474 $ 441,125 $ 417,796 $ 418,492

There were no transfers of financial assets or liabilities within the fair value hierarchy during the nine months ended September 30, 2024.

There were no transfers of financial assets or liabilities within the fair value hierarchy during the three months ended March 31, 2025.

Shareholders' Equity

Common Share Awards

On May 30, 2024, in accordance with our Trustee compensation arrangements, we awarded to each of our six Trustees 4,735 of our common shares, valued at the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq on that day.

The aggregate value of common shares awarded was $ 360 .

On September 11, 2024, we awarded an aggregate of 91,118 of our common shares to our officers and certain other employees of Tremont Realty Capital LLC, or Tremont, and of The RMR Group LLC, or RMR, valued at the closing price of our common shares on Nasdaq that day.

On March 19, 2025, in accordance with our Trustee compensation arrangements, we awarded one of our Trustees 4,709 of our common shares, valued at the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on that day.

The aggregate value of common shares awarded was $ 60 .

Common Share Purchases

During the three months ended March 31, 2025, we purchased 359 of our common shares from certain current and former officers of The RMR Group LLC, or RMR, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares, valued at the closing price of our common shares on Nasdaq on the applicable purchase date.

The aggregate value of common shares purchased was $ 5 .

SEVEN HILLS REALTY TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

Common Share Purchases

During the nine months ended September 30, 2024, we purchased 24,485 of our common shares from certain current and former officers of RMR in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares, valued at the closing price of our common shares on Nasdaq on the applicable purchase date.

The aggregate value of common shares purchased was $ 327 .

Distributions

For the nine months ended September 30, 2024, we declared and paid regular quarterly distributions to common shareholders, using cash on hand, as follows:

For the three months ended March 31, 2025, we declared and paid regular quarterly distributions to common shareholders, using cash on hand, as follows:

Record Date Payment Date Distribution per Share Total Distribution

January 22, 2024

February 15, 2024

$ 0.35 $ 5,184

April 22, 2024 May 16, 2024 0.35 5,182

July 22, 2024 August 15, 2024 0.35 5,190

$ 1.05 $ 15,556

On October 16, 2024, we declared a quarterly distribution of $ 0.35 per common share, or $ 5,216 , to shareholders of record on October 28, 2024.

We expect to pay this distribution on or about November 14, 2024, using cash on hand.

January 27, 2025 February 20, 2025 $ 0.35 $ 5,216

On April 10, 2025, we declared a quarterly distribution of $ 0.35 per common share, or $ 5,217 , to shareholders of record on April 22, 2025.

We expect to pay this distribution on or about May 15, 2025, using cash on hand.

Management Agreement with Tremont

We have no employees.

The personnel and various services we require to operate our business are provided to us, pursuant to a management agreement with Tremont, which provides for the day to day management of our operations by Tremont, subject to the oversight and direction of our Board of Trustees.

The personnel and various services we require to operate our business are provided to us, pursuant to a management agreement with Tremont Realty Capital LLC, or Tremont, which provides for the day to day management of our operations, subject to the oversight and direction of our Board of Trustees.

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.

19 unchanged sentences

and an officer and employee of RMR, and our other officers are officers and employees of Tremont and/or RMR.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

See Note 7 for information relating to the awards of our common shares we made in September 2024 to our officers and certain other employees of Tremont and/or RMR and common shares we purchased from certain of our current and former officers and current and former officers and employees of Tremont and/or RMR in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

We include amounts recognized as expense for awards of our common shares to our officers and employees of Tremont and/or RMR in general and administrative expenses in our condensed consolidated statements of operations.

Our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services.

Certain of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services.

Portnoy serves as the chair of the board and as a managing trustee of those companies and other officers of RMR, including Mr.

3 unchanged sentences

See Note 8 for further information regarding our management agreement.

As of September 30, 2024, Tremont owned 1,708,058 of our common shares, and Mr.

As of March 31, 2025, Tremont owned 1,708,058 of our common shares, and Mr.

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

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Property Management Agreement with RMR.

4 unchanged sentences

No termination fee would be payable as a result of terminating the agreement.

We recognized property management and construction supervision fees of $ 20 and $ 51 for the three and nine months ended September 30, 2024, respectively, related to real estate owned.

We recognized property management and construction supervision fees of $ 21 and $ 9 for the three months ended March 31, 2025 and 2024, respectively, related to real estate owned.

For further information about these and other such relationships and certain other related person transactions, refer to our 2024 Annual Report.

7 unchanged sentences

Unvested share awards are considered participating securities 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 calculation of net income per common share - basic and diluted is as follows (amounts in thousands, except per share data):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Net income $ 4,532 $ 5,233

4 unchanged sentences

Net income per common share - basic and diluted $ 0.30 $ 0.35

Commitments and Contingencies

As of September 30, 2024, we had unfunded loan commitments of $ 36,876 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 1.0 years as of September 30, 2024.

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

Segment Reporting

We manage our business on a consolidated basis and therefore have one reportable segment:

originating and investing in floating rate first mortgage loans secured by CRE properties.

The Chief Operating Decision Maker, or CODM, is our President and Chief Investment Officer.

The CODM assesses performance, allocates resources and makes strategic decisions based on net income as shown in our condensed consolidated statements of operations.

Our significant expense categories are included in our condensed consolidated statements of operations.

The measure of segment assets is reported as total assets in our condensed consolidated balance sheets.

Tab le of Contents

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