What changed in this filing

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Item 1. Financial Statements

2025-07-28 compared with 2025-04-28 · 121 added, 75 removed, 361 unchanged (35% 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 $ 45,951 $ 70,750

26 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended March 31,

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

2025 2024 2025 2024

INCOME FROM INVESTMENTS:

10 unchanged sentences

Reimbursement of shared services expenses 551 691 1,101 1,382

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

Provision for credit losses 912 1,315 759 2,012

Expenses from real estate owned 569 599 1,163 1,244

1 unchanged sentence

Income before income taxes 2,675 4,242 7,218 9,478

Income tax expense ( 11 ) ( 3 )

Income tax benefit (expense) 3 ( 13 ) ( 8 ) ( 16 )

Net income $ 2,678 $ 4,229 $ 7,210 $ 9,462

12 unchanged sentences

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

Share grants 42 — 677 — — 677

Share repurchases ( 5 ) — ( 63 ) — — ( 63 )

Net income — — — 2,678 — 2,678

Distributions — — — — ( 5,217 ) ( 5,217 )

Balance at June 30, 2025 14,944 $ 15 $ 241,390 $ 96,690 $ ( 71,075 ) $ 267,020

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

4 unchanged sentences

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

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

See accompanying notes.

2 unchanged sentences

(dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

2 unchanged sentences

Accretion of purchase discount — ( 1,927 )

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

Provision for credit losses 759 2,012

Amortization of loan origination and exit fees ( 1,097 ) ( 1,283 )

21 unchanged sentences

Distributions ( 10,433 ) ( 10,366 )

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

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

Net cash used in financing activities ( 13,041 ) ( 47,636 )

Decrease in cash and cash equivalents ( 24,799 ) ( 18,252 )

Cash and cash equivalents at beginning of period 70,750 87,855

30 unchanged sentences

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

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

The table below provides overall statistics for our loan portfolio as of June 30, 2025 and December 31, 2024:

As of June 30, 2025 As of December 31, 2024

Number of loans 23 21

16 unchanged sentences

(dollars in thousands, except per share data)

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

The tables below represent our loan activities during the three months ended June 30, 2025 and 2024:

Principal Balance Deferred Fees and Other Items Amortized Cost

Balance at December 31, 2024 $ 610,811 $ ( 895 ) $ 609,916

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

Additional funding 1,285 — 1,285

Originations 40,800 ( 544 ) 40,256

Repayments ( 70,648 ) ( 396 ) ( 71,044 )

Net amortization of deferred fees — 584 584

Balance at June 30, 2025 $ 632,826 $ ( 1,508 ) $ 631,318

Principal Balance Deferred Fees and Other Items Amortized Cost

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

Additional funding 811 — 811

Originations 36,017 ( 446 ) 35,571

Repayments ( 17,250 ) — ( 17,250 )

Net amortization of deferred fees — 701 701

Purchase discount accretion — 782 782

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

The tables below represent our loan activities during the six months ended June 30, 2025 and 2024:

Principal Balance Deferred Fees and Other Items Amortized Cost

1 unchanged sentence

Additional funding 5,358 — 5,358

Originations 87,305 ( 1,314 ) 85,991

Repayments ( 70,648 ) ( 396 ) ( 71,044 )

Net amortization of deferred fees — 1,097 1,097

Balance at June 30, 2025 $ 632,826 $ ( 1,508 ) $ 631,318

Principal Balance Deferred Fees and Other Items Amortized Cost

Balance at December 31, 2023 $ 629,892 $ ( 3,430 ) $ 626,462

Additional funding 1,855 ( 158 ) 1,697

Originations 36,017 ( 446 ) 35,571

Repayments ( 57,554 ) ( 136 ) ( 57,690 )

Net amortization of deferred fees — 1,283 1,283

Purchase discount accretion — 1,927 1,927

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

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

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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 June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024

Property Type Number of Loans

9 unchanged sentences

23 $ 631,318 100 % 21 $ 609,916 100 %

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Geographic Location Number of Loans

3 unchanged sentences

West 6 135,916 22 % 6 142,560 23 %

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

Midwest 4 134,951 21 % 4 135,349 22 %

East 3 99,574 16 % 4 139,899 23 %

23 $ 631,318 100 % 21 $ 609,916 100 %

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Credit Quality Information and Allowance for Credit Losses

2 unchanged sentences

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

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

As of June 30, 2025 and December 31, 2024, the amortized cost of our loan portfolio within each internal risk rating by year of origination was as follows:

June 30, 2025

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

5 unchanged sentences

23 100 % $ 86,344 $ 134,272 $ 78,348 $ 97,375 $ 208,359 $ 26,620 $ 631,318

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

December 31, 2024

12 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.

11 unchanged sentences

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 March 31, 2025 and 2024.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

The tables below represent the changes to the allowance for credit losses during the three months ended June 30, 2025 and 2024.

Loans Held for Investment, net Unfunded Loan Commitments Total

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

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

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

Provision for (reversal of) credit losses 1,727 ( 815 ) 912

Balance at June 30, 2025 $ 9,375 $ 292 $ 9,667

Loans Held for Investment, net Unfunded Loan Commitments Total

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

Provision for credit losses 574 741 1,315

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

The tables below represent the changes to the allowance for credit losses during the six months ended June 30, 2025 and 2024.

Loans Held for Investment, net Unfunded Loan Commitments Total

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

Provision for (reversal of) credit losses 1,301 ( 542 ) 759

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.

Balance at June 30, 2025 $ 9,375 $ 292 $ 9,667

Loans Held for Investment, net Unfunded Loan Commitments Total

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

Provision for credit losses 1,347 665 2,012

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

The increase in the allowance for credit losses during the three and six months ended June 30, 2025 was primarily attributable to unfavorable CRE pricing forecasts used in our CECL model and extensions for certain of our loans, partially offset by loan repayments.

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

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

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

As of June 30, 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 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.

As of June 30, 2025, this loan had an amortized cost of $ 26,636 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.

As of June 30, 2025, this loan had an amortized cost of $ 24,414 and a risk rating of 4.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

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.

As of June 30, 2025, this loan had an amortized cost of $ 19,999 and a risk rating of 4.

In May 2025, we amended the agreement governing our loan secured by an office property in Downers Grove, IL.

As part of this amendment, the borrower repaid $ 3,000 of the outstanding principal balance and the maturity date was extended by one year to May 22, 2026.

As of June 30, 2025, this loan had an amortized cost of $ 26,620 and a risk rating of 4.

We did not have any outstanding past due loans or nonaccrual loans as of June 30, 2025 or December 31, 2024.

As of June 30, 2025 and July 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.

As of June 30, 2025, we had unfunded loan commitments of $ 32,595 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 1.3 years as of June 30, 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:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

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

6 unchanged sentences

Total liabilities

(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

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

(1) Includes $ 1,125 and $ 1,094 of straight line rent receivables as of June 30, 2025 and December 31, 2024, 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 $ 16 and $ 278 for the three months ended March 31, 2025 and 2024, respectively.

We increased revenue from real estate owned to record revenue on a straight line basis by $ 15 and $ 31 for the three and six months ended June 30, 2025, respectively, and $ 107 and $ 385 for the three and six months ended June 30, 2024, respectively.

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

5 unchanged sentences

We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation methods.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Secured Financing Agreements

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;

As of June 30, 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.

2 unchanged sentences

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

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

The table below summarizes our Secured Financing Facilities as of June 30, 2025 and December 31, 2024:

Debt Obligation

4 unchanged sentences

Principal Balance

March 31, 2025:

June 30, 2025:

UBS Master Repurchase Facility $ 250,000 $ 156,929 $ 156,663 6.76 % 0.5 2/18/2026 $ 241,161

12 unchanged sentences

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

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

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

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

As of June 30, 2025, we were in compliance with the covenants and other terms of the agreements that govern our Secured Financing Facilities.

As of June 30, 2025, our outstanding borrowings under our Secured Financing Facilities had the following remaining maturities:

Year Principal Payments on

4 unchanged sentences

Fair Value Measurements

The carrying values of cash and cash equivalents and accounts payable approximate their fair values due to the short term nature of these financial instruments.

We determine the estimated fair value of financial assets and liabilities using the three-tier value hierarchy established by GAAP.

As of June 30, 2025, the carrying values of cash and cash equivalents, accrued interest receivable and accounts payable approximate their fair values due to the short term nature of these financial instruments.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

We estimate the fair values of our loans held for investment and outstanding principal balances under our Secured Financing Facilities by using Level III inputs, including discounted cash flow analyses and currently prevailing market terms as of the measurement date.

1 unchanged sentence

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

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Carrying Value Fair Value Carrying Value Fair Value

3 unchanged sentences

Secured Financing Facilities $ 415,999 $ 417,656 $ 417,796 $ 418,492

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

There were no transfers of financial assets or liabilities within the fair value hierarchy during the six months ended June 30, 2025.

Shareholders' Equity

2 unchanged sentences

The aggregate value of common shares awarded was $ 60 .

On May 28, 2025, in accordance with our Trustee compensation arrangements, we awarded each of our seven Trustees 5,977 of our common shares, valued at the closing price of our common shares on Nasdaq, on that day.

The aggregate value of common shares awarded was $ 490 .

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.

During the six months ended June 30, 2025, we purchased 5,593 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 $ 68 .

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Distributions

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

For the six months ended June 30, 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 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.

April 22, 2025 May 15, 2025 0.35 5,217

$ 0.70 $ 10,433

On July 10, 2025, we declared a quarterly distribution of $ 0.28 per common share, or $ 4,184 , to shareholders of record on July 21, 2025.

We expect to pay this distribution on or about August 14, 2025 using cash on hand.

Management Agreement with Tremont

1 unchanged sentence

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.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

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.

25 unchanged sentences

See Note 8 for further information regarding our management agreement.

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

As of June 30, 2025, Tremont owned 1,708,058 of our common shares, and Mr.

Portnoy beneficially owned (including through Tremont and ABP Trust) 13.6 % 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 $ 21 and $ 9 for the three months ended March 31, 2025 and 2024, respectively, related to real estate owned.

We recognized property management and construction supervision fees of $ 16 and $ 37 for the three and six months ended June 30, 2025, respectively, and $ 22 and $ 31 for the three and six months ended June 30, 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.

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.

7 unchanged sentences

The calculation of net income per common share - basic and diluted is as follows (amounts in thousands, except per share data):

Three Months Ended March 31,

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

2025 2024 2025 2024

Net income $ 2,678 $ 4,229 $ 7,210 $ 9,462

11 unchanged sentences

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