What changed in this filing

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Item 9A. Controls and Procedures

2026-02-18 compared with 2025-02-18 · 150 added, 143 removed, 795 unchanged (27% of the section changed)

9 unchanged sentences

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025.

In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway

Commission (2013 Framework) in Internal Control - Integrated Framework .

In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) in Internal Control - Integrated Framework .

Based on our assessment, we believe that, as of December 31, 2025, our internal control over financial reporting is effective.

57 unchanged sentences

10.2 Letter Agreement, dated as of April 26, 2021, among the Company, Tremont Mortgage Trust and Tremont Realty Capital LLC.(+) (Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by the Company on April 27, 2021.)

10.3 Amended and Restated Seven Hills Realty Trust 2021 Equity Compensation Plan.(+) (Incorporated by reference to the Company's Registration Statement on Form S-8 filed by the Company on December 23, 2021.)

10.3 Second Amended and Restated Seven Hills Realty Trust 2021 Equity Compensation Plan.(+) (Incorporated by reference to Annex A to the Registrant’s definitive Proxy Statement for the Registrant’s 2025 Annual Meeting of Shareholders filed on March 19, 2025.)

10.4 Form of Share Award Agreement.(+) (Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.)

7 unchanged sentences

(Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.)

10.9 Amendment No.

3 to Master Repurchase Agreement, dated February 9, 2026, among UBS AG, RMTG Lender LLC and the Company.

(Filed herewith.)

10.10 Amended and Restated Master Repurchase Agreement, dated March 15, 2022, by and between TRMT CB Lender LLC and Citibank, N.A.

3 unchanged sentences

10.12 First Amendment to Amended and Restated Master Repurchase Agreement, dated September 27, 2024, by and between TRMT CB Lender LLC and Citibank, N.A.

(Filed herewith.)

(Incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.)

10.13 Facility Loan Program Agreement and Security Agreement, dated November 9, 2021, by and between Seven Hills BH Lender LLC and BMO Harris Bank N.A.

11 unchanged sentences

10.19 First Amendment to Master Repurchase and Securities Contract, dated October 25, 2024, by and between Seven Hills WF Lender LLC and Wells Fargo Bank, National Association.

(Incorporated by reference to Exhibit 10.18 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.)

10.20 Second Amendment to Master Repurchase and Securities Contract, dated February 17, 2026, by and between Seven Hills WF Lender LLC and Wells Fargo Bank, National Association.

(Filed herewith.)

1 unchanged sentence

(Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)

10.22 Rights Offering Backstop Agreement, dated October 30, 2025, by and between the Company and Tremont Realty Capital, LLC.

(Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by the Company on October 30, 2025.)

19.1 Seven Hills Realty Trust Insider Trading Policies and Procedures.

32 unchanged sentences

(+) Contract with management or compensatory plan or arrangement.

† This document was previously filed as Exhibit 19.1 to our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 18, 2025, and is being refiled to correct a scrivener’s error.

Form 10-K Summary

2 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Seven Hills Realty Trust (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, shareholders' equity, and cash flows, for each of the two years in the period ended December 31, 2024, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

We have audited the accompanying consolidated balance sheets of Seven Hills Realty Trust and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, shareholders' equity, and cash flows, for each of the two years in the period ended December 31, 2025, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

65 unchanged sentences

Interest and related income $ 56,340 $ 64,762

Purchase discount accretion 2,347 4,128

interest and related expenses ( 29,485 ) ( 31,769 )

7 unchanged sentences

Reimbursement of shared services expenses 2,040 2,647

Provision for (reversal of) credit losses 3,080 ( 799 )

Provision for credit losses 203 3,080

Expenses from real estate owned 2,269 2,489

1 unchanged sentence

Income before income taxes 15,448 17,853

Income tax (expense) benefit ( 33 ) 38

Income tax expense ( 14 ) ( 33 )

Net income $ 15,434 $ 17,820

Weighted average common shares outstanding - basic and diluted 15,240 14,712

14,712 14,625

Net income per common share - basic and diluted $ 1.00 $ 1.20

5 unchanged sentences

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 120 — 1,359 — — 1,359

Share repurchases ( 28 ) — ( 377 ) — — ( 377 )

Share forfeitures ( 3 ) — ( 3 ) — — ( 3 )

Net income — — — 17,820 — 17,820

1 unchanged sentence

Balance at December 31, 2024 14,903 15 240,425 89,480 ( 60,642 ) 269,278

Issuance of shares, net 7,520 8 61,413 — — 61,421

Share grants 197 — 1,736 — — 1,736

12 unchanged sentences

Accretion of purchase discount ( 37 ) ( 2,347 )

Provision for (reversal of) credit losses 3,080 ( 799 )

Provision for credit losses 203 3,080

Amortization of loan origination and exit fees ( 2,052 ) ( 2,697 )

Amortization of deferred financing costs 1,533 1,423

Deferred interest capitalized to loans held for investment ( 1,008 ) —

Straight line rental income ( 117 ) ( 447 )

8 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Origination of loans held for investment ( 132,061 ) ( 131,679 )

Origination and acquisition of loans held for investment ( 208,834 ) ( 132,061 )

Additional funding of loans held for investment ( 6,578 ) ( 12,333 )

Repayment of loans held for investment 142,718 165,984

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

Real estate owned improvements ( 263 ) ( 329 )

Net cash provided by investing activities 21,261 35,844

Net cash (used in) provided by investing activities ( 72,957 ) 21,261

CASH FLOWS FROM FINANCING ACTIVITIES:

2 unchanged sentences

Payments of deferred financing costs ( 325 ) ( 1,133 )

Proceeds from issuance of common shares, net 61,530 —

Repurchase of common shares ( 383 ) ( 377 )

Distributions ( 18,835 ) ( 20,772 )

Net cash used in financing activities ( 58,476 ) ( 39,326 )

(Decrease) increase in cash and cash equivalents ( 17,105 ) 16,788

Net cash provided by (used in) financing activities 110,640 ( 58,476 )

Increase (decrease) in cash and cash equivalents 52,721 ( 17,105 )

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

2 unchanged sentences

Interest paid $ 27,778 $ 30,555

Income taxes (refunded) paid $ ( 35 ) $ 135

NON-CASH INVESTING ACTIVITIES

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

Income taxes refunded $ ( 14 ) $ ( 35 )

See accompanying notes.

2 unchanged sentences

(dollars in thousands, except per share data)

Seven Hills Realty Trust is a Maryland real estate investment trust, or REIT, that focuses primarily on originating and investing in first mortgage loans secured by middle market and transitional commercial real estate, or CRE.

Summary of Significant Accounting Policies

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Allowance for Credit Losses.

On January 1, 2023, we adopted Accounting Standards Update, or ASU, No.

2016-13, Financial Instruments - Credit Losses (Topic 326) :

Measurement of Credit Losses on Financial Instruments , which replaces the “incurred loss” model for recognizing credit losses with a forward-looking “expected loss” model that generally will result in the earlier recognition of credit losses.

The measurement of current expected credit losses, or CECL, is based upon historical experience, current conditions, and reasonable and supportable forecasts incorporating forward-looking information that affect the collectability of the reported amount.

2016-13 is applicable to financial assets measured at amortized cost and off-balance sheet credit exposures, such as unfunded loan commitments.

We recognize the allowance for credit losses under the current expected credit loss, or CECL, model.

The CECL measurement is based upon historical experience, current conditions, and reasonable and supportable forecasts incorporating forward-looking information that affect the collectability of the reported amount.

The CECL model is applicable to financial assets measured at amortized cost and off-balance sheet credit exposures, such as unfunded loan commitments.

The allowance for credit losses is a valuation account that is deducted from the related loans’ amortized cost basis in our consolidated balance sheets.

Our loans typically include commitments to fund incremental proceeds to borrowers over the life of the loan.

these future funding commitments are also subject to the CECL model.

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

SEVEN HILLS REALTY TRUST

NOTES TO 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.

2 unchanged sentences

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 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.

3 unchanged sentences

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.

Upon adoption of ASU No.

2016-13 using the modified retrospective transition method and, based on our loan portfolio, the then current economic environment and expectations for future conditions, we recorded a cumulative-effect adjustment reducing our cumulative net income in our consolidated balance sheets by $ 6,595 , establishing an allowance for credit losses of $ 4,893 with respect to our then outstanding loans held for investment and increasing accounts payable, accrued liabilities and other liabilities by $ 1,702 with respect to our then unfunded loan commitments.

No reserve for loan losses or allowance for credit losses was recognized within our consolidated financial statements prior to our adoption of ASU No.

We evaluate the credit quality of each of our loans at least quarterly by assessing a variety of risk factors in relation to each loan and assigning a risk rating to each loan based on those factors.

15 unchanged sentences

and/or the property having a high LTV.

SEVEN HILLS REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

“5” loss likely—Criteria reflects a very high risk of realizing a principal loss or having incurred a principal loss;

7 unchanged sentences

Real estate owned is property acquired in full or partial settlement of loan obligations generally through foreclosure or by deed in lieu of foreclosure.

Upon acquisition, we allocate the fair value of the real estate owned in accordance with ASC 805, Business Combinations.

Upon acquisition, we allocate the fair value of the real estate owned in accordance with Accounting Standards Codification, or ASC, 805, Business Combinations.

Upon acquisition, real estate owned is recognized at the fair value of the property at the time of acquisition.

2 unchanged sentences

If the amortized cost of the loan exceeds the fair value of the property the difference is recorded through the allowance for credit losses as a write off.

Conversely, if the fair value of the property exceeds the amortized cost of the loan, the difference is recorded through the allowance for credit losses as a recovery, with any excess recorded as a gain.

Conversely, if the fair value of the property exceeds the amortized cost of the loan, the difference is recorded through the allowance for credit losses

SEVEN HILLS REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

as a recovery, with any excess recorded as a gain.

Any related shortfall or excess of previously established allowances for credit losses is recognized in the consolidated statements of operations as a provision for or reversal of credit losses, respectively.

18 unchanged sentences

Level III—Inputs include unobservable prices and are supported by little or no market activity and are significant to the overall fair value measurement.

SEVEN HILLS REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Loan Deferred Fees.

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If a loan's interest or principal payments are not paid when due and there is uncertainty that such payments will be collected, the loan may be categorized as non-accrual and no interest will be recorded until it is collected.

When all overdue payments are collected and, in our judgment, a loan is likely to remain current, it may be re-categorized as accrual.

We did not have any non-accrual loans as of December 31, 2024.

When all overdue

SEVEN HILLS REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

payments are collected and, in our judgment, a loan is likely to remain current, it may be re-categorized as accrual.

We did not have any non-accrual loans as of December 31, 2025 and 2024.

For loans purchased at a discount, GAAP limits the yield that may be accreted (accretable yield) to the excess of the investor’s estimate of undiscounted expected principal, interest and other cash flows (cash flows expected at acquisition to be collected) over the investor’s initial investment in the loan.

3 unchanged sentences

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.

Effective for the fiscal year ended December 31, 2024, we adopted ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , or ASU No.

2023-07, which requires public entities 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 ASC 280, Segment Reporting , or ASC 280, 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.

Public entities with a single reportable segment must apply all the disclosure requirements of ASU No.

2023-07, as well as all the existing segment disclosures under ASC 280.

The amendments in ASU No.

2023-07 are incremental to the requirements in ASC 280 and do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

As a result, we have included additional information related to the required disclosures within Note 13 to our consolidated financial statements.

We operate in one business segment:

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

See Note 13 for more information.

New Accounting Pronouncements.

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

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

2024-03, Income Statement (Topic 220):

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

In November 2025, the FASB issued ASU No.

2025-08, Financial Instruments-Credit Losses (Topic 326):

Purchased Loans, or ASU No.

2025-08, which amends the guidance under ASC 326 on the accounting for certain purchased financial assets subject to the CECL model.

Specifically, ASU No.

2025-08 requires entities to account for loans that meet certain criteria at acquisition (purchased seasoned loans) by recognizing them at their purchase price plus an allowance for expected credit losses.

2025-08 is effective for fiscal years beginning after December 15, 2026, including interim periods, with early adoption permitted.

We have not early adopted ASU No.

2025-08 and do not expect the adoption of ASU No.

2025-08 to have a material impact on our consolidated financial statements.

SEVEN HILLS REALTY TRUST

2 unchanged sentences

Loans Held for Investment, net

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

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

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

17 unchanged sentences

The table below represents our loan activities during 2024 and 2025:

Principal Balance Deferred Fees and Other Items Amortized Cost

Principal Balance Unamortized Deferred Fees and Other Items Amortized Cost

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

$ 678,555 $ ( 8,626 ) $ 669,929

Additional funding 12,492 ( 158 ) 12,334

1 unchanged sentence

Repayments ( 165,390 ) ( 594 ) ( 165,984 )

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

Net amortization of deferred fees — 2,697 2,697

1 unchanged sentence

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

629,892 ( 3,430 ) 626,462

Additional funding 6,578 — 6,578

Originations 133,817 ( 1,757 ) 132,060

Deferred interest capitalized to loans held for investment 1,008 — 1,008

Originations and acquisitions (1)

211,198 ( 2,364 ) 208,834

Repayments ( 142,010 ) ( 708 ) ( 142,718 )

1 unchanged sentence

Purchase discount accretion (1)

— 2,347 2,347

Balance at December 31, 2025 $ 687,585 $ ( 1,878 ) $ 685,707

$ 610,811 $ ( 895 ) $ 609,916

(1) In November 2025, we acquired two loans from RMR for an aggregate purchase price of $ 61,733 , which represented the outstanding principal balance of the loans at the time of acquisition.

In connection with the acquisition, we recorded a $ 370 purchase discount, which represents an exit fee contractually due upon repayment of one of the acquired loans, which will be accreted into income over the remaining term of the loan.

See Note 9 for further information regarding the acquisition of these loans.

SEVEN HILLS REALTY TRUST

8 unchanged sentences

Percentage of Value

Office 6 $ 167,749 28 % 7 $ 181,268 29 %

Multifamily 7 $ 203,495 30 % 5 $ 163,987 27 %

Office 6 165,745 24 % 6 167,749 28 %

Industrial 6 160,782 23 % 5 136,646 22 %

Hotel 4 121,393 18 % 3 84,028 14 %

Mixed Use 1 34,292 5 % — — — %

Retail — — — % 2 57,506 9 %

5 unchanged sentences

Percentage of Value

East 7 $ 223,240 33 % 4 $ 139,899 23 %

South 8 222,512 32 % 7 192,108 32 %

West 6 134,741 20 % 6 142,560 23 %

East 4 139,899 23 % 3 89,815 14 %

Midwest 3 105,214 15 % 4 135,349 22 %

23 unchanged sentences

21 100 % $ 133,085 $ 78,156 $ 163,228 $ 205,842 $ 29,605 $ 609,916

The tables below present the changes to the allowance for credit losses during the years ended December 31, 2024 and 2023:

The table below presents the changes to the allowance for credit losses during the years ended December 31, 2024 and 2025:

Loans Held for Investment, net Unfunded Loan Commitments Total

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

Provision for credit losses 3,698 ( 618 ) 3,080

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

Loans Held for Investment, net Unfunded Loan Commitments Total

Provision for (reversal of) credit losses 3,698 ( 618 ) 3,080

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

Cumulative-effect adjustment upon adoption of the CECL model 4,893 1,702 6,595

Reversal of credit losses ( 549 ) ( 250 ) ( 799 )

Write offs (1)

( 708 ) — ( 708 )

Recoveries 740 — 740

Provision for (reversal of) credit losses 725 ( 522 ) 203

Balance at December 31, 2025 $ 8,799 $ 312 $ 9,111

(1) Write offs for the year ended December 31, 2023 relate to our loan secured by an office property located in Yardley, PA that was originated in 2019.

We assumed legal title to the property through a deed in lieu of foreclosure in June 2023.

The increase in the allowance for credit losses during the year ended December 31, 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.

The increase in the allowance for credit losses during the year ended December 31, 2025 was primarily attributable to increased provisions for our office loans and a larger loan portfolio as of December 31, 2025, offset by increasing values for CRE and favorable CRE pricing forecasts used in our CECL model and loans nearing maturity.

The increase in the allowance for credit losses during the year ended December 31, 2024 was primarily attributable to declining values for CRE and increased provisions for our office loans, as compared to the allowance for credit losses as of December 31, 2023.

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.

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 December 31, 2024, 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 December 31, 2024, 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.

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 December 31, 2025, this loan had an amortized cost of $ 20,245 and a risk rating of 4.

SEVEN HILLS REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

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

As part of this amendment, the maturity date was extended by 90 days to February 5, 2025.

Subsequently, in January 2025, the maturity date was extended by 60 days to April 7, 2025.

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 December 31, 2025, this loan had an amortized cost of $ 26,640 and a risk rating of 3.

2 unchanged sentences

As of December 31, 2025 and February 13, 2026, our borrowers with outstanding loans had paid their debt service obligations owed and due to us.

SEVEN HILLS REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Real Estate Owned

3 unchanged sentences

Building and improvements 9,075 8,855

Tenant improvements 1,501 1,164

Total real estate owned 11,955 11,735

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

We recognized amortization expense related to our acquired real estate leases of $ 771 and $ 458 for the years ended December 31, 2024 and 2023, respectively.

We recognized amortization expense related to acquired real estate leases of $ 594 and $ 771 for the years ended December 31, 2025 and 2024, respectively.

Future amortization of acquired in place lease values is estimated to be $ 493 in 2026, $ 493 in 2027, $ 466 in 2028, $ 421 in 2029, $ 446 in 2030 and $ 453 thereafter.

As of December 31, 2025 and 2024, the weighted average amortization period of acquired real estate leases was 6.1 and 6.9 years, respectively.

The following operating lease maturity analysis presents the future contractual lease payments to be received by us through 2035 as of December 31, 2025:

SEVEN HILLS REALTY TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

The following operating lease maturity analysis presents the future contractual lease payments to be received by us through 2034 as of December 31, 2024:

Secured Financing Agreements

11 unchanged sentences

Interest expense under our Secured Financing Facilities accrues at a rate of SOFR plus a premium.

In September 2024, we amended our Citibank Master Repurchase Agreement.

The amendment to the 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 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.

In December 2024, we amended the fee letter to our UBS Master Repurchase Agreement to extend the stated maturity date to February 18, 2026 and increase the maximum facility size to $ 250,000 .

In February 2026, we amended the Wells Fargo Master Repurchase Agreement and made certain changes to the agreement, including extending the stated maturity date to March 13, 2028 and increasing the maximum facility size by $ 125,000 to $ 250,000 .

In February 2026, we amended our UBS Master Repurchase Agreement to extend the stated maturity date to February 18, 2028.

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

10 unchanged sentences

UBS Master Repurchase Facility (3)

$ 250,000 $ 194,948 $ 194,887 6.19 % 0.1 2/18/2026 $ 278,594

Citibank Master Repurchase Facility 215,000 135,715 135,426 5.84 % 0.7 9/27/2026 199,838

1 unchanged sentence

Wells Fargo Master Repurchase Facility (4)

125,000 92,980 92,902 5.54 % 0.2 3/11/2026 120,469

Total/weighted average $ 740,000 $ 488,275 $ 487,657 5.92 % 0.4 $ 687,585

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

4 unchanged sentences

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

(3) In February 2026, we extended the stated maturity date to February 18, 2028.

(4) In February 2026, we extended the stated maturity date to March 13, 2028 and increased the maximum facility size by $ 125,000 to $ 250,000 .

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

5 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.

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

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.

11 unchanged sentences

Shareholders' Equity

Rights Offering

In November 2025, we commenced a transferable rights offering, or the Rights Offering, pursuant to which we issued transferable rights to our shareholders of record as of November 10, 2025.

The record date shareholders received one transferable right for each outstanding common share they owned on the record date, which entitled them to purchase one new common share for every two rights held.

The Rights Offering was fully backstopped by Tremont.

In December 2025, we completed the Rights Offering, in which 7,532,861 common shares were issued at $ 8.65 per share, generating net proceeds of $ 61,530 , after offering costs.

See Note 9 for further information regarding the Rights Offering.

Common Share Awards

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

During the years ended December 31, 2024 and 2023, we awarded to our officers and certain other employees of Tremont and of RMR annual share awards of 91,118 and 80,000 of our common shares, respectively, valued at $ 1,236 and $ 876 , in aggregate, respectively.

In accordance with our Trustee compensation arrangements, during the years ended December 31, 2024 and 2023, we awarded each of our then Trustees 4,735 and 6,000 of our common shares, respectively, valued at $ 360 and $ 387 , respectively, as part of their annual compensation.

During the years ended December 31, 2025 and 2024, we awarded to our officers and certain other employees of Tremont and RMR annual share awards of 150,158 and 91,118 of our common shares, respectively, valued at $ 1,653 and $ 1,236 , in aggregate, respectively.

In accordance with our Trustee compensation arrangements, during the year ended December 31, 2025, we awarded each of our Trustees 5,977 of our common shares as part of their annual compensation and awarded an additional 4,709 of our common shares to one of our Trustees in connection with the election to our Board of Trustees.

The aggregate value of our common shares awarded to our Trustees during the year ended December 31, 2025 was $ 550 .

During the year ended 2024, we awarded each of our then Trustees 4,735 of our common shares, valued at $ 360 , as part of their annual compensation.

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 dates of awards.

The common shares that we award to our Trustees as trustee compensation vest immediately.

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

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

We recognize any share forfeitures as they occur.

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66,464 shares in 2026, 56,688 shares in 2027, 44,956 shares in 2028 and 29,604 shares in 2029.

SEVEN HILLS REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

As of December 31, 2025, the estimated future compensation expense for the unvested shares was $ 2,052 .

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During the years ended December 31, 2025 and 2024, we recorded $ 1,736 and $ 1,359 , respectively, of compensation expense related to the 2021 Plan.

In May 2025, 550,000 additional shares were authorized to be issued under the 2021 Plan.

At December 31, 2025, 415,840 of our common shares remained available for issuance under the 2021 Plan.

SEVEN HILLS REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Common Share Purchases

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• The product of (i) 20 % and (ii) the difference between (A) our Core Earnings for the most recent 12 month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of the incentive fee is being made, and (B) the product of (1) our Equity in the most recent 12 month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of the incentive fee is being made, and (2) 7 % per year, and

• The sum of any incentive fees paid to Tremont with respect to the first three calendar quarters of the most recent 12 month period (or such lesser number of completed calendar quarters, if applicable).

SEVEN HILLS REALTY TRUST

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(dollars in thousands, except per share data)

No incentive fee shall be payable with respect to any calendar quarter unless Core Earnings for the 12 most recently completed calendar quarters (or such lesser number of completed calendar quarters, if applicable) in the aggregate is greater than zero.

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Business Opportunities.

Under our management agreement, we and Tremont have agreed that for so long as Tremont is managing us, neither Tremont nor any of its affiliates, including RMR, will sponsor or manage any other publicly traded REIT that invests primarily in first mortgage loans secured by middle market and transitional CRE located in the United States, unless such activity is approved by our Independent Trustees.

However, our management agreement does not prohibit Tremont or its affiliates (including RMR) or their respective directors, trustees, officers, employees or agents from competing or providing services to other persons, funds and investment vehicles, private REITs or other entities that may compete with us, including, among other things, with respect to the origination, acquisition, making, arranging or managing of first mortgage loans secured by middle market or transitional CRE or other investments like those we intend to make.

Under our management agreement, we and Tremont have agreed that for so long as Tremont is managing us, neither Tremont nor any of its affiliates, including RMR, will sponsor or manage any other publicly traded REIT that invests primarily in first mortgage loans secured by middle market transitional CRE located in the United States, unless such activity is approved by our Independent Trustees.

However, our management agreement does not prohibit Tremont or its affiliates (including RMR) or their respective directors, trustees, officers, employees or agents from competing or providing services to other persons, funds and investment vehicles, private REITs or other entities that may compete with us, including, among other things, with respect to the origination, acquisition, making, arranging or managing of first mortgage loans secured by middle market transitional CRE or other investments like those we intend to make.

Because Tremont and RMR will not be prohibited from competing with us in all circumstances, and RMR provides management services to other companies, conflicts of interest exist with regard to the allocation of investment opportunities and for the time and attention of Tremont, RMR and their personnel.

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RMR provides certain shared services to Tremont that are applicable to us, and we reimburse Tremont or pay RMR for the amounts Tremont or RMR pays for those services.

One of our Managing Trustees and Chair of our Board of Trustees, Adam D.

Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., and he is also a director of Tremont, the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc., and an officer and employee of RMR.

One of our Managing Trustees and Chair of our Board of Trustees, Adam Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., and he is also a director of Tremont, the chair of the board of directors, a managing director and the president and chief executive officer of RMR Inc., and an officer and employee of RMR.

Jordan, our other Managing Trustee, is a director and the president and chief executive officer of Tremont.

Jordan is also an officer of RMR Inc.

Jordan is also a managing director and an officer of RMR Inc.

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

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.

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

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

Jordan and certain of our other officers and officers of Tremont, serve as managing trustees or officers of certain of these companies.

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See Note 8 for further information regarding our management agreement.

As of December 31, 2024, Tremont owned 1,708,058 of our common shares, or approximately 11.5 % of our outstanding common shares, and Mr.

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

RMR provides certain shared services to Tremont which are applicable to us, and we reimburse Tremont or pay RMR for the amounts Tremont or RMR pays for those services.

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We recognized property management and construction supervision fees of $ 85 and $ 71 during the years ended December 31, 2025 and 2024, respectively, related to real estate owned.

Purchase of Mortgage Loans.

On November 10, 2025 we purchased from RMR two floating rate first mortgage loans that were originated in 2024 and secured by hotel and industrial properties in Revere, MA and Wayne, PA, respectively, for an aggregate purchase price of $ 61,733 , which represented the outstanding principal balance of the loans at the time of acquisition.

Rights Offering.

On October 30, 2025, we announced our intent to commence the Rights Offering to issue 7,532,861 new common shares and to raise gross proceeds of approximately $ 65,200 .

We and Tremont entered into a backstop agreement, pursuant to which Tremont agreed to exercise its pro rata primary subscription right in full and, upon the completion of the Rights Offering, to purchase 100 % of all remaining common shares not otherwise subscribed for pursuant to all other rights holders’ primary subscription rights and over-subscription privileges, subject to the terms and conditions of the backstop agreement, or the Backstop Commitment.

Tremont did not receive any fees or other consideration in connection with the Backstop Commitment.

Through the exercise of their respective primary subscription rights, Tremont purchased 854,029 common shares, Adam Portnoy purchased 109,669 common shares and ABP Trust purchased 58,266 common shares in the Rights Offering.

The Rights Offering resulted in subscriptions for approximately 5,517,113 of our common shares, or approximately 73.2 % of the 7,532,861 common shares.

Accordingly, pursuant to the Backstop Commitment, Tremont purchased 2,015,748 common shares that remained unsubscribed upon expiration of the Rights Offering.

As of December 31, 2025, Tremont owned 4,577,835 of our common shares, or 20.3 % of our outstanding common shares, and Mr.

Portnoy beneficially owned (including through Tremont and ABP Trust) 5,085,332 of our common shares, or 22.5 % of our outstanding common shares.

SEVEN HILLS REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended.

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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 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):

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12/16/2027 12/16/2029 I/O — 39,800 39,475

5 Retail, Brandywine, MD S + 3.85 %

03/29/2025 03/29/2027 I/O — 42,200 42,254

5 Multifamily, Oxford, MS S + 2.95 %

11/26/2027 11/26/2029 I/O — 42,000 41,706

7 Multifamily, Farmington Hills, MI S + 3.15 %

6 Multifamily, College Park, MD S + 2.95 %

11/12/2028 11/12/2030 I/O — 27,911 27,531

8 Office, Downers Grove, IL S + 5.00 %

7 Hotel, Revere, MA S + 3.95 %

07/01/2026 07/01/2029 I/O — 37,000 37,037

8 Mixed Use, New York, NY S + 3.20 %

09/05/2027 09/05/2030 I/O — 34,500 34,292

9 Multifamily, San Marcos, TX S + 3.25 %

01/14/2028 01/14/2030 I/O — 28,228 27,992

10 Hotel, Anaheim, CA S + 4.00 %

11/29/2026 11/29/2028 I/O — 29,000 28,988

10 Industrial, Fountain Inn, SC S + 4.25 %

11 Industrial, San Antonio, TX S + 3.40 %

06/13/2028 06/13/2030 I/O — 22,800 22,549

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07/01/2026 07/01/2026 I/O — 26,569 26,636

12 Multifamily, Las Vegas, NV S + 3.30 %

13 Office, Downers Grove, IL S + 5.00 %

05/22/2026 05/22/2026 I/O — 26,500 26,640

14 Industrial, Wayne, PA S + 4.25 %

07/18/2027 07/18/2029 I/O — 24,733 24,733

15 Industrial, Fayetteville, GA S + 3.35 %

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10/27/2026 10/27/2026 I/O — 24,417 24,415

15 Industrial, Fontana, CA S + 3.75 %

11/18/2025 11/18/2026 I/O — 22,000 21,934

17 Industrial, Los Angeles, CA S + 3.40 %

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12/09/2026 12/09/2026 I/O — 23,530 23,593

18 Office, Bellevue, WA (6)

19 Industrial, Fontana, CA S + 3.75 %

11/18/2026 11/18/2026 I/O — 20,470 20,418

19 Multifamily, Newport News, VA S + 3.15 %

20 Office, Bellevue, WA S + 2.85 %

04/07/2028 04/07/2029 I/O — 20,245 20,245

20 Retail, Sandy Springs, GA S + 3.75 %

21 Multifamily, Waco, TX S + 3.35 %

03/06/2028 03/06/2030 I/O — 18,500 18,346

22 Multifamily, Boise, ID S + 3.50 %

06/26/2028 06/26/2030 I/O — 18,000 17,857

23 Multifamily, Newport News, VA S + 3.15 %

04/25/2027 04/25/2029 I/O — 15,126 15,080

24 Hotel, Lake Mary, FL S + 4.00 %

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(4) As of December 31, 2025, none of our borrowers were delinquent in payment.

(5) In January 2025, the maturity date of this loan was extended to January 28, 2026.

(6) In January 2025, the maturity date of this loan was extended to April 7, 2025.

(5) In January 2026, the maturity date of this loan was extended to March 31, 2026.

(6) For further information regarding our allowance for credit losses, see Note 3 to our Consolidated Financial Statements.

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Net amortization of deferred fees 2,697

Decrease in allowance for credit losses

Deductions during the year:

Transfer to real estate owned

Deferred fees ( 2,509 )

Cumulative effect adjustment upon adoption of the CECL model ( 4,893 )

Increase in allowance for credit losses ( 3,698 )

Balance as of December 31, 2024 601,842

Additions during the year:

Originations 133,817

Originations and acquisitions 211,198

Additional funding 6,578

Deferred interest capitalized to loans held for investment 1,008

Purchase discount accretion 37

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February 18, 2026

/s/ Fernando Diaz

Chief Financial Officer and Treasurer February 18, 2025

Fernando Diaz

(principal financial and accounting officer)

/s/ Matthew C.

Brown Chief Financial Officer and Treasurer February 18, 2026

Brown (principal financial and accounting officer)

Danner Independent Trustee February 18, 2026

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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-K

Item 9A. Controls and Procedures