Q3 2024 Seven Hills Realty Trust Earnings Call

Fernando Diaz; Chief Financial Officer, Treasurer; Seven Hills Realty Trust

Jason Weaver; Analyst; JonesTrading Institutional Services LLC

Operator

Good morning and welcome to Seven Hills Realty Trust third quarter, 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions to ask a question. You may press star then one on your telephone keypad to withdraw your question. Please press star. Then two. Please note this event is being recorded. I would now like to turn the call over to Melissa mccarthy, Manager of Investor Relations. Please go ahead.

Thank you. Good morning. Joining me on today's call are Tom Lawrence Lee, President and Chief Investment Officer, Fernando Diaz, Chief Financial Officer and treasurer and Jared Lewis Vice President.
Today's call includes a presentation by management followed by a question and answer session with analysts. Please note that the recording retransmission and transcription of today's conference call is prohibited without the prior written consent of the company.
Also note that today's conference call contains forward-looking statements within the meaning of the private securities litigation Reform Act of 1,995 and other securities laws. These forward-looking statements are based on sevenhills beliefs and expectations as of today, October 29th, 2024. And actual results may differ materially from those that we project.
The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call.
Additional information concerning factors that could cause those differences is contained in our findings with the with the Securities and Exchange Commission or SEC which can be accessed from the SECs website.
Investors are cautious not to place undue reliance upon any poor looking famous.
In addition, we will be discussing nongaap financial numbers during this call including distributable earnings and distributable earnings per share.
A reconciliation of GAAP to Nongaap financial measures can be found in our earnings release presentation which can be found on our website at sev nre dotcom. With that, I will now send the call over to Tom.

Thank you, Melissa and good morning everyone on today's call. I will begin with an overview of our loan portfolio and third quarter performance before turning it over to Jared to discuss the macro perspective and its impact on our pipeline. Fernando will then review our financial results before we open the call for questions.
Last evening, we reported third quarter results highlighted by distributable earnings per share that were involved. Analyst consensus estimates our continued strong performance is a testament to the quality and strength of our loan book and as a direct result of our disciplined underwriting originations and asset management teams with ample liquidity on hand and an increasingly robust pipeline. We look forward to continuing to pursue attractive lending opportunities that further diversify and grow our portfolio.
Turning to a few highlights from the third quarter, we delivered distributable earnings of 36¢ per share. The credit profile of our loan portfolio remains stable with an overall weighted average risk rating of 3.1 with no loans in default and no nonaccrual loans.
We received three loan payoffs totaling $70.6 million demonstrating a consistent ability for our well capitalized sponsors to be refinanced in the current environment and we furthered our loan production building one new commitment totaling $16 million.
Turning to our third quarter portfolio activity, our conservatively underwritten portfolio continues to experience repayments across a range of property types. During the quarter, we received the repayment of our two Portland Oregon multifamily loans totaling $33.1 million in our Auburn University student housing loan for $37.5 million. We also closed one new loan with a repeat borrower of ours totaling $16 million secured by a recently constructed hotel located in Greater Orlando.
Turning to our loan book as of September 30th 7 Hills portfolio remained 100% invested in floating rate loans which consisted of 21st mortgages with an average loan size of $30 million and total commitments of $594 million which is a decrease of approximately 9% or $58 million from last quarter, future fundings remain consistent and approximately 6% of total commitments.
Our investments have a weighted average coupon of 8.9% and an all in yield of 9.3% in aggregate. The portfolio has a weighted average maximum maturity of 2.5 years when including extension options and a stable overall credit profile with an average risk rating of 3.1 and a weighted average loan to value a close of 68%.
None of our loans are rated five.
We continue to make progress diversifying our loan book.
As of quarter end, our office exposure was 30%. A slight uptick from last quarter due to the three loan payoffs received in the third quarter. Yet our office exposure remains greatly reduced from a high of 40% last year and we remained focused on decreasing our office exposure further as we grow our portfolio. More importantly, all of our office loans remain current and continue to be supported by their sponsors.
Multifamily continues to be one of our largest property types of 28% this quarter and the balance of our portfolio is comprised of retail, industrial and hotel loans.
Our loans are also diversified by geographic region with most properties located in the south and west from a capital perspective, our lending partners remain very supportive of our business and we recently extended two of our three repurchase facilities. We extended the city facility for two years until September of 2026 and our Wells Fargo facility until March of 2026.
With that, I'll now turn the call over to Jared.