sevn-20221026
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  UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K
 
CURRENT REPORT PURSUANT
TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT of 1934
Date of report (Date of earliest event reported): October 26, 2022
Seven Hills Realty Trust
(Exact Name of Registrant as Specified in Its Charter)
Maryland
(State or other Jurisdiction of Incorporation)
001-3438320-4649929
(Commission File Number)(IRS Employer Identification Number)
Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts    02458-1634
        (Address of Principal Executive Offices)                 (Zip Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Shares of Beneficial InterestSEVNThe Nasdaq Stock Market LLC
 (617) 332-9530
(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:  
☐             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐


Item 2.02.  Results of Operations and Financial Condition.
On October 26, 2022, Seven Hills Realty Trust, or the Company, issued a press release regarding the Company’s results of operations and financial condition for the quarter and nine months ended September 30, 2022 and also provided certain supplemental operating and financial data for the quarter and nine months ended September 30, 2022. Copies of the Company’s press release and supplemental operating and financial data are furnished as Exhibits 99.1 and 99.2 hereto, respectively.
Item 9.01.  Financial Statements and Exhibits.
(d)          Exhibits
99.1 Press release dated October 26, 2022
99.2 Third Quarter 2022 Supplemental Operating and Financial Data
104 Cover Page Interactive Data File. (Embedded within the inline XBRL document.)


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SEVEN HILLS REALTY TRUST
Date:October 26, 2022By:/s/ Tiffany R. Sy
Name:Tiffany R. Sy
Title:Chief Financial Officer and Treasurer


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Exhibit 99.1
FOR IMMEDIATE RELEASE        
Seven Hills Realty Trust Announces Third Quarter 2022 Results
Net Income Per Share of $0.35, a 13% Sequential Quarter Increase
Adjusted Distributable Earnings Per Share of $0.27, a 13% Sequential Quarter Increase
Aggregate Loan Commitments of $763 Million
____________________________________________________________________________________________________
Newton, MA (October 26, 2022): Seven Hills Realty Trust (Nasdaq: SEVN) today announced financial results for the quarter and nine months ended September 30, 2022.
Tom Lorenzini, President of SEVN, made the following statement:
"We delivered another solid quarter of earnings growth supported by continued investment activity and the positive impact of rising interest rates on our floating rate loan portfolio. During the third quarter, earnings increased sequentially, our quarterly distribution remained well covered and total committed capital increased to $763 million.

We continue to closely monitor the ongoing macroeconomic changes related to rising inflation, higher interest rates and recessionary concerns. Our portfolio's credit quality remains strong, with all of our loans current on debt service and our weighted average risk rating below three. While SEVN has ample cash on hand and is modestly leveraged, we are taking a measured approach to new loan originations, with one loan closed during the quarter and one loan currently in diligence. In the meantime, SEVN's earnings should continue to benefit in the quarters ahead from expected future increases in interest rates."

Quarterly Results
Three Months Ended
(dollars in thousands, except per share data)
September 30, 2022June 30, 2022September 30, 2021
Income from investments, net
$7,799$7,498$4,022
Net income
$5,176$4,578$2,484
Net income per diluted share
$0.35$0.31$0.24
Adjusted Distributable Earnings
$3,943$3,490$2,484
Adjusted Distributable Earnings per diluted share
$0.27$0.24$0.24
Book value per common share
$18.24$18.22$16.32
Adjusted Book Value per common share (1)
$18.80$18.89$18.83
(1)Adjusted Book Value per common share is a non-GAAP financial measure that excludes the impact of the unaccreted purchase discount resulting from the excess of the fair value of the loans Tremont Mortgage Trust, or TRMT, then held for investment and which SEVN acquired as a result of the merger with TRMT on September 30, 2021, or the Merger, over the consideration SEVN paid in the Merger. The purchase discount of $36.4 million was allocated to each acquired loan and is being accreted into income over the remaining term of the respective loan. As of September 30, 2022, June 30, 2022 and September 30, 2021, Adjusted Book Value per common share excludes $8.2 million, or $0.56 per common share, $9.8 million, or $0.67 per common share, and $36.4 million, or $2.51 per common share, respectively, of unaccreted purchase discount.
Portfolio Summary
As of
(dollars in thousands)
September 30, 2022June 30, 2022September 30, 2021
Number of loans282822
Total loan commitments$763,076$734,883$525,885
Weighted average maximum maturity (years) 3.53.63.7
Weighted average coupon rate6.59%5.14%4.86%
Weighted average all in yield
7.10%5.64%5.43%
Weighted average floor0.55%0.61%1.01%
Weighted average risk rating2.92.73.0
Weighted average loan to value 68%68%68%

Recent Investment Activities

SEVN originated the following first mortgage loan during the three months ended September 30, 2022:
LocationProperty TypeOrigination DateCommitted Principal
Principal as of September 30, 2022
Coupon RateAll in Yield Maximum
Maturity
(date)		Loan to Value
(dollars in thousands)
Passaic, NJIndustrial09/08/2022$47,000$38,440 S + 3.85%S + 4.22%09/08/202769 %

•During the quarter ended September 30, 2022, SEVN received $19.5 million of loan repayment proceeds and in October 2022, SEVN received $22.5 million of loan repayment proceeds for an unlevered loan investment.

•In October 2022, SEVN received a loan application from a potential borrower for a first mortgage loan with a total commitment of $24.4 million to finance the acquisition of an industrial property located in Fontana, CA.

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Recent Financing Activities

•The aggregate outstanding principal balance under SEVN's secured financing facilities was $505.8 million as of September 30, 2022 and October 24, 2022.

•As of September 30, 2022, SEVN was in compliance with all covenants and other terms under its secured financing facilities.

Distributions
•On August 18, 2022, SEVN paid a quarterly distribution of $0.25 per common share, or approximately $3.7 million, to shareholders of record as of July 25, 2022.

•On October 13, 2022, SEVN declared a quarterly distribution of $0.25 per common share, or approximately $3.7 million, to shareholders of record on October 24, 2022. SEVN expects to pay this distribution on November 17, 2022.

Conference Call
At 11:00 a.m. Eastern Time on Thursday, October 27, 2022, President, Tom Lorenzini, and Chief Financial Officer and Treasurer, Tiffany Sy, will host a conference call to discuss SEVN’s third quarter 2022 financial results. The conference call telephone number is (866) 739-7850. Participants calling from outside the United States and Canada should dial (412) 317-6592. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Time on Thursday, November 3, 2022. To access the replay, dial (412) 317-0088. The replay pass code is 6097520.
A live audio webcast of the conference call will also be available in a listen-only mode on SEVN’s website, which is located at www.sevnreit.com. Participants wanting to access the webcast should visit SEVN’s website about five minutes before the call. The archived webcast will be available for replay on SEVN’s website after the call. The transcription, recording and retransmission in any way of SEVN’s third quarter conference call are strictly prohibited without the prior written consent of SEVN.
Supplemental Data
A copy of SEVN’s Third Quarter 2022 Supplemental Operating and Financial Data is available for download at SEVN’s website, www.sevnreit.com. SEVN’s website is not incorporated as part of this press release.
About Seven Hills Realty Trust
Seven Hills Realty Trust (Nasdaq: SEVN) is a real estate investment trust, or REIT, that originates and invests in first mortgage loans secured by middle market and transitional commercial real estate. SEVN is managed by Tremont Realty Capital, an affiliate of The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $37 billion in assets under management and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. For more information about SEVN, please visit www.sevnreit.com.

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Non-GAAP Financial Measures
SEVN presents Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings, Adjusted Distributable Earnings per common share and Adjusted Book Value per common share, which are considered “non-GAAP financial measures” within the meaning of the applicable rules of the Securities and Exchange Commission, or SEC.
These non-GAAP financial measures do not represent net income, net income per common share or cash generated from operating activities and should not be considered as an alternative to net income or net income per common share determined in accordance with GAAP or as an indication of SEVN’s cash flows from operations determined in accordance with GAAP, a measure of SEVN’s liquidity or operating performance or an indication of funds available for SEVN’s cash needs. In addition, SEVN’s methodologies for calculating these non-GAAP financial measures may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures; therefore, SEVN’s reported Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share may not be comparable to distributable earnings, distributable earnings per common share, adjusted distributable earnings and adjusted distributable earnings per common share, as reported by other companies.
SEVN calculates Distributable Earnings and Distributable Earnings per common share as net income and net income per common share, respectively, computed in accordance with GAAP, including realized losses not otherwise included in net income determined in accordance with GAAP, and excluding: (a) the management incentive fees earned by SEVN’s manager, if any; (b) depreciation and amortization, if any; (c) non-cash equity compensation expense; (d) unrealized gains, losses and other similar non-cash items that are included in net income for the period of the calculation (regardless of whether such items are included in or deducted from net income or in other comprehensive income under GAAP), if any; and (e) one-time events pursuant to changes in GAAP and certain non-cash items, if any. Distributable Earnings are reduced for realized losses on loan investments when amounts are deemed uncollectable.
SEVN defines Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share as Distributable Earnings and Distributable Earnings per common share, respectively, excluding the effects of certain non-recurring transactions.
Management believes that Adjusted Book Value per common share is a meaningful measure of SEVN's capital adequacy because it excludes the unaccreted purchase discount resulting from the excess of the fair value of the loans TRMT then held for investment and that SEVN acquired as a result of the Merger over the consideration SEVN paid in the Merger. Adjusted Book Value per common share does not represent book value per common share or alternative measures determined in accordance with GAAP. SEVN's methodology for calculating Adjusted Book Value per common share may differ from the methodologies employed by other companies to calculate the same or similar supplemental capital adequacy measures; therefore, SEVN's Adjusted Book Value per common share may not be comparable to the adjusted book value per common share reported by other companies.
4

In order to maintain its qualification for taxation as a REIT, SEVN is generally required to distribute substantially all of its taxable income, subject to certain adjustments, to its shareholders. SEVN believes that one of the factors that investors consider important in deciding whether to buy or sell securities of a REIT is its distribution rate. Over time, Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share may be useful indicators of distributions to SEVN's shareholders and are measures that are considered by SEVN's Board of Trustees when determining the amount of distributions. SEVN believes that Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share provide meaningful information to consider in addition to net income, net income per common share and cash flows from operating activities determined in accordance with GAAP. These measures help SEVN evaluate its performance excluding the effects of certain transactions, the variability of any management incentive fees that may be paid or payable and GAAP adjustments that SEVN believes are not necessarily indicative of SEVN’s current loan portfolio and operations. In addition, Distributable Earnings is used in determining the amount of base management and management incentive fees payable by SEVN to its manager under SEVN’s management agreement.
Please see the pages attached hereto for a more detailed statement of SEVN’s operating results and financial condition and for a reconciliation of net income and net income per common share determined in accordance with GAAP to SEVN's calculation of Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share.

5

SEVEN HILLS REALTY TRUST
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)


Three Months Ended September 30, Nine Months Ended September 30,
2022202120222021
INCOME FROM INVESTMENTS:
Interest income from investments$11,650 $4,510 $30,098 $9,566 
Purchase discount accretion1,596 — 9,167 — 
Less: interest and related expenses (5,447)(488)(10,191)(680)
Income from investments, net7,799 4,022 29,074 8,886 
OTHER EXPENSES:
Base management fees
1,064 731 3,190 2,167 
General and administrative expenses1,016 433 3,340 1,739 
Reimbursement of shared services expenses520 349 1,520 950 
Other transaction related costs— — 37 — 
Total other expenses 2,600 1,513 8,087 4,856 
Income before income taxes 5,199 2,509 20,987 4,030 
Income tax expense(23)(25)(107)(36)
Net income$5,176 $2,484 $20,880 $3,994 
Weighted average common shares outstanding - basic 14,551 10,263 14,526 10,225 
Weighted average common shares outstanding - diluted14,551 10,264 14,526 10,225 
Net income per common share - basic and diluted$0.35 $0.24 $1.43 $0.39 


6


SEVEN HILLS REALTY TRUST
RECONCILIATION OF NET INCOME TO DISTRIBUTABLE EARNINGS AND
ADJUSTED DISTRIBUTABLE EARNINGS
(amounts in thousands, except per share data)
(unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2022202120222021
Reconciliation of net income to Distributable Earnings and Adjusted Distributable Earnings:
Net income$5,176 $2,484 $20,880 $3,994 
Non-cash equity compensation expense259 — 889 181 
Non-cash accretion of purchase discount(1,596)— (9,167)— 
Exit fees collected on loans acquired in Merger (1)
104 — 104 — 
Distributable Earnings3,943 2,484 12,706 4,175 
Other transaction related costs (2)
— — 37 — 
Adjusted Distributable Earnings$3,943 $2,484 $12,743 $4,175 
Weighted average common shares outstanding - basic 14,551 10,263 14,526 10,225 
Weighted average common shares outstanding - diluted14,551 10,264 14,526 10,225 
Net income per common share - basic and diluted$0.35 $0.24 $1.43 $0.39 
Distributable Earnings per common share - basic and diluted$0.27 $0.24 $0.87 $0.41 
Adjusted Distributable Earnings per common share - basic and diluted$0.27 $0.24 $0.88 $0.41 

(1)    Exit fees collected on loans acquired in the Merger represent fees collected upon repayment of loans for which no income has previously been recognized in Distributable Earnings. In accordance with GAAP, exit fees on loans acquired in the Merger were accreted as a component of the purchase discount and were excluded from Distributable Earnings as a non-cash item. Accordingly, these exit fees have been recognized in Distributable Earnings upon collection.

(2)    Other transaction related costs include expenses related to the Merger.




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SEVEN HILLS REALTY TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(unaudited)


September 30,December 31,
20222021
ASSETS
Cash and cash equivalents$76,371 $26,197 
Restricted cash66 98 
Loans held for investment, net 695,154 570,780 
Prepaid expenses and other assets3,608 2,918 
Total assets $775,199 $599,993 
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, accrued liabilities and deposits$1,508 $1,561 
Secured financing facilities, net503,514 339,627 
Due to related persons1,768 1,111 
Total liabilities 506,790 342,299 
Commitments and contingencies
Shareholders' equity:
Common shares of beneficial interest, $0.001 par value, 25,000,000 shares authorized; 14,713,623 and 14,597,079 shares issued and outstanding, respectively
15 15 
Additional paid in capital 238,417 237,624 
Cumulative net income45,530 24,650 
Cumulative distributions(15,553)(4,595)
Total shareholders' equity 268,409 257,694 
Total liabilities and shareholders' equity $775,199 $599,993 

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Warning Concerning Forward-Looking Statements
This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever SEVN uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, SEVN is making forward-looking statements. These forward-looking statements are based upon SEVN’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by SEVN’s forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond SEVN’s control. For example:
•Mr. Lorenzini states that SEVN delivered another solid quarter of earnings growth supported by continued investment activity and the positive impact of rising interest rates on SEVN's floating rate loan portfolio. Mr. Lorenzini also states that during the third quarter, earnings increased sequentially, SEVN's quarterly distribution remained well covered and total committed capital increased to $763 million. These statements may imply that SEVN will experience continued growth in future periods including in its loan originations and investment income. However, SEVN operates in a highly competitive industry and its business is subject to various risks, many of which are outside its control, including the potential negative impact on the CRE lending market as a result of inflation, high interest rates, geopolitical risks and possible economic recession. These risks and other factors may prevent SEVN from successfully closing additional loans, executing its business plans and realizing its investment objectives and increasing or maintaining its current earnings. SEVN's quarterly distribution coverage may decline if these risks are realized or for other reasons.

•Mr. Lorenzini states that SEVN's credit quality remains strong, with all loans current on debt service and the weighted average risk rating below three. These statements may imply that SEVN’s loans will remain current. However, SEVN's borrowers' and their tenants' businesses are subject to risks, including those related to the current economic conditions, including inflation, high interest rates, geopolitical risks and possible economic recession. As a result of these or other factors, SEVN’s loans may not continue to remain current and the weighted average portfolio risk rating could increase.

•Mr. Lorenzini states that SEVN is modestly leveraged. This statement may imply that SEVN will maintain its current leverage profile. However, SEVN may increase its leverage in the future, whether as a result of operational or financial performance or other reasons.

•Mr. Lorenzini states that SEVN is taking a measured approach to new loan originations, with one closing during the quarter and one loan currently in diligence. This may result in SEVN pursuing and completing fewer loan originations for an indefinite period. Additionally, SEVN's pending and prospective loan and application may not be completed or become a loan, may be delayed or its terms may change. Further, once SEVN invests or commits its remaining capital, its ability to continue to grow and fund loans will be subject to its ability to obtain additional cost-effective capital or to redeploy proceeds from repayments of its loan investments. Additionally, any growth of its loan portfolio may not benefit SEVN if, for example, SEVN does not realize the returns it expects from that growth.

9

•Mr. Lorenzini states that SEVN's earnings should continue to benefit in the quarters ahead from expected future increases in interest rates. This statement may imply that SEVN will experience continued growth in its investment income and Distributable Earnings, resulting in continued or increased distributions to SEVN's shareholders. However, SEVN's business is subject to various risks, including interest rate risks that could cause SEVN's interest costs to increase to a level that may prevent SEVN from realizing its business objectives. In addition, as SEVN's loan investments are repaid, it may not be able to reinvest those amounts in loans that provide it with spreads similar to those it currently expects. Further, the timing, amount and form of any future distributions will be determined at the discretion of SEVN's Board of Trustees and will depend on various factors that its Board of Trustees deems relevant, including SEVN's historical and projected income, its Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share, the then current and expected needs and availability of cash to pay its obligations and fund its investments, distributions which may be required to be paid to maintain SEVN's qualification for taxation as a REIT, limitations on distributions contained in SEVN's financing arrangements and other factors deemed relevant by SEVN's Board of Trustees. Accordingly, any future distributions may be increased, decreased, suspended or discontinued, and there is no assurance as to the rate at which future dividends, if any, will be paid.

The information contained in SEVN's filings with the SEC, including under “Risk Factors” in SEVN's periodic reports, or incorporated therein, identifies other important factors that could cause SEVN’s actual results to differ materially from those stated in or implied by SEVN’s forward-looking statements. SEVN’s filings with the SEC are available on the SEC’s website at www.sec.gov.

You should not place undue reliance upon forward-looking statements.

Except as required by law, SEVN does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.


Contact:
Kevin Barry
Director, Investor Relations
(617) 796-7651
(END)
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1 THIRD QUARTER 2022 Supplemental Operating and Financial Data ALL AMOUNTS IN THIS REPORT ARE UNAUDITED. Exhibit 99.2

 
2 Supplemental Q3 2022 2 Table of Contents CORPORATE INFORMATION Company Profile ...................................................................................................................................................................... 3 Investor Information and Research Coverage ................................................................................................................... 4 Company Highlights ............................................................................................................................................................... 5 PORTFOLIO OVERVIEW Third Quarter 2022 Highlights .............................................................................................................................................. 6 Loan Portfolio Summary ......................................................................................................................................................... 7 Portfolio Growth and Diversification ................................................................................................................................... 8 Portfolio Credit Quality .......................................................................................................................................................... 9 Capital Structure Overview .................................................................................................................................................... 10 Interest Rate Sensitivity ........................................................................................................................................................... 11 APPENDIX Loan Investment Details ......................................................................................................................................................... 13 Purchase Discount Details ..................................................................................................................................................... 15 Condensed Consolidated Balance Sheets ......................................................................................................................... 16 Condensed Consolidated Statements of Operations ...................................................................................................... 17 Reconciliation of Net Income to Distributable Earnings and Adjusted Distributable Earnings ............................... 18 WARNING CONCERNING FORWARD-LOOKING STATEMENTS ................................................................................................ 19 NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS Non-GAAP Financial Measures ............................................................................................................................................. 20 Other Measures and Definitions .......................................................................................................................................... 21 Please refer to Non-GAAP Financial Measures and Other Measures and Definitions for terms used throughout this document.

 
3 Supplemental Q3 2022 3 Management: Our manager, Tremont Realty Capital LLC, or Tremont, is registered with the Securities and Exchange Commission, or SEC, as an investment adviser. Tremont is owned by The RMR Group (Nasdaq: RMR). RMR is an alternative asset management company that is focused on CRE and related businesses. RMR primarily provides management services to publicly traded real estate companies, privately held real estate funds and real estate related operating businesses. As of September 30, 2022, RMR had over $37 billion of real estate assets under management and the combined RMR managed companies had approximately $12 billion of annual revenues, 2,100 properties and over 38,000 employees. We believe Tremont’s relationship with RMR provides us with a depth of market knowledge that may allow us to identify high quality investment opportunities and to evaluate them more thoroughly than many of our competitors, including other commercial mortgage REITs. We also believe RMR’s broad platform provides us with access to RMR’s extensive network of real estate owners, operators, intermediaries, sponsors, financial institutions and other real estate related professionals and businesses with which RMR has historical relationships. We also believe that Tremont provides us with significant experience and expertise in investing in middle market and transitional CRE. The Company: Seven Hills Realty Trust, or SEVN, we, our or us, is a real estate investment trust, or REIT, that focuses on originating and investing in floating rate first mortgage loans secured by middle market and transitional commercial real estate, or CRE. We define middle market CRE as commercial properties that have values up to $100.0 million and transitional CRE as commercial properties subject to redevelopment or repositioning activities that are expected to increase the value of the properties. Corporate Headquarters: Two Newton Place 255 Washington Street, Suite 300 Newton, MA 02458-1634 (617) 332-9530 Stock Exchange Listing: Nasdaq Trading Symbol: Common Shares: SEVN Key Data (as of and for the three months ended September 30, 2022): (dollars in thousands) Income from investments, net $ 7,799 Net income $ 5,176 Adjusted Distributable Earnings $ 3,943 Loans held for investment, net $ 695,154 Total assets $ 775,199 Company Profile RETURN TO TABLE OF CONTENTSCORPORATE INFORMATION

 
4 Supplemental Q3 2022 4 Investor Information and Research Coverage Board of Trustees Equity Research Coverage Barbara D. Gilmore Phyllis M. Hollis William A. Lamkin JMP Securities Independent Trustee Independent Trustee Independent Trustee Chris Muller, CFA (212) 906-3559 Joseph L. Morea Jeffrey P. Somers [email protected] Lead Independent Trustee Independent Trustee Matthew P. Jordan Adam D. Portnoy Jones Trading Institutional Services, LLC Managing Trustee Chair of the Board & Managing Trustee Jason M. Stewart (646) 465-9932 Executive Officers [email protected] Thomas J. Lorenzini Tiffany R. Sy President Chief Financial Officer and Treasurer Contact Information Investor Relations Inquiries SEVN is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding SEVN’s performance made by these analysts do not represent opinions, estimates or forecasts of SEVN or its management. SEVN does not by its reference above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts. Seven Hills Realty Trust Financial, investor and media inquiries should be directed to: Two Newton Place Kevin Barry, Director, Investor Relations 255 Washington Street, Suite 300 at (617) 332-9530 or [email protected] (617) 796-8253 [email protected] www.sevnreit.com CORPORATE INFORMATION RETURN TO TABLE OF CONTENTS

 
5 Supplemental Q3 2022 5 Company Highlights CORPORATE INFORMATION 28 Floating Rate First Mortgage Loans SEVN Nasdaq Listed $763M Total Loan Commitments 100% Loans Current on Debt Service $682M Total Debt Capacity 68% Weighted Average Loan to Value 1.9x Debt to Equity Ratio 2.9 Weighted Average Portfolio Risk Rating 0.5x Price to Adjusted Book Value RETURN TO TABLE OF CONTENTS Student Housing Acquisition Financing Starkville, MS (As of September 30, 2022)

 
6 Supplemental Q3 2022 6 Financial Results Investment Activity Portfolio Update Capitalization • Generated net income of $5.2 million, or $0.35 per diluted share, and Adjusted Distributable Earnings of $3.9 million, or $0.27 per diluted share. • Book value per common share of $18.24 and Adjusted Book Value per common share of $18.80. • Declared quarterly dividend of $0.25 per common share. • Portfolio of 28 first mortgage loans with an aggregate total loan commitment of $763.1 million. • Portfolio remains diversified by property type and geographic location. • All loans current on debt service and credit quality remains strong at a weighted average risk rating of 2.9. • Closed one new loan secured by an industrial property with a total commitment of $47.0 million and a coupon rate of 6.60%. • One loan secured by a retail property with an aggregate principal of $19.5 million was fully repaid during the quarter. • Outstanding principal balance of $505.8 million under our Secured Financing Facilities. • Continued to improve the efficiency of our equity by increasing debt to equity ratio to 1.9x at September 30, 2022 from 1.7x at June 30, 2022. Third Quarter 2022 Highlights PORTFOLIO OVERVIEW RETURN TO TABLE OF CONTENTS (As of and for the three months ended September 30, 2022, unless otherwise noted)

 
7 Supplemental Q3 2022 7 $682.3 $682.3 $720.7 $705.5 $705.5 $38.4 $4.3 $19.5$52.7 $57.7 Q2 2022 Portfolio Originations Fundings Repayments Q3 2022 Portfolio Third Quarter 2022 Portfolio Activity (dollars in millions) Total Loan Commitments Unfunded Commitments (dollars in thousands) Third Quarter Originations Total Portfolio As of September 30, 2022 Number of loans 1 28 Average loan commitment $47,000 $27,253 Total loan commitments $47,000 $763,076 Unfunded loan commitments $8,560 $57,712 Principal balance $38,440 $705,460 Weighted average coupon rate 6.60% 6.59% Weighted average All In Yield 6.97% 7.10% Weighted average Maximum Maturity 5.0 3.5 Weighted average LTV 69% 68% Weighted average floor 0.25% 0.55% Loans with active floors 0% 0% Weighted average risk rating 3.0 2.9 Principal Balance Loan Portfolio Summary $763.1 PORTFOLIO OVERVIEW RETURN TO TABLE OF CONTENTS $734.9

 
8 Supplemental Q3 2022 8 Retail East: 15% South: 24% West: 26% Midwest: 35% Office: 39% Multifamily: 28% Retail: 19% Industrial: 14% Geographic Region (2) Property Type (2) (dollars in millions) Portfolio Growth and Diversification (1) Includes loans originated by Tremont Mortgage Trust, or TRMT, and acquired by SEVN on September 30, 2021, as a result of the merger with TRMT, or the Merger. (2) Based on principal balance of loans held for investment as of September 30, 2022. $55.5 $77.0 $128.4 $157.3 $91.2 $51.6 $38.4 $10.0 $11.8 $11.1 $7.4 $4.6 $8.9 $8.6 $65.5 $88.8 $139.5 $164.7 $95.8 $60.5 $47.0 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Total Loan Commitments Unfunded Commitments Principal Balance Loan Originations by Quarter (1) PORTFOLIO OVERVIEW Loan Count 6 6 3 2 RETURN TO TABLE OF CONTENTS 32 1

 
9 Supplemental Q3 2022 9 Loan Count 14% 13% 31% 35% 7% 30% - 60% 61% - 65% 66% - 70% 71% - 75% 76% - 80% Loan to Value (1) % of Portfolio Portfolio Credit Quality Loan Count 4 2 9 11 2 0 9 15 4 0 —% 28% 57% 15% —% Lower Risk (1) Average Risk (2) Acceptable Risk (3) Higher Risk (4) Impaired/Loss Likely (5) Risk Rating Distribution (1) % of Portfolio Weighted Average LTV: 68% Weighted Average Risk Rating: 2.9 (1) Percentage of portfolio based on principal balance of loans held for investment as of September 30, 2022. PORTFOLIO OVERVIEW RETURN TO TABLE OF CONTENTS

 
10 Supplemental Q3 2022 10 CA PI TA L ST RU CT UR E OV ER VI EW Secured Financing Facilities Maximum Facility Size Principal Balance Unused Capacity Weighted Average Advance Rate Weighted Average Coupon Rate Weighted Average Remaining Maturity (1) (dollars in thousands) Master Repurchase Facilities $ 532,000 $ 394,726 $ 137,274 74.0% 4.94% 1.5 Asset Specific Financing 150,000 111,105 38,895 74.8% 4.73% 2.5 Total $ 682,000 $ 505,831 $ 176,169 74.2% 4.89% 1.7 Capital Structure Detail (1) The weighted average remaining maturity of our Master Repurchase Facilities is determined using the earlier of the underlying loan maturity date and the respective repurchase agreement maturity date. The weighted average remaining maturity of Asset Specific Financing is determined using the underlying loan investment maturity date. (2) Adjusted Book Value per common share excludes the impact of the unaccreted purchase discount resulting from the excess fair value over the purchase price of the loans held for investment acquired in the Merger. The purchase discount of $36.4 million was allocated to each acquired loan held for investment and is accreted into income over the remaining term of the respective loan held for investment. As of September 30, 2022, the unaccreted purchase discount was $8.2 million. Secured Financing Facilities, 65% Equity, 35% Capital Structure Overview Capital Structure Composition RETURN TO TABLE OF CONTENTS PORTFOLIO OVERVIEW RETURN TO TABLE OF CONTENTS (As of September 30, 2022) Reconciliation of Book Value per Common Share to Adjusted Book Value per Common Share (amounts in thousands, except per share data) Shareholders’ equity $ 268,409 Total outstanding common shares 14,714 Book value per common share 18.24 Unaccreted purchase discount per common share 0.56 Adjusted Book Value per common share (2) $ 18.80

 
11 Supplemental Q3 2022 11 The above table illustrates the incremental impact on our annual income from investments, net, due to hypothetical increases in LIBOR and SOFR, taking into consideration our borrowers’ interest rate floors as of September 30, 2022. The results in the table above are based on our loan portfolio and debt outstanding as of September 30, 2022. Any changes to the mix of our investments or debt outstanding could impact the interest rate sensitivity analysis. This illustration is not meant to forecast future results. Interest Rate Increases $0.01 $0.04 $0.08 $0.11 $0.15 $0.18 $0.22 $0.25 25 bps 50 bps 75 bps 100 bps 125 bps 150 bps 175 bps 200 bps Interest Rate Sensitivity Estimated Annual Increase in Net Interest Income Per Share PORTFOLIO OVERVIEW RETURN TO TABLE OF CONTENTS • Weighted average interest rate floor of total portfolio of 0.55%. • None of our loans have active interest rate floors. • No interest rate floors on advances under our Secured Financing Facilities. (As of September 30, 2022)

 
12 Supplemental Q3 2022 12APPENDIX Appendix

 
13 Supplemental Q3 2022 13 First mortgage loans as of September 30, 2022: Location Property Type Origination Date Committed Principal Amount Principal Balance (1) Coupon Rate All in Yield Maturity Date Maximum Maturity Date LTV Risk Rating St. Louis, MO Office 12/19/2018 $ 29,500 $ 29,367 L + 3.25% L + 3.74% 12/19/2022 12/19/2023 72% 2 Yardley, PA Office 12/19/2019 16,500 15,251 L + 4.58% L + 6.15% 12/19/2023 12/19/2024 75% 4 Allentown, PA Industrial 01/24/2020 9,911 9,911 L + 3.50% L + 4.03% 01/24/2023 01/24/2025 67% 2 Dublin, OH Office 02/18/2020 22,820 22,507 S + 3.75% S + 4.95% 02/18/2023 02/18/2023 33% 2 Downers Grove, IL Office 09/25/2020 30,000 29,500 L + 4.25% L + 4.69% 11/25/2023 11/25/2024 67% 3 Los Angeles, CA (2) Retail 12/17/2020 24,600 22,061 L + 4.25% L + 5.02% 12/17/2022 12/17/2024 67% 2 Aurora, IL Office / Industrial 12/18/2020 17,460 15,299 L + 4.35% L + 5.03% 12/18/2023 12/18/2024 73% 2 Olmsted Falls, OH Multifamily 01/28/2021 54,575 46,084 L + 4.00% L + 4.64% 01/28/2024 01/28/2026 63% 3 Colorado Springs, CO Office / Industrial 04/06/2021 35,000 30,210 L + 4.50% L + 5.05% 04/06/2024 04/06/2025 73% 2 Westminster, CO Office 05/25/2021 15,250 14,020 L + 3.75% L + 4.19% 05/25/2024 05/25/2026 66% 2 Plano, TX Office 07/01/2021 27,385 25,781 L + 4.75% L + 5.17% 07/01/2024 07/01/2026 78% 3 Portland, OR Multifamily 07/09/2021 19,687 19,687 L + 3.57% L + 3.97% 07/09/2024 07/09/2026 75% 3 Portland, OR Multifamily 07/30/2021 13,400 13,400 L + 3.57% L + 3.98% 07/30/2024 07/30/2026 71% 4 Seattle, WA Multifamily 08/16/2021 12,500 12,317 L + 3.55% L + 3.89% 08/16/2024 08/16/2026 70% 3 Dallas, TX Office 08/25/2021 50,000 43,450 L + 3.25% L + 3.61% 08/25/2024 08/25/2026 72% 4 Loan Investment Details (dollars in thousands) APPENDIX RETURN TO TABLE OF CONTENTS (dollars in thousands)

 
14 Supplemental Q3 2022 14 First mortgage loans as of September 30, 2022: Location Property Type Origination Date Committed Principal Amount Principal Balance (1) Coupon Rate All in Yield Maturity Date Maximum Maturity Date LTV Risk Rating Sandy Springs, GA Retail 09/23/2021 16,488 15,017 L + 3.75% L + 4.11% 09/23/2024 09/23/2026 72% 3 Carlsbad, CA Office 10/27/2021 24,750 23,825 L + 3.25% L + 3.58% 10/27/2024 10/27/2026 78% 3 Bellevue, WA Office 11/05/2021 21,000 20,000 L + 3.85% L + 4.19% 11/05/2024 11/05/2026 68% 3 Ames, IA Multifamily 11/15/2021 18,000 17,820 L + 3.80% L + 4.13% 11/15/2024 11/15/2026 71% 2 Downers Grove, IL Office 12/09/2021 23,530 23,530 L + 4.25% L + 4.57% 12/09/2024 12/09/2026 72% 3 West Bloomfield, MI Retail 12/16/2021 42,500 37,453 L + 3.85% L + 4.66% 12/16/2023 12/16/2024 59% 3 Summerville, SC Industrial 12/20/2021 35,000 35,000 L + 3.50% L + 3.82% 12/20/2024 12/20/2026 70% 2 Delray Beach, FL Retail 03/18/2022 16,000 14,833 S + 4.25% S + 4.92% 03/18/2024 03/18/2026 56% 3 Starkville, MS Multifamily 03/22/2022 37,250 36,599 S + 4.00% S + 4.33% 03/22/2025 03/22/2027 70% 4 Brandywine, MD Retail 03/29/2022 42,500 42,200 S + 3.85% S + 4.25% 03/29/2025 03/29/2027 62% 3 Farmington Hills, MI Multifamily 05/24/2022 31,520 28,520 S + 3.15% S + 3.50% 05/24/2025 05/24/2027 75% 3 Las Vegas, NV Multifamily 06/10/2022 28,950 23,378 S + 3.30% S + 4.07% 06/10/2025 06/10/2027 60% 3 Passaic, NJ Industrial 09/08/2022 47,000 38,440 S + 3.85% S + 4.22% 09/08/2025 09/08/2027 69% 3 Total/weighted average $ 763,076 $ 705,460 + 3.83% + 4.34% 68% 2.9 Loan Investment Details (Continued) (dollars in thousands) APPENDIX RETURN TO TABLE OF CONTENTS (1) The principal balance excludes the impact of the $8,224 unaccreted purchase discount related to the Merger. (2) This loan was repaid in October 2022.

 
15 Supplemental Q3 2022 15 (1) The estimate of purchase discount accretion is based on information as of September 30, 2022 and is subject to change as a result of early repayments or modifications of loans accounted for as extinguishments. Purchase Discount Details (dollars in millions) The fair value of the loans acquired in the Merger exceeded the purchase price of the loans. In accordance with U.S. generally accepted accounting principles, or GAAP, a purchase discount is recorded for the difference between the fair value and purchase price of the loans acquired. The purchase discount is accreted into income over the remaining terms of the acquired loans. Purchase Discount Fair value of TRMT loans acquired in the Merger  $ 205.6 Less: Purchase price of TRMT loans acquired in the Merger 169.2 Purchase discount as of September 30, 2021 36.4 Less: Accumulated accretion of purchase discount as of September 30, 2022 (28.2) Remaining purchase discount to be accreted as of September 30, 2022 $ 8.2 Estimate of Purchase Discount Accretion $18.9 $5.9 $1.6 $1.6 $1.5 $4.4 $2.3 Q4 2021 (Actual) Q1 2022 (Actual) Q2 2022 (Actual) Q3 2022 (Actual) Q4 2022 2023 2024 (1) APPENDIX RETURN TO TABLE OF CONTENTS

 
16 Supplemental Q3 2022 16 Financial Summary September 30, 2022 December 31, 2021 ASSETS   Cash and cash equivalents $ 76,371 $ 26,197 Restricted cash 66 98 Loans held for investment, net 695,154 570,780 Prepaid expenses and other assets 3,608 2,918 Total assets $ 775,199 $ 599,993 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable, accrued liabilities and deposits $ 1,508 $ 1,561 Secured financing facilities, net 503,514 339,627 Due to related persons 1,768 1,111 Total liabilities 506,790 342,299 Commitments and contingencies Shareholders' equity: Common shares of beneficial interest, $0.001 par value, 25,000,000 shares authorized; 14,713,623 and 14,597,079 shares issued and outstanding, respectively 15 15 Additional paid in capital 238,417 237,624 Cumulative net income 45,530 24,650 Cumulative distributions (15,553) (4,595) Total shareholders' equity 268,409 257,694 Total liabilities and shareholders' equity $ 775,199 $ 599,993 Condensed Consolidated Balance Sheets (dollars in thousands, except per share data) APPENDIX RETURN TO TABLE OF CONTENTS

 
17 Supplemental Q3 2022 17 Condensed Consolidated Statements of Operations Three Months Ended September 30, Nine Months Ended September 30,     2022 2021 2022 2021 INCOME FROM INVESTMENTS:                 Interest income from investments   $ 11,650 $ 4,510 $ 30,098 $ 9,566 Purchase discount accretion 1,596 — 9,167 — Less: interest and related expenses   (5,447) (488) (10,191) (680) Income from investments, net   7,799 4,022 29,074 8,886 OTHER EXPENSES: Base management fees   1,064 731 3,190 2,167 General and administrative expenses   1,016 433 3,340 1,739 Reimbursement of shared services expenses 520 349 1,520 950 Other transaction related costs   — — 37 — Total other expenses   2,600 1,513 8,087 4,856 Income before income taxes 5,199 2,509 20,987 4,030 Income tax expense (23) (25) (107) (36) Net income   $ 5,176 $ 2,484 $ 20,880 $ 3,994   Weighted average common shares outstanding - basic   14,551 10,263 14,526 10,225 Weighted average common shares outstanding - diluted   14,551 10,264 14,526 10,225   Net income per common share - basic and diluted   $ 0.35 $ 0.24 $ 1.43 $ 0.39 (amounts in thousands, except per share data) APPENDIX RETURN TO TABLE OF CONTENTS

 
18 Supplemental Q3 2022 18 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Reconciliation of net income to Distributable Earnings and Adjusted Distributable Earnings: Net income $ 5,176 $ 2,484 $ 20,880 $ 3,994 Non-cash equity compensation expense 259 — 889 181 Non-cash accretion of purchase discount (1,596) — (9,167) — Exit fees collected on loans acquired in Merger (1) 104 — 104 — Distributable Earnings 3,943 2,484 12,706 4,175 Other transaction related costs (2) — — 37 — Adjusted Distributable Earnings $ 3,943 $ 2,484 $ 12,743 $ 4,175 Weighted average common shares outstanding - basic   14,551 10,263 14,526 10,225 Weighted average common shares outstanding - diluted   14,551 10,264 14,526 10,225 Net income per common share - basic and diluted $ 0.35 $ 0.24 $ 1.43 $ 0.39 Distributable Earnings per common share - basic and diluted   $ 0.27 $ 0.24 $ 0.87 $ 0.41 Adjusted Distributable Earnings per common share - basic and diluted $ 0.27 $ 0.24 $ 0.88 $ 0.41 Reconciliation of Net Income to Distributable Earnings and Adjusted Distributable Earnings (amounts in thousands, except per share data) APPENDIX RETURN TO TABLE OF CONTENTS (1) Exit fees collected on loans acquired in the Merger represent fees collected upon repayment of loans for which no income has previously been recognized in Distributable Earnings. In accordance with GAAP, exit fees on loans acquired in the Merger were accreted as a component of the purchase discount and were excluded from Distributable Earnings as a non-cash item. Accordingly, these exit fees have been recognized in Distributable Earnings upon collection. (2) Other transaction related costs include expenses related to the Merger.

 
19 Supplemental Q3 2022 19 This supplemental operating and financial data may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever we use words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, we are making forward-looking statements. These forward-looking statements are based upon our present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by our forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. The information contained in our filings with the SEC, including under “Risk Factors” in our periodic reports, or incorporated therein, identifies important factors that could cause our actual results to differ materially from those stated in or implied by our forward-looking statements. Our filings with the SEC are available on the SEC's website at www.sec.gov. You should not place undue reliance upon forward-looking statements. Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise. Warning Concerning Forward-Looking Statements WARNING CONCERNING FORWARD-LOOKING STATEMENTS RETURN TO TABLE OF CONTENTS

 
20 Supplemental Q3 2022 20 ON -G AA P FI NA NC IA L ME AS UR ES A ND C ER TA IN D EF IN IT IO NS We present Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings, Adjusted Distributable Earnings per common share and Adjusted Book Value per common share, which are considered “non-GAAP financial measures” within the meaning of the applicable SEC rules. These non-GAAP financial measures do not represent net income, net income per common share or cash generated from operating activities and should not be considered as an alternative to net income or net income per common share determined in accordance with GAAP or as an indication of our cash flows from operations determined in accordance with GAAP, a measure of our liquidity or operating performance or an indication of funds available for our cash needs. In addition, our methodologies for calculating these non- GAAP financial measures may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures; therefore, our reported Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings, and Adjusted Distributable Earnings per common share may not be comparable to distributable earnings, distributable earnings per common share, adjusted distributable earnings and adjusted distributable earnings per common share, as reported by other companies. We believe that Adjusted Book Value per common share is a meaningful measure of our capital adequacy because it excludes the unaccreted purchase discount resulting from the excess of the fair value of the loans TRMT then held for investment and that we acquired as a result of the Merger over the consideration we paid in the Merger. Adjusted Book Value per common share does not represent book value per common share or alternative measures determined in accordance with GAAP. Our methodology for calculating Adjusted Book Value per common share may differ from the methodologies employed by other companies to calculate the same or similar supplemental capital adequacy measures; therefore, our Adjusted Book Value per common share may not be comparable to the adjusted book value per common share reported by other companies. In order to maintain our qualification for taxation as a REIT, we are generally required to distribute substantially all of our taxable income, subject to certain adjustments, to our shareholders. We believe that one of the factors that investors consider important in deciding whether to buy or sell securities of a REIT is its distribution rate. Over time, Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share may be useful indicators of distributions to our shareholders and are measures that are considered by our Board of Trustees when determining the amount of distributions. We believe that Distributable Earnings, Distributable Earnings per common share, Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share provide meaningful information to consider in addition to net income, net income per common share and cash flows from operating activities determined in accordance with GAAP. These measures help us to evaluate our performance excluding the effects of certain transactions, the variability of any management incentive fees that may be paid or payable and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations. In addition, Distributable Earnings is used in determining the amount of base management and management incentive fees payable by us to Tremont under our management agreement. Distributable Earnings: We calculate Distributable Earnings and Distributable Earnings per common share as net income and net income per common share, respectively, computed in accordance with GAAP, including realized losses not otherwise included in net income determined in accordance with GAAP, and excluding: (a) the management incentive fees earned by our Manager, if any; (b) depreciation and amortization, if any; (c) non-cash equity compensation expense; (d) unrealized gains, losses and other similar non-cash items that are included in net income for the period of the calculation (regardless of whether such items are included in or deducted from net income or in other comprehensive income under GAAP), if any; and (e) one-time events pursuant to changes in GAAP and certain non-cash items, if any. Distributable Earnings are reduced for realized losses on loan investments when amounts are deemed uncollectable. Adjusted Distributable Earnings: We define Adjusted Distributable Earnings and Adjusted Distributable Earnings per common share as Distributable Earnings and Distributable Earnings per common share, respectively, excluding the effects of certain non-recurring transactions. Adjusted Book Value: Adjusted Book Value per common share is a non-GAAP measure that excludes the impact of the unaccreted purchase discount resulting from the excess of the fair value of the loans TRMT then held for investment which we acquired as a result of the merger with TRMT on September 30, 2021 over the consideration we paid in the merger. Non-GAAP Financial Measures NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS RETURN TO TABLE OF CONTENTS

 
21 Supplemental Q3 2022 21 ON -G AA P FI NA NC IA L ME AS UR ES A ND C ER TA IN D EF IN IT IO NS All In Yield: All In Yield represents the yield on a loan, including amortization of deferred fees over the initial term of the loan and excluding any purchase discount accretion. Asset Specific Financing: Amounts advanced under the facility loan agreement and security agreement with BMO Harris Bank N.A. are pursuant to separate facility loan agreements that we refer to as Asset Specific Financing. LIBOR: LIBOR refers to the London Interbank Offered Rate. LTV: Loan to value ratio, or LTV, represents the initial loan amount divided by the underwritten in-place value of the underlying collateral at closing. Master Repurchase Facilities: Collectively, we refer to the master repurchase facilities with UBS AG, Citibank, N.A. and Wells Fargo, National Association as our Master Repurchase Facilities. Maximum Maturity: Maximum Maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions. Secured Financing Facilities: Collectively, we refer to the Master Repurchase Facilities and our Asset Specific Financing as our Secured Financing Facilities. SOFR: SOFR is defined as the Secured Overnight Financing Rate. Other Measures and Definitions NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS RETURN TO TABLE OF CONTENTS