sevn-20260331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-34383

Seven Hills Realty Trust

(Exact Name of Registrant as Specified in Its Charter)


Maryland			20-4649929
(State of Organization)			(IRS Employer Identification No.)

Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458-1634

(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code 617-332-9530

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of each exchange on which registered

Common Shares of Beneficial Interest

SEVN

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

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 in Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of registrant's common shares of beneficial interest, $0.001 par value per share, outstanding as of April 24, 2026: 22,596,077.

Table of Contents

SEVEN HILLS REALTY TRUST

FORM 10-Q

March 31, 2026

INDEX


		Page
PART I	Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets — M arch 31, 2026 and December 31, 202 5	1
	Condensed Consolidated Statements of Operations — Three Months Ended March 31, 2026 and 2025	2
	Condensed Consolidated Statements of Shareholders’ Equity — Three Months Ended March 3 1 , 202 6 and 20 25	3
	Condensed Consolidated Statements of Cash Flows — Three Months Ended M a rch 3 1 , 202 6 and 202 5	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
	Warning Concerning Forward-Looking Statements	28
PART II	Other Information	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 6.	Exhibits	30
	Signatures	31

References in this Quarterly Report on Form 10-Q to "SEVN", "we", "us" or "our" mean Seven Hills Realty Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

Table of Contents

PART I. Financial Information

Item 1. Financial Statements

SEVEN HILLS REALTY TRUST

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(unaudited)


	March 31,		December 31,
	2026		2025
ASSETS
Cash and cash equivalents	$	56,606	$	123,471
Loans held for investment	730,096		685,707
Allowance for credit losses	(9,495)		(8,799)
Loans held for investment, net	720,601		676,908
Real estate owned, net	10,872		10,986
Acquired real estate leases, net	2,649		2,772
Accrued interest receivable	3,410		3,186
Prepaid expenses and other assets, net	3,262		3,533
Total assets	$	797,400	$	820,856

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, accrued liabilities and other liabilities	$	3,271	$	3,305
Secured financing facilities, net	465,817		487,657
Due to related persons	1,330		1,243
Total liabilities	470,418		492,205

Commitments and contingencies

Shareholders' equity:
Common shares of beneficial interest, $0.001 par value per share; 25,000,000 shares authorized; 22,596,077 and 22,584,285 shares issued and outstanding, respectively	23		23
Additional paid in capital	303,464		303,191
Cumulative net income	109,299		104,914
Cumulative distributions	(85,804)		(79,477)
Total shareholders' equity	326,982		328,651
Total liabilities and shareholders' equity	$	797,400	$	820,856

See accompanying notes.

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SEVEN HILLS REALTY TRUST

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(unaudited)


	Three Months Ended March 31,
	2026		2025
INCOME FROM INVESTMENTS:
Interest and related income	$	14,839	$	14,322
Less: interest and related expenses	(7,182)		(7,437)
Income from loan investments, net	7,657		6,885
Revenue from real estate owned	682		709
Total revenue	8,339		7,594
OTHER EXPENSES:
Base management fees	1,305		1,079
Incentive fees	—		18
General and administrative expenses	886		963
Reimbursement of shared services expenses	574		550
Provision for (reversal of) credit losses	603		(153)
Expenses from real estate owned	580		594
Total other expenses	3,948		3,051
Income before income taxes	4,391		4,543
Income tax expense	(6)		(11)
Net income	$	4,385	$	4,532

Weighted average common shares outstanding - basic and diluted	22,398		14,757


Net income per common share - basic and diluted	$	0.19	$	0.30

See accompanying notes.

Table of Contents

SEVEN HILLS REALTY TRUST

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(amounts in thousands)

(unaudited)


	Number of Common Shares	Common Shares		Additional Paid In Capital		Cumulative Net Income		Cumulative Distributions		Total

Balance at December 31, 2025	22,584	$	23	$	303,191	$	104,914	$	(79,477)	$	328,651
Issuance of shares, net	13	—		73		—		—		73
Share grants	—	—		207		—		—		207
Share repurchases	(1)	—		(7)		—		—		(7)

Net income	—	—		—		4,385		—		4,385
Distributions	—	—		—		—		(6,327)		(6,327)
Balance at March 31, 2026	22,596	$	23	$	303,464	$	109,299	$	(85,804)	$	326,982





Balance at December 31, 2024	14,903	$	15	$	240,425	$	89,480	$	(60,642)	$	269,278
Share grants	5	—		356		—		—		356
Share repurchases	(1)	—		(5)		—		—		(5)

Net income	—	—		—		4,532		—		4,532
Distributions	—	—		—		—		(5,216)		(5,216)
Balance at March 31, 2025	14,907	$	15	$	240,776	$	94,012	$	(65,858)	$	268,945

See accompanying notes.

Table of Contents

SEVEN HILLS REALTY TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)


	Three Months Ended March 31,
	2026		2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	4,385	$	4,532
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion of purchase discount	(145)		—
Provision for (reversal of) credit losses	603		(153)
Amortization of loan origination and exit fees	(546)		(513)
Amortization of deferred financing costs	388		366
Deferred interest capitalized to loans held for investment	(137)		—
Straight line rental income	(14)		(16)
Depreciation and amortization	265		280
Share based compensation	207		356
Changes in operating assets and liabilities:
Accrued interest receivable	(224)		(375)
Prepaid expenses and other assets	257		149
Accounts payable, accrued liabilities and other liabilities	(104)		(420)
Due to related persons	87		(520)
Net cash provided by operating activities	5,022		3,686

CASH FLOWS FROM INVESTING ACTIVITIES:
Origination of loans held for investment	(57,380)		(45,735)
Additional funding of loans held for investment	(2,181)		(4,073)
Repayment of loans held for investment	16,000		—
Real estate owned improvements	(72)		(93)
Net cash used in investing activities	(43,633)		(49,901)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from secured financing facilities	31,725		22,404
Repayments under secured financing facilities	(52,531)		—
Payments of deferred financing costs	(1,114)		(81)

Repurchase of common shares	(7)		(5)
Distributions	(6,327)		(5,216)
Net cash (used in) provided by financing activities	(28,254)		17,102

Decrease in cash and cash equivalents	(66,865)		(29,113)
Cash and cash equivalents at beginning of period	123,471		70,750
Cash and cash equivalents at end of period	$	56,606	$	41,637

SUPPLEMENTAL DISCLOSURES:
Interest paid	$	6,906	$	7,002
Income taxes refunded	$	11	$	—

Table of Contents

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Note 1. Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2025, or our 2025 Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim periods have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the accompanying condensed consolidated financial statements include the allowance for credit losses, the valuation of real estate owned and the fair value of financial instruments.

Note 2. Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update, or ASU, No. 2024-03, Income Statement (Topic 220): Reporting Comprehensive Income - Expense Disaggregation Disclosures, or ASU No. 2024-03, which requires public entities to provide disaggregated disclosure of certain income statement expense captions within the footnotes to the financial statements. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact ASU No. 2024-03 will have on our consolidated financial statements and disclosures.

Note 3. Loans Held for Investment, net

We originate first mortgage loans secured by middle market transitional commercial real estate, or CRE, which are generally to be held as long term investments. We fund our loan portfolio using cash on hand and advancements under our Secured Financing Facilities, as defined in Note 5. See Note 5 for further information regarding our secured financing agreements.

The table below provides overall statistics for our loan portfolio as of March 31, 2026 and December 31, 2025:


	As of March 31, 2026			As of December 31, 2025
Number of loans	26			24
Total loan commitments	$	775,958		$	724,458
Unfunded loan commitments (1)	$	43,955		$	36,873
Principal balance	$	732,003		$	687,585

Carrying value	$	720,601		$	676,908
Weighted average coupon rate	7.44		%	7.52		%
Weighted average all in yield (2)	7.84		%	7.92		%
Weighted average floor	2.83		%	2.81		%
Weighted average maximum maturity (years) (3)	2.6			2.6
Weighted average risk rating	2.8			2.8

(1)Unfunded loan commitments are primarily used to finance property improvements and leasing capital and are generally funded over the term of the loan.

(2)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.

(3) Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions.

SEVEN HILLS REALTY TRUST

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

The tables below represent our loan activities during the three months ended March 31, 2026 and 2025:


	Principal Balance		Deferred Fees and Other Items		Amortized Cost
Balance at December 31, 2025	$	687,585	$	(1,878)	$	685,707
Additional funding	2,181		—		2,181
Deferred interest capitalized to loans held for investment	137		—		137
Originations	58,100		(720)		57,380
Repayments	(16,000)		—		(16,000)

Net amortization of deferred fees	—		546		546
Purchase discount accretion	—		145		145
Balance at March 31, 2026	$	732,003	$	(1,907)	$	730,096


	Principal Balance		Deferred Fees and Other Items		Amortized Cost
Balance at December 31, 2024	$	610,811	$	(895)	$	609,916
Additional funding	4,073		—		4,073

Originations	46,505		(770)		45,735


Net amortization of deferred fees	—		513		513


Balance at March 31, 2025	$	661,389	$

SEC Form 10-Q filed by Seven Hills Realty Trust