Seven Hills Realty Trust at Nareit REITweek: Strategic Middle Market Focus

On Wednesday, 04 June 2025, Seven Hills Realty Trust (NASDAQ:SEVN) participated in the Nareit REITweek: 2025 Investor Conference. The discussion, led by senior executives, provided insights into the company’s strategic position in the commercial mortgage REIT sector. Seven Hills highlighted its commitment to the middle market and addressed both opportunities and challenges, including interest rate volatility and competitive lending conditions.

Key Takeaways

• Seven Hills focuses on middle-market lending, with loans primarily in the $20-$75 million range.
• Despite interest rate volatility, the company maintains a robust origination pipeline.
• The REO asset in Yardley, Pennsylvania, remains profitable and contributes to earnings.
• The company expects $125 million to $150 million in repayments during 2025.
• Seven Hills’ dividend is well covered, though Q2 earnings guidance is slightly lower than Q1.

Financial Results

• Net interest rate spreads average about 1.5% on recent originations.
• The Yardley office property contributed approximately $0.03 to last quarter’s earnings.
• As of March 31, the company held $42 million in cash, with $28 million in unfunded commitments.
• Q1 2025 earnings were $0.34 of distributable earnings, with Q2 guidance between $0.29 and $0.31.
• Dividends are $0.35 per quarter, with the Board reviewing them quarterly.

Operational Updates

• The average loan size is approximately $30 million, focusing on senior secured mortgages.
• Seven Hills closed $50 million in loans in Q1 2025, with a $1 billion deal pipeline.
• The Yardley office property is 82% leased, enhancing distributable earnings.
• One-third of the loan volume comes from repeat sponsorships, with a portfolio risk rating below 3.

Future Outlook

• The company anticipates a couple of rate cuts for the remainder of 2025.
• Another $50 million in loans is progressing through due diligence.
• Seven Hills is actively managing repayments to redeploy capital effectively.
• With banks expected to remain cautious, Seven Hills sees opportunities for alternative lenders.

Q&A Highlights

• Overleveraged assets from 2021 and 2022 require capital infusions.
• Seven Hills is keen on lending to multifamily assets due to their favorable risk profile.

Readers are encouraged to refer to the full transcript for a more detailed understanding of Seven Hills Realty Trust’s strategic insights and financial performance.

Full transcript - Nareit REITweek: 2025 Investor Conference:

Chris Moeller, Analyst, Citizens Capital Markets: Alright. I’m getting the the ghost signal here, so why don’t we get started? So good morning, everyone. Thank you for joining our fireside chat today featuring Seven Hills Realty Trust. My name is Chris Moeller.

I’m an analyst at Citizens Capital Markets where I focus on commercial mortgage REITs. We are pleased to cover Seven Hills as well as 22 other names that comprise the 24 company, public company commercial mortgage REIT universe. That group of companies collectively manages total assets of over a hundred and 21,000,000,000 and has an aggregate common market equity market cap of about 21,000,000,000. 7 Hills trades under ticker SEVN and has a market cap of about hundred 77,000,000. Today, I’m joined by Tom Lorenzini, down on my far right, president and CIO of Seven Hills Realty Trust, and Matt Brown, CFO and treasurer.

It’s a pleasure to be with the two of you today, and thank you for joining me. So why don’t we start from a high level overview of Seven Hills and the RMR platform? You guys are externally managed by a subsidiary of the RMR Group, an asset manager focused on commercial real estate with over $40,000,000,000 of assets under management. This gives you guys a really broad view into commercial real estate overall. So Tom, maybe we’ll start with you.

Can you talk a little bit about the breadth the breadth of the RMR platform and how Seven Hills fits into that picture?

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: Sure. Thanks Chris and thanks for those of you listening at home. Before I start, I will mention that we posted an investor deck on Monday onto the website. So there were some additional information that we put out this week. As far as how Seven Hills relates to the broader RMR platform, RMR based in Boston, solely focused on real estate about 40,000,000,000 AUM and the firm itself touches really all facets of commercial real estate from multifamily, industrial, hospitality, retail, life science, hotels, traditional office, medical office, etcetera.

So there’s a tremendous depth of knowledge within the organization. Seven Hills, the publicly traded mortgage REIT is externally managed as Chris mentioned by Tremont Realty Capital. Tremont Realty Capital is a wholly owned subsidiary of the RMR Group and Tremont is the registered investment advisor for the four Seven Hills, the commercial mortgage REIT. So strength really behind the platform helps us immensely as a commercial mortgage REIT because RMR itself has some 30 offices across the country, some 2,000 properties across the country really allows us to draw upon those resources when we’re making decisions. The strength of that platform really is unparalleled for a firm of our size that would really be typically reserved for a, you know, a Blackstone or KKR or something like that.

But we’re able to draw upon these internal resources to really help us make very well informed decisions, which personally I think is part of our secret sauce, if you will, for the commercial mortgage rate.

Chris Moeller, Analyst, Citizens Capital Markets: Are there any specific examples that you could give us where having the RMR backing has helped with Seven Hills, maybe either on the loan sourcing side or asset management, just any specifics would be very helpful.

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: Yeah, sure. So because RMR manages several verticals, several publicly traded REITs, they’re always in the market looking at acquisitions and things of that nature. So there’s deal flow that comes into that side of the shop. You know, we might see referrals internally that maybe there was an acquisition that they didn’t want to do, but whoever was bringing them that acquisition said, Hey, you know, we know you have a credit platform or debt platform, can we speak to them? Maybe there’s an opportunity for that group to finance a different buyer.

So that certainly happens on a fairly regular basis. More importantly, I think really is the situation where we need to protect shareholder value in the event that we need to take back an asset. We’ve had one asset in our careers that we’ve had to foreclose upon. And the RMR platform allows us to seamlessly take that asset internally, manage that asset and really protect shareholder value. And that is a tremendous value not only to the shareholders, but to us as the commercial mortgage REIT that we’re able to maintain that asset and kind of work it out of its whatever state it might’ve been in.

So that would be really probably one of the strongest strengths the firm is bringing to us.

Chris Moeller, Analyst, Citizens Capital Markets: Yeah, very helpful. So I guess drilling down a little bit, you guys are one of 24 publicly traded commercial mortgage rates like I mentioned. The basic business model is originating and managing a portfolio of floating rate loans, bridge loans specifically. So can you talk about what sets you guys apart from the group a little bit? Is it loan sizing?

Is it the geographies you operate in? Kind of how do you fit within that 24 company universe?

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: Sure. So geography, are, we’re well diversified as many of our competitors are as well, but we are solely focused on the middle markets and middle market, you know, we think about the middle markets as asset values between 25 and a hundred million dollars. So when we’re looking at a financing situation, we’re generally lending in the 20,000,000 to $75,000,000 bandwidth if you will. A lot of our larger competitors kind of start where we stop and we feel that the middle markets is a little bit, there’s a little more pricing power in that middle markets because it’s a little bit more granular. So our average loan size is about $30,000,000 and I think that by being in the middle markets, you still have a very sophisticated borrowing base, you still have quality transactions, you’re still in major markets, you’re just on a little bit on the smaller loan size.

Again, relative to this kind of starting out at the 75,000,000 to $100,000,000 mark, which provides us because we’re such a deep organization, we can be nimble in those markets where a lot of other lenders can’t necessarily be efficient there, but we can be because most of the assets that we own on the RMR side fall within that middle market. So that’s really an expertise, I guess, across the entire platform. The other item that sets us apart from some of our peers is we are, we’re vertically integrated a %. So, and what I mean by that is, we have an originations team that is sourcing transactions that are speaking with developers and borrowers on a regular basis. We’re working with the brokerage community to bring in transactions.

Underwriting is done internally, all credit functions are done internally and most importantly, the asset management and ongoing loan surveillance is all done internally. So we’re not relying on third parties to handle critical functions from, especially from an asset management standpoint, which keeps us very close to the transaction, real time information with our sponsors, we’re dealing with them on a regular basis. And that really is a luxury that we have that many of our competitors don’t have. And the other thing I would just mention about relative to our competitors, we are a super clean business plan. We are secured, senior secured, senior mortgages, and that’s all that we do.

So we’re not investors in securities. We’re not investors in real estate to own. We are purely senior secured mortgages. We stick to our knitting and I think it’s a very easy business plan for the investing community to understand.

Chris Moeller, Analyst, Citizens Capital Markets: Great. And you guys have talked about on a couple of your earnings calls, the strength of sponsors. So can you talk about a little bit what that means? And just to put in perspective for everyone in the room, within our commercial mortgage REIT universe, people are lending on loan sizes up $5,000,000 up to $150,000,000 So they are squarely in the middle market here. So can you talk about what is a typical sponsor in that middle market space?

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: Sure. So a sponsor for us, we are very sponsor centric. We’re very focused on their ability to execute on their business plans. It is generally a firm, it could be a large regional firm, it could be a national firm, it could be an institutional borrower as well. You know, they have transact, they have done this transaction or similar transactions before.

This is not their first, we’re certainly not banking somebody in their first transaction. They’ve had an executable business plan. They have a track record. We’re also looking for sponsors that have skin in the game. They’re they have the ability to write a check.

These are bridge loans. These are generally some sort of transitional type financing that’s happening here. And with that, we want to make sure that our sponsors are liquid enough that should they choose to write a check to solve a problem, they can do that. Really a critical decision when we’re looking at whether we’re gonna bank a new sponsor or not. And generally, you know, they may have an institutional equity partner with them as the LP in these transactions.

So we’ve made the conscious decision to stay really kind of stay away from the syndicated equity model and the retail syndicated equity model and really have focused on sponsors again, deep pockets generally and long track record and strong experience within the space.

Chris Moeller, Analyst, Citizens Capital Markets: Got it. So maybe changing gears a little bit and turning to the interest rate environment. So the biggest headwinds to commercial mortgage REITs the last couple of years has been the elevated interest rate environment and then the interest rate volatility. Higher interest rates have been a double edged sword as well with existing portfolios pressured from higher interest rates as well as overall transaction activity also being slowed by the interest rate environment. So maybe Matt, I’ll throw this one to you.

Can you talk about what you guys are seeing in terms of rates impacting commercial real estate lending markets from a high level? And Tom, feel free to add anything as well.

Matt Brown, CFO and Treasurer, Seven Hills Realty Trust: Sure. I would say that rates remain competitive. What we’re mostly seeing on origination activity is a competitive landscape and our net interest rate spreads are tightening a bit on recent originations. They’re averaging about 1.5% on originations that we’ve done or are doing this year. So it remains competitive.

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: Yeah. And I think from a rate perspective as well, just whole loan rates, if you will, they remain elevated, but there’s, but that’s okay because borrowers still need to transact. So we’re still seeing tremendous flow come through the shop and the borrowers looking for opportunities to recapitalize the projects.

Chris Moeller, Analyst, Citizens Capital Markets: And I guess we saw some pretty heavy rate volatility in early April following liberation day. Can you guys talk about what impact if any of that had on your pipeline and kind of where we sit today after things have kind of been digested by the market a little bit?

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: Sure. So I think in January there was tremendous deal flow. And then as we, as we kind of came in late, you know, into the second quarter and we started hitting liberation date, things did seize up for about six weeks. We saw the backup in the CMBS market. We saw backup in the, in the, all the securitized markets.

We saw some of our competitors actually kind of sit on the sidelines and pull back on some term sheets. And we saw a transaction volume kind of seize up as well, just because borrowers, I think were hesitant to commit to move forward without knowing what the future might look like. That lasted about six weeks. And then people began to understand that they can work within this framework. And during that seize up, if you will, we saw spreads widen quite a bit, but then they came back in rather dramatically.

And we’re, I would tell you that we’re close to, if not at the same levels that we were pre liberation day, if you will.

Chris Moeller, Analyst, Citizens Capital Markets: And would you say the absolute level of rates or interest rate volatility are more important to getting transaction activities that start to normalize?

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: Just stability, right? It’s the volatility, it’s the unknown that I think that gives a lot of borrowers pause because oftentimes they might be making a decision between, shall I do a short term fixed rate loan or shall I do a floating rate loan? What do I think rates are gonna in the future? And if they’re all moving around and we see that volatility, a lot of folks, if they don’t need to transact, they’re just not gonna do anything. But if rates can remain elevated, but if they’re stable and we know what the rules of the game are, then everybody can deal with that appropriately and make a decision that they can have some confidence in.

Chris Moeller, Analyst, Citizens Capital Markets: And can you talk about, I guess the typical lifespan of an origination or timeline of an origination and how that volatility kind of plays into that? Like what I’m trying to get at, have you seen deals drop out of the pipeline because of the volatility in the process of the closing?

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: Absolutely. Generally from start to close, from the time of transaction comes in until the time that we actually fund typically probably about sixty days. It could certainly take longer in certain circumstances, but generally forty five to sixty days. We may find ourselves in a situation where if for interest rates were moving, let’s go back two years when or three years when rates were increasing dramatically on a fairly regular basis, it was nearly impossible to make a decision to close the transaction from a borrower’s perspective because they were underwriting one level of cost of capital and then thirty days later it was completely different. Obviously if rates are coming down, that’s a benefit and borrowers are not going to be as skittish of that.

But anytime that there’s volatility and you have the, you don’t have the ability to have confidence in what your ultimate capital stack is going to look like, it’s a reason to delay a transaction or it’s a reason to back out of an acquisition, which then just puts the whole cancel the whole transaction altogether. So we’ve seen a fair amount of that through the pipeline where borrowers are looking at a property to acquire, they get into diligence, they’re looking at the capital stack, they don’t like what they see compared to what they saw thirty days ago and they simply move away from the transaction and that deal dies.

Chris Moeller, Analyst, Citizens Capital Markets: Got it. And Matt, does RMR have a house view of rates or just anything that you want to share with what your expectation of the path of rates is over the next year or two?

Matt Brown, CFO and Treasurer, Seven Hills Realty Trust: Sure. So obviously we pay attention to the curve quite regularly. And right now I think we’re expecting a couple rate cuts for the balance of ’25, but something we monitor closely and think about how that impacts our origination activity.

Chris Moeller, Analyst, Citizens Capital Markets: Got it. So one thing that’s not talked about much these days, but could become a net benefit to commercial mortgage REITs are interest rate floors. Everyone’s talked about caps for the last couple of years as rates went up, but loan floors are also typically part of new originations. So if rates do come down the way futures are suggesting, which I think last I looked was about 100 basis points by the end of ’twenty six, those floors on newer vintage loans could start playing into earnings. So Matt, can you talk about the existing floors in the portfolio and if you do expect them to be a meaningful contributor to earnings going forward?

Matt Brown, CFO and Treasurer, Seven Hills Realty Trust: Sure. So right now, all but one of our loans has an interest rate floor. Those floors range from 10 basis points all the way to five twenty basis points. So we have one loan that’s currently active. The floor is helping us.

I would say our average floor, I think, is 2.16%. So if we see a rate cut, we do expect a couple more floors to kick in, but it definitely provides protection as rates decline. It’s also important to note on our secured financing facilities, we don’t have any interest rate floors in place, so that’s going to benefit us. We do have a couple office loans in our portfolio. And as we’ve done extensions on those loans, we’ve increased the floors once again giving us more protection as well as motivation to the borrowers to refinance us out over time.

Chris Moeller, Analyst, Citizens Capital Markets: Very helpful. So I guess turning to the loan portfolio, you guys have done a great job. And as Tom mentioned, they’ve only had to take back one REO property to date. So can you talk about what drove that success on the credit side?

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: Yeah, look, a lot of that really falls on the fact that we have this depth of bench at the RMR platform, right? That we have these resources to pull upon when we’re looking at whatever property type it is. If I have an industrial asset that we’re considering in Columbus, Ohio, and I have an industrial team that I can call upon and say, we have assets in that market. What are we seeing? What do we think about this location?

What do we think about leasing activity? And that helps us make really informed decisions. And if you multiply that across the platform and I can do that with office, I can do that with hotels, I can do that with retail, I can do that with multifamily. It really allows us to make, in our opinion, very good decisions. So if we like a transaction, we can really lean in.

It also helps us that if we see a flaw in the transaction that maybe wasn’t apparent that helps us back away from it. The other piece of that equation, I think is sponsorship. We have, again, we have been, we’re very focused on sponsorship and we’re looking to bank individuals and firms that have the wherewithal to weather the weather a storm and contribute additional equity if needed, what have you. And that makes a difference when for portfolio performance.

Chris Moeller, Analyst, Citizens Capital Markets: And I guess drilling down a little bit on the REO asset and it’s relatively small relative to your portfolio size. I think it’s $9,000,000 and change. So it’s an office property in Yardley, Pennsylvania, but you guys are in a good position where that property is profitable. I think you said it contributed about $03 to last quarter’s earnings. So you have the ability to be patient on it.

It’s not something that’s dragging on your current earnings. So are there any updates you can give us on the path of that asset? Is that something we could see sold in 2025 or is it the plan to just be patient since it’s not really driving my earnings?

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: I think the plan right now is to be patient. There’s no, there’s no impetus to sell the asset. The asset is an 87,000 square foot class A LEED certified property, 82% leased. There’s There’s a tenant that is renewing right now. Beyond that, there’s no rollover in that asset until late twenty twenty eight.

And even at that point, I think it’s only about 4% of the building. So rent roll there is incredibly stable to your point, it’s added to our distributable earnings. So we’ll, you know, we’ll collectively make that decision when to sell there is, but there’s no immediate timeline to do so.

Chris Moeller, Analyst, Citizens Capital Markets: Got it. And I guess aside from that, Yardley office, we’ve seen office has been the poster child for stress in the commercial real estate sector. And aside from the one property you had to take back, you guys still have 25% of your portfolio in office assets. So how come your office exposure has performed so much better than the rest of the sector?

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: I like to think we’re smarter. Don’t, I think really part of the reason, I think, again, it’s sponsorship. I think we are, our loans have been structured appropriately. All of our loans, not just office loans, all of our loans will have generally have some sort of rebalancing guarantee if there’s any kind of sort of debt service shortfall where the sponsors will have to contribute additional equity to them. There might be some of the extensions that we’ve done in the office space, sponsors have come in with cash to deleverage the position, which indicates to us that they’re there to protect their equity, which is a terrific spot for us to be in, right?

That we’ve got a borrower that is looking at this saying, hey, look, I’m gonna protect the asset, I’m gonna do what’s right and I’m gonna put in some additional cash. And I would also say that just from an underwriting perspective, six office loans that we have, three of them are in the mid nineties on occupancy and the other three are in the low to mid eighties on occupancy. So, so they’re all occupied, they’re all cash flowing. Obviously they’re all well located and they’re generally pretty well leased. So part of that is a little bit of luck, but I’d like to think that a lot of it really has to do with the fact that we’ve just underwritten and structured these loans appropriately.

Chris Moeller, Analyst, Citizens Capital Markets: Then Matt, how are you guys thinking about origination volumes for the balance of the year? And what does your repayment schedule look like over that same period? Should we expect to see some net portfolio growth for the balance of 2025?

Matt Brown, CFO and Treasurer, Seven Hills Realty Trust: Thus far in 2025, we’ve closed on about $50,000,000 in loans. That was in the first quarter. We have a couple of loans progressing through diligence for about another $50 ish million. We had one repay during the quarter for 42,500,000.0 a retail property. And we’re expecting about $125,000,000 to $150,000,000 of additional repayments during 2025.

And it’s really on us to actively manage that and get ready to redeploy that capital as soon as we can. We have a robust pipeline of about $1,000,000,000 of deals that we’re constantly looking at. So it’s really a timing game of getting ready as that repay happens, getting the origination right behind that.

Chris Moeller, Analyst, Citizens Capital Markets: Got it. So we’re also hearing that banks largely remain on the sidelines, which does create a nice opportunity for guys like you to kind of help fill that void and to get some loans that you may not have gotten before that would have gone to the banks. So is this a dynamic that you guys are seeing continue? And how long do you expect that to remain? Is that the foreseeable future or do we normalize in six, eight quarters and then the banks step back in?

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: I think the banks are going to be forever have a little bit lower real estate exposure than what they’ve had historically. I think that model has changed a little bit. The banks today, the regional banks and certainly large money center banks would rather provide a lender such as Seven Hills or a debt fund or another mortgage REIT. They would rather provide them with a facility to finance their assets, right. They get better treatment that way.

They’re looked through LTVs are remain much lower at 50%, fifty five %, sixty %. So that’s a much better place for them to play than to go out and originate a new loan and increase their production in their overall real estate exposure. So I don’t want to anticipate it’s going to ramp up dramatically at all. I think it’s going to stay muted for the foreseeable future. And I think that the it’s a great opportunity for lenders such as alternative lending in the alternative lending space really to increase market share.

Chris Moeller, Analyst, Citizens Capital Markets: Got it. So I guess turning to the financing side. So the financing environment’s also seen a couple of false starts. Earlier this year, we saw a couple of new CRE CLOs get done, but that interest rate volatility in early April kind of put things on pause, although things have started to fall back a little bit. So Matt, can you talk about the financing side of the business and what looks attractive today?

And could a CLO work at some point in the seven structure at some point in the future, maybe billion plus loan portfolio size? Just how are you guys thinking about the financing side of the business?

Matt Brown, CFO and Treasurer, Seven Hills Realty Trust: Sure. As relates to CLOs, potentially in the future it could be in the cards. I would say right now given our portfolio size and portfolio composition, it’s not something that we’re currently focused upon. Look, we have great relationships with our lenders. They remain open for business and quite competitive in this environment.

So that’s a real positive supporting our deals that we’re looking at. The other thing as it relates to Seven Hills, we have a hands on approach with our borrowers, both from origination, underwriting and asset management and servicing. And I think that’s something that our borrowers really like.

Chris Moeller, Analyst, Citizens Capital Markets: Got it. So I guess shifting to some liquidity management questions. So most of the commercial mortgage REITs have been holding excess liquidity to have more flexibility on loan workouts for the most part. But you guys have not needed that liquidity to take back much REO aside from that yardly office that we talked about earlier. So can you talk about how you think about liquidity in this environment?

And what’s like a normalized cash balance that you guys would like to operate once we get past or through this cycle?

Matt Brown, CFO and Treasurer, Seven Hills Realty Trust: Sure. So our current cash position as of March 31 was about $42,000,000 We view that as more than adequate for Seven to run its business and look to deploy some of that cash with upcoming originations that we’re expecting. We have about $28,000,000 of unfunded commitments in our loan portfolio. As borrowers request those funds, we can put leverage against that. But where we are today, we definitely have adequate liquidity to run the business.

Chris Moeller, Analyst, Citizens Capital Markets: Got it. You guys have had pretty solid dividend coverage over the last couple of years, and you’re one of only a handful of commercial mortgage REITs that has not had to cut their dividend through this cycle. So can you share any thoughts on the path of earnings going forward and dividend coverage for the remainder of the year? Do you expect that to persist? Or is it kind of dependent on the pace of originations and portfolio size?

Matt Brown, CFO and Treasurer, Seven Hills Realty Trust: Yes. Our dividend historically has been very well covered. We currently pay $0.35 per quarter. I will say our Q1 earnings were $0.34 of DE. We guided to $0.29 to $0.31 for the second quarter of twenty twenty five.

It’s always important to note that our portfolio is rock solid. We have an average risk rating below three and all of our loans are performing. I will say, our Board does look at our dividend each quarter. And what we’re expecting in 2025 is that the repayments that I touched on earlier have higher net interest rate spreads than the loan originations that we’re doing. But I will say it’s a very fluid situation at Seven that we’re monitoring closely.

And getting the money put to work in deals that we feel good about is really important for us.

Chris Moeller, Analyst, Citizens Capital Markets: Got it. So we just have a few minutes here. Why don’t we see if we have any questions in the audience? Otherwise, can throw a couple more out.

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: There is certainly a need for that. There’s a lot of over leveraged assets that right, that were loans were written in ’21, ’20 ’2, and they’re coming due and they don’t qualify for a new financing without a significant amount of cash coming into to lower that profile, lower the capital stack. It’s not something that we’re pursuing as a business plan, but there, and I think there’s opportunity funds out there that will do that, right, that they’ll do a pay and accrue type structure or they’ll take a piece of the equity or something along those lines and do a participating mortgage or something. It’s not, it’s not necessarily what our business plan has been to date. In that situation and we’ve financed properties like this, where that refinance is coming due, they’re over leveraged, but we’re looking for the sponsorship to kind of come in and write the ship and then we’ll write a new senior loan rather than do a cash neutral and then take additional risk for additional yield.

That just hasn’t been our business plan. It doesn’t mean it’s, it’s the wrong business plan. It’s just not what we’re focused on. I I believe I’m sure that there are. I’m sure that there’s there’s private debt funds out there that are doing that.

I think I missed part of that question. Were you asking how many of them are repeat? Did I hear that? Yes. Yes.

So about a third of our volume is repeat sponsorship. You know, that’s one of the things that we’re looking at when we write the first loan, right. We want to make sure that we’re lending to organizations or individuals that have a business, this is their business, this is their business plan. You know, let’s do the first loan with them and then hopefully we’ll do the second and the third with them as well because those are certainly easier to do kind of as you’ve as everybody’s been indoctrinated into the process. So we’re actively looking for repeat sponsorship.

Multifamily remains probably the number one product type that we like to lend into in the market as well. I mean, that’s a market that has long term fundamentals just makes sense. There’s just a housing shortage in this country. Two, you’ve got the government agencies and they’re financing everybody on the back end. So there’s a tremendous amount of liquidity there and it’s also really the one of the largest traded property types out there.

So there’s a massive investor demand. So that’s a terrific space to lend into. I would tell you industrial still makes sense. There’s been some softening there, but pick your spots. We like the select service hotel space, not necessarily the full service, but we like the select service.

And then neighborhood retail, grocery anchored retail, needs based retail that’s a little bit more Amazon proof that that’s a terrific place to lend capital today as well. Well, we’ll we’ll write a new senior in that in that situation, but they’re gonna come in with some cash ideally to delever their existing loan when we go to refinance. If the re if their mortgage that’s coming due is $40,000,000, but we think they only qualify for 35, we’re gonna ask them to write a check for $5,000,000. Well then we might not do that transaction. So then we’ve the risk profile doesn’t fit what we’re looking for.

Chris Moeller, Analyst, Citizens Capital Markets: I think that’s all the time we have. I’d like to thank Tom and Matt for sitting up here today.

Tom Lorenzini, President and CIO, Seven Hills Realty Trust: Thank you, Chris. Thank you all. Thank you.

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