Seven Hills Realty Trust (SEVN): Business Model Canvas [Dec-2025 Updated]

You're looking to understand the core engine of Seven Hills Realty Trust (SEVN) and how they are navigating the commercial real estate debt market right now. Forget the fluff; we're mapping their actual value creation using the Business Model Canvas. Honestly, what jumps out from their Q3 2025 snapshot is the quality of their assets: a \$642 million floating-rate loan portfolio with no nonaccrual loans, generating a weighted average all-in yield of 8.21% across their originations. If you want to see precisely how their key partnerships and disciplined underwriting-which resulted in \$7.09 million in total revenue that quarter-actually work, dive into the detailed canvas below.

Seven Hills Realty Trust (SEVN) - Canvas Business Model: Key Partnerships

You're looking at the core relationships Seven Hills Realty Trust (SEVN) relies on to execute its strategy of originating and investing in first mortgage loans secured by middle market transitional commercial real estate. These partnerships are critical for management, capital access, and deal flow.

Tremont Realty Capital/The RMR Group for external management and real estate expertise

Seven Hills Realty Trust is externally managed by Tremont Realty Capital LLC, which is a wholly-owned subsidiary of The RMR Group (NASDAQ:RMR). This relationship provides SEVN with institutional experience. As of late 2025, The RMR Group managed approximately $39 billion to $40 billion in gross assets under management across its platform. This management structure is a key resource for sourcing and underwriting deals.

Major financial institutions providing \$740 million in secured financing facilities

Access to substantial, cost-effective capital is a primary enabler for SEVN's lending platform. The company maintains significant secured financing facilities with major financial institutions. Here are the key figures related to this partnership:

• Total committed secured financing facilities size: $740 million.
• Unused capacity as of September 30, 2025: $309.6 million.
• The lending group includes institutions such as UBS, Citibank, BMO, and Wells Fargo.
• The weighted average coupon rate on borrowings under these facilities was reported at 6.30%.

This committed capital allows SEVN to maintain a conservative leverage profile, evidenced by a debt-to-equity ratio of 1.6x as of Q3 2025.

The following table summarizes the financing capacity and the structure of the late 2025 capital raise:

Tremont Realty Capital as the backstop for the late 2025 Rights Offering

To ensure the success of its capital raise, Tremont Realty Capital committed to fully backstop the rights offering announced in late 2025. This commitment means Tremont Realty Capital agreed to purchase any unsubscribed shares. The offering was structured to allow shareholders of record as of November 10, 2025, to purchase one new common share for every two Rights held. UBS Securities LLC was retained as the dealer manager for this transaction, which was set to expire on December 4, 2025, unless extended.

Experienced commercial real estate sponsors/borrowers

The quality of SEVN's loan portfolio, which stood at $641.9 million in total commitments across 22 loans as of September 30, 2025, is directly linked to the quality of its borrowers and their sponsors. SEVN explicitly states its strategy is to originate loans supported by experienced sponsors. For example, a recent $34.5 million first mortgage loan closing in September 2025 was supported by sponsors TPG Angelo Gordon and Premier Equities. The portfolio generally maintains a conservative weighted average loan-to-value ratio of 67% at close, indicating strong underlying collateral protection relative to the loan size.

Finance: draft 13-week cash view by Friday.

Seven Hills Realty Trust (SEVN) - Canvas Business Model: Key Activities

Origination and underwriting of new first mortgage loans involves a rigorous investment screening process, utilizing a team with an average of over 20 years experience in the CRE finance sector. Seven Hills Realty Trust is focused on originating new loans in 2025, targeting market segments where traditional lenders have pulled back. During the third quarter of 2025, the company closed a \$34.5 million first mortgage loan secured by a 100% leased mixed-use retail and medical office property in Manhattan's Upper West side. Also, in November 2025, Seven Hills Realty Trust deployed \$101.3 million across three new first mortgage loans, including a \$37.3 million loan for student housing in College Park, MD, a \$37.0 million loan for a hotel in Revere, MA, and a \$27.0 million loan for an industrial property in Wayne, PA. The pipeline for new opportunities is robust, exceeding \$1 billion in evaluated loan opportunities as of Q3 2025.

Active management of the loan portfolio centers on the current asset base, which as of September 30, 2025, consisted of \$642 million in floating rate first mortgage commitments across 22 loans. The portfolio maintains a weighted average all-in yield of 8.2% and a weighted average Loan-to-Value (LTV) at close of 67%. The management activity includes processing repayments, which totaled \$53.8 million during the third quarter of 2025. The company anticipates a net portfolio growth target of approximately \$100 million for the full year 2025.

Capital raising via debt markets supports the deployment of capital. As of the end of the third quarter of 2025, Seven Hills Realty Trust reported \$77 million in cash on hand and \$310 million of unused capacity on its secured financing facilities. The portfolio's weighted average borrowing rate was SOFR plus 2.15%. The company is focused on disciplined capital deployment, leveraging its fully integrated platform for a competitive advantage versus outsourced models.

Credit monitoring and risk management are core to maintaining portfolio quality. As of September 30, 2025, the portfolio's weighted average risk rating was 2.9 on a scale where 1 is lowest risk and 5 is highest risk. All loans in the portfolio remained current on debt service, with no nonaccrual loans reported. The company maintains an allowance for credit losses representing 1.5% of total loan commitments. Office exposure, a segment under close scrutiny, represented 27% of the portfolio as of Q3 2025.

• All loans current on debt service.
• Allowance for credit losses: 1.5% of total commitments.
• Office exposure: 27% of portfolio.
• No 5-rated loans or nonaccrual balances.

Seven Hills Realty Trust (SEVN) - Canvas Business Model: Key Resources

You're looking at the core assets Seven Hills Realty Trust (SEVN) uses to generate returns, which really boils down to the quality of their loans and the strength of their capital structure. Honestly, for a REIT like this, the resources are the assets they hold and the credit lines they can tap.

The foundation of the Key Resources is the loan portfolio itself. As of the third quarter of 2025, Seven Hills Realty Trust held a fully performing loan portfolio consisting of 22 first mortgage loans. This portfolio had total commitments of $641.9 million at that time. It's important to note that all loans were current, with no non-accrual balances reported.

Liquidity is another critical resource, giving the company the ability to act quickly on new opportunities. At the end of Q3 2025, the balance sheet showed significant dry powder:

• Cash on Hand: $77.5 million.
• Unused Financing Capacity: $309.6 million available under secured facilities.

This liquidity position, combined with the financing framework, is a major differentiator. The company has secured financing facilities with a maximum size of $740 million.

Here's a quick look at the capital structure elements that backstop the lending operations:

The third major resource is the intellectual capital derived from its manager, The RMR Group (RMR). This relationship provides access to a massive institutional real estate platform. As of September 30, 2025, The RMR Group managed approximately $39.0 billion in assets under management. This deep bench of experience, spanning over 35 years in buying, selling, financing, and operating commercial real estate, informs SEVN's underwriting and deal sourcing.

To be fair, the ability to deploy capital is directly tied to these resources. The company is actively evaluating over $1 billion in loan opportunities, showing the pipeline is robust enough to utilize its available capacity.

Seven Hills Realty Trust (SEVN) - Canvas Business Model: Value Propositions

You're looking at the core reasons why borrowers choose Seven Hills Realty Trust for their financing needs as of late 2025. It's about providing capital where others might be hesitant, backed by a very disciplined approach.

Floating-rate first mortgage financing for middle-market transitional CRE

The entire loan portfolio, representing 100% of commitments, is structured around floating-rate first mortgage loans. As of September 30, 2025, the total portfolio commitment stood at $641.9 million across 22 individual loans. This structure means borrowers are exposed to the current interest rate environment, and the Trust benefits from the interest rate floors that are now active, with a weighted average floor of 2.59% across all but one loan.

Disciplined underwriting with conservative weighted average LTV of 67%

The underwriting standards are intentionally conservative. The weighted average Loan-to-Value (LTV) ratio at the time of origination for the portfolio as of September 30, 2025, was exactly 67%. This low leverage point is a key differentiator. The portfolio's weighted average risk rating was 2.9 on a scale where 1 is the lowest risk. The allowance for credit losses was set at 1.5% of total loan commitments.

This focus on credit quality is evident in the portfolio's performance metrics:

• All loans current on debt service.
• Zero nonaccrual balances reported.
• Zero loans rated as a 5 (highest risk).

Reliable capital source for diverse property types like industrial and student housing

Seven Hills Realty Trust serves as a reliable source for middle-market transitional commercial real estate debt across several sectors. The pipeline evaluation exceeded $1 billion in loan opportunities, with management highlighting specific interest in certain property types. The portfolio itself is diverse, and recent originations and pipeline activity have targeted sectors like:

• Industrial properties.
• Student housing loans.
• Mixed-use retail and medical office.
• Hospitality assets.

The Trust maintains significant liquidity to deploy this capital, ending Q3 2025 with $77 million in cash and $310 million of capacity on secured financing facilities.

Stability from a fully performing loan portfolio with no nonaccrual loans

The stability proposition is grounded in the current performance. The portfolio is described as fully performing. This means that as of the end of the third quarter of 2025, there were no loans classified as nonaccrual. The weighted average all-in yield on the portfolio was 8.21% as of September 30, 2025. The current dividend declared was $0.28 per common share.

Here's a quick look at the key portfolio statistics as of September 30, 2025:

Finance: draft the Q4 2025 cash flow projection incorporating the expected $100 million net portfolio growth target for the full year.

Seven Hills Realty Trust (SEVN) - Canvas Business Model: Customer Relationships

Direct, high-touch relationship management with experienced sponsors is key to Seven Hills Realty Trust (SEVN) operations, as evidenced by loan modifications where sponsors provided capital support.

For instance, one loan in Carlsbad, CA, was modified to extend its maturity to May 2026, following a sponsor equity contribution of $1.1 million to fund reserves since 2024. Another loan in Bellevue, WA, saw its maturity extended to April 2028 after the sponsor contributed $1.6 million in additional equity. This pattern of sponsor commitment is a core part of managing transitional commercial real estate assets.

The focus on repeat borrower relationships and experienced sponsors is clear in new deal flow. SEVN closed a $34.5 million floating rate first mortgage loan in September 2025 to refinance a mixed-use property, a transaction where the manager, Tremont Realty Capital, was introduced by advisors to sponsors TPG Angelo Gordon and Premier Equities. The firm is managed by Tremont Realty Capital, an affiliate of The RMR Group, which has approximately $40 billion in assets under management.

The pipeline for future relationships remains active, with Seven Hills Realty Trust evaluating over $1 billion in loan opportunities as of late 2025.

Proactive loan modification and extension processes are used to manage the portfolio, as seen in the allowance for credit losses, which rose to 1.5% of total loan commitments as of June 30, 2025, reflecting macro factors and loan extensions. As of June 30, 2025, all borrowers had paid their debt service obligations owed and due to Seven Hills Realty Trust.

Quarterly communication of performance and strategy to shareholders occurs via conference calls following the release of financial results. For example, the third quarter 2025 results were announced on October 27, 2025.

Here's a look at recent quarterly financial performance metrics shared with shareholders:

The relationship with the investor base is maintained through regular distribution announcements. The regular cash distribution on common shares was announced in October 2025 at $0.28 per share, which annualizes to $1.12 per share per year.

The firm's operational structure supports these relationships:

• Loan originations in Q2 2025 totaled $46.0 million.
• Q3 2025 saw $101.3 million deployed across three new loan investments.
• The debt-to-equity ratio remained conservative at approximately 1.6x as of mid-2025.
• Cash on hand was $46.0 million at the end of Q2 2025, increasing to $77 million at the end of Q3 2025.

Seven Hills Realty Trust (SEVN) - Canvas Business Model: Channels

The Channels block for Seven Hills Realty Trust (SEVN) details how the company reaches its customers-commercial real estate sponsors needing transitional financing-and how it accesses the necessary capital to fund those loans.

Internal origination team and network via Tremont Realty Capital

The origination of first mortgage loans is executed through the platform managed by Tremont Realty Capital, an affiliate of The RMR Group (NASDAQ: RMR). Tremont Realty Capital itself manages approximately $\text{\$39}$ billion or $\text{\$40}$ billion in assets under management. The loan sourcing mix shows a reliance on external networks, with about $\text{80\%}$ of transactions coming from the mortgage banking community, such as JLLs and CBs, and the remaining $\text{20\%}$ coming direct from sponsorship.

Direct lending to commercial real estate sponsors

Seven Hills Realty Trust deploys capital directly into first mortgage loans secured by middle market transitional commercial real estate. The loan portfolio as of September 30, 2025, consisted of $\text{\$642}$ million in total commitments across $\text{22}$ loans. Recent deployment activity included closing a $\text{\$34.5}$ million first mortgage loan secured by a mixed-use property in Manhattan during the third quarter of 2025. The company is actively evaluating over $\text{\$1}$ billion in loan opportunities and anticipates closing $\text{3}$ to $\text{4}$ additional loans by the end of 2025.

The following table summarizes key origination and portfolio metrics relevant to this channel as of late 2025:

Public equity markets for capital access (NASDAQ: SEVN)

Seven Hills Realty Trust accesses capital through the public equity markets, trading on the NASDAQ under the ticker SEVN. As of early December 2025, the stock was trading around $\text{\$8.72}$ to $\text{\$8.80}$. The market capitalization was reported at $\text{\$128,359,951}$. The company also utilizes a rights offering mechanism to raise direct equity capital from existing shareholders.

The company declared an annualized dividend of $\text{\$1.12}$ per common share, which represented a current yield of $\text{12.84\%}$ based on the reported price data. The 52-week trading range for SEVN was between a low of $\text{\$8.62}$ and a high of $\text{\$13.97}$ as of late 2025.

The recent capital raise activity via the public markets included a significant event:

• Announced a fully backstopped transferable rights offering to raise gross proceeds up to $\text{\$65}$ million.
• Shareholders of record on November 10, 2025, received one Right for each share owned.
• Holders could purchase one new Common Share for every two Rights held.
• The subscription price per share was set at $\text{\$8.65}$.
• The Rights were expected to trade on Nasdaq under the symbol SEVNR.
• The offering was registered on Form S-3 (File No. $\text{333-290401}$) declared effective on September 29, 2025.

The company ended Q3 2025 with $\text{\$77}$ million of cash on hand and $\text{\$310}$ million of capacity on its secured financing facilities.

Investor relations and SEC filings for shareholder communication

Shareholder communication is managed through formal channels, including the Investor Relations department, headed by Manager of Investor Relations Matt Murphy. Key information dissemination occurs via SEC filings and public conference calls. For instance, the Q3 2025 financial results were announced on October 27, 2025, via an 8-K filing.

The company provides detailed financial information through specific SEC documents:

• Q3 2025 results press release furnished as Exhibit $\text{99.1}$ of a Form 8-K.
• Q3 2025 results presentation furnished as Exhibit $\text{99.2}$ of a Form 8-K.
• The rights offering documentation was filed under Form S-3 (File No. $\text{333-290401}$).
• The rights themselves were expected to trade under the symbol SEVNR.

The Q3 2025 conference call was held on October 28, 2025, at $\text{11:00}$ a.m. Eastern Time. Seven Hills Realty Trust reported distributable earnings of $\text{\$4.2}$ million, or $\text{\$0.29}$ per share, for the third quarter. The declared regular quarterly dividend was $\text{\$0.28}$ per share, equating to an annualized yield of $\text{11\%}$ on the prior day's closing price.

Seven Hills Realty Trust (SEVN) - Canvas Business Model: Customer Segments

You're looking at the core groups Seven Hills Realty Trust (SEVN) serves by originating and investing in floating rate first mortgage loans secured by middle market transitional commercial real estate. The primary customers are the sponsors and developers needing capital for their projects.

Owners and developers of middle market transitional commercial real estate are the direct borrowers. Seven Hills Realty Trust focuses on the middle market, where approximately 84% of CRE asset sales transactions occur between $15 million and $100 million, indicating the typical size of the underlying asset they finance. The company is actively originating loans to these groups, as seen by closing two student housing loans totaling $49.7 million in the first quarter of 2025. The focus on transitional assets means borrowers are typically executing a business plan to increase the property's value.

Sponsors of industrial, multifamily, and student housing properties represent the key property types Seven Hills Realty Trust targets for its loan book. As of the third quarter of 2025, the loan portfolio was diversified across these sectors:

• Multifamily represented 29% of the total principal balance.
• Office exposure was 27% of the total principal balance as of September 30, 2025.
• Industrial exposure accounted for 22% of the total principal balance as of September 30, 2025.
• Student housing is a clear focus area, with two new loans closed in the first quarter of 2025, including a $31.2 million loan in San Marcos and an $18.5 million loan in Waco.

Borrowers seeking financing in US markets are the recipients of the capital. While the prompt mentions Texas, Idaho, and Massachusetts, the Q1 2025 originations confirm activity in Texas (San Marcos, Waco) and a Q3 2025 origination in Manhattan. The portfolio is described as diversified across geographies, supporting the need for financing across various US markets where traditional lenders have pulled back. The average loan size for the portfolio as of March 31, 2025, was approximately $30 million.

Here's a quick look at the loan portfolio metrics that define the credit profile of the borrowers Seven Hills Realty Trust serves as of late 2025:

Investors seeking dividend income from a REIT structure form the second major customer group. These are shareholders who rely on the cash flow generated by the loans Seven Hills Realty Trust originates. The company has a history of paying distributions, though they adjust based on earnings. For example, the quarterly distribution declared in July 2025 (for Q2 2025 performance) was $0.28 per common share, while the Q1 2025 distribution was $0.35 per share. Distributable earnings (DE) per share for Q3 2025 were $0.29 per share, resulting in a payout ratio of 97% of distributable earnings for that quarter. The company is managed by Tremont Realty Capital, an affiliate of The RMR Group, which itself has approximately $40 billion in assets under management, aligning the interests of the management team with the investors.

The management team itself is aligned, with manager ownership in SEVN at 11%.

Seven Hills Realty Trust (SEVN) - Canvas Business Model: Cost Structure

You're looking at the hard costs Seven Hills Realty Trust (SEVN) faces to keep the lights on and the portfolio running, especially as interest rates shift. This is where the rubber meets the road for a mortgage REIT.

The cost of debt is a primary driver here. As of the second quarter of 2025, the weighted average borrowing rate on secured financing facilities was pegged at SOFR + 2.20%. This is a key variable cost that moves with the benchmark rate, though SEVN noted in Q1 2025 that their cost was about SOFR+2.21%.

Credit risk management also carries a direct cost. For the second quarter of 2025, Seven Hills Realty Trust recorded a \$0.912 million provision for credit losses. This provision increased the allowance for credit losses to 1.5% of total loan commitments as of June 30, 2025.

Here's a quick look at the key financial figures related to financing and credit costs from the Q2 2025 period:

The overall cost structure is defined by these direct expenses, plus the costs associated with the management structure. You should keep an eye on how the deployment of that \$322.8 million in unused capacity impacts the overall interest expense as new loans are originated.

The major elements contributing to the Cost Structure are:

• Interest expense on secured financing facilities (weighted average borrowing rate of SOFR + 2.20%)
• Provision for credit losses (e.g., \$0.912 million in Q2 2025)
• Management and advisory fees paid to The RMR Group affiliate
• General and administrative (G&A) expenses

Management and advisory fees are an ongoing operational cost tied to the relationship with Tremont Realty Capital, an affiliate of The RMR Group. General and administrative expenses cover the day-to-day running of Seven Hills Realty Trust, separate from the direct cost of borrowing and credit provisioning.

Finance: draft 13-week cash view by Friday.

Seven Hills Realty Trust (SEVN) - Canvas Business Model: Revenue Streams

You're looking at the core income drivers for Seven Hills Realty Trust as of late 2025. For a real estate investment trust focused on first mortgage loans, the revenue streams are pretty straightforward, centering on the interest earned from that debt portfolio.

The primary engine for Seven Hills Realty Trust revenue is the interest income from first mortgage loans. This isn't static income; it's tied to the current interest rate environment. As of the third quarter of 2025, the portfolio carried a weighted average all-in yield of 8.21%. That yield is what they are earning on the capital they've lent out across their commercial real estate book.

Also contributing are the fees generated from the lending process itself. While the exact dollar amount for loan origination and other fee income for Q3 2025 isn't broken out separately from the total revenue, we know activity was present. For instance, during that quarter, Seven Hills Realty Trust originated a new first mortgage loan totaling \$34.5 million. Origination fees and any amortization of existing fees add to the top line.

Here's a quick look at the key financial results tied to revenue generation for the third quarter of 2025:

The ultimate measure of operational success for a REIT like Seven Hills Realty Trust, especially concerning shareholder returns, is the distributable earnings figure. For Q3 2025, the reported Distributable Earnings were \$0.29 per share. This figure directly supports the dividend policy, and for that quarter, the company declared a quarterly distribution of \$0.28 per common share.

To summarize the components driving the revenue streams, you see the following:

• Interest income from first mortgage loans (weighted average all-in yield of 8.21% in Q3 2025).
• Loan origination and other fee income.
• Q3 2025 Total Revenue of \$7.09 million.
• Distributable Earnings of \$0.29 per share for Q3 2025.

Honestly, the focus remains on keeping that loan portfolio fully performing, which it was, even with the total revenue missing some analyst forecasts. Finance: draft Q4 2025 cash flow projection by next Tuesday.