Weekly Real Estate News
Summary
Seven Hills Realty Trust closed $98 million of new first mortgage loans, received $68 million from repayments and reduced office exposure to roughly 13% while expanding capacity for new commercial real estate lending.
Seven Hills Realty Trust has closed $98 million of new first mortgage investments while loan repayments helped cut the commercial mortgage REIT’s office exposure to approximately 13% of its portfolio.
In an Oct. 5 business update distributed by Business Wire, Seven Hills said the two new loans are secured by multifamily and mixed-use properties. The company also received $68 million from the repayment of two loans.
Office exposure fell from 19% as of June 30 to roughly 13% as of Sept. 30, based on outstanding principal balances. Seven Hills said one repayment increased lending capacity by approximately $46 million because the loan carried limited financing relative to its other investments.
Capital moves toward newer loans
The company said that repaid loan carried a net interest margin approximately 80 basis points below the weighted average margin on new Seven Hills loans closed year to date. A separate $25.3 million loan secured by a self-storage property in Fayetteville, Georgia, was also repaid in full; its margin was approximately 100 basis points below the year-to-date new-loan average.
Since the beginning of the third quarter, Seven Hills has closed $122.3 million of first mortgage investments, including the two loans announced Monday.
The lender also has three loans totaling $121.7 million in diligence that it expects could close during the fourth quarter. Those transactions remain subject to closing conditions and are not completed investments.
Seven Hills is a mortgage REIT focused on first mortgage loans secured by middle-market transitional commercial real estate. It is managed by Tremont Realty Capital, an affiliate of The RMR Group.
The update illustrates an increasingly important theme in commercial real estate credit: repayments can create an opportunity for lenders to rotate out of older, lower-spread assets and redeploy capital into loans priced for today’s higher-rate environment. For Seven Hills, that rotation is also reducing exposure to office at a time when the sector continues to face uneven leasing and valuation conditions.
The company is scheduled to report third-quarter results after the Nasdaq close on Oct. 27 and discuss the quarter on an Oct. 28 earnings call.
