Seven Hills Realty Trust reported its financial results for the second quarter of 2025, revealing a decline in both revenue and net income compared to the same period in 2024. For the three months ended June 30, 2025, total revenue was $7.4 million, down 21.1% from $9.4 million in the prior year. The company’s net income also decreased by 36.5%, falling to $2.7 million, or $0.18 per share, from $4.2 million, or $0.28 per share, in the same quarter of 2024. For the first half of 2025, total revenue was $15.0 million, a 20% decrease from $18.7 million in the first half of 2024, while net income dropped to $7.2 million from $9.5 million.
The decline in revenue was primarily attributed to a decrease in interest and related income, which fell to $14.4 million from $16.4 million year-over-year, reflecting lower weighted average coupon rates on loan investments. Additionally, the company reported a significant reduction in purchase discount accretion, which was fully recognized in the previous year. Despite a decrease in interest expenses, the overall income from loan investments netted $6.8 million, down from $8.8 million in the prior year. Revenue from real estate owned increased slightly to $558,000, compared to $568,000 in the previous year.
In terms of operational developments, Seven Hills Realty Trust expanded its loan portfolio, increasing the number of loans from 21 to 23, with total loan commitments rising to $665.4 million as of June 30, 2025, up from $641.2 million at the end of 2024. The weighted average coupon rate for the loan portfolio was reported at 8.03%, down from 8.24% at the end of the previous year. The company also noted an increase in its allowance for credit losses, which rose to $9.4 million, reflecting unfavorable commercial real estate pricing forecasts and extensions for certain loans.
Looking ahead, Seven Hills Realty Trust has declared a reduced quarterly distribution of $0.28 per share, totaling $4.2 million, to be paid on August 14, 2025. This reduction is attributed to expectations that loan repayment proceeds will be redeployed at lower net interest margins amid a declining SOFR index rate curve. The company remains focused on its strategy of originating and investing in floating-rate first mortgage loans secured by middle-market transitional commercial real estate, while navigating the challenges posed by current market conditions and interest rate fluctuations.
About Seven Hills Realty Trust
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