Seven Hills Realty Trust
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Item 1. Business
Our Company. Seven Hills Realty Trust is a Maryland REIT that focuses primarily on originating and investing in floating rate first mortgage loans that range from $15.0 million to $75.0 million, secured by middle market transitional CRE properties that have values up to $100.0 million. We define transitional CRE as commercial properties subject to redevelopment or repositioning activities that are expected to increase the value of the properties.
As of December 31, 2025, we had a portfolio of 24 floating rate first mortgage loans with aggregate loan commitments of $724.5 million with a weighted average maximum maturity of 2.6 years, a weighted average coupon rate and a weighted average all in yield of 7.52% and 7.92%, respectively, and a weighted average interest rate floor of 2.81%.
We operate our business in a manner consistent with our qualification for taxation as a REIT under the Internal Revenue Code of 1986, or the IRC. As such, we generally are not subject to U.S. federal income tax, provided that we meet certain distribution and other requirements. We also operate our business in a manner that permits us to maintain our exemption from registration under the 1940 Act.
Our principal executive offices are located at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634, and our telephone number is 617-332-9530.
Our Investment and Leverage Strategies. Our primary investment strategy is to balance capital preservation with generating attractive, risk adjusted returns by creating customized loan structures tailored to borrowers’ specific business plans for the underlying collateral properties. To this end, the loans that we target for origination and investment generally have the following characteristics:
•first mortgage loans with principal balances ranging from $15.0 million to $75.0 million;
•stabilized loan to value ratios, or LTVs, of 75% or less;
•terms of five years or less;
•floating interest rates based on the Secured Overnight Financing Rate, or SOFR, plus a margin that is competitive in the market;
•non-recourse to sponsors (subject to customary non-recourse carve-out guarantees); and
•secured by middle market transitional CRE across the United States that are equity owned by well capitalized sponsors with experience investing in the relevant property type.
We invest in floating rate first mortgage loans that provide bridge financing on transitional CRE properties. These investments typically are secured by properties undergoing redevelopment or repositioning activities that are expected to increase the value of the properties. We fund these loans over time as the borrowers’ business plans for the properties are executed. Our loans secured by transitional CRE are typically bridge loans that are refinanced with the proceeds from other CRE mortgage loans or property sales. We expect to receive origination fees for bridge loans we make and we may also receive exit fees, extension fees, modification or similar fees in connection with some of our bridge loans.
Bridge loans may lead to future investment opportunities for us, including making mortgage loans to repay our transitional loans, otherwise known as “takeout mortgage loans.” We may also originate or acquire subordinated and mezzanine loans, which are loans secured by junior mortgages on the underlying collateral property or loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests in the entity that owns the interest in the entity owning the property.
Our strategy to invest in floating rate first mortgage loans generally will result in an increase to our net income in periods of rising interest rates and a decrease to our net income in periods of declining interest rates. Decreases to our net income during periods of declining interest rates may be mitigated by active interest rate floors that are higher than the applicable benchmark index. As of December 31, 2025, 96.6% of our loan portfolio by principal outstanding had interest rate floors in place with a weighted average floor of 2.81%. As of December 31, 2025, SOFR was 3.69%, and as a result, seven of our loan investments had an active interest rate floor.
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We generally seek to match the terms of our financing, including benchmark indices and duration, to the loans we originate and pledge as collateral. As of December 31, 2025, all amounts outstanding under our financing agreements pay interest at floating rates that are not subject to floors. We currently expect that our leverage, on a debt to equity basis, will generally be below a ratio of 3.5:1. As of December 31, 2025, our debt to equity ratio was 1.5:1.
We employ direct leverage, and we may employ structural leverage, on our first mortgage loan investments. Our direct leverage is from repurchase facilities and other secured financing facilities for which we may pledge our first mortgage loans as collateral. If we employ structural leverage, we expect it will involve the sale of senior interests in first mortgage loans, such as A-Notes, to third parties and our retention of B-Notes and other subordinated interests in the loans.
As of December 31, 2025, we had a portfolio of 24 loans held for investment with a total commitment of $724.5 million, of which $36.9 million remained unfunded. The charts below detail the geographic region and property type of the properties securing the loans in our portfolio by amortized cost as of December 31, 2025:
For further information regarding our loans held for investment, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 3 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.
We believe that our investment and leverage strategies are appropriate for the current market environment. However, we may change our investment and leverage strategies from time to time to capitalize on investment opportunities at different times in the economic and CRE investment cycle. We believe that the flexibility of our investment and leverage strategies and the experience and resources of Tremont and its affiliates will allow us to take advantage of changing market conditions to preserve capital and generate attractive risk adjusted returns on our investments. Our investment and leverage strategies may be changed, amended, supplemented or waived at any time by our Board of Trustees without shareholder approval.
Our Financing Policies. To maintain our qualification for taxation as a REIT under the IRC, we must distribute at least 90% of our annual REIT taxable income (excluding capital gains) and satisfy a number of organizational and operational requirements. Accordingly, we generally will not be able to retain sufficient cash from operations to fund our loan originations or investments. Instead, we expect to fund our loan originations or investments by utilizing our existing debt facilities or other future financing arrangements, issuing debt or equity securities or using retained cash from operations that may exceed any distributions we make.
We will decide when and whether to issue equity or new debt depending upon market conditions and other factors. Because our ability to raise capital depends, in large part, upon market conditions, we cannot be sure that we will be able to raise sufficient capital to fund our growth strategies. We expect to repay our debts through repayments from our borrowers on loans held for investment.
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We funded our loan originations to date using cash on hand and advancements under our debt facilities. For further information regarding our debt agreements and our financing sources and activities, see Note 5 to our Consolidated Financial Statements included in Part IV, Item 15 and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” of this Annual Report on Form 10-K.
Our Board of Trustees may change our financing policies at any time without a vote of, or notice to, our shareholders.
Competition. The financial services industry and CRE markets are highly competitive. We compete with a variety of banks, insurance companies, other financial institutions, specialty finance companies and public and private funds, including mortgage REITs, that Tremont, RMR or their subsidiaries currently, or may in the future, sponsor, advise or manage. Some of our competitors may have a lower cost of funds and greater financial and other resources than we have. Many of our competitors are not subject to the operating constraints associated with maintaining REIT status, SEC reporting compliance or maintaining an exemption from registration as an investment company under the 1940 Act.
For additional information about competition and other risks associated with our business, see Item 1A, “Risk Factors—We operate in a highly competitive market for investment opportunities and competition may limit our ability to originate or acquire our target investments on attractive terms or at all” in this Annual Report on Form 10-K.
Our Manager, Tremont Realty Capital LLC. Tremont manages our day to day operations, subject to the oversight and direction of our Board of Trustees. Tremont is an investment adviser registered with the SEC, that is owned by RMR, the majority owned operating subsidiary of The RMR Group Inc., or RMR Inc., a holding company listed on The Nasdaq Stock Market LLC, or Nasdaq.
RMR is an alternative asset management company that provides management services to a wide range of real estate assets, including CRE and related businesses. RMR or its subsidiaries also act as a manager to other publicly traded real estate companies, privately held real estate funds and real estate related operating businesses. Most of the CRE assets under management by RMR are middle market properties owned by four publicly traded equity REITs that are managed by RMR. As manager, RMR is responsible for implementing investment strategies and managing day-to-day operation of its managed companies, including the oversight of significant capital expenditure budgets for building improvements and property redevelopment.
As of December 31, 2025, RMR Inc. had over $37 billion of real estate assets under management, approximately 1,800 properties and 40 years of institutional experience in buying, selling, financing and operating CRE.
We believe that Tremont’s relationship with RMR provides us with a depth of market knowledge that may allow us to identify high quality investment opportunities and to evaluate them more thoroughly than many of our competitors, including other commercial mortgage REITs. We also believe that RMR’s broad platform provides us with access to its extensive network of real estate owners, operators, intermediaries, sponsors, financial institutions and other real estate related professionals and businesses with which RMR has historical relationships. We also believe that Tremont provides us with significant experience and expertise in investing in middle market transitional CRE.
As of February 13, 2026, the executive officers of RMR are: Adam Portnoy, president and chief executive officer; Christopher J. Bilotto, executive vice president; Matthew C. Brown, executive vice president, chief financial officer and treasurer; Yael Duffy, executive vice president; Lindsey A. Getz, executive vice president, general counsel and secretary; Matthew P. Jordan, executive vice president and chief operating officer; Jeffrey C. Leer, executive vice president; and John G. Murray, executive vice president. Messrs. Portnoy and Jordan are our Managing Trustees. Our President and Chief Investment Officer, Thomas J. Lorenzini, our Chief Financial Officer and Treasurer, Matthew C. Brown, and our Vice President, Jared R. Lewis, are officers and employees of Tremont and/or RMR.
For further information about these and other such relationships and related person transactions, see Item 1A, “Risk Factors—Risks Relating to Our Relationships with Tremont and RMR” and Notes 8 and 9 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.
Sustainability, Environmental and Climate Change Matters. We are managed by Tremont, a subsidiary of RMR. As such, many of the environmental, social and governance, or ESG, initiatives employed by RMR apply to us. RMR periodically publishes its Sustainability Report, which summarizes the ESG initiatives employed by RMR and its clients, including us. RMR’s Sustainability Report may be accessed on the RMR Inc. website at www.rmrgroup.com/corporate-sustainability/default.aspx. The information on or accessible through RMR Inc.’s website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this report.
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We are committed to responsibly managing risk and preserving capital. We consider the ESG characteristics of potential borrowers and collateral properties when evaluating investment opportunities, performing due diligence procedures and making capital allocation decisions. In addition to incorporating ESG diligence practices in our investment process, where available, we also share key ESG initiatives with Tremont and RMR, including corporate sustainability and environmental improvements at our office locations and diversity, equality and inclusion programs.
Investments in Human Capital. We have no employees. All services that would otherwise be provided to us by employees are provided or arranged by Tremont. As of December 31, 2025, RMR had nearly 900 employees, including Tremont’s employees, located at its headquarters and more than 30 offices throughout the United States.
Corporate Citizenship. We seek to be a responsible corporate citizen and to strengthen the communities in which we operate. Tremont regularly encourages its employees to engage in a variety of charitable and community programs, including participating in a company-wide service day and charitable gift giving matching program.
Diversity & Inclusion. We value a diversity of backgrounds, experience and perspectives. As of December 31, 2025, our Board was comprised of seven Trustees, of which five were independent trustees. Our Board of Trustees is comprised of approximately 29% women and members of underrepresented communities. RMR is an equal opportunity employer, with all qualified applicants receiving consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability or protected veteran status.
Government Regulation. Our operations are subject, in certain instances, to supervision and regulation by state and federal governmental authorities, and may be subject to various laws and judicial and administrative decisions imposing various requirements and restrictions, which, among other things: (a) regulate credit granting activities; (b) establish maximum interest rates, finance charges and other charges; (c) require disclosures to customers; (d) govern secured transactions; (e) set collection, foreclosure, repossession and claims handling procedures and other trade practices; (f) govern privacy of customer information; and (g) regulate anti-terror and anti-money laundering activities.
In our judgment, existing statutes and regulations have not had a material adverse effect on our business. While we expect that additional new regulations in these areas will be adopted and existing regulations may change in the future, it is not possible at this time to forecast the exact nature of any future legislation, regulations, judicial decisions, orders or interpretations, nor their impact upon our future business, financial condition or our results of operations or prospects.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our condensed consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q and in our 2025 Annual Report.
OVERVIEW (dollars in thousands, except share data)
We are a Maryland REIT. Our business strategy is focused on originating and investing in floating rate first mortgage loans that range from $15,000 to $75,000, secured by middle market transitional CRE properties that have values up to $100,000. We define transitional CRE as commercial properties subject to redevelopment or repositioning activities that are expected to increase the value of the properties.
Tremont is registered with the Securities and Exchange Commission, or SEC, as an investment adviser under the Investment Advisers Act of 1940, as amended. We believe that Tremont provides us with significant experience and expertise in investing in middle market transitional CRE.
We operate our business in a manner that is consistent with our qualification for taxation as a REIT under the IRC. As such, we generally are not subject to U.S. federal income tax, provided that we meet certain distribution and other requirements. We also operate our business in a manner that permits us to maintain our exemption from registration under the Investment Company Act of 1940, as amended, or the 1940 Act.
Factors Affecting Operating Results
Our results of operations are primarily impacted by general CRE market conditions and unanticipated defaults by our borrowers. For further information regarding the risks associated with our loan portfolio, see Note 3 to the Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 and elsewhere in this Management Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report on Form 10-Q and Part I, Item 1A, "Risk Factors" of our 2025 Annual Report.
Credit Risk. We are subject to the credit risk of our borrowers in connection with our investments. We seek to mitigate this risk by utilizing a comprehensive underwriting, diligence and investment selection process and by ongoing monitoring of our investments. Nevertheless, unanticipated credit losses could occur that may adversely impact our operating results.
Changes in Fair Value of our Assets. We generally intend to hold our investments for their contractual terms, unless repaid earlier by the borrowers. We evaluate the credit quality of each of our loans at least quarterly. If a loan is determined to be collateral dependent (because the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral property) and the borrower is experiencing financial difficulties, but foreclosure is not probable, we may record an allowance for credit losses by comparing the collateral's fair value to the amortized cost basis of the loan. For collateral-dependent loans for which foreclosure is probable, the related allowance for credit losses is determined using the fair value of the collateral compared to the loan's amortized cost.
Availability of Leverage and Equity. We use leverage to make additional investments that may increase our returns. We may not be able to obtain the expected amount of leverage we desire or its cost may exceed our expectation and, consequently, the returns generated from our investments may be reduced. Our ability to further grow our loan portfolio over time will depend, to a significant degree, upon our ability to obtain additional capital. However, our access to additional capital depends on many factors including the price at which our common shares trade relative to their book value and market lending conditions. See "—Market Conditions" below.
Market Conditions. During the first quarter of 2026, CRE market conditions reflected a continuation of the stabilization trends that emerged in the second half of 2025. CRE transaction activity continued to show signs of recovery early this quarter, supported by improving property‑level fundamentals, substantial liquidity in debt capital markets and increased confidence in underwriting assumptions.
The relative value of CRE debt investments today compared to alternative corporate or private debt investments continues to drive demand from lenders, including banks, securitized lenders, life insurance companies, private debt funds and mortgage REITs. This increased competition amongst lenders has led to a tightening of credit spreads and lower overall borrowing costs for CRE debt investors across all property sectors.
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More recent geopolitical developments in the Middle East have the potential to affect U.S. economic conditions and has complicated the outlook for U.S. monetary policy. The potential for future Federal Open Markets Committee, or FOMC, interest rate cuts in the near term is lower today than at the beginning of the year. However, the FOMC has indicated it intends to remain patient as it evaluates the potential impact of these events on oil prices and, in turn, U.S. economic growth and labor market conditions.
To date, demand for CRE debt in the U.S. has not been materially impacted by geopolitical events and there continues to be a significant amount of maturing CRE debt to be refinanced in the coming year. While the duration and ultimate economic impact of the Middle East conflict remain uncertain, continued volatility in energy prices and financial markets could influence inflation trends, interest‑rate expectations, and economic growth, all of which may affect commercial real estate investment conditions in 2026.
Changes in Interest Rates. With respect to our business operations, increases in interest rates, in general, may cause: (a) the coupon rates on our variable rate investments to reset, perhaps on a delayed basis, to higher rates; (b) it to become more difficult and costly for our borrowers, which may negatively impact their ability to repay our investments; and (c) the interest expense associated with our variable rate borrowings to increase.
Conversely, decreases in interest rates, in general, may cause: (a) the coupon rates on our variable rate investments to reset, perhaps on a delayed basis, to lower rates; (b) it to become easier and more affordable for our borrowers to refinance, and as a result, repay our loans, but may negatively impact our future returns if any such repayment proceeds were to be reinvested in lower yielding investments; and (c) the interest expense associated with our variable rate borrowings to decrease.
The interest income on our loans and interest expense on our borrowings float with benchmark rates, such as SOFR. Because we generally intend to leverage up to 80% of the amount of our investments, as benchmark rates increase above the floors of our loans, our income from investments, net of interest and related expenses, will increase. Decreases in benchmark rates are mitigated by interest rate floor provisions in all but one of our loan agreements with borrowers, ranging from 0.25% to 4.34% with a weighted average floor of 2.83%; therefore, changes to income from investments, net, may not move proportionately with the increase or decrease in benchmark rates. As of March 31, 2026, SOFR was 3.66%, and as a result, seven of our loan investments had an active interest rate floor.
Size of Portfolio. The size of our loan portfolio, as measured both by the aggregate principal balance and the number of our CRE loans and our other investments, is also an important factor in determining our operating results. Generally, if the size of our loan portfolio grows, the amount of interest income we receive would increase and we may achieve certain economies of scale and diversify risk within our loan portfolio. A larger portfolio, however, may result in increased expenses; for example, we may incur additional interest expense or other costs to finance our investments. Also, if the aggregate principal balance of our loan portfolio grows but the number of our loans or the number of our borrowers does not grow, we could face increased risk by reason of the concentration of our investments.
Prepayment Risk. We are subject to risk that our loan investments will be repaid at an earlier date than anticipated, which may reduce the returns realized on those loans as less interest income may be received over time. Additionally, we may not be able to reinvest the principal repaid timely and/or at a similar or higher yield of the original loan investment. We seek to limit this risk by structuring our loan agreements with fees required to be paid to us upon prepayment of a loan within a specified period of time before the loan’s maturity; however, unanticipated prepayments could negatively impact our operating results.
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Our Loan Portfolio
The table below details 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 | ||||||||||
Weighted average LTV (4) | 66 | % | 66 | % | ||||||||
(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.
(4)LTV represents the initial loan amount divided by the underwritten in-place value of the underlying collateral at closing.
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Loan Portfolio Details
The table below details our loan portfolio as of March 31, 2026:
| # | Location | Property Type | Origination Date | Committed Principal Amount | Principal Balance | Coupon Rate | All in Yield (1) | Maximum Maturity (date) (2) | LTV (3) | Risk Rating | ||||||||||||||||||||||||||||||||||||||||||||||||
| First mortgage loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1 | Olmsted Falls, OH (4) | Multifamily | 01/28/2021 | $ | 54,575 | $ | 54,575 | S + 4.00% | S + 4.15% | 04/15/2026 | 63 | % | 1 | |||||||||||||||||||||||||||||||||||||||||||||
| 2 | Passaic, NJ | Industrial | 09/08/2022 | 47,000 | 45,260 | S + 3.85% | S + 4.42% | 09/08/2027 | 69 | % | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
| 3 | Dallas, TX | Office | 08/25/2021 | 46,811 | 44,217 | S + 3.25% | S + 3.27% | 08/25/2026 | 72 | % | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
| 4 | Boston, MA | Hotel | 12/16/2024 | 45,000 | 39,800 | S + 3.95% | S + 4.39% | 12/16/2029 | 49 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 5 | Oxford, MS | Student Housing | 11/26/2024 | 42,000 | 42,000 | S + 2.95% | S + 3.35% | 11/26/2029 | 75 | % | 1 | |||||||||||||||||||||||||||||||||||||||||||||||
| 6 | College Park, MD | Student Housing | 11/12/2025 | 37,320 | 28,327 | S + 2.95% | S + 3.45% | 11/12/2030 | 43 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 7 | Revere, MA | Hotel | 07/01/2024 | 37,000 | 37,000 | S + 3.95% | S + 5.14% | 07/01/2029 | 73 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 8 | New York, NY | Mixed Use | 09/05/2025 | 34,500 | 34,500 | S + 3.20% | S + 4.02% | 09/05/2030 | 70 | % | 2 | |||||||||||||||||||||||||||||||||||||||||||||||
| 9 | San Marcos, TX | Student Housing | 01/14/2025 | 31,200 | 28,811 | S + 3.25% | S + 3.67% | 01/14/2030 | 62 | % | 2 | |||||||||||||||||||||||||||||||||||||||||||||||
| 10 | Atlanta, GA | Medical Office | 02/05/2026 | 30,500 | 25,500 | S + 3.95% | S + 4.42% | 02/05/2031 | 66 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 11 | Anaheim, CA | Hotel | 11/29/2023 | 29,000 | 29,000 | S + 4.00% | S + 4.05% | 11/29/2028 | 55 | % | 2 | |||||||||||||||||||||||||||||||||||||||||||||||
| 12 | San Antonio, TX | Industrial | 06/13/2025 | 28,000 | 22,800 | S + 3.40% | S + 3.88% | 06/13/2030 | 62 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 13 | Plano, TX | Office | 07/01/2021 | 27,385 | 26,569 | S + 3.75% | S + 3.76% | 07/01/2026 | 78 | % | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
| 14 | Downers Grove, IL | Office | 09/25/2020 | 27,000 | 26,500 | S + 5.00% | S + 5.15% | 05/22/2026 | 67 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 15 | Wayne, PA | Industrial | 07/18/2024 | 27,000 | 25,252 | S + 4.25% | S + 4.72% | 07/18/2029 | 62 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 16 | Fayetteville, GA | Self Storage | 10/06/2023 | 25,250 | 25,250 | S + 3.35% | S + 3.73% | 10/06/2028 | 55 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 17 | Carlsbad, CA | Office | 10/27/2021 | 24,750 | 24,417 | S + 3.25% | S + 3.26% | 10/27/2026 | 78 | % | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
| 18 | Los Angeles, CA | Self Storage | 06/28/2024 | 23,800 | 23,092 | S + 3.40% | S + 3.82% | 06/28/2029 | 58 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 19 | Downers Grove, IL | Office | 12/09/2021 | 23,530 | 23,530 | S + 4.25% | S + 4.51% | 12/09/2026 | 72 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 20 | Fontana, CA | Industrial | 11/18/2022 | 22,080 | 20,470 | S + 3.75% | S + 4.03% | 11/18/2026 | 72 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 21 | Bellevue, WA | Office | 11/05/2021 | 21,000 | 20,817 | S + 2.85% | S + 2.85% | 04/07/2029 | 68 | % | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
| 22 | Palm Desert, CA | Retail | 02/25/2026 | 19,500 | 15,190 | S + 3.60% | S + 4.12% | 02/25/2031 | 72 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 23 | Waco, TX | Student Housing | 03/06/2025 | 18,500 | 18,500 | S + 3.35% | S + 3.75% | 03/06/2030 | 73 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 24 | Boise, ID | Multifamily | 06/26/2025 | 18,000 | 18,000 | S + 3.50% | S + 4.28% | 06/26/2030 | 79 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 25 | Newport News, VA | Multifamily | 04/25/2024 | 17,757 | 15,126 | S + 3.15% | S + 3.85% | 04/25/2029 | 71 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| 26 | Scottsdale, AZ | Hotel | 03/06/2026 | 17,500 | 17,500 | S + 3.85% | S + 4.44% | 03/06/2031 | 63 | % | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total/weighted average | $ | 775,958 | $ | 732,003 | S + 3.63% | S + 4.03% | 66 | % | 2.8 | |||||||||||||||||||||||||||||||||||||||||||||||||
(1)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.
(2)Maximum maturity assumes all borrower loan extension options have been exercised, which options are subject to the borrower meeting certain conditions.
(3)LTV represents the initial loan amount divided by the underwritten in-place value of the underlying collateral at closing.
(4)This loan was repaid in April 2026.
As of March 31, 2026, we had $775,958 in aggregate loan commitments, consisting of a diverse portfolio, geographically and by property type, of 26 first mortgage loans. As of March 31, 2026, we had five loans representing approximately 22% of the amortized cost of our loan portfolio with a loan risk rating of “4” or “higher risk”. We have no “5” or “loss likely” rated loans.
In April 2025, we amended the agreement governing our loan secured by an office property in Bellevue, WA. As part of this amendment, the borrower was required to contribute $1,625 to cash reserves, the coupon rate was reduced from SOFR + 3.85% to SOFR + 2.85% and the maturity date was extended by three years to April 7, 2028. As of March 31, 2026, this loan had an amortized cost of $20,817 and a risk rating of 4.
In May 2025, we amended the agreement governing our loan secured by an office property in Downers Grove, IL. As part of this amendment, the borrower repaid $3,000 of the outstanding principal balance and the maturity date was extended by one year to May 22, 2026. As of March 31, 2026, this loan had an amortized cost of $26,650 and a risk rating of 3.
All of the loans in our portfolio are structured with risk mitigation mechanisms, such as cash flow sweeps or interest reserves, to help protect us against investment losses. In addition, we actively engage with our borrowers regarding the execution of their business plans for the underlying collateral, among other things.
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As of March 31, 2026 and April 24, 2026, all of our borrowers had paid their debt service obligations owed and due to us.
We did not have any outstanding past due loans or nonaccrual loans as of March 31, 2026. However, our borrowers' businesses, operations and liquidity may be materially adversely impacted by current inflationary pressures, interest rate fluctuations, supply chain issues or a prolonged economic slowdown or recession could amplify those negative impacts. As a result, they may become unable to pay their debt service obligations owed and due to us, which may result in an increased allowance for credit losses and/or recognition of income on a nonaccrual basis. For further information regarding our loan portfolio and risk rating policy, see Note 3 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, "—Factors Affecting our Operating Results" and "Warning Concerning Forward-Looking Statements" elsewhere in this Quarterly Report on Form 10-Q and the risk factors identified in Part I, Item 1A, “Risk Factors”, of our 2025 Annual Report.
Financing Activities
The table below is an overview of our Secured Financing Facilities as of March 31, 2026:
| Facility | Maturity Date | Principal Balance | Carrying Value | Unused Capacity | Maximum Facility Size | Collateral Principal Balance | ||||||||||||||||||||||||||||
| UBS Master Repurchase Facility | 02/18/2028 | $ | 142,417 | $ | 141,837 | $ | 107,583 | $ | 250,000 | $ | 208,538 | |||||||||||||||||||||||
| Wells Fargo Master Repurchase Facility | 03/13/2028 | 104,305 | 103,708 | 145,695 | 250,000 | 136,658 | ||||||||||||||||||||||||||||
| Citibank Master Repurchase Facility | 09/27/2026 | 135,715 | 135,513 | 79,285 | 215,000 | 200,409 | ||||||||||||||||||||||||||||
| BMO Facility | Various | 85,032 | 84,759 | 64,968 | 150,000 | 114,323 | ||||||||||||||||||||||||||||
| Total | $ | 467,469 | $ | 465,817 | $ | 397,531 | $ | 865,000 | $ | 659,928 | ||||||||||||||||||||||||
In February 2026, we amended our master repurchase agreement with UBS to extend the stated maturity date to February 18, 2028.
In February 2026, we amended our master repurchase agreement with Wells Fargo and made certain changes to the agreement, including extending the stated maturity date to March 13, 2028 and increasing the maximum facility size by $125,000 to $250,000.
The table below details our Secured Financing Facilities activities during the three months ended March 31, 2026:
| Carrying Value | |||||
| Balance at December 31, 2025 | $ | 487,657 | |||
| Borrowings | 31,725 | ||||
| Repayments | (52,531) | ||||
| Deferred fees | (1,422) | ||||
| Amortization of deferred fees | 388 | ||||
| Balance at March 31, 2026 | $ | 465,817 | |||
As of March 31, 2026, outstanding advancements under our Secured Financing Facilities had a weighted average interest rate of 5.84% per annum, excluding associated fees and expenses. As of March 31, 2026 and April 24, 2026, we had a $467,469 and $463,157, respectively, aggregate outstanding principal balance under our Secured Financing Facilities.
As of March 31, 2026, we were in compliance with all covenants and other terms under our Secured Financing Facilities.
For further information regarding our Secured Financing Facilities, see Note 5 to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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RESULTS OF OPERATIONS (amounts in thousands, except per share data)
Three Months Ended March 31, 2026 Compared to Three Months Ended December 31, 2025:
| Three Months Ended | |||||||||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | Change | % Change | ||||||||||||||||||||||||||
| INCOME FROM INVESTMENTS: | |||||||||||||||||||||||||||||
| Interest and related income | $ | 14,839 | $ | 14,217 | $ | 622 | 4.4 | % | |||||||||||||||||||||
| Less: interest and related expenses | (7,182) | (7,526) | 344 | 4.6 | % | ||||||||||||||||||||||||
| Income from loan investments, net | 7,657 | 6,691 | 966 | 14.4 | % | ||||||||||||||||||||||||
| Revenue from real estate owned | 682 | 613 | 69 | 11.3 | % | ||||||||||||||||||||||||
| Total revenue | 8,339 | 7,304 | 1,035 | 14.2 | % | ||||||||||||||||||||||||
| OTHER EXPENSES: | |||||||||||||||||||||||||||||
| Base management fees | 1,305 | 1,129 | 176 | 15.6 | % | ||||||||||||||||||||||||
| Incentive fees | — | ||||||||||||||||||||||||||||
Next expected filings
- ~2026-07-27 10-Q expected by 2026-08-08 (in 1 day)
- ~2026-10-26 10-Q expected by 2026-11-07 (in 92 days)
- ~2027-02-17 10-K expected by 2027-02-28 (in 206 days)
- ~2027-04-27 10-Q expected by 2027-05-09 (in 275 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-06-10 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits
- 2026-04-28 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-28 10-Q Quarterly Report
- 2026-02-18 10-K Annual Report
- 2026-02-18 8-K Earnings Release; Financial Statements and Exhibits
- 2025-12-10 8-K Other Events; Financial Statements and Exhibits
- 2025-11-10 8-K Other Events; Financial Statements and Exhibits
- 2025-10-30 8-K Other Events; Financial Statements and Exhibits
- 2025-10-30 8-K Other Events
- 2025-10-27 10-Q Quarterly Report
- 2025-10-27 8-K Earnings Release; Financial Statements and Exhibits
- 2025-09-19 S-3 Registration Statement
- 2025-07-28 10-Q Quarterly Report
- 2025-07-28 8-K Earnings Release; Financial Statements and Exhibits
- 2025-05-29 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits