七山房地產信託 (SEVN) 2026 年第三季法說會：新增放款額達 1.223 億美元

重點提要

• Seven Hills Realty Trust 公布 2026 年第三季可分配盈餘為 380 萬美元，或每股 0.17 美元。若扣除達拉斯辦公室貸款 150 萬美元的已實現損失，可分配盈餘則為 530 萬美元，或每股 0.24 美元。
• 該公司承作了三筆貸款，總額達 1.223 億美元，創下 2021 年第四季以來最高的單季新承作貸款量。幾乎所有款項均在交割時撥付。
• 還款總額為 1.39 億美元。辦公室相關曝險自第二季末的 19% 降至第三季末的 13%，且在季後處置卡爾斯巴德 (Carlsbad) 辦公室貸款後進一步降至 10%。
• 投資組合的加權平均全包式收益率 (all-in yield) 約為 7.8%。所有借款人均按時履約還本付息，不過加權平均風險評級自 2.9 升至 3.2。
• 管理層預測第四季可分配每股盈餘為 0.25 美元至 0.27 美元，此數據未計入卡爾斯巴德貸款約每股 0.11 美元的已實現損失。
• 管理層目前預計，在 2027 年上半年將可持續維持 0.28 美元的季度股利發放覆蓋率，這反映出貸款交割時間比原先預期有所延後。

關鍵財務數據

業務與營運績效

Seven Hills 新承作了一筆以田納西州查塔努加 (Chattanooga) A 級多戶住宅房產為擔保的 6,800 萬美元貸款；一筆針對北卡羅來納州夏洛特 (Charlotte) 出租率達 95% 零售房產的 3,000 萬美元貸款；以及一筆以猶他州帕克城 (Park City) 高檔零售房產為擔保的 2,430 萬美元貸款。

達拉斯辦公室貸款以其 4,420 萬美元未償餘額的約 97% 達成處置，產生了 150 萬美元折價。該損失低於先前為該投資撥備的 630 萬美元 CECL 備抵損失。該筆還款也釋放了約 4,600 萬美元的投資額度。

季末過後，位於加州卡爾斯巴德 (Carlsbad) 的辦公室房產售出，產生約 2,210 萬美元資金，回收了該筆貸款 2,470 萬美元未償本金的約 90%。由此產生的約 260 萬美元損失與相關 CECL 備抵金額一致，並進一步釋放了約 1,100 萬美元的投資額度。

自 2018 年承作第一筆貸款以來，Seven Hills 已完成 72 筆貸款，總額達 19.3 億美元。管理層表示，累計已實現損失僅佔該總額的 0.2%。目前投資組合中近 80% 是自 2024 年以來新承作的。

該公司在第三季結束時，尚有兩筆於 9 月下旬承作、總額 9,800 萬美元的貸款未進行槓桿融資。若以典型預付率 (advance rates) 為其進行融資，將提供約 7,800 萬美元的額外流動性。Seven Hills 還將其花旗銀行 (Citibank) 融資額度展期至 2028 年 9 月，且在 2028 年之前沒有任何到期的融資設施。

管理層財務預測

管理層預計第四季可分配每股盈餘為 0.25 美元至 0.27 美元，不含卡爾斯巴德貸款約每股 0.11 美元的已實現損失。截至 9 月 30 日，該損失已全額提列備抵，因此管理層預期在第四季認列時不會對淨利產生影響。

目前有三筆總額超過 1.2 億美元的貸款正在進行盡職調查，預計將於第四季完成交割。管理層表示，在目前的利差與預付率下，投資組合每淨成長 1 億美元，單季可分配每股盈餘將增加約 0.04 美元。需要約 2.2 億美元的投資組合淨成長，才能填補第三季年化獲利率 (earnings run rate) 與季度股利之間的差距。

管理層預計在 2027 年上半年實現可持續的股利覆蓋率。此外，該公司的目標是到 2026 年底將投資組合規模提高至約 9 億美元（甚至更多），並預計在 2027 年將投資組合規模保持在 10 億至 11 億美元。

風險與關注事項

利率波動、長期公債殖利率上升、通膨疑慮、能源成本以及地緣政治不確定性，使得商業不動產融資環境更具挑戰性。管理層已觀察到房產交易活動放緩、放款機構重新定價，以及部分放款機構退出交易。

該投資組合仍保持 100% 浮動利率。管理層表示，基準利率持續上升將有助於增進獲利，但較高利率也可能影響借款人的再融資選擇與交易活動。

2026 年剩餘的辦公室到期貸款為一筆以芝加哥郊區出租率 95% 的房產為擔保的 2,350 萬美元貸款。Seven Hills 正與贊助人 (sponsor) 討論潛在的後續步驟，預計將在第四季提供最新進展。

Downers Grove 辦公室與 Fontana 工業物業貸款的風險評級從 3 級升至 4 級，主要是因為即將到期。管理層預期可能進行短期展期，但看好能獲得積極的解決方案。

分析師問答集錦

• 槓桿率：管理層預計隨著資本於 2026 年第四季和 2027 年初陸續投放，負債股權比將從 1.4 倍上升至 2 倍以上。
• 新承作貸款效益：由於查塔努加 (Chattanooga) 貸款利差較低且規模較大，拉低了本季的平均新承作利差。管理層引用目前定價中貸款的淨利潤率約為 145 至 165 個基點，並指出 160 至 180 個基點是合理的穩定狀態淨利差假設。
• 投資組合成長：在考慮卡爾斯巴德還款與預期的新交割後，管理層預計投資組合規模將達到約 8.5 億美元，之後將進一步朝年底目標成長。
• Yardley 辦公室資產：公司正在進行積極的租賃談判，有機會將出租率提升至 90% 以上。管理層計劃在 2027 年上半年至年中尋求變現，潛在可釋放超過 4,000 萬美元的貸款額度。
• 資本配置：儘管股價交易價格僅為帳面價值的 44%，但管理層表示，目前的首要任務是促進投資組合成長和恢復股利覆蓋率，而非執行買回庫藏股。

法說會完整逐字稿

完整財報電話會議逐字稿

管理層陳述

Operator

Good day, and welcome to the Seven Hills Realty Trust Third Quarter 2026 Earnings Conference Call.

[Operator Instructions]

Please note this event is being recorded. I would now like to turn the conference over to Matt Murphy, Manager of Investor Relations. Please go ahead.

Matt Murphy

Good morning. Joining me on today's call are Tom Lorenzini, President and Chief Investment Officer; Matt Brown, Chief Financial Officer and Treasurer; and Jared Lewis, Vice President. Today's call includes a presentation by management, followed by a question-and-answer session with analysts. Please note, the recording, retransmission and transcription of today's conference call is prohibited without the prior written consent of the company.

Also note that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based on Seven Hills' beliefs and expectations as of today, October 28, 2026, and actual results may differ materially from those that we project.

The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission, or SEC, which can be accessed from the SEC's website. Investors are cautioned not to place undue reliance upon any forward-looking statements.

In addition, we will be discussing non-GAAP financial numbers during this call, including distributable earnings and distributable earnings per share. A reconciliation of GAAP to non-GAAP financial measures can be found in our earnings release presentation, which can be found on our website at sevnreit.com.

With that, I will now turn the call over to Tom.

Thomas Lorenzini

Thank you, Matt, and good morning, everyone. On our call today, I will begin with an overview of our third quarter activity and portfolio performance. Jared will then discuss market conditions and our investment pipeline before Matt reviews our financial results and outlook.

The third quarter was highly productive for Seven Hills as we continue deploying capital into accretive investments while reducing our legacy office exposure. We generated distributable earnings of $0.24 per share, excluding a modest loss associated with the repayment of our Dallas office loan. As I'll discuss shortly, we believe this loan's resolution was a positive outcome for Seven Hills that will further support ongoing earnings growth within the portfolio.

Origination activity accelerated meaningfully during the quarter as we continue to capitalize on attractive lending opportunities across our target sectors. We originated 3 loans totaling $122.3 million, representing our highest quarterly loan origination volume since the fourth quarter of 2021. These investments included a $68 million loan secured by a Class A multifamily property in Chattanooga, Tennessee, a $30 million loan secured by a 95% leased retail property in Charlotte, North Carolina and a $24.3 million loan secured by a high-end retail property in Park City, Utah.

Importantly, virtually 100% of the loan proceeds from these 3 loans were funded at closing, eliminating any earnings drag on unfunded future commitments. We also received $139 million of repayment proceeds during the quarter, improving our portfolio composition and enhancing our ability to pursue new lending opportunities. Included in this activity was the repayment of our Dallas office loan, which was resolved at approximately 97% of its $44.2 million outstanding balance, reflecting a $1.5 million discount that was significantly below the $6.3 million CECL reserve allocated to the investment.

We believe this represents a highly favorable resolution. In addition, the repayment unlocked approximately $46 million of previously trapped capacity due to the underlevered nature of the loan. This allows us to efficiently redeploy this capital into new investments and grow our portfolio. As a result of our origination and repayment activity, office exposure declined from 19% at the end of the second quarter to 13% at the end of the third quarter. Going forward, we expect our office exposure to continue trending lower into the high single digits over the coming quarters as additional office loans are repaid and capital is redeployed.

Turning to portfolio performance. Our loan book continues to perform well, reflecting the benefits of our disciplined underwriting approach and active asset management. Our portfolio maintained a weighted average all-in yield of approximately 7.8% at quarter end and credit performance was steady as all borrowers remain current on debt service. Our weighted average risk rating increased from 2.9% last quarter to 3.2%, driven by two 1-rated loans being repaid as well as a single office loan in Carlsbad, California being downgraded to a risk rating of 5 as it approached maturity and a negotiated resolution was in progress.

Subsequent to quarter end, the Carlsbad property was sold, netting approximately $22.1 million, which represents a recovery of approximately 90% of the loan's $24.7 million outstanding principal balance. This outcome was consistent with the discounted payoff we agreed to and reflect a discount of approximately $2.6 million in line with the CECL reserve allocated to the investment. While this repayment occurred after quarter end and is not reflected in our third quarter results, it further reduced our office exposure to 10% and unlocked an additional investment capacity of approximately $11 million due to the underlevered nature of the loan.

Furthermore, I'd like to put the recent realized losses into perspective. Since writing our first loan in the spring of 2018, we have closed 72 loans for $1.93 billion. The combined realized losses incurred totaled 0.2%, a track record we are extremely proud of and certainly one of the best amongst our peer group. We believe the resolution of these office loans represents significant progress in not only reducing our legacy office exposure, but improving the overall composition of the portfolio, enhancing our ability to redeploy capital into new investments that will drive future earnings growth.

Our only remaining office maturity in 2026 is a $23.5 million loan backed by a 95% leased asset in suburban Chicago, where we remain actively engaged with the sponsor regarding a path forward and expect to provide an update in the fourth quarter. Additionally, nearly 80% of our portfolio has been originated since 2024 in a higher interest rate environment. This positions us well for the current operating environment and provides increased visibility into the portfolio's future performance.

Looking ahead, we remain focused on actively deploying capital into investments that meet our disciplined underwriting and return objectives. Our pipeline remains healthy, and we currently have 3 loans in diligence totaling over $120 million that we expect to close over the next couple of weeks. Based on our current outlook, we now expect to achieve sustainable dividend coverage in the first half of 2027. This timing primarily reflects certain loan closings occurring later than anticipated rather than any change in our origination assumptions.

We remain committed to our current quarterly dividend of $0.28 per share and believe our active pipeline, growing lending capacity and continued reduction in legacy office exposure positions Seven Hills to create long-term value for our shareholders.

With that, I'll turn the call over to Jared to discuss current market conditions and provide further details on our pipeline.

Jared Lewis

Thank you, Tom. Through most of this year and much of the third quarter, commercial real estate capital markets have performed well. Despite continuous interest rate volatility, ongoing concerns regarding inflation, rising energy costs and continued geopolitical uncertainty, transaction activity remains strong and financing activity has been robust. The recent spike in longer-term treasury yields and greater uncertainty surrounding the path of the federal funds rate has created a more challenging environment for many market participants today.

We are beginning to see signs of slowing sale transaction activity as buyers, sellers and lenders adjust return expectations to reflect the current and potential future interest rate environment. We are also starting to see a growing number of situations where certain lenders have had to reprice loan quotes or revisit transactions as market conditions have evolved. In many of these cases, higher interest rates have materially changed financing terms or caused lenders to step away from opportunities altogether.

Despite the heightened level of interest rate volatility and a potential slowdown in property sale activity, we continue to see significant demand for debt capital, driven by the substantial volume of loans originated during 2021, 2022 that are scheduled to mature over the next several years, which we believe will continue to create a meaningful and durable opportunity for Seven Hills.

The current macroeconomic climate should benefit lenders with the ability to source and evaluate transactions based on the quality of the underlying assets, the strength of sponsorship and the merits of a specific business plan rather than relying on lower interest rates as a means of value creation. To that end, we continue to see a number of attractive lending opportunities that no longer fit a traditional lender's loan sizing parameters and sponsors are in need of flexible capital and a lender that can deliver certainty of execution like Seven Hills.

In addition to industrial and multifamily, we continue to see opportunities spanning a variety of property types, including retail, medical office, self-storage and student housing. While there continues to be heightened competition among alternative lenders for high-quality opportunities, pricing for new investments has firmed up and the focus today is on certainty of execution in addition to pricing. We believe these conditions will continue to provide attractive risk-adjusted returns and support ongoing capital deployment.

Looking ahead, activity in our pipeline remains healthy. As Tom mentioned, we currently have 3 loans in diligence totaling over $120 million, and we continue to evaluate a steady flow of prospective opportunities. Given the significant volume of upcoming loan maturities across the market, we expect refinancing demand to remain a meaningful driver of our pipeline and origination activity.

With that, I'll turn the call over to Matt to discuss our financial results.

Matthew Brown

Thank you, Jared, and good morning, everyone. Yesterday, we reported third quarter distributable earnings of $3.8 million or $0.17 per share, which included a $1.5 million or $0.07 per share realized loss associated with the repayment of our Dallas office loan. Distributable earnings, excluding this loss, were $5.3 million or $0.24 per share at the midpoint of our guidance and in line with consensus estimates. As it relates to this $1.5 million realized loss, as Tom mentioned, the shortfall had been more than fully reserved through our CECL allowance in prior quarters and the release of this reserve was the primary driver of a net $3.6 million reversal of credit losses this quarter.

Just as important, this was a meaningfully under-levered loan and its repayment roughly doubles the lending capacity to approximately $93 million. Lastly, we are earning a net spread of only 100 basis points on this loan and the redeployment of these proceeds should generate higher net spreads, coupled with the unlocked additional capacity, resulting in further growth to our earnings.

Turning to credit. Our CECL reserve stands at $9.5 million or 130 basis points of total loan commitments, down from 190 basis points last quarter, largely driven by the resolution of the Dallas office loan. All of our loans are current on debt service and the portfolio's weighted average risk rating increased from 2.9 last quarter to 3.2. The increase was largely driven by 2 unrated loans being repaid for $71 million in the quarter as well as our Carlsbad, California office loan being downgraded to a risk rating of 5 before its resolution earlier this week. We expect to recognize a realized loss of approximately $2.6 million on this office loan in the fourth quarter, which was fully reserved for as of September 30.

From a liquidity standpoint, we ended the quarter with $51.5 million of cash and approximately $426 million of unused capacity under our secured financing facilities. The 2 loans we closed in late September, totaling $98 million were unlevered at quarter end. Financing these loans at our typical advance rates would generate approximately $78 million of additional liquidity available for redeployment.

During the quarter, we also extended our Citibank facility to September 2028, and we now have no facility maturities until 2028. Our debt-to-equity ratio remains conservative at 1.4x, and our liquidity positions us to fund our targeted portfolio growth.

Turning to our outlook. I want to start by walking through the drivers of earnings growth. First, the 2 loans we closed in late September contributed only modestly to our results, but they will contribute fully for the fourth quarter. Second, we have 3 loans totaling over $120 million in diligence that we expect to close in the fourth quarter, not including several additional investments the team is currently evaluating. And third, we were able to further grow our portfolio by approximately $57 million due to the increased capacity resulting from the 2 office loan repayments while also lending at meaningfully higher net interest margins.

To put this in perspective, at today's spreads and advance rates, each $100 million of net portfolio growth adds approximately $0.04 per share to quarterly distributable earnings. Closing the gap between our third quarter run rate and our dividend requires approximately $220 million of net portfolio growth, and we have the capital in place to fund it. Taking these factors into consideration, we expect fourth quarter distributable earnings, excluding realized losses to be in the range of $0.25 to $0.27 per share. Our reported distributable earnings will also reflect the approximately $0.11 per share realized loss on our Carlstad loan, which was fully reserved.

With origination activity picking up in the second half of the year, we are seeing our distributable earnings trending back towards our quarterly dividend level. Earlier this month, our Board declared a regular quarterly dividend of $0.28 per share. While distributable earnings remain below our dividend, we continue to expect meaningful earnings growth as recently closed loans begin contributing and additional investments are funded.

In addition, our portfolio remains 100% floating rate and sustained increases in benchmark rates provide an incremental benefit to earnings. Based on our current pipeline and capital deployment expectations, we now expect to achieve sustainable dividend coverage during the first half of 2027.

In closing, we believe continued financing demand is generating an attractive pipeline of new opportunities and the combination of declining office exposure, expanding lending capacity and a healthy origination pipeline positions Seven Hills to continue growing earnings and shareholder value into 2027.

That concludes our prepared remarks. Operator, please open the line for questions.

Operator

[Operator Instructions]

Our first question comes from Marissa Lobo of UBS.

分析師問答

Ameeta Lobo Nelson

Looking at liquidity, given the significant liquidity still available, where do you ultimately expect leverage to settle once the current pipeline is funded?

Matthew Brown

Marissa, it's a good question. Our leverage is conservative at 1.4x at September 30. It's been around that level for several quarters now. It is important to note that those -- the $98 million of loans were unlevered at quarter end. So we didn't see an increase in leverage. But as we deploy capital in the fourth quarter and into early 2027, we expect that leverage to grow to above 2x.

Ameeta Lobo Nelson

Okay. Great. And you had several early repayments that we saw in the quarter across student housing, hotel, self-storage. Can you speak to what drove those payoffs and what you're seeing in refinancing liquidity across those sectors?

Thomas Lorenzini

Sure. The student housing transaction was actually a sale. Our understanding is that they literally received an offer that they couldn't turn down because it was significantly higher than they were anticipating. So that was not a planned repayment, I guess, absent the offer that they received. On the self-storage, that loan was performing as expected. They simply -- the sponsor there had refinanced the portfolio. We only had 2 of the assets, and then he refinanced, I think, another 3 or 4 and put them together and then the larger acquisition or larger refinance on that.

And then on the hotel transaction, they had fully executed their business plan there. That property was performing quite well, and they simply were looking to refinance into a more permanent debt structure and pay back our floating rate debt.

Operator

Our next question comes from Jason Weaver of JonesTrading.

Jason Weaver

Seeing the third quarter origination spreads have come down almost 90 basis points since first quarter. Where do you expect that number to settle in? And is that related to mix shift with the Chattanooga property coming relatively tight? What do you think the sustainable run rate would be going forward once the mix is more notable?

Jared Lewis

Jason, this is Jared. So the Chattanooga deal definitely had an impact on sort of where the net margins were and spreads were for those 3 loans. It was a larger loan, obviously, but it was a very well-performing asset and sort of -- it provides a real efficient use of capital because 100% of that -- those dollars are deployed day 1. So net-net, while the spread was a little bit lower, it's sort of like a cornerstone and a real good cash flowing asset that eats up a lot of useful capital for us, which was great.

Going forward, the 3 loans that we've got currently in diligence sort of make up for a good chunk of that lower spread. I can't get into too much of the detail as to where those are pricing right now, but we made up margins on those -- in those 3 loans that we're currently in diligence on and plan to close in the next month or so.

And then from a steady state perspective, Matt can probably speak to where we settle out going forward, but we're seeing deals, and we're pricing loans right now with net margins anywhere from 145 to 165 give or take. So it's really just going to be a deal-by-deal basis, but...

Matthew Brown

Yes. Overall, I think a good assumption is somewhere between a net spread of 160 and probably 180.

Jason Weaver

Got it. That's good color. I appreciate it. And then on the reserve release, it looks like the allowance came down to 130 basis points of commitments. Beyond the Dallas specific reversal, did any of that reflect the change in the macro overlay? Or was it related to other properties in particular?

Matt Murphy

No, it wasn't anything specific to the macro. With the $122 million of new loans we did in the quarter, we established reserves on that. So that made up a good chunk of kind of the delta between the $4.7 million reduction from the Dallas loan and the $3.6 million total reversal that netted out.

Operator

Our next question comes from Chris Muller of Citizens Capital Markets.

Christopher Muller

So really great outcome on the Dallas office property there. I guess the question is, did something improve at the property or in that market that resulted in you guys being over reserved? Just curious how that kind of played out.

Thomas Lorenzini

A couple of things there. Again, the asset was performing fine. They've continued to lease space there. But through our negotiations with -- for a potential extension there, sponsorship was very bullish on -- remain very bullish on the asset. We had the asset appraised. And just through a negotiated payoff, we arrived at the number that we arrived at, and we felt very comfortable with it. We simply had a larger CECL reserve on there, really just based on kind of the broader Dallas market and kind of what we -- where we saw some trades happening, and we wanted to certainly be conservative with the way that we presented that reserve. So there wasn't anything in particular to point to, to say that did we over reserve on that in hindsight, potentially. But again, I think we'd rather take that tact than be under-reserved on these situations.

Christopher Muller

Got it. I mean sometimes the stars just the line. So it's a really great outcome there. And I guess given the increased capacity that you guys cited following these resolutions, do you have a target portfolio size over the next year or so in mind? I know in the past you've talked about getting to $1 billion. Is that kind of back in the cards now? Just how are you thinking about portfolio growth over the next year?

Thomas Lorenzini

Yes, I think that's absolutely in the cards. We're -- at the end of Q3, we're about $745 million. You back off the Carlsbad payoff that just occurred and then the new closings that we plan to have will be mid-8s, $850 million, something along those lines. And we have additional transactions that we're certainly looking at right now. So we would hope to close out the year somewhere around $900 million, maybe potentially more. And then I think for 2027, we're expecting to maintain between $1 billion and $1.1 billion of portfolio size.

Operator

The next question comes from Craig Kucera of Lucid.

Craig Kucera

I'm curious to hear as to whether or not the Yardley office asset is up for sale or any update on what's going on there?

Thomas Lorenzini

Yes, sure. So we are in active lease discussions with a tenant there. We hope to have something that we can report in the fourth quarter where we've got an executed lease. And then at that point, we're going to be approaching 90-some-odd percent leased on the asset. And I think our business plan will then be to monetize that come early to mid-2027. And that will free up some additional capacity for us, too, at the same time, which will be great, right? So that will give us another, I think, $40-some-odd million of potential loan capacity upon repayment or sale.

Craig Kucera

Got it. And just kind of going through your loan portfolio, it looks like you had a few loans that moved from a risk rating 3 to 4. Can you give us some color on what's going on in both the Downers Grove office loan and the Fontana industrial loan?

Thomas Lorenzini

Yes, sure. So those both moved primarily due to near-term maturities. We're in conversations with both of those sponsors right now. The Fontana loan is a -- both of those loans are actually with repeat sponsors of ours. My anticipation would be that there's probably some short-term extensions there. But we're anticipating positive outcomes of both. I just don't know that they're going to be repaid exactly on the maturity date at this point on the current maturity date.

Craig Kucera

Right. And just one more for me. I think you mentioned that you were looking for $0.25 to $0.27 in fourth quarter earnings available for distribution. Was that net of the $0.11 loss? Or was that not including that?

Matthew Brown

That was not including that $0.11 loss.

Craig Kucera

I just wanted to confirm that.

Operator

The next question comes from Christopher Nolan of Ladenburg Thalmann.

Christopher Nolan

As a follow-up on the $0.11, will that be accompanied by a reserve release?

Matthew Brown

So we've set the reserve as of September 30 to match that $2.6 million loss that we'll realize in the fourth quarter. So from a net income standpoint, there will be no impact there.

Christopher Nolan

Okay. And if you guys can articulate what you think in terms of capital management, the stock is trading at 44% of book value and in specific, like to see what it needs to get to, to start implementing share repurchases.

Matthew Brown

It's a fair question. At today's pricing, which we're obviously not pleased with, you can make an argument that it'd be accretive to do a share repurchase plan. In December of 2025, when we completed the rights offering, the strategy was to grow the portfolio because at Seven Hills, the size was an issue there. And we're really seeing that origination activity picking up here in the second half of the year. We're trending towards getting back to dividend coverage, and we think that's really the best path right now to continue doing what we do best, originating, underwriting, asset managing loans to really narrow that gap between share price and book value per share.

Christopher Nolan

Right. Okay. And then final question. GAAP EPS well exceeded the dividend, but book value per share went down. It looks like to me that there were some share issuances in the quarter, were these 2 employees?

Matthew Brown

That is correct. In September of each year, the Compensation Committee generally grants, share grants to officers and employees of Tremont, SEVN and RMR.

Christopher Nolan

And were these close to the current share trading price?

Matt Murphy

They are at -- it's the fair value of the share price on the day of grant, and they vest over 5 years.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Tom Lorenzini, President and Chief Investment Officer, for any closing remarks.

Thomas Lorenzini

Thank you, everyone, for joining today's call. Please reach out to Investor Relations if you are interested in scheduling a meeting with Seven Hills. Operator, that concludes our call.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.