Jones Trading Starts Seven Hills Realty Trust at Buy

(Updated - November 30, 2022 8:30 AM EST)

Jones Trading analyst Jason M. Stewart initiates coverage Seven Hills Realty Trust (NASDAQ: SEVN) with a Buy rating and a price target of $13.00.

The analyst comments "initiate coverage of Seven Hills Realty Trust (SEVN) with a Buy rating and a $13 price target. SEVN is a pure play commercial mortgage REIT that originates and invests in floating rate first mortgage loans. Loans are secured by middle market and transitional commercial real estate diversified across geographies and sectors. While we share macro concerns over the impact of higher cap rates on underlying real estate values, portfolio LTVs are low and SEVN has historically maintained pristine credit experience. SEVN's sponsor increases origination scale, asset management capabilities and has demonstrated consistent support for the vehicle. Trading at 0.5x adjusted book value per share (BVPS) of $18.80 and at a 10.6% dividend yield, shares are substantially discounted to peers and below intrinsic value. Our $13 price target represents 0.7x adjusted BVPS and a 7.7% yield based on the current dividend. If achieved, our price target represents a total return opportunity of 48%."

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