Core Viewpoint - Sunrise Realty Trust, Inc. has committed $30.8 million to a $41.0 million bridge loan aimed at repaying an existing senior mortgage on a mixed-use property in Miami, which includes senior living, medical office, and retail components [1][4] Group 1: Investment Details - The bridge loan consists of $30.8 million from Sunrise Realty Trust and $10.3 million from an affiliate of TCG Real Estate [1] - The property features a 4-story medical office building and a 10-story senior living tower, with significant pre-sales and leasing activity [2][3] - The medical office building includes 6,411 square feet of retail and 25,244 square feet of medical office condos, with 37 of 39 units pre-sold [2] - The senior living tower has 163 units across seven floors, with 36 units pre-leased [3] Group 2: Market Position and Demand - The property is located in a medical epicenter of Southern Florida, addressing significant unmet demand for medical care housing [3] - The investment is characterized by robust pre-sales and a specialized operator, indicating a strong potential for value creation [4] Group 3: Company Background - Sunrise Realty Trust, Inc. is an institutional commercial real estate lender focusing on transitional projects in the Southern United States [5] - TCG Real Estate is affiliated with Sunrise Realty Trust and provides flexible financing solutions for transitional commercial real estate properties [6] - Dornin Investment Group specializes in distressed and opportunistic investments, with a track record of over $725 million in non-performing loan investments [1][7][8]

Core Viewpoint - Sunrise Realty Trust, Inc. has announced an upsized public offering of 5,750,000 shares at a price of $12.00 per share, aiming to raise approximately $69 million in gross proceeds to fund loans and for general corporate purposes [1][2]. Group 1: Offering Details - The public offering price is set at $12.00 per share, with a total of 5,750,000 shares being offered [1]. - The underwriters have a 30-day option to purchase an additional 862,500 shares [1]. - The offering is expected to close on or about January 29, 2025, pending customary closing conditions [2]. Group 2: Use of Proceeds - The net proceeds from the offering will be used to fund loans related to unfunded commitments to existing borrowers and to originate commercial loans consistent with the company's investment strategy [2]. - Additional uses of the proceeds include working capital and repayment of debt [2]. Group 3: Company Overview - Sunrise Realty Trust, Inc. is an institutional lender focused on commercial real estate in the Southern United States, providing flexible financing solutions [6]. - The company targets transitional commercial real estate projects with potential for near-term value creation, backed by high-quality real property assets [6].

WEST PALM BEACH, Fla., Jan. 21, 2025 (GLOBE NEWSWIRE) -- Sunrise Realty Trust, Inc. ("Sunrise Realty" or "the Company") (NASDAQ:SUNS), an institutional lender that originates and funds loans to commercial real estate projects in the Southern United States, today announced that it has launched an underwritten public offering (the "Offering") of 5,500,000 shares of its common stock. Sunrise Realty intends to grant the underwriters of the Offering a 30-day option to purchase up to an additional 825,000 shares ...

WEST PALM BEACH, Fla., Dec. 13, 2024 (GLOBE NEWSWIRE) -- Sunrise Realty Trust, Inc. (Nasdaq: SUNS) (“SUNS” or the “Company”) today announced that it has committed $32.0 million, of which the Company funded $29.9 million, to a $57.0 million senior loan originated by an affiliate on the TCG Real Estate platform. This loan is for the refinancing of The Loren at Lady Bird Lake (the “Project” or “The Loren”), a luxury boutique hotel located in Austin, Texas. The Sponsor is The Loren Group, a leading real estate ...

WEST PALM BEACH, Fla., Nov. 18, 2024 (GLOBE NEWSWIRE) -- Sunrise Realty Trust, Inc. (Nasdaq: SUNS) (“SUNS” or the “Company”) today announced that it has committed $13.0 million to a $26.0 million subordinate loan for the development of the Excel Miami Apartments (“Excel” or the “Project”), a 24-story multifamily tower located at 1550 NE Miami Place in Miami’s Art & Entertainment District. An affiliated entity committed the remaining $13.0 million of the total loan amount. Centennial Bank provided a $68.5 mi ...

Sunrise Realty Trust, Inc. (NASDAQ:SUNS) Q3 2024 Results Conference Call November 7, 2024 10:00 AM ET Company Participants Gabriel Katz - Chief Legal Officer Leonard Tannenbaum - Executive Chairman Brian Sedrish - CEO Brandon Hetzel - CFO Conference Call Participants Stephen Laws - Raymond James Chris Muller - Citizens JMP Operator Good morning, and welcome to Sunrise Realty Trust's Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and ...

Sunrise Realty Trust, Inc. Announces Financial Results for Third Quarter 2024 Third quarter 2024 GAAP net income of $1.7 million or $0.26 per basic weighted average common share and Distributable Earnings of $1.9 million or $0.27 per basic weighted average common share (1) WEST PALM BEACH, FL, November 7, 2024 – Sunrise Realty Trust, Inc. (NASDAQ:SUNS) ("SUNS" or the "Company") today announced its results for the quarter ended September 30, 2024. SUNS reported generally accepted accounting principles ("GAAP ...

Third quarter 2024 GAAP net income of $1.7 million or $0.26 per basic weighted average common share and Distributable Earnings(1) of $1.9 million or $0.27 per basic weighted average common share WEST PALM BEACH, Fla., Nov. 07, 2024 (GLOBE NEWSWIRE) -- Sunrise Realty Trust, Inc. (NASDAQ:SUNS) (“SUNS” or the “Company”) today announced its results for the quarter ended September 30, 2024. SUNS reported generally accepted accounting principles (“GAAP”) net income of $1.7 million or $0.26 per basic weighted aver ...

Part I. Financial Information This section presents the company's interim financial statements and management's discussion and analysis of its financial condition and operating results [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents SUNS' unaudited interim financial statements, including balance sheets, operations, equity, and cash flows, post-spin-off [Balance Sheets](index=4&type=section&id=Balance%20Sheets) Provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity Balance Sheet Highlights (September 30, 2024 vs. December 31, 2023) | Metric | Sep 30, 2024 (Unaudited) | Dec 31, 2023 | | :-------------------------------------- | :----------------------- | :----------- | | **Assets** | | | | Loans held for investment, net | $96,405,746 | $— | | Cash and cash equivalents | $70,171,119 | $31,244,622 | | Total assets | $167,834,524 | $31,244,622 | | **Liabilities** | | | | Dividends payable | $4,362,999 | $— | | Line of credit payable to affiliate | $50,000,000 | $— | | Total liabilities | $55,695,714 | $10,000 | | **Shareholders' Equity** | | | | Total shareholders' equity | $112,138,810 | $31,234,622 | [Statements of Operations](index=6&type=section&id=Statements%20of%20Operations) Outlines the company's financial performance, including interest income, net income, and earnings per share Statements of Operations Highlights (Unaudited) | Metric | Three months ended Sep 30, 2024 | Period from Aug 28, 2023 to Sep 30, 2023 | Nine months ended Sep 30, 2024 | Period from Aug 28, 2023 to Sep 30, 2023 | | :-------------------------------------- | :------------------------------ | :--------------------------------------- | :----------------------------- | :--------------------------------------- | | Interest income | $3,220,930 | $7,767 | $7,226,812 | $7,767 | | Net interest income | $3,177,733 | $7,767 | $7,183,615 | $7,767 | | Total expenses | $1,486,897 | $— | $2,144,837 | $— | | Net income | $1,738,363 | $7,767 | $5,014,451 | $7,767 | | Basic earnings per common share | $0.26 | $— | $0.74 | $— | | Diluted earnings per common share | $0.25 | $— | $0.73 | $— | [Statements of Shareholders' Equity](index=7&type=section&id=Statements%20of%20Shareholders%27%20Equity) Details changes in shareholders' equity, including the impact of the spin-off, stock-based compensation, and dividends Shareholders' Equity Changes (Nine months ended Sep 30, 2024) | Item | Amount | | :-------------------------------------------------- | :------------- | | Balance as of Dec 31, 2023 | $31,234,622 | | Effect of corporate conversion on member's equity | $0 | | Stock-based compensation | $148,639 | | Dividends declared on common shares ($0.63 per share) | $(4,362,999) | | Issuance of common stock in connection with Spin-Off | $69,365,177 | | Net transfers and distributions from (to) Former Parent | $10,738,920 | | Net income | $5,014,451 | | Balance as of Sep 30, 2024 | $112,138,810 | - The company's total shareholders' equity significantly increased from **$31.2 million** at December 31, 2023, to **$112.1 million** at September 30, 2024, primarily due to the issuance of common stock in connection with the Spin-Off (**$69.4 million**) and net transfers from the Former Parent (**$10.7 million**), alongside net income of **$5.0 million**[13](index=13&type=chunk) [Statement of Cash Flows](index=9&type=section&id=Statement%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (Nine months ended Sep 30, 2024 vs. Period from Aug 28, 2023 to Sep 30, 2023) | Activity | Nine months ended Sep 30, 2024 | Period from Aug 28, 2023 to Sep 30, 2023 | | :---------------------------------------- | :----------------------------- | :--------------------------------------- | | Net cash provided by operating activities | $2,685,307 | $7,767 | | Net cash used in investing activities | $(93,862,907) | $— | | Net cash provided by financing activities | $130,104,097 | $21,000,000 | | **Net increase in cash and cash equivalents** | **$38,926,497** | **$21,007,767** | | Cash and cash equivalents, end of period | $70,171,119 | $21,007,767 | - The significant increase in cash from financing activities for the nine months ended September 30, 2024, was driven by net transfers and distributions from the Former Parent (**$80.1 million**) and borrowings on the revolving credit facility (**$50.0 million**)[16](index=16&type=chunk) [Notes to the Financial Statements](index=10&type=section&id=Notes%20to%20the%20Financial%20Statements) Provides detailed explanations of the company's accounting policies, financial instruments, and significant transactions [1. ORGANIZATION](index=10&type=section&id=1.%20ORGANIZATION) Describes SUNS' formation, spin-off from AFC, and intent to elect REIT status - Sunrise Realty Trust, Inc. (SUNS) was formed on August 28, 2023, converted to a Maryland corporation in February 2024, and operates as an institutional lender providing debt capital solutions to the commercial real estate (CRE) market in the Southern United States[18](index=18&type=chunk) - On July 9, 2024, SUNS completed its spin-off from Advanced Flower Capital Inc. (AFC), becoming an independent, publicly traded company listed on the Nasdaq Capital Market under the symbol 'SUNS'[21](index=21&type=chunk) - The company intends to elect to be taxed as a REIT for U.S. federal income tax purposes starting with the taxable year ending December 31, 2024[20](index=20&type=chunk) [2. SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=2.%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines the accounting principles used, including GAAP conformity and emerging growth company elections - The unaudited interim financial statements are prepared in conformity with GAAP and SEC rules, reflecting all necessary adjustments for fair presentation[26](index=26&type=chunk) - The company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised accounting standards, which may affect comparability with other public companies[29](index=29&type=chunk) - The FASB issued ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes), with ASU 2023-07 effective for fiscal years beginning after December 15, 2023, and ASU 2023-09 effective for annual periods beginning after December 15, 2024; the company is evaluating the impact of ASU 2023-07 and does not anticipate a material impact from ASU 2023-09[30](index=30&type=chunk)[31](index=31&type=chunk) [3. LOANS HELD FOR INVESTMENT AT CARRYING VALUE](index=12&type=section&id=3.%20LOANS%20HELD%20FOR%20INVESTMENT%20AT%20CARRYING%20VALUE) Details the company's loan portfolio, including outstanding principal, funding, and interest rate characteristics - As of September 30, 2024, the company's portfolio included six loans held at carrying value, totaling approximately **$96.4 million**, with an aggregate originated commitment of **$121.6 million**[32](index=32&type=chunk)[33](index=33&type=chunk) - During the nine months ended September 30, 2024, the company funded approximately **$122.5 million** in new loans and additional principal, with **$24.9 million** in principal repayments[32](index=32&type=chunk) - Approximately **72%** of the loans held at carrying value as of September 30, 2024, had floating interest rates, benchmarked to one-month SOFR with a weighted average floor of **4.2%**[32](index=32&type=chunk) Loans Held for Investment at Carrying Value (September 30, 2024) | Loan Type | Outstanding Principal | Original Issue Discount | Carrying Value | Weighted Average Remaining Life (Years) | | :-------------------------- | :-------------------- | :---------------------- | :------------- | :-------------------------------------- | | Senior mortgage loans | $75,179,550 | $(915,856) | $74,263,694 | 2.7 | | Subordinate debt | $22,367,562 | $(225,510) | $22,142,052 | 2.6 | | **Total** | **$97,547,112** | **$(1,141,366)** | **$96,405,746** | **2.6** | [4. CURRENT EXPECTED CREDIT LOSSES](index=13&type=section&id=4.%20CURRENT%20EXPECTED%20CREDIT%20LOSSES) Explains the CECL reserve, risk rating methodology, and related activity - As of September 30, 2024, the Current Expected Credit Loss (CECL) Reserve was approximately **$24.3 thousand**, representing **0.03%** of total loans held at carrying value, primarily related to unfunded commitments[39](index=39&type=chunk) - The company uses a 5-point risk rating scale for loans, from 'Very Low Risk' (1) to 'Impaired/Loss Likely' (5), based on factors like property type, cash flow, LTV, and macroeconomic environment[41](index=41&type=chunk)[42](index=42&type=chunk) CECL Reserve Activity (Nine months ended Sep 30, 2024) | Item | Outstanding | Unfunded | Total | | :-------------------------------------------------- | :------------ | :--------- | :-------- | | Balance at Dec 31, 2023 | $— | $— | $— | | Increase (decrease) in provision for current expected credit losses | $— | $24,327 | $24,327 | | Balance at Sep 30, 2024 | $— | $24,327 | $24,327 | Loans Held at Carrying Value by Risk Rating (September 30, 2024) | Risk Rating | 2024 | Total | | :---------- | :----------- | :----------- | | 1 (Very Low Risk) | $10,572,368 | $10,572,368 | | 2 (Low Risk) | $85,833,378 | $85,833,378 | | 3 (Medium Risk) | $— | $— | | 4 (High Risk) | $— | $— | | 5 (Impaired/Loss Likely) | $— | $— | | **Total** | **$96,405,746** | **$96,405,746** | [5. INTEREST RECEIVABLE](index=15&type=section&id=5.%20INTEREST%20RECEIVABLE) Provides a breakdown of interest and other fees receivable Interest Receivable (September 30, 2024 vs. December 31, 2023) | Item | Sep 30, 2024 | Dec 31, 2023 | | :-------------------- | :----------- | :----------- | | Interest receivable | $983,034 | $— | | Unused fees receivable | $16,473 | $— | | Other fees receivable | $7,813 | $— | | **Total** | **$1,007,320** | **$—** | [6. DEBT](index=15&type=section&id=6.%20DEBT) Details the company's revolving credit facility, including terms and repayment - In September 2024, the company entered into an unsecured revolving credit agreement (SRT Revolving Credit Facility) with an affiliate for **$50.0 million**, which was fully drawn as of September 30, 2024, and subsequently repaid on October 1, 2024, and terminated on November 6, 2024[46](index=46&type=chunk) - Interest on the SRT Revolving Credit Facility was 1-month SOFR (**3.0% floor**) plus **2.75%** (**7.60%** at September 30, 2024), with a maturity date of December 31, 2025[46](index=46&type=chunk) [7. COMMITMENTS AND CONTINGENCIES](index=15&type=section&id=7.%20COMMITMENTS%20AND%20CONTINGENCIES) Outlines unfunded loan commitments and the absence of material legal claims Unfunded Loan Commitments (September 30, 2024) | Item | Total | | :-------------------------- | :------------- | | Total original loan commitments | $121,570,101 | | Less: drawn commitments | $(97,547,112) | | **Total undrawn commitments** | **$24,022,989** | - As of September 30, 2024, all unfunded commitments were related to total loan commitments and were available for funding in less than three years[180](index=180&type=chunk) - The company is not aware of any legal claims that could materially impact its business, financial condition, or results of operations as of September 30, 2024[48](index=48&type=chunk) [8. SHAREHOLDER'S EQUITY](index=16&type=section&id=8.%20SHAREHOLDER%27S%20EQUITY) Describes the company's corporate conversion, common stock issuance, and stock incentive plan - In February 2024, the company converted from a Delaware LLC to a Maryland corporation, authorizing **50,000,000** shares of common stock and **10,000** shares of preferred stock[49](index=49&type=chunk) - As of September 30, 2024, **6,925,395** shares of common stock were issued and outstanding, with no preferred stock issued[51](index=51&type=chunk) - The Spin-Off on July 9, 2024, resulted in AFC shareholders receiving one share of SUNS common stock for every three shares of AFC common stock held, increasing SUNS' outstanding shares to **6,889,032**[54](index=54&type=chunk) - The company established the 2024 Stock Incentive Plan, with **36,363** shares of restricted stock granted to the CEO in July 2024, vesting over three years; total unrecognized compensation cost related to non-vested restricted stock was approximately **$1.3 million** as of September 30, 2024[57](index=57&type=chunk)[58](index=58&type=chunk)[65](index=65&type=chunk) [9. EARNINGS PER SHARE](index=18&type=section&id=9.%20EARNINGS%20PER%20SHARE) Details the calculation of basic and diluted earnings per common share - The Spin-Off on July 9, 2024, resulted in **6,889,032** shares of Common Stock outstanding, which is used for EPS calculation for all periods prior to the Spin-Off[66](index=66&type=chunk) Earnings Per Common Share (Unaudited) | Metric | Three months ended Sep 30, 2024 | Period from Aug 28, 2023 to Sep 30, 2023 | Nine months ended Sep 30, 2024 | Period from Aug 28, 2023 to Sep 30, 2023 | | :---------------------------------------- | :------------------------------ | :--------------------------------------- | :----------------------------- | :--------------------------------------- | | Net income attributable to common shareholders | $1,738,363 | $7,767 | $5,014,451 | $7,767 | | Basic weighted average shares outstanding | 6,800,500 | 6,889,032 | 6,800,500 | 6,889,032 | | Diluted weighted average shares outstanding | 6,825,905 | 6,889,032 | 6,825,905 | 6,889,032 | | Basic weighted average EPS | $0.26 | $— | $0.74 | $— | | Diluted weighted average EPS | $0.25 | $— | $0.73 | $— | [10. INCOME TAX](index=18&type=section&id=10.%20INCOME%20TAX) Discusses the company's intent to elect REIT status and its income tax provision - The company intends to elect to be taxed as a REIT for U.S. federal income tax purposes, commencing with the taxable year ending December 31, 2024, and generally will not be subject to U.S. federal income taxes on its REIT taxable income if it distributes all of its taxable income[68](index=68&type=chunk)[70](index=70&type=chunk) - The income tax provision for the company was **zero** for the three and nine months ended September 30, 2024[70](index=70&type=chunk) - The company incurred no expense for U.S. federal excise tax for the three and nine months ended September 30, 2024, and does not expect any unrecognized tax benefits to change in the next 12 months[71](index=71&type=chunk)[72](index=72&type=chunk) [11. FAIR VALUE](index=19&type=section&id=11.%20FAIR%20VALUE) Presents the fair value of financial instruments and their valuation inputs Fair Value of Financial Instruments (September 30, 2024) | Financial Instrument | Carrying Value | Fair Value | | :-------------------------------------- | :------------- | :----------- | | Cash and cash equivalents | $70,171,119 | $70,171,119 | | Loans held for investment at carrying value | $96,405,746 | $96,668,539 | - Fair value estimates for cash and cash equivalents use **Level 1 inputs** (observable, quoted market prices), while loans held for investment are measured using **Level 3 inputs** (unobservable inputs)[73](index=73&type=chunk) [12. RELATED PARTY TRANSACTIONS](index=19&type=section&id=12.%20RELATED%20PARTY%20TRANSACTIONS) Details transactions with the Manager and affiliates, including fees and co-invested loans - SUNS is externally managed by Sunrise Manager LLC (the 'Manager') under a Management Agreement, effective July 9, 2024, receiving Base Management Fees and potential Incentive Compensation[74](index=74&type=chunk)[76](index=76&type=chunk)[79](index=79&type=chunk) - The Manager also entered into an Administrative Services Agreement with TCG Services LLC and a Services Agreement with SRT Group LLC, both affiliates, for administrative and investment personnel services[80](index=80&type=chunk)[81](index=81&type=chunk) Related Party Costs Incurred (Unaudited) | Item | Three months ended Sep 30, 2024 | Nine months ended Sep 30, 2024 | | :-------------------------------------------------- | :------------------------------ | :----------------------------- | | Base management fees | $422,238 | $422,238 | | Incentive fees earned | $— | $— | | General and administrative expenses reimbursable to Manager | $492,870 | $492,870 | | **Total** | **$915,108** | **$915,108** | - As of September 30, 2024, there were six co-invested loans held by the company and affiliates of the company[84](index=84&type=chunk) [13. DIVIDENDS AND DISTRIBUTIONS](index=22&type=section&id=13.%20DIVIDENDS%20AND%20DISTRIBUTIONS) Summarizes dividends declared and their per-share and total distribution amounts Dividends Declared (Nine months ended Sep 30, 2024) | Declaration Date | Record Date | Payment Date | Per Common Share Distribution Amount | Total Distribution Amount | | :--------------- | :---------- | :----------- | :----------------------------------- | :------------------------ | | 8/14/2024 | 9/30/2024 | 10/15/2024 | $0.21 | $1,454,333 | | 8/14/2024 | 12/31/2024 | 1/15/2025 | $0.42 | $2,908,666 | | **2024 Period Subtotal** | | | **$0.63** | **$4,362,999** | [14. SUBSEQUENT EVENTS](index=22&type=section&id=14.%20SUBSEQUENT%20EVENTS) Describes significant events after the reporting period, including new loan commitments and credit facilities - In November 2024, the company and affiliated co-investors entered into a new whole loan commitment of **$96.0 million** for a development site and condominium project in Fort Lauderdale, Florida, with SUNS committing **$30.0 million**[89](index=89&type=chunk)[90](index=90&type=chunk) - On November 6, 2024, the company entered into a new senior secured revolving credit facility with East West Bank for **$50.0 million**, expandable up to **$200.0 million**, maturing on November 8, 2027, and simultaneously terminated the previous unsecured SRT Revolving Credit Facility[91](index=91&type=chunk)[92](index=92&type=chunk)[98](index=98&type=chunk) - The new Revolving Credit Facility bears interest at SOFR plus **2.75%** (with a **2.63% SOFR floor**) and includes customary covenants and fees[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses SUNS' financial condition and operating results, covering business overview, spin-off impact, loan portfolio, and key financial metrics [Overview](index=26&type=section&id=Overview) Introduces SUNS as a CRE lender, its investment strategy, and target portfolio characteristics - SUNS is a Maryland corporation formed on August 28, 2023, intending to elect REIT status, and operates as an institutional lender for commercial real estate (CRE) in the Southern United States, focusing on originating CRE debt investments[107](index=107&type=chunk) - The company targets a diversified investment portfolio including senior mortgage loans, mezzanine loans, B-notes, CMBS, and debt-like preferred equity across various CRE asset classes (residential, retail, office, hospitality, industrial, mixed-use, specialty-use)[107](index=107&type=chunk) - Investment focus includes loans of **$15-100 million**, **2-5 year duration**, floating interest rates (SOFR + spread), LTV no greater than **75%**, targeting a portfolio net IRR in the **low-teens**, and an expected leverage ratio of **1.5:1** debt-to-equity[108](index=108&type=chunk) [Spin-Off](index=27&type=section&id=Spin-Off) Details the spin-off of SUNS from AFC, including asset transfers and new management appointments - On July 9, 2024, AFC completed the spin-off of SUNS, transferring its CRE portfolio to SUNS and distributing SUNS common stock to AFC shareholders, making SUNS an independent, publicly traded company[112](index=112&type=chunk) - Prior to the spin-off, AFC contributed approximately **$114.8 million** to SUNS, comprising its loan portfolio and cash[112](index=112&type=chunk) - In connection with the spin-off, SUNS entered into a Management Agreement with SUNS Manager and other related agreements, and new executive officers and directors were appointed[113](index=113&type=chunk)[115](index=115&type=chunk) [Developments During the Third Quarter ended September 30, 2024](index=27&type=section&id=Developments%20During%20the%20Third%20Quarter%20ended%20September%2030%2C%202024) Highlights key events in Q3 2024, including public listing, loan amendments, and new credit facilities - Effective July 9, 2024, SUNS became an independent, publicly traded company on the Nasdaq Capital Market[117](index=117&type=chunk) - In August 2024, amendments were made to existing loans for a mixed-use property in Houston, TX, extending maturity, modifying interest rates, and including a **$12.0 million** upsize to the senior loan[118](index=118&type=chunk) - New senior secured credit facilities were entered into for residential developments in Austin, TX (**$35.2 million** commitment) and Palm Beach Gardens, FL (**$160.0 million** commitment), and a luxury hotel in San Antonio, TX (**$42.0 million** commitment)[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) - In September 2024, the company entered into a **$50.0 million** SRT Revolving Credit Facility, which was terminated on November 6, 2024[123](index=123&type=chunk) [Recent Developments](index=28&type=section&id=Recent%20Developments) Covers post-quarter events, including new loan commitments and the establishment of a new revolving credit facility - In November 2024, SUNS and co-investors committed to a **$96.0 million** whole loan for a Fort Lauderdale, FL condominium project, with SUNS committing **$30.0 million**[125](index=125&type=chunk)[126](index=126&type=chunk) - On November 6, 2024, SUNS secured a new senior secured revolving credit facility with East West Bank for **$50.0 million**, with potential to increase to **$200.0 million**, maturing November 8, 2027, and simultaneously terminated the previous SRT Revolving Credit Facility[127](index=127&type=chunk)[128](index=128&type=chunk)[134](index=134&type=chunk) - The new Revolving Credit Facility bears interest at SOFR plus **2.75%** (**2.63% SOFR floor**) and includes an unused line fee of **0.25%** per annum, waived if the average cash balance exceeds the minimum required[129](index=129&type=chunk)[130](index=130&type=chunk) [Key Financial Measures and Indicators](index=31&type=section&id=Key%20Financial%20Measures%20and%20Indicators) Identifies Distributable Earnings, book value per share, and dividends as core performance metrics - The company identifies Distributable Earnings, book value per share, and dividends declared per share as key financial measures and indicators for its business[136](index=136&type=chunk) [Non-GAAP Metrics](index=31&type=section&id=Non-GAAP%20Metrics) Defines Distributable Earnings as a non-GAAP metric for performance and dividend evaluation - Distributable Earnings is a non-GAAP metric used to evaluate performance, excluding non-cash equity compensation, depreciation, unrealized gains/losses, CECL provision changes, and one-time events, while including accrued income from deferred interest features[137](index=137&type=chunk)[138](index=138&type=chunk) - Distributable Earnings is considered a useful indicator of dividends, as the company intends to distribute at least **90%** of its annual REIT taxable income[139](index=139&type=chunk) Reconciliation of GAAP Net Income to Distributable Earnings (Unaudited) | Metric | Three months ended Sep 30, 2024 | Nine months ended Sep 30, 2024 | | :---------------------------------------- | :------------------------------ | :----------------------------- | | Net income | $1,738,363 | $5,014,451 | | Stock-based compensation expense | $160,139 | $160,139 | | (Decrease) increase in provision for current expected credit losses | $(47,527) | $24,327 | | **Distributable earnings** | **$1,850,975** | **$5,198,917** | | Distributable earnings per basic weighted average share | $0.27 | $0.76 | [Book Value Per Share](index=32&type=section&id=Book%20Value%20Per%20Share) Presents the company's book value per share and its significant increase Book Value Per Share | Date | Book Value Per Share | | :---------------- | :------------------- | | September 30, 2024 | $16.19 | | December 31, 2023 | $4.53 | | September 30, 2024 (ex-dividend) | $16.61 | - The book value per share increased significantly from **$4.53** at December 31, 2023, to **$16.19** at September 30, 2024, with the latter figure including a reduction due to the declared fourth-quarter dividend[143](index=143&type=chunk) [Factors Impacting our Operating Results](index=32&type=section&id=Factors%20Impacting%20our%20Operating%20Results) Discusses factors influencing operating results, including net interest margin and credit losses - Operating results are primarily affected by net interest margin, market value of assets, and supply/demand for commercial real estate debt, with interest rates varying based on loan type, market conditions, and borrower creditworthiness[144](index=144&type=chunk) - Operating results may also be impacted by credit losses exceeding initial anticipations or unanticipated credit events experienced by borrowers[144](index=144&type=chunk) [Results of Operations for the three and nine months ended September 30, 2024](index=32&type=section&id=Results%20of%20Operations%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202024) Analyzes net income, net interest income, and operating expenses for the reported periods - For the three months ended September 30, 2024, net income was approximately **$1.7 million** (**$0.26** basic EPS), with net interest income of **$3.2 million** and operating expenses of **$1.5 million**[146](index=146&type=chunk)[147](index=147&type=chunk) - For the nine months ended September 30, 2024, net income was approximately **$5.0 million** (**$0.74** basic EPS), with net interest income of **$7.2 million** and operating expenses of **$2.1 million**[148](index=148&type=chunk)[149](index=149&type=chunk) - Operating expenses for both periods included management fees (**$0.4 million**), general and administrative expenses (**$0.6 million** for 9 months), professional fees (**$1.0 million** for 9 months, including **$0.6 million** in spin-off costs), and stock-based compensation (**$0.2 million**)[147](index=147&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - The CECL Reserve balance as of September 30, 2024, was approximately **$24.3 thousand**, primarily for unfunded commitments, representing **0.03%** of total loans held at carrying value[151](index=151&type=chunk) [Loan Portfolio](index=34&type=section&id=Loan%20Portfolio) Provides a summary of the company's loan portfolio, including commitments, balances, and interest rates Loan Portfolio Summary (September 30, 2024) | Loan Type | Location | Current Commitments | Principal Balance | Cash Interest Rate | Fixed/Floating | (1) YTM | | :-------------------------- | :--------------- | :------------------ | :---------------- | :----------------- | :------------- | :------ | | Senior mortgage loans: | | | | | | | | Mixed-use | Houston, TX | $11,994,037 | $10,629,036 | 16.5% | Floating | 20% | | Residential | Austin, TX | $14,087,288 | $12,079,636 | 9.1% | Floating | 10% | | Hospitality | San Antonio, TX | $27,300,000 | $25,342,611 | 11.2% | Floating | 13% | | Residential | PBG, FL | $21,250,000 | $18,262,152 | 13.1% | Floating | 13% | | Residential | PBG, FL | $18,750,000 | $8,866,115 | 11.1% | Floating | 12% | | Subordinate debt: | | | | | | | | Residential | Sarasota, FL | $28,188,776 | $22,367,562 | 13.0% | Fixed | 14% | | **Subtotal** | | **$121,570,101** | **$97,547,112** | **12.3%** | | **13%** | - As of September 30, 2024, the portfolio included six loans with an aggregate originated commitment of approximately **$121.6 million** and outstanding principal of **$97.5 million**[156](index=156&type=chunk) - Approximately **72%** of the loans had floating interest rates, benchmarked to one-month SOFR with a weighted average floor of **4.2%**[156](index=156&type=chunk) [Collateral Overview](index=35&type=section&id=Collateral%20Overview) Describes the real estate assets securing the company's loans and default recovery options - The company's loans are secured by various real estate assets, including high-quality residential (multi-family, condominiums, single-family), retail, office, hospitality, industrial, mixed-use, and specialty-use properties[161](index=161&type=chunk)[162](index=162&type=chunk) - Upon loan default, the company may sell the loan, work with the borrower to sell collateral, or initiate foreclosure proceedings, noting that recovery amounts may be less than appraised values[163](index=163&type=chunk)[165](index=165&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's cash sources, unrestricted cash balance, and sufficiency of funds - Primary cash sources include future debt/equity offerings, debt financing (e.g., Revolving Credit Facility), principal/interest payments on assets, and operating cash flows[167](index=167&type=chunk) - As of September 30, 2024, unrestricted cash totaled approximately **$70.2 million**, up from **$31.2 million** at December 31, 2023[167](index=167&type=chunk) - Management believes current cash, Revolving Credit Facility capacity, and operating cash flows will be sufficient to meet business operating requirements for at least the next twelve months[168](index=168&type=chunk) [Revolving Credit Facility](index=36&type=section&id=Revolving%20Credit%20Facility) Details the previous and new revolving credit facilities, including terms and security - The company entered into a **$50.0 million** SRT Revolving Credit Facility in September 2024, which was fully drawn by September 30, 2024, repaid on October 1, 2024, and terminated on November 6, 2024[170](index=170&type=chunk) - A new Revolving Credit Facility with **$50.0 million** in initial commitments (expandable to **$200.0 million**) and a maturity date of November 8, 2027, was established, bearing interest at SOFR plus **2.75%** (**2.63% SOFR floor**)[171](index=171&type=chunk)[174](index=174&type=chunk) - The new facility is secured by substantially all assets of the company and its material subsidiaries and includes financial and other covenants[174](index=174&type=chunk) [Other Credit Facilities, Warehouse Facilities and Repurchase Agreements](index=37&type=section&id=Other%20Credit%20Facilities%2C%20Warehouse%20Facilities%20and%20Repurchase%20Agreements) Outlines potential future financing sources for target investments - The company may use other financing sources in the future, including credit facilities and secured/unsecured borrowings, typically with **2-5 year maturities** and fixed or floating interest rates, to fund target investments[175](index=175&type=chunk) [Cash Flows](index=37&type=section&id=Cash%20Flows) Summarizes cash flow changes from operating, investing, and financing activities Cash Flow Summary (Nine months ended Sep 30, 2024 vs. Period from Aug 28, 2023 to Sep 30, 2023) | Activity | Nine months ended Sep 30, 2024 | Period from Aug 28, 2023 to Sep 30, 2023 | | :---------------------------------------- | :----------------------------- | :--------------------------------------- | | Net cash provided by operating activities | $2,685,307 | $7,767 | | Net cash used in investing activities | $(93,862,907) | $— | | Net cash provided by financing activities | $130,104,097 | $21,000,000 | | **Change in cash and cash equivalents** | **$38,926,497** | **$21,007,767** | - The increase in operating cash flow was primarily due to a **$5.0 million** increase in net income, partially offset by changes in working capital[177](index=177&type=chunk) - Investing activities saw a significant cash outflow of **$93.9 million** due to **$118.8 million** in new loan fundings, partially offset by **$24.9 million** in loan repayments[178](index=178&type=chunk) - Financing cash flow increased by **$109.1 million**, driven by **$59.1 million** in net transfers from the Former Parent and **$50.0 million** in revolving credit facility borrowings[179](index=179&type=chunk) [Contractual Obligations, Other Commitments, and Off-Balance Sheet Arrangements](index=38&type=section&id=Contractual%20Obligations%2C%20Other%20Commitments%2C%20and%20Off-Balance%20Sheet%20Arrangements) Details unfunded loan commitments and the absence of off-balance sheet arrangements Contractual Obligations (September 30, 2024) | Obligation | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | Total | | :------------------ | :--------------- | :---------- | :---------- | :---------------- | :------------- | | Unfunded commitments | $— | $24,022,989 | $— | $— | $24,022,989 | - All unfunded commitments as of September 30, 2024, were related to total loan commitments and were available for funding in less than three years[180](index=180&type=chunk) - Off-balance sheet commitments consist of unfunded commitments on delayed draw loans; the company has no relationships with unconsolidated entities for off-balance sheet arrangements[182](index=182&type=chunk) [Dividends](index=38&type=section&id=Dividends) Explains the company's REIT dividend distribution policy and potential funding sources - As a REIT, the company intends to distribute at least **90%** of its annual REIT taxable income to shareholders to avoid U.S. federal income tax[183](index=183&type=chunk) - Failure to distribute the Required Distribution (**85%** ordinary income, **95%** capital gain net income, plus prior year shortfall) could result in a **4%** non-deductible excise tax[183](index=183&type=chunk) - If cash for distribution is insufficient, the company may fund distributions from working capital, equity/debt financings, asset sales, or taxable stock/debt distributions[184](index=184&type=chunk) [Critical Accounting Policies and Estimates](index=39&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Confirms no significant changes in critical accounting policies and the quarterly evaluation of estimates - There have been no significant changes in critical accounting policies and estimates from those previously disclosed in the Information Statement[186](index=186&type=chunk) - The company evaluates estimates and judgments quarterly based on historical experience and other reasonable factors, noting that estimates are subject to change[186](index=186&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details the company's exposure to market risks, including fair value, interest rate, and credit risks, and its management strategies [Risk Management](index=39&type=section&id=Risk%20Management) Outlines the company's strategy for diversifying investments and allocating capital based on market conditions - The company intends to diversify its investment mix across high-quality residential, retail, office, hospitality, industrial, mixed-use, and specialty-use real estate, aiming for value creation and downside protection[187](index=187&type=chunk) - Capital allocation among target assets will depend on prevailing market conditions, including interest rates and economic conditions, and may change over time[188](index=188&type=chunk) [Changes in Fair Value of Our Assets](index=39&type=section&id=Changes%20in%20Fair%20Value%20of%20Our%20Assets) Describes the valuation process for target investments and factors influencing fair value fluctuations - The company generally holds target investments as long-term loans and evaluates them quarterly, with fair value determined by the Board of Directors through its independent Audit and Valuation Committee, using an independent third-party valuation firm[189](index=189&type=chunk)[190](index=190&type=chunk) - Loans are typically valued using a yield analysis, considering current contractual interest rates, maturity, borrower risk, and leverage, with changes in market yields, recovery rates, and revenue multiples potentially impacting fair value[191](index=191&type=chunk) - The fair value of illiquid loans may fluctuate and differ significantly from values realized in a forced liquidation[192](index=192&type=chunk) [Changes in Market Interest Rates and Effect on Net Interest Income](index=40&type=section&id=Changes%20in%20Market%20Interest%20Rates%20and%20Effect%20on%20Net%20Interest%20Income) Analyzes the impact of interest rate fluctuations on net interest margin and income, including a hypothetical scenario - The company is exposed to interest rate risk, with operating results dependent on the net interest margin between asset income and borrowing costs[194](index=194&type=chunk)[195](index=195&type=chunk) - Rising interest rates could increase borrowing costs faster than floating-rate asset yields, potentially decreasing net interest spread and net income[195](index=195&type=chunk) - As of September 30, 2024, five floating-rate loans represented approximately **72%** of the portfolio; a hypothetical **100 basis points** increase in the floating benchmark rate would increase annual interest income by **$0.7 million**, while a **100 basis points** decrease would decrease it by **$(0.4) million**[196](index=196&type=chunk) [Interest Rate Cap Risk](index=40&type=section&id=Interest%20Rate%20Cap%20Risk) Explains how interest rate caps on loans can limit yield increases, potentially impacting net interest income - The company originates both fixed and floating rate loans, which may be subject to periodic and lifetime interest rate caps, limiting yield increases[197](index=197&type=chunk) - If borrowing costs increase without similar caps, while asset yields are limited, it could lower net interest income or cause a net loss during periods of rising interest rates[197](index=197&type=chunk) [Interest Rate Mismatch Risk](index=40&type=section&id=Interest%20Rate%20Mismatch%20Risk) Describes the risk of differing interest rate benchmarks between borrowings and assets affecting profitability - The company faces interest rate mismatch risk if borrowings are based on different benchmarks than its fixed or floating-rate assets, leading to increased borrowing costs not matched by asset earnings[198](index=198&type=chunk) - Such mismatches could adversely affect profitability and distributions to shareholders[198](index=198&type=chunk) [Credit Risk](index=41&type=section&id=Credit%20Risk) Details the company's exposure to credit risk on loans and its mitigation strategies - The company is exposed to credit risk on its loans and interest receivable, which its Manager mitigates through rigorous analysis, comprehensive review, and proactive monitoring[201](index=201&type=chunk)[202](index=202&type=chunk) - Credit risk is also managed through ongoing review and quarterly monitoring of loans for variances from expected prepayments, defaults, severities, losses, and cash flow[203](index=203&type=chunk) [Real Estate Risk](index=41&type=section&id=Real%20Estate%20Risk) Discusses the volatility of commercial real estate loans due to economic and property-specific factors - Commercial real estate loans are subject to volatility from national, regional, and local economic conditions, local real estate conditions, industry slowdowns, construction quality, and demographic factors[205](index=205&type=chunk) - Decreases in property values reduce collateral value and potential repayment proceeds, which could lead to losses for the company[205](index=205&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and the absence of material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=41&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) States that the CEO and CFO concluded disclosure controls were effective as of September 30, 2024 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2024, ensuring timely and accurate reporting under the Exchange Act[206](index=206&type=chunk) [Changes in Internal Control over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Reports no material changes in internal control over financial reporting during the quarter - There have been no material changes in the company's internal control over financial reporting during the quarter ended September 30, 2024[207](index=207&type=chunk) Part II. Other Information Covers legal proceedings, risk factors, equity sales, defaults, and subsequent events [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) States that Sunrise Realty Trust, Inc. was not subject to any material legal proceedings as of September 30, 2024 - As of September 30, 2024, the company was not subject to any material legal proceedings[209](index=209&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) Refers to the company's final Information Statement for a discussion of potential risks and uncertainties, confirming no material changes - There have been no material changes to the risk factors disclosed in the company's final Information Statement[210](index=210&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no unregistered sales of equity securities or common stock repurchases during the three months ended September 30, 2024 - There were no unregistered sales of equity securities during the period[210](index=210&type=chunk) - The company did not repurchase any shares of its Common Stock during the three months ended September 30, 2024[210](index=210&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) States that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[211](index=211&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[211](index=211&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) Provides additional details on the new Revolving Credit Facility entered into on November 6, 2024, including its terms and covenants - On November 6, 2024, the company entered into a new Revolving Credit Facility with initial aggregate commitments of **$50.0 million**, expandable up to **$200.0 million**[212](index=212&type=chunk)[214](index=214&type=chunk) - The facility bears interest at SOFR plus **2.75%** (with a **2.63% SOFR floor**) and includes a **$75,000** agent fee, a **0.25%** per annum loan fee, and an unused line fee of **0.25%** per annum (waived if average cash balance exceeds minimum)[212](index=212&type=chunk)[213](index=213&type=chunk) - The Revolving Credit Facility is guaranteed by certain material subsidiaries and secured by substantially all assets of the company, subject to financial and other covenants[214](index=214&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including agreements related to the spin-off, corporate governance documents, the stock incentive plan, and credit agreements - The exhibits include the Separation and Distribution Agreement, Tax Matters Agreement, Management Agreement, 2024 Stock Incentive Plan, and the Loan and Security Agreement for the new Revolving Credit Facility[218](index=218&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.01 per share SUNS The Nasdaq Stock Market LLC FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 14, 2024 SUNRISE REALTY TRUST, INC. (Exact name of Registrant as Specified in Its Charter) Maryland 001-41971 93-3168928 (State or Othe ...