Sunrise Realty Trust, Inc.(US:SUNS)2025-05-07 11:30Part I. Financial Information Financial Statements The company reported a net income of $3.1 million for Q1 2025, with significant loan portfolio growth to $230.5 million funded by a $71.4 million stock offering Consolidated Balance Sheets Total assets decreased to $234.4 million due to cash deployment into loans, while shareholders' equity increased to $184.8 million following a stock issuance Consolidated Balance Sheet Highlights (unaudited) | Account | March 31, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Assets | | | | Loans held for investment, net | $230,480,478 | $130,711,848 | | Cash and cash equivalents | $1,642,780 | $184,626,770 | | Total assets | $234,442,565 | $317,535,780 | | Liabilities | | | | Line of credit payable | $43,200,000 | $123,840,000 | | Line of credit payable to affiliate | $0 | $75,000,000 | | Total liabilities | $49,634,467 | $203,398,033 | | Shareholders' Equity | | | | Total shareholders' equity | $184,808,098 | $114,137,747 | Consolidated Statements of Operations Net income increased to $3.1 million for Q1 2025, driven by a significant rise in interest income to $5.0 million from an expanded loan portfolio Consolidated Statements of Operations Highlights (unaudited) | Metric | Three months ended March 31, 2025 (USD) | Three months ended March 31, 2024 (USD) | | :--- | :--- | :--- | | Interest income | $4,958,523 | $2,026,306 | | Net interest income | $4,622,364 | $2,026,306 | | Total expenses | $1,405,279 | $263,961 | | Net income | $3,099,437 | $1,762,345 | | Diluted earnings per share | $0.27 | $0.26 | Consolidated Statement of Cash Flows Cash and cash equivalents decreased by $183.0 million due to significant cash usage in investing activities for new loans and financing activities for credit facility repayments Cash Flow Summary (unaudited) | Activity | Three months ended March 31, 2025 (USD) | Three months ended March 31, 2024 (USD) | | :--- | :--- | :--- | | Net cash from operating activities | $(914,591) | $1,117,808 | | Net cash from investing activities | $(95,727,807) | $(46,414,144) | | Net cash from financing activities | $(86,341,592) | $14,400,000 | | Net decrease in cash | $(182,983,990) | $(30,896,336) | Notes to the Financial Statements Notes detail the company's spin-off, REIT election intent, loan portfolio growth to $230.5 million, and a $71.4 million stock offering - The company was spun-off from Advanced Flower Capital Inc. ("AFC") on July 9, 2024, becoming an independent, publicly traded company focused on commercial real estate (CRE) debt investments in the Southern United States1922 - The company intends to elect to be taxed as a REIT for the taxable year ending December 31, 20242176 - In January 2025, the company completed a public offering of 6.4 million shares of common stock, raising total net proceeds of approximately $71.4 million63 - For Q1 2025, the Manager waived Base Management Fees of $568,790 and Incentive Fees of $298,3068889 - A regular cash dividend of $0.30 per share, totaling approximately $4.0 million, was declared on March 4, 202598 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on CRE loan origination, significant portfolio growth in Q1 2025, and a net income of $3.1 million with $3.5 million in Distributable Earnings - The company focuses on originating secured CRE loans of $15-100 million with 2-5 year durations, targeting a portfolio net IRR in the low-teens and an expected leverage ratio of 1.5:1 debt-to-equity114 - In Q1 2025, the company originated several new loans, including a $30.8 million commitment in Aventura, FL, a $44.0 million commitment in New Orleans, LA, and a $46.5 million commitment in Dallas, TX117118121 Reconciliation of GAAP Net Income to Distributable Earnings | Metric | Three months ended March 31, 2025 (USD) | Three months ended March 31, 2024 (USD) | | :--- | :--- | :--- | | Net income | $3,099,437 | $1,762,345 | | Adjustments | $361,269 | $0 | | Distributable earnings | $3,460,706 | $1,762,345 | | Distributable earnings per basic share | $0.31 | $0.26 | - Book value per share was approximately $13.77 as of March 31, 2025, compared to $16.29 as of December 31, 2024133 Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate, credit, and real estate market risks, with 89% of its loan portfolio having floating rates and a $2.1 million estimated annual interest income increase from a 100 bps rate hike - As of March 31, 2025, 89% of the company's loan portfolio had floating interest rates, primarily tied to SOFR143182 - A hypothetical 100 basis point increase in the floating benchmark rate would increase annual interest income by approximately $2.1 million; a 100 basis point decrease would reduce annual interest income by approximately $0.4 million, limited by interest rate floors182 - The loan portfolio is concentrated, with the top three borrowers accounting for 41.9% of the aggregate outstanding principal balance as of March 31, 2025190 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report192 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls193 Part II. Other Information Legal Proceedings The company was not subject to any material legal proceedings as of March 31, 2025 - The company reports no material legal proceedings as of March 31, 2025194 Risk Factors No material changes to risk factors were reported, except for a new risk concerning U.S. tariff regulations impacting construction costs and real estate asset values - A new risk factor was noted regarding U.S. tariff regulations, which could adversely affect borrowers and the value of real estate assets, particularly due to tariffs on foreign goods used in construction195 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales or repurchases of its equity securities during the three months ended March 31, 2025 - There were no unregistered sales of equity securities during the quarter196 - The company did not repurchase any of its Common Stock during the quarter197 Defaults Upon Senior Securities The company reported no defaults upon its senior securities - None198 Mine Safety Disclosures This item is not applicable to the company - Not applicable199 Other Information The company reported no other information for this item - None200 Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements related to spin-off, management, credit facilities, and officer certifications