Sunrise Realty Trust, Inc. Q2 FY2025 earnings call

• Leonard Tannenbaum announced that during Q2, $90 million of additional commitments were added to the senior secured revolving credit facility, bringing total commitments to $140 million (expandable to $200 million) with an attractive interest rate of 2.75% over SOFR with a 2.63% floor.
• Brian Sedrish discussed the commercial real estate market, noting a pickup in Q1 2025, slowdown in Q2 due to tariffs, then pickup again in Q3. SUNS focuses on transitional real estate projects, with $9 million committed to a senior secured loan for a residential property in Park City, Utah. The pipeline had 5 signed nonbinding term sheets totaling ~$275 million in first mortgage loans with spreads above the existing portfolio rate.
• Brandon Hetzel provided financial results, dividend details ($0.30 per share declared, paid on July 15, 2025), and portfolio details, including CECL reserve and book value per share.

For the quarter ended June 30, 2025, Sunrise Realty Trust (SUNS) generated net interest income of $5.7 million and distributable earnings of $4.1 million ($0.31 per basic weighted average common share). GAAP net income was $3.4 million ($0.25 per basic weighted average common share). As of June 30, 2025, the portfolio had $360.2 million of current commitments and $251 million of principal outstanding spread across 13 loans, with a weighted average portfolio yield to maturity of approximately 12.2%.

• The pipeline of 5 term sheets totaling ~$275 million in first mortgage loans have spreads above the existing blended portfolio rate.
• Leonard Tannenbaum mentioned the next avenue for debt capital is the unsecured markets, aiming to draw on the $75 million unsecured line to increase leverage to the target 1.5x.
• Brian Sedrish expressed encouragement about the pipeline and market activity, though transaction closings are uncertain.

• Uncertainties in predicting future results due to inherent uncertainties in market developments.
• Impact of global uncertainty around tariffs affecting transaction activity in Q2.
• Competition in the near stabilized/stabilized financing markets, though SUNS focuses on transitional projects where competition is less.

Q: Related to the 5 term sheets for $275 million in the pipeline, can you size the interest rate profile?

A: The 5 term sheets are all first mortgages with spreads above the existing blended portfolio rate of existing loans.

Q: Talk about the Park City loan from a return perspective and broadening geographies?

A: Len Tannenbaum said the Park City loan was an attractive value, brought in as a syndicate partner; SUNS continues to look at various geographies, with a majority in current states but opportunistically expanding.

Q: Origination targets for the second half of 2025 and 2026, split of senior and subordinate loans?

A: Len Tannenbaum said loans can take time to close, with 5 signed term sheets in documentation but unclear on exact timing; Brian Sedrish encouraged by pipeline but transaction closings uncertain.

Q: Florida condo loans market performance and progress?

A: Brian Sedrish said Florida condo projects are performing as expected, with activity relatively stable, especially on more 'affordable' price points.

Q: Leverage target timeline and unsecured issuance?

A: Leonard Tannenbaum said they want to draw the $75 million unsecured line and are monitoring the unsecured market for scaling leverage, targeting fourth quarter for unsecured issuance.

Q: Competition in the market and impact on business if interest rates drop?

A: Brian Sedrish said heaviest competition is in near stabilized/stabilized multi-side financing; Leonard Tannenbaum noted SUNS is positioned with construction loans locked in good floors, and a drop in interest rates could expand net interest margin as new deals have lower floors, leaving room against the credit facility's floor.