Sunrise Realty Trust, Inc. Q3 FY2025 earnings call

Leonard Mark Tannenbaum - Executive Chairman

• Investment focus on transitional loans in Southern US with local expertise, leverage at ~0.4 times (below target 1-1.5 times), weighted average loan to cost at closing 56%, 95% floating rate loans with SOFR floors, and a disciplined team.
• Confidence in SUNS offering compelling risk-adjusted return, discount to book value, stable dividend coverage, and growth potential.

Brian Sedrish - CEO

• Market pickup in real estate activity, renewed interest rate stability, bid-ask spread narrowing, traditional banks reentering market. Pipeline with $170 million in nonbinding term sheets. Q3 origination of $60 million loan in Miami, funding $33 million in Q3, and subsequent closings after quarter end.

Brandon Hetzel - CFO

• Reported net interest income, distributable earnings, dividend declaration, portfolio details including commitments, principal outstanding, CECL reserve, assets, and shareholder equity.

For the quarter ended 09/30/2025, Sunrise Realty Trust (SUNS) generated distributable earnings of $0.31 per share of common stock, which covered its dividend of $0.30. Net interest income for the quarter was $6.1 million. Distributable earnings were $4.12 million or $0.31 per basic weighted average common share, and GAAP net income was $4.05 million or $0.30 per basic weighted average common share. As of 09/30/2025, the portfolio had $367 million of commitments with $253 million funded. By 11/03/2025, the portfolio consisted of $421.1 million of current commitments and $295.2 million of principal outstanding across 16 loans with a weighted average portfolio yield to maturity of approximately 11.8%. About 95% of the loans are floating rate, with an average SOFR floor across the portfolio of about 4%.

• Anticipated to earn additional income due to SOFR dropping below floors in loan book and credit line. - Intention to consider preferred or unsecured offering in upcoming quarters, watching market for favorable conditions.

• Inherent uncertainties in predicting future results, subject to conditions and factors in SEC filings that could materially affect actual results. - Potential issues with construction delays or borrower requests, but noted as ordinary course.

Q: What new geographies in the Southern US are in the pipeline?

A: Sure. Thanks for the questions, Brian. We are staying true to our focus of primarily the Southern U.S. I mean, that has not changed. Florida, Texas, of course, we are currently looking at. We have one signed in the Carolinas. In this case, specifically North Carolina. Georgia, Tennessee, those really remain the primary markets that we're seeing a preponderance of our deals. And then sporadically, as we've said, if there are interesting deals that we believe represent good risk-adjusted returns, we'll look at those, as well.

Q: Which geographies in Southern US are most attractive?

A: Not particularly different than what we have historically been looking at. We still are seeing really interesting pockets in the state of Texas. There are certainly some interesting deals still within Florida. It's obviously asset class dependent. You have to worry about oversaturation. So just like anything, you have to be cognizant of the particular on-the-ground dynamics. The Carolinas still remain interesting. Tennessee, we're looking at a bunch of deals right now. Those are continuing to be the areas that we're focusing on, and we're seeing enough deal flow to really enable us to continue to stay focused on those areas.

Q: Debt side strategy, repo line, bank participation, bond issuance?

A: Okay. Start with the easy one. We're not going for a repo line for sure. We really are differentiated from the other mortgage REITs in that we don't want to do these four-time leverage deals. And repos. We think that's how you get in trouble. We're instead going more after the latter financial model of getting an investment-grade rating over time, not levering over one to one and a half times. From a bank perspective, it's really great. There's a lot of interest in banks. Think Jeff Bacuzzi, who leads our DCM desk, is doing a good job educating these banks as they come in one by one. And they have very positive experiences. But because our portfolio is really strong. So I think so far, so good. With expanding our bank lines at that two seventy-five over SOFR level. So I think that's the way we're gonna continue finance. I did say in the last call that I was gonna look to do a I don't know, either preferred or unsecured offering. We're still working on it. We're watching the tape today as read after read has started to print perpetual preferreds. And they're actually being absorbed by the market. So we are watching that market. We do intend to be there this quarter or next quarter. But, you know, you do have to have the market open. So I think that is gonna be a good Okay. A good enhancer.

Q: Portfolio underlying performance and trends?

A: Sure. Yes, Jade, I'll take it. It's Brian. Our portfolio now is performing as really as expected. I mean, of course, in any of these deals, there are always things that pop up that need to be addressed. Borrower calls us and says, know, they'd like to do something because they think it's more value add or maybe there's a two-week delay here or there. But that's just ordinary course. The underlying construction activity and progression has been going well on all the loans that we have. And then on the top line, in terms of if it's presales on condos or whether it's lease-up, they've all been, they've all been moving along as expected. There's nothing particularly exciting about the progress, which is what we love. Slow, steady, expected. And that's that's what we're continuing to see. There's actually been a bit of a pickup recently on a couple of our for-sale projects, just resulting from, I think, just a view of more migration down this particular case to South Florida. I expect that will continue in light of some of the political environment. But other than that, everything's pretty normal course.