What changed in this filing

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Item 1. Business

2026-03-12 compared with 2025-03-06 · 48 added, 67 removed, 409 unchanged (22% of the section changed)

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should be read in conjunction with the information included elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2025.

Unless the context otherwise requires, the terms “SUNS,” “we,” “us,” or “our” refers to Sunrise Realty Trust, Inc.

SUNS is a Maryland corporation that was formed on August 28, 2023, that intends to elect to be treated as a real estate investment trust for U.S.

federal income tax purposes and that made its first investment in January 2024.

Unless the context otherwise requires, the terms “Company,” “SUNS,” “we,” “us,” or “our” refers to Sunrise Realty Trust, Inc.

SUNS is a Maryland corporation that was formed on August 28, 2023, that elected to be treated as a real estate investment trust for U.S.

federal income tax purposes for its taxable year ended December 31, 2024, and made its first investment in January 2024.

SUNS is an integral part of the platform of affiliated asset managers under the Tannenbaum Capital Group (“TCG”).

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We do not expect to be fully drawn on our secured debt availability and, as a result, we are targeting an expected leverage ratio of 1.5:1 debt-to-equity.

On February 22, 2024, Advanced Flower Capital Inc.

(f/k/a AFC Gamma, Inc.) (“AFC” or the “Former Parent”) announced a plan to separate into two independent, publicly traded companies.

Prior to the Spin-Off (as defined below), the Company held AFC’s CRE portfolio as a wholly-owned subsidiary of AFC.

On July 9, 2024, AFC completed the separation of its CRE portfolio (the “Separation”) through the spin-off of the Company from AFC (the “Spin-Off”) through a pro-rata distribution of all of the outstanding shares of our common stock to all of AFC’s shareholders of record (the “Distribution”) as of the close of business on July 8, 2024 (the “Record Date”).

AFC’s shareholders of record as of the Record Date received one share of our common stock for every three shares of AFC common stock held as of the Record Date.

The Spin-Off was completed on July 9, 2024 (the “Distribution Date”).

On the Distribution Date, SUNS became an independent, publicly traded company, trading on the Nasdaq Capital Market under the symbol “SUNS.” AFC retained no ownership interest in us following the Spin-Off.

Prior to the Spin-Off, AFC contributed cash to us, bringing our total net assets, comprised of cash and our CRE portfolio, to approximately $114.8 million in connection with the Spin-Off.

In connection with the Spin-Off, we entered into several agreements with AFC that govern the relationship between us and AFC following the Spin-Off, including a separation and distribution agreement (the “Separation and Distribution Agreement”) and a tax matters agreement (the “Tax Matters Agreement”).

These agreements provide for the allocation

between AFC and us of the assets, liabilities and obligations (including, among others, investments, property and tax-related assets and liabilities) of AFC and its subsidiaries attributable to periods prior to, at and after the Spin-Off.

Moreover, concurrent with the completion of the Spin-Off on July 9, 2024, our management agreement with our Manager (the “Management Agreement”) became effective.

Our Manager entered into an administrative services agreement (the “Administrative Services Agreement”) with TCG Services LLC (“TCG Services”), that sets forth the terms on which TCG Services provides certain administrative services, including providing personnel, office facilities, information technology and other equipment and legal, accounting, human resources, clerical, bookkeeping and record keeping services at such facilities and other services that are necessary or useful for us.

TCG Services is an affiliate of our Manager and Leonard Tannenbaum, our Executive Chairman, and Robyn Tannenbaum, our President.

Our Manager also entered into a Services Agreement (the “Services Agreement”) with SRT Group LLC (“SRT Group”), an affiliate of our Manager, Mr.

Tannenbaum, Mrs.

Tannenbaum, Brian Sedrish, our Chief Executive Officer, and Brandon Hetzel, our Chief Financial Officer and Treasurer.

The Services Agreement sets forth the terms on which SRT Group provides investment personnel to us.

Effective July 1, 2024, Jodi Hanson Bond and James Fagan resigned from AFC’s Board of Directors and joined our Board of Directors (our “Board”).

Additionally, Alexander Frank was appointed as a director of the Company and remains a director of AFC.

In addition, effective July 1, 2024, Leonard M.

Tannenbaum was appointed as our Executive Chairman (and remains Chairman of AFC) and Brian Sedrish was appointed as our Chief Executive Officer and as a member of our Board.

Brandon Hetzel continued in his role as our Chief Financial Officer and Treasurer (and remains the Chief Financial Officer and Treasurer of AFC), and Robyn Tannenbaum continued in her role as our President (and remains the President and Chief Investment Officer of AFC).

In July 2024, we separated from Advanced Flower Capital Inc.

(“AFC”) through a spin-off transaction (the “Spin-Off”).

The separation was effected by the transfer of AFC’s commercial real estate portfolio from AFC to us, and the distribution of all of the outstanding shares of our common stock to all of AFC’s stockholders of record (the “Distribution”) as of the close of business on July 8, 2024 (the “Record Date”).

As a result of the Spin-Off, we are now an independent, public company trading under the symbol “SUNS” on The Nasdaq Stock Market (“Nasdaq”).

Investment Objective

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We may originate or purchase the above types of investments and hold them to maturity.

may also originate a whole loan and subsequently create a mezzanine loan by partnering with a senior lender (likely a national or regional bank, or an insurance company), who will acquire the senior portion of the loan from us.

We may also originate a whole loan and subsequently create a mezzanine loan by partnering with a senior lender (likely a national or regional bank, or an insurance company), who will acquire the senior portion of the loan from us.

We believe that this structure would allow us to deliver enhanced returns to our investors while providing competitive financing rates to our borrowers.

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Our investments are primarily concentrated in those states/districts that SUNS considers to be part of the Southern U.S.

Those states/districts include AL, AR, DE, FL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, VA, WV and D.C.

Those states/districts include AL, AR, AZ, DE, FL, GA, KY, LA, MD, MS, NC, NM, NV, OK, SC, TN, TX, UT, VA, WV and D.C.

Within its targeted geographic region, we expect that the following states, which are and are expected to continue exhibiting above average population and employment growth, will represent a greater share of the overall geographic exposure:

GA, FL, NC, SC, TN and TX.

AZ, FL, GA, NC, NV, SC, TN and TX.

Commercial Real Estate Sub-Industries

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Our Loan Origination Pipeline

As of March 1, 2025 , we had a potentially actionable pipeline through the TCG Real Estate platform of approximately $1.4 billion of commercial real estate deal commitments under review by our Manager and its affiliates, including two signed, non-binding term sheets totaling approximately $115 million of commitments, of which we expect to be allocated a portion.

As of February 27, 2026 , we had a potentially actionable pipeline through the TCG Real Estate platform of approximately $0.7 billion of commercial real estate deal commitments under review by our Manager and its affiliates, including one signed, non-binding term sheet totaling approximately $35 million of commitments, of which we expect to be allocated a portion.

On the whole, our Manager and its affiliates have sourced a pool of approximately $81.1 billion CRE deals.

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We are currently completing our underwriting process and negotiating definitive loan documents for each of the potential loan investments related to our active non-binding term sheets.

The potential loans remain subject to satisfactory completion of our underwriting and due diligence processes, definitive documentation and final approval by members of the investment committee of our Manager (the “Investment Committee”), as applicable.

The potential loans remain subject to satisfactory completion of our underwriting and due diligence processes, definitive documentation and final approval by members of the investment comm ittee of our Manager (the “Investment Committee”), as applicable.

As a result, there can be no assurance that we will move forward with any of these potential investments.

We intend to fund these potential loans using cash and unused borrowing capacity under our senior secured revolving credit facility (the “Revolving Credit Facilit y”), obtained under the Loan and Security Agreement, dated as of November 6, 2024, by and among the Company and certain of its subsidiaries, as borrowers, the lenders party thereto, and East West Bank, as Agent, Joint Lead Arranger, Joint Book Runner, Co-Syndication Agent and Co-Documentation Agent (as amended, restated, or otherwise modified from time to time, the “Revolving Credit Agreement”), our un secured revolving credit facility (as amended, restated, or otherwise modified from time to time, the “SRTF Credit Facilit y”), obtained under the Loan and Security Agreement, dated as of December 9, 2024, by and among the Company, as borrower, the lenders party thereto from time to time, and SRT Finance LLC, as agent and lender (the “SRTF Credit Agreement”), net proceeds of future debt or equity offerings and/or, depending upon the timing of closing, net proceeds from loan repayments.

We intend to fund these potential loans using cash and unused borrowing capacity under our senior secured revolving credit facility (the “Revolving Credit Facility”), obtained under the Loan and Security Agreement, dated as of November 6, 2024, by and among the Company and certain of its subsidiaries, as borrowers, the lenders party thereto, and East West Bank, as Agent, Joint Lead Arranger, Joint Book Runner, Co-Syndication Agent and Co-Documentation Agent (as amended, restated, or otherwise modified from time to time, the “Revolving Credit Agreement”), our unsecured revolving credit facility (as amended, restated, or otherwise modified from time to time, the “SRTF Credit Facility”), dated as of December 9, 2024, by and among the Company, as borrower, the lenders party thereto from time to time, and SRT Finance LLC, as agent and lender (the “SRTF Credit Agreement”), obtained under the Loan and Security Agreement, net proceeds of future debt or equity offerings, including in connection with our at-the-market offering program (the “ATM Program”), and/or, depending upon the timing of closing, net proceeds from loan repayments.

Market Opportunity

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and (2) dislocations and declining liquidity caused by the rapid rise in interest rates that began in March 2022.

While the Federal Reserve made three rate cuts in each of 2024 and 2025, there is uncertainty as to the timing and extent of future rate cuts in light of ongoing inflationary challenges and generally resilient macroeconomic data.

We believe that this represents a paradigm shift relative to the low interest rate environment observed over the past ten years, which was characterized by an abundance of cheap capital.

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• Unique Market Opportunity :

A rapid rise in interest rates has caused significant impairment and disruption to the CRE capital markets.

Legacy portfolio issues have caused banks and other traditional CRE lenders to retrench from CRE, and elevated interest rates have drained liquidity from the CRE capital markets.

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a list of pending or threatened claims/litigation by or against the borrower or its guarantor(s) including the status of any claim;

information about other liabilities, including loans, foreclosures and

bankruptcies;

information about other liabilities, including loans, foreclosures and bankruptcies;

lending and banking references;

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We are currently externally managed and advised by Sunrise Manager LLC, a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).

As of December 31, 2024, our Manager was beneficially owned 67.8% by Leonard M.

Tannenbaum, our Executive Chairman, 8.8% by Robyn Tannenbaum, our President, and 18.4% by Tannenbaum family members and trusts.

As of the date of this Annual Report on Form 10-K, our Manager was beneficially owned approximately 37% by Leonard M.

Tannenbaum, our Executive Chairman, 8% by Robyn Tannenbaum, our President, 42% by other Tannenbaum family members and trusts, 7% by Mr.

Sedrish, our Chief Executive Officer, 2% by Brandon Hetzel, our Chief Financial Officer, and 1% by Gabriel Katz, our Chief Legal Officer.

Each of our officers is an employee of our Manager and/or its affiliates, and certain of our officers are members of our Manager’s Investment Committee.

Our Manager has entered into the Administrative Services Agreement with TCG Services, which sets forth the terms on which TCG Services provides certain administrative services, including providing personnel, office facilities, information technology and other equipment and legal, accounting, human resources, clerical, bookkeeping and record keeping services at such facilities and other services that are necessary or useful for us.

TCG Services is an affiliate of our Manager and Leonard Tannenbaum, our Executive Chairman, and Robyn Tannenbaum, our President.

Our Manager has entered into the Administrative Services Agreement with TCG Services, which sets forth the terms on which TCG Services provides certain administrative services, including providing personnel, office facilities, information technology and other equipment and legal, ac counting, human resources, clerical, bookkeeping and record keeping services at such facilities and other services that are necessary or useful for us.

TCG Services is an affiliate of our Manager and Mr.

Tannenbaum, and Mrs.

Our Manager has also entered into a Services Agreement with SRT Group, an affiliate of the Manager, Mr.

Tannenbaum, Mrs.

Tannenbaum, and Brian Sedrish, our Chief Executive Officer, and Brandon Hetzel, our Chief Financial Officer and Treasurer, that sets forth the terms on which SRT Group provides investment personnel to us.

As of December 31, 2024, our Manager, through the Administrative Services Agreement with TCG Services and the Services Agreement with SRT Group, has access to the services of over 30 professionals, including seven investment

professionals.

Tannenbaum, Mr.

Hetzel and Mr.

Katz, that sets forth the terms on which SRT Group provides investment personnel to us.

As of the date of this Annual Report on Form 10-K, our Manager, through the Administrative Services Agreement with TCG Services and the Services Agreement with SRT Group, has access to the services of over 35 professionals, including seven investment professionals.

The investment personnel provided by our Manager and the investment committee members of our Manager have over 70 years of combined investment management experience and are a valuable resource to us.

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Termination for Cause

that the same be remedied in such 30-day period (or 45 days after written notice of such breach if our Manager takes steps to cure such breach within 30 days of the written notice);

We may terminate our Management Agreement effective upon 30 days’ prior written notice, without payment of any termination fee, if (i) our Manager, its agents or its assignees breach any material provision of our Management Agreement and such breach shall continue for a period of 30 days after written notice thereof specifying such breach and requesting that the same be remedied in such 30-day period (or 45 days after written notice of such breach if our Manager takes steps to cure such breach within 30 days of the written notice);

(ii) there is a commencement of any proceeding relating to our Manager’s bankruptcy or insolvency, including an order for relief in an involuntary bankruptcy case or our Manager authorizing or filing a voluntary bankruptcy petition;

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In the event that certain conditions are met, we have the option to internalize our Manager.

Any such transaction will require the approval of a committee consisting solely of our independent directors and shareholder approval as further described below.

Any such transaction will require the approval of a committee consisting solely of our independent directors and shareholder approval as further

described below.

Upon the date on which our equity equals or exceeds $1,000,000,000 (such date, the “Internalization Trigger Date”), the Company may, at its election, provide our Manager with a written offer for an internalization transaction in which our Manager will contribute all of its assets to us, or in the alternative, the equity owners of our Manager will contribute 100% of the outstanding equity interest in our Manager to us (such transaction an “Internalization Transaction”).

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The value of our common stock paid as partial or full consideration of any Internalization Transaction shall be calculated based on the volume-weighted average of the closing market price of our common stock for the ten consecutive trading days immediately preceding the date with respect to which value must be determined;

agreement between our Board and our Manager or, in the absence of such agreement, the Internalization Price shall be paid in cash.

provided, however, that if our common stock is not traded on a securities exchange at the time of closing of any such Internalization Transaction, then the number of shares of common stock shall be determined by agreement between our Board and our Manager or, in the absence of such agreement, the Internalization Price shall be paid in cash.

Investment Guidelines

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The Investment Committee has the following responsibilities:

(i) reviewing loan opportunities for us presented to it by senior investment professionals of our Manager and (ii) reviewing our loan portfolios for compliance with the Investment Guidelines established pursuant to our Management Agreement at least on a quarterly basis, or more frequently as necessary.

(i) reviewing loan opportunities for us presented to it by senior investment professionals of our Manager and (ii) reviewing our loan portfolios

for compliance with the Investment Guidelines established pursuant to our Management Agreement at least on a quarterly basis, or more frequently as necessary.

All of our loans require the approval of the Investment Committee.

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Co-Investments

Tannenbaum, Mrs.

Tannenbaum, Mr.

Sedrish or any of their or our respective affiliates or entities in which any such person is an executive.

and, subject to compliance with the Manager COI Policy (as defined below) and our code of business conduct and ethics, our Manager may allocate such loans and participate in such loans as our Manager deems reasonable under the circumstances in good faith with the Allocation Policy (as discussed below).

Certain investment opportunities in loans, which may be suitable for us, may also be suitable for other accounts, private funds, pooled investment vehicles or other entities managed or advised, directly or indirectly, by our Manager or any of their or our respective affiliates or entities in which any such person is an executive and, subject to compliance with the Manager COI Policy (as defined below) and our code of business conduct and ethics, our Manager may allocate such loans and participate in such loans as our Manager deems reasonable under the circumstances in good faith with the Allocation Policy (as discussed below).

We, alongside the Manager and certain of its affiliates, are party to a co-investment exemptive relief order issued by the SEC on March 11, 2026 (the "Co-Investment Exemptive Order”), that permits us to co-invest in certain investments alongside affiliated investment vehicles, subject to the conditions of the Co-Investment Exemptive Order and the Manager’s allocation policies and procedures.

The Co-Investment Exemptive Order establishes a framework designed to ensure that investment opportunities are allocated in a manner the Manager believes to be fair and equitable over time consistent with our investment strategy.

Allocation Policy

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The internal policies of our Manager and its affiliates, which may be amended without our consent, are intended to enable us to share equitably with any other investment vehicles that are managed by our Manager or affiliates of our Manager, such as Southern Realty Trust Inc.

These policies may and are expected to change and be

updated from time to time, for example, to reflect the ongoing experience of our Manager and its affiliates with respect to allocation matters, changes in circumstances, such as changes in relevant market conditions, certain regulatory considerations, and the acceptance of additional clients by our Manager and its affiliates.

These policies may and are expected to change and be updated from time to time, for example, to reflect the ongoing experience of our Manager and its affiliates with respect to allocation matters, changes in circumstances, such as changes in relevant market conditions, certain regulatory considerations, and the acceptance of additional clients by our Manager and its affiliates.

In general, loan opportunities are allocated taking into consideration various factors, including, among others, the relevant investment vehicles’ available capital, their investment objectives or strategies, their risk profiles and their existing or prior positions in a borrower or particular loan, their potential conflicts of interest, the nature of the opportunity and market conditions, certain regulatory considerations, the rotation of loan opportunities and any other considerations deemed relevant by our Manager and its affiliates.

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The allocation policy of our Manager addresses the allocation of investment and disposition opportunities among SUNS and other clients which may include, among others, private funds, REITs, separately managed accounts, collateralized loan obligation issuers and small business investment companies and entities regulated under the Investment Company Act (collectively, the “Funds”) advised by our Manager or its affiliates, such as SRT.

The policy recognizes that because of commonality and/or overlap of investment objectives and policies among the Funds, investment and/or disposition opportunities that are attractive to SUNS may be attractive to one or more other Funds.

The policy recognizes that because of commonality and/or overlap of investment objectives and policies among the Funds, investment and/or disposition

opportunities that are attractive to SUNS may be attractive to one or more other Funds.

Under the allocation policy, which applies to investment advisers affiliated with our Manager, each Fund’s investment committee is responsible for evaluating whether a particular investment opportunity is appropriate at that time for such Fund.

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Our Manager’s Chief Compliance Officer may delegate certain responsibilities, including, without limitation, the granting or withholding of any consents or pre-approvals required by the Manager COI Policy, or the making of other determinations pursuant to the Manager COI Policy, to one or more of our Manager’s partners, members, owners, principals, directors, officers, supervisors and employees, and any other person who provides investment advice on behalf of our Manager and is subject to the supervision and control of our Manager (collectively, “Covered Persons”), in each case acting under the supervision of our Manager’s Chief Compliance Officer (or under the supervision of another person designated by our Manager’s Chief Compliance Officer), but shall retain overall responsibility for our Manager’s compliance program.

in such cases our Manager’s Chief Financial Officer shall be responsible for granting or making any such consents, pre-approvals or other determinations with respect to our Manager’s Chief Compliance Officer.

In the event that our Manager’s Chief Compliance Officer personally is required to obtain any consents, pre-approvals or other determinations pursuant to the Manager COI Policy that would, with respect to any other Covered Person, be made by our Manager’s Chief Compliance Officer himself, then in such cases our Manager’s Chief Financial Officer shall be responsible for granting or making any such consents, pre-approvals or other determinations with respect to our Manager’s Chief Compliance Officer.

Pursuant to our Management Agreement, our Manager has also agreed to (i) use reasonable efforts to avoid any potential conflicts of interest, (ii) disclose the nature and source of any material conflict of interest to our Board and the Audit and Valuation Committee of our Board before undertaking a transaction on our behalf and (iii) require the persons who provide services to us to comply with our code of business conduct and ethics, which includes our conflict of interest policy, in the performance of such services or such comparable policies as shall in substance hold such persons to at least the standards of conduct set forth in our code of business conduct and ethics.

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Pursuant to our conflict of interest policy, in such circumstances where a Covered Person’s outside business activities include an investment in or management role at one of our borrowers or other clients, such Covered Person shall not participate in any decision making processes that will give rise to a potential or actual conflict of interest unless approved by the Audit and Valuation Committee of our Board.

A Covered Person may seek approval for making an investment in or engaging in outside activity with a borrower by sending a written request to our legal department describing the nature of the investment or the outside activity, the time commitment involved, the parties for whom such Covered Person will be working with or associated with, and other relevant particulars of such activity.

commitment involved, the parties for whom such Covered Person will be working with or associated with, and other relevant particulars of such activity.

Requests to engage in such investment and outside activity will be reviewed and approved by our legal department on a case-by-case basis.

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From time to time, the Manager may waive fees it would otherwise be entitled to under the terms of the Management Agreement.

The Manager has agreed to waive (i) the inclusion of the net proceeds from the January 2025 Offering (hereinafter defined) in the Company’s Equity for purposes of calculating the management fee until the earlier of (a) December 31, 2025 and (b) the quarter in which the total amount of the net proceeds of the January 2025 Offering have been utilized to fund loans in our portfolio and (ii) an additional $1.0 million in fees.

The Manager agreed to waive (i) the inclusion of the net proceeds from the January 2025 Offering (hereinafter defined) in the Company’s Equity for purposes of calculating the management fee until the earlier of (a) December 31, 2025 and (b) the quarter in which the total amount of the net proceeds of the January 2025 Offering have been utilized to fund loans in our portfolio and (ii) an additional $1.0 million in fees.

For the year ended December 31, 2025, Base Management Fees waived were $0.6 million and Incentive Fees waived were $0.5 million .

Management Compensation

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The service by any personnel of our Manager and its affiliates as a member of the Investment Committee will not, by itself, be dispositive in the determination as to whether such personnel is deemed “investment personnel” of our Manager and its affiliates for purposes of expense reimbursement.

For the year ended December 31, 2024, our Manager did not seek reimbursement for our allocable share of Mr.

For the years ended December 31, 2025 and 2024, our Manager did not seek reimbursement for our allocable share of Mr.

Tannenbaum’s compensation, but did seek reimbursement for our allocable share of Mrs.

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REIT Qualification

We intend to make an election to be taxed as a REIT for U.S.

We elected to be taxed as a REIT for U.S.

federal income tax purposes, commencing with our taxable year ended December 31, 2024.

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Investment Company Act

We have not been and are not currently required to be registered under the Investment Company Act pursuant to Section 3(c)(5) (the “Section 3(c)(5) Exemption”) of the Investment Company Act.

We have not been and are not currently required to be registered under the Investment Company Act pursuant to Section 3(c)(5)(C) (the “Section 3(c)(5)(C) Exemption”) of the Investment Company Act.

Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities.

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government securities and cash items) on an unconsolidated basis, which we refer to as the 40% test.

Real estate mortgages are excluded from the term “investment securities.”

We rely on the Section 3(c)(5) Exemption, which is available for entities “primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” This exemption generally requires that at least 55% of an entity’s portfolio must be comprised of qualifying assets and at least another 25% of the portfolio must be comprised of real estate-related assets under the Investment Company Act (and no more than 20% comprised of non-qualifying or non-real estate assets).

We rely on the Section 3(c)(5)(C) Exemption, which is available for entities “primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” This exemption generally requires that at least 55% of an entity’s portfolio must be comprised of qualifying assets and at least another 25% of the portfolio must be comprised of additional qualifying assets or real estate-related assets under the Investment Company Act (and no more than 20% comprised of non-qualifying or non-real estate assets).

“Qualifying assets” for this purpose include, for example, certain mortgage loans, certain B-Notes and certain mezzanine loans that satisfy various conditions as interpreted by the SEC staff in various no-action letters and other SEC interpretive guidance.

We believe we qualify for the exemption under this section and our current intention is to continue to focus on originating and investing in loans collateralized by real estate so that at least 55% of our assets are “qualifying assets” and no more than 20% of our assets are non-qualifying or non-real estate assets.

However, if, in the future, we do acquire assets that do not meet this test, we may qualify as an “investment company” and be required to register as such under the Investment Company Act, which could have a material adverse effect on us.

We believe we qualify for the exemption under this section and our current intention is to continue to focus on originating and investing in loans collateralized by real estate so that at least 55% of our assets are “qualifying assets,” at least 80% of our assets are a combination of qualifying assets and real estate-related assets, and no more than 20% of our assets are non-qualifying or non-real estate assets.

However, if, in the future, we do acquire assets that do not meet this test, we may be required to register as an investment company under the Investment Company Act, which could have a material adverse effect on us.

The Investment Company Act provides certain protections and imposes certain restrictions on registered investment companies, none of which are currently applicable to us.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business