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Item 7. Management’s Discussion and Analysis

2026-03-12 compared with 2025-03-06 · 265 added, 229 removed, 236 unchanged (68% of the section changed)

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Business Overview

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.

We are led by a veteran team of commercial real estate investment professionals and our external manager, Sunrise Manager LLC.

We conduct our business through our parent company, Sunrise Realty Trust, Inc., and several subsidiaries.

We consolidate all of our subsidiaries under generally accepted accounting principles in the United States of America (“GAAP”).

We are an institutional lender that provides debt capital solutions to CRE markets in the Southern United States.

SUNS’ focus is on originating CRE debt investments and providing capital to high-quality borrowers and sponsors with transitional business plans collateralized by CRE assets with opportunities for near-term value creation, as well as recapitalization opportunities.

SUNS intends to create a diversified investment portfolio, targeting investments in senior mortgage loans, mezzanine loans, B-notes, CMBS and debt-like preferred equity securities across CRE asset classes.

We intend for SUNS’ investment mix to include high quality residential (including multi-family, condominiums and single-family residential communities), retail, office, hospitality, industrial, mixed-use and specialty-use real estate.

Our investment focus includes originating or acquiring loans backed by single assets or portfolios of assets that typically have (i) an investment hold size of approximately $15-100 million, secured by CRE assets, including transitional or construction projects, across diverse property types, (ii) a duration of approximately 2-5 years, (iii) interest rates that are determined periodically on the basis of a floating base lending rate (e.g., SOFR) plus a credit spread, (iv) a loan-to-value (“LTV”) ratio of no greater than approximately 75% on an individual investment basis and (v) no more than approximately 75% LTV across the portfolio, in each case, at the time of origination or acquisition, and are led by experienced borrowers and well-capitalized sponsors with high quality business plans.

Our loans typically feature origination fees and/or exit fees.

We target a portfolio net internal rate of return (“IRR”) in the low-teens, which we believe may increase to the mid-teens after including total interest and other revenue from the portfolio, including loans funded from drawing on our leverage, net of our interest expense from our portfolio lenders.

We are also targeting a near- to mid-term target capitalization of one-third equity, one-third secured debt availability and one-third unsecured debt.

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.

SUNS is a Maryland corporation that was formed on August 28, 2023 and that made its first investment in January 2024.

We are a real estate focused debt fund, actively pursuing opportunities to finance transitional commercial real estate projects located across the Southern U.S.

We are an integral part of the platform of affiliated asset managers under TCG.

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 to us and the distribution of all of the outstanding shares of our common stock to all of AFC’s stockholders of record as of the close of business on July 8, 2024.

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

Our focus is on originating and investing in secured CRE loans and providing capital to high-quality borrowers and sponsors with transitional business plans collateralized by CRE assets with opportunities for near-term value creation, as well as recapitalization opportunities.

We intend to further diversify our investment portfolio, targeting investments in senior mortgage loans, mezzanine loans, B-notes, CMBS and debt-like preferred equity securities across CRE asset classes.

We intend for our investment mix to include loans secured by high quality residential (including multi-family, condominiums and single-family residential communities), retail, office, hospitality, industrial, mixed-use and specialty-use real estate.

We are an externally managed Maryland corporation and elected to be taxed as a REIT under Section 856 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2024.

We believe our organization and current and proposed method of operation will enable us to qualify as a REIT.

However, no assurances can be given that our beliefs or expectations will be fulfilled, since qualification as a REIT depends on our continuing to satisfy numerous asset, income, distribution and other tests, which in turn depends, in part, on our operating results and ability to obtain financing.

We also intend to operate our business in a manner that will permit us to maintain our exemption from registration under the Investment Company Act.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

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and (2) the date on which we have issued more than $1 billion in non-convertible debt securities during the prior three-year period.

On February 22, 2024, AFC announced a plan to separate into two independent, publicly traded companies.

On July 9, 2024, AFC completed the separation of its CRE portfolio through the spin-off of SUNS.

The Spin-Off was effected by the transfer of AFC’s CRE portfolio from AFC to SUNS and the distribution of all of the outstanding shares of SUNS Common Stock to all of AFC’s shareholders of record as of the close of business on July 8, 2024.

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.

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 the Separation and Distribution Agreement and the Tax Matters Agreement.

These agreements provide for the allocation between AFC and SUNS 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 became effective.

Our Manager also entered into (i) an Administrative Services Agreement with TCG Services, an affiliate of our Manager and Leonard Tannenbaum, our Executive Chairman, and Robyn Tannenbaum, our President, and (ii) a Services Agreement with SRT Group, an affiliate of our Manager, Mr.

Tannenbaum, Mrs.

Tannenbaum, Mr.

Sedrish and Mr.

We adopted the 2024 Stock Incentive Plan (the “2024 Plan”).

See Note 8 to our financial statements for the year ended December 31, 2024 included in this Annual Report for additional information regarding our 2024 Plan.

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

Additionally, Alexander Frank was appointed as a director of SUNS and remained 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).

During the year ended December 31, 2024, we incurred approximately $0.6 million related to Spin-Off costs, which are recorded within professional fees in the consolidated statements of operations.

Developments During the Year Ended December 31, 2025:

Updates to Our Loan Portfolio During the Year Ended December 31, 2025

In January 2024, we and an affiliate of ours, purchased an aggregate of approximately $56.4 million in loan commitments in a secured mezzanine loan facility, of which approximately $28.2 million of principal has been funded by us and another approximately $28.2 million of principal has been funded by the affiliate.

We and the affiliate are each 50.0% syndicate lenders in the secured mezzanine loan facility.

Approximately $16.9 million was established as reserves, for the payment of interest and other costs and expenses, which is fully funded and held by an affiliated agent on the loan.

The lenders have a right to convert the mezzanine loan to a first priority mortgage loan after the repayment of the existing senior loan and subject to certain other terms and conditions.

The secured mezzanine loan bears interest at an annual rate of SOFR plus a 15.31% spread, subject to a SOFR floor of 2.42%.

At the end of February 2024, we and an affiliate entered into an amendment to the secured mezzanine loan, which among other things, extended the maturity date to May 31, 2024.

In May 2024, we and the affiliate entered into an amendment to the secured mezzanine loan and purchased approximately $2.5 million of the senior loan, of which approximately $1.3 million has been funded by us and another $1.3 million has been funded by the affiliate.

The senior loan bears interest at an annual rate of SOFR plus a 3.48% spread, subject to a SOFR floor of 2.42%, and matures on November 30, 2024.

The amendment to the secured mezzanine loan, among other things, (1) extended the maturity date to November 30, 2024 and (2) replenished the interest reserves held by the administrative

agent on the loan in an amount of approximately $9.6 million, for the payment of interest and other costs and expenses.

In August 2024, we and the affiliate entered into amendments to the existing secured mezzanine and senior loan credit agreements for the mixed-use property in Houston, Texas.

The amendments, among other things, (i) extended the maturity date on both loans from November 2024 to February 2026, (ii) modified the senior loan interest rate from floating (3.48% plus SOFR, SOFR floor of 4.0%) to fixed 12.5% and (iii) included a $12.0 million upsize to the senior loan, of which we have commitments for $6.0 million and the affiliate has commitments for the rest.

The property securing the loan is a mixed-use (for-sale residential, retail and hotel) project located in Houston, Texas.

A portion of the proceeds are being used to facilitate the completion of construction.

In December 2024, the Borrower repaid the secured mezzanine loan in full.

In January 2024, we and an affiliate entered into a secured mezzanine loan facility consisting of an aggregate of approximately $56.4 million in loan commitments, of which approximately $20.7 million of principal was funded by us as a result of our participation interest in the loan and another approximately $20.7 million of principal was funded by the affiliate.

The secured mezzanine loan commitments were issued by us and the affiliate at a discount of 1.0% for a net funding amount of approximately $20.4 million each, respectively.

The $56.4 million of total commitments includes $15.0 million of unfunded commitments which was established to be drawn to pay interest on the secured mezzanine loan, of which we are responsible for $7.5 million.

The $15.0 million of unfunded commitments are anticipated to be drawn over the life of the loan.

We and the affiliate are each 50.0% syndicate lenders in the secured mezzanine loan facility.

The secured mezzanine loan bears interest at an annual fixed rate of 13.00% and matures in May 2027, which the borrower may extend, at its option and subject to meeting certain terms and conditions, to May 2028.

The mezzanine loan facility is secured by a security interest in all of the equity interests held by the borrower in its wholly-owned subsidiary.

The property securing the loan is a 424-unit multi-family (with a component of ground-floor retail) project that is under construction and is located in Sarasota, Florida.

A portion of the proceeds are being used to facilitate the completion of construction.

In July 2024, we and an affiliate entered into a senior secured mortgage loan for a total aggregate commitment amount of approximately $35.2 million for the refinance of an active adult multi-family residential rental development in southwest Austin, Texas.

We committed a total of approximately $14.1 million and the affiliate committed the remaining approximately $21.1 million.

The senior secured loan was issued at a discount of 1.0% and matures in July 2027.

At closing, we funded approximately $11.4 million and the affiliate funded approximately $17.0 million.

The loan bears interest at a rate of SOFR plus 4.25%, with a rate index floor of 4.75%.

The senior secured loan is secured by a deed of trust on the property, any deposit and reserve accounts established by the terms of the senior secured loan and other customary collateral.

The proceeds of the senior secured loan will be used to, among other things, fund the completion of construction and other reserves and refinance existing debt.

In July 2024, we and an affiliate entered into a senior secured mortgage loan for a total aggregate commitment amount of $42.0 million for the refinance of a luxury hotel component of a 20-story mixed-use project in San Antonio, Texas.

We committed a total of approximately $27.3 million, and SRT committed the remaining $14.7 million.

The senior secured loan was issued at a discount of 1.0% and matures in August 2027.

At closing, we funded approximately $25.0 million and the affiliate funded approximately $13.5 million.

The senior secured loan bears interest at a rate of SOFR plus 6.35%, with a rate index floor of 4.50%.

The senior secured loan is secured by a first-priority mortgage on the property and a security interest in all of the equity interests held by the borrower.

The proceeds of the senior secured loan will be used to, among other things, fund the completion of reserves and refinance existing debt.

In August 2024, we, along with our affiliates, entered into a $75.0 million senior secured revolving loan and a $85.0 million senior mortgage loan for a total aggregate commitment amount of $160.0 million for the construction of a master-planned single-family residential home community and property development in Palm Beach Gardens, Florida.

We committed a total of approximately $18.75 million and $21.25 million to the revolving loan and mortgage loan, respectively, and funded $8.77 million and $18.76 million towards each respective loan at close.

Affiliates committed the remaining $56.25 million and $63.75 million towards the revolving loan and mortgage loan, funding $26.32 million and $56.29 million, respectively, at close.

The revolving loan and mortgage loan were each issued at a discount of 1.25%.

The revolving loan bears interest at a rate of SOFR plus 6.25%, with a rate index floor of 4.00%, and unused fee of 2.00%.

The proceeds of the revolving loan will be used to, among other things, fund the completion of reserves, fund home construction costs and refinance existing debt.

The mortgage loan bears an interest rate of SOFR plus 8.25%, with a rate index floor of 4.00%.

The proceeds of the mortgage loan will be used to, among other things, fund the completion of construction and other reserves and refinance existing debt.

The mortgage loan and the revolving loan each mature in September 2027.

The loans are each secured by senior first mortgage lien on the property and a security interest in all of the equity interests held by the borrower.

In November 2024, we and affiliated co-investors, entered into a whole loan (the “Whole Loan”) consisting of an aggregate of $96.0 million in loan commitments.

The property securing the loan is a development site and related condominium project located in Fort Lauderdale, Florida.

The proceeds are expected to be used to commence and facilitate construction.

We committed a total of $30.0 million and affiliated co-investors committed $60.0 million, with the remaining $6.0 million committed by an unaffiliated investor (the “Originating Lender”).

At closing, we funded approximately $3.6 million, the affiliated co-investors funded approximately $7.2 million and the Originating Lender funded approximately $0.7 million.

The Whole Loan is split into a Senior Loan and Mezzanine Loan, each with two A-Notes ($62.4 million of the total commitment amount) and two B-Notes ($33.6 million of the total commitment amount, of which $6.0 million was committed by the Originating Lender).

The A-Notes bear interest at a rate of SOFR plus 4.75%, with a rate index floor of 4.75% of which we have commitments for approximately $20.8 million.

The B-Notes bear interest at a rate of SOFR plus 11.00%, with a rate index floor of 4.75% of which we have commitments for approximately $9.2 million.

The A-Notes and B-Notes were issued at a discount of 1.0% and mature in December 2026, subject to two, six-month extension options.

In November 2024, we and an affiliated co-investor entered into a $26.0 million subordinate loan (the “Subordinate Loan”).

The property securing the loan is a development site and related multifamily project located in Miami, Florida.

The proceeds are expected to be used to commence and facilitate construction.

We committed a total of $13.0 million and the affiliated co-investor committed the remaining $13.0 million.

The Subordinate Loan bears interest at a rate of 13.25% per annum, was issued at a discount of 1.0% and matures in November 2027, subject to one, six-month extension option.

As of December 31, 2024, the outstanding principal balance on the Subordinate Loan was approximately $0.1 million and the cash interest rate was 13.25%.

In December 2024, we and an affiliated co-investor entered into a $57.0 million senior secured loan for the refinance of a luxury boutique hotel located in Austin, Texas.

We committed a total of approximately $32.0 million, and the affiliate committed the remaining $25.0 million.

The senior secured loan was issued at a discount of 1.25% and matures in December 2027.

At closing, we funded approximately $29.9 million and the affiliate funded approximately $23.4 million.

The senior secured loan bears interest at a rate of SOFR plus 5.50%, with a rate index floor of 4.00%.

The senior secured loan is secured by a deed of trust on the property and other customary collateral.

The proceeds of the senior secured loan will be used to, among other things, refinance existing debt and fund reserves.

Revolving Credit Facility

On November 6, 2024, the Company entered into the Loan and Security Agreement (as amended, restated or otherwise modified from time to time, the “Revolving Credit Agreement”) by and among the Company, as borrower, the lenders party thereto, and East West Bank, as administrative agent, joint lead arranger, joint book runner, co-syndication agent and co-documentation agent (“East West Bank”).

The Revolving Credit Agreement provides for a senior secured revolving credit facility (the “Revolving Credit Facility”) that contains initial aggregate commitments of $50.0 million from one or more FDIC-insured banking institutions, which may be borrowed, repaid and redrawn, subject to a borrowing base based on eligible loan obligations held by the Company and subject to the satisfaction of other conditions provided under the Revolving Credit Agreement.

Pursuant to the terms of the Revolving Credit Agreement, the amount of total commitments may be increased to up to $200.0 million in aggregate, subject to available borrowing base and lenders’ willingness to provide additional commitments.

The Revolving Credit Facility has a maturity date of November 8, 2027.

Interest is payable on the Revolving Credit Facility in cash in arrears at the rate per annum of SOFR plus 2.75%, with a SOFR floor of 2.63%;

provided, however, that the interest rate will increase by an additional 0.25% during any Increase Rate Month (as defined in the Revolving Credit Agreement).

The Company is required to pay certain fees to the agent and the lenders under the Revolving Credit Agreement, including a $75.0 thousand agent fee payable to the agent and an 0.25% per annum loan fee payable ratably to the lenders, in each case, payable on the closing date and on the annual anniversary thereafter.

Commencing on the six-month anniversary of the closing date, the Revolving Credit Facility has an unused line fee of 0.25% per annum, payable semi-annually in arrears.

Based on the terms of the Revolving Credit Agreement, the unused line fee is waived if our average revolver usage exceeds the minimum amount required per the Revolving Credit Agreement.

The Revolving Credit Facility is guaranteed by certain material subsidiaries of the Company and is secured by substantially all assets of the Company and certain of its material subsidiaries;

provided that upon the meeting of certain conditions, the facility will be secured only by certain assets of the Company comprising of or relating to loan obligations designed for inclusion in the borrowing base.

In addition, the Company is subject to various financial and other covenants, including a liquidity and debt service coverage ratio covenant.

On December 9, 2024, the Company entered into Amendment Number One to Loan and Security Agreement, by and among the Company and certain of its subsidiaries, as borrowers, the lenders party thereto, and East West Bank, pursuant to which, among other things, the maximum revolver usage was temporarily increased until January 8, 2025 to the sum of (i) $50.0 million plus (ii) the lesser of $75.0 million and the aggregate amount of funds maintained in the Company’s borrowing base cash account.

Following January 8, 2025, the maximum revolver usage automatically reverted back to $50.0 million.

On December 30, 2024, the Company entered into Amendment Number Two to Loan and Security Agreement, by and among the Company and certain of its subsidiaries, as borrowers, the lenders party thereto, and East West Bank, pursuant to which, among other things, the parties agreed to additional representations, covenants and other amendments to maintain its REIT status and limit the use of participation interests in any underlying obligor loan receivables secured as collateral.

On February 26, 2025, the Company entered into Amendment Number Three to Loan and Security Agreement, by and among the Company and certain of its subsidiaries, as borrowers, the lenders party thereto, and East West Bank, pursuant to which, among other things, the parties agreed to reduce the procedural requirements for obligor loan receivables to become eligible under the borrowing base.

The description above is only a summary of the material provisions of the Revolving Credit Agreement and the amendments thereto and is qualified in its entirety by reference to the Revolving Credit Agreement, as amended by the amendments, copies of which are filed as Exhibit 10.7, Exhibit 10.8, Exhibit 10.10 and Exhibit 10.11, respectively, to this Annual Report on Form 10-K and incorporated by reference herein.

SRTF Credit Facility

On November 6, 2024, in conjunction with the entry by the Company into the Revolving Credit Facility, the Company terminated the unsecured revolving credit agreement (the “Credit Agreement”) dated September 26, 2024, by and between the Company, as borrower, and SRT Finance LLC, as agent and lender.

Upon execution of the Revolving Credit Facility, the lenders’ commitments under the Credit Agreement were terminated and the liability of the Company and its subsidiaries with respect to their obligations under the Credit Agreement was discharged.

On December 9, 2024, the Company entered into a new unsecured revolving credit agreement ( as amended, restated or otherwise modified from time to time, the “SRTF Credit Agreement”), by and among the Company, as borrower, the lenders party thereto from time to time, and SRT Finance LLC, as agent and lender.

SRT Finance LLC continues to be indirectly owned by Mr.

Tannenbaum and Mrs.

Tannenbaum, along with their family members and associated family trusts.

The SRTF Credit Agreement provides for an unsecured revolving credit facility (the “SRTF Credit Facility”) with a $75.0 million commitment, which may be borrowed, repaid and redrawn, subject to a draw fee and the other conditions provided in the SRTF Credit Agreement.

Interest is payable on the SRTF Credit Facility at a rate per annum equal to 8.00%.

The SRTF Credit Facility matures on the earlier of (i) May 31, 2028 and (ii) the date of the closing of any Refinancing Indebtedness (as defined in the SRTF Credit Agreement) with an aggregate principal amount equal to or greater than $75.0 million.

Commencing on January 1, 2026, the Company is required to pay an annual fee equal to 1.00% of the aggregate commitments ratably to the lenders, payable on the first business day of each calendar year;

provided that the fee due and payable on January 3, 2028 will be pro rated on the basis of a year of 360 days for the actual number of days elapsed from and including January 1, 2028 until and excluding May 31, 2028.

The description above is only a summary of the material provisions of the SRTF Credit Agreement and the amendment thereto and is qualified in its entirety by reference to the SRTF Credit Agreement, a copy of which is filed as Exhibit 10.9 to this Annual Report on Form 10-K and incorporated by reference herein.

Dividends Declared Per Share

For the year ended December 31, 2024, we declared the following cash dividends:

Date Declared Payable to Shareholders of Record at the Close of Business on Payment Date Amount per Share Total Amount

August 14, 2024 September 30, 2024 October 15, 2024 $ 0.21 $ 1.5 million

August 14, 2024 December 31, 2024 January 15, 2025 0.42 2.9 million

2024 Period Subtotal

$ 0.63 $ 4.4 million

Based on our current estimates and assumptions, including with respect to the timeline for the deployment of our equity and debt capital, we expect to generate distributable earnings at, or close to, $0.30 per basic weighted average common share for the first two fiscal quarters of 2025 as we deploy equity capital from the January 2025 Offering.

However, this estimate is preliminary and may change, and we do not anticipate providing further guidance following the deployment of the capital from the January 2025 Offering.

See “ Special Note Regarding Forward-Looking Statements ” and “ Risk Factors .”

Recent Developments

On January 29, 2025, we completed a registered public offering of 5,750,000 shares of common stock at a public offering price of $12.00 per share (the “January 2025 Offering”), of which 1,000,000 shares of common stock were sold to Leonard M.

Tannenbaum, our Executive Chairman, at the public offering price.

We received net proceeds from the January 2025 Offering of $65.3 million, net of underwriting discounts of $3.7 million.

In connection with the January 2025 Offering, the underwriters were granted an over-allotment option to purchase up to an additional 862,500 shares of our common stock.

On January 31, 2025, the underwriters partially exercised the over-allotment option with respect to 650,000 shares of common stock and we received additional net proceeds of $7.3 million, net of underwriting discounts of $0.5 million.

In January 2025, our senior loan for the mixed-use property in Houston, Texas was repaid in full.

In January 2025, our senior loan for a mixed-use property in Houston, Texas was repaid in full.

The outstanding principal on the date of repayment was approximately $0.2 million.

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We committed a total of $30.8 million, and the affiliate committed the remaining $10.3 million, funding $28.5 million and $9.5 million, respectively, on close.

The Note was issued at a discount of 1.0% and matures in two years with an exit fee of 1.0% and one 12-month extension option.

was issued at a discount of 1.0% and matures in two years with an exit fee of 1.0% and one 12-month extension option.

The Note bears interest at a rate of SOFR plus 5.00%, with a rate index floor of 4.00%.

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In March 2025, we entered into an assignment and assumption agreement with an affiliated co-lender owned by Mr.

Tannenbaum, our Executive Chairman, pursuant to which we purchased $10.6 million of the senior term loan and $9.4 million of the home construction revolver on the property in Palm Beach Gardens, FL, with $9.9 million and $7.4 million currently funded under such loans, respectively.

Tannenbaum, our Executive Chairman, pursuant to which we purchased $10.6 million of the senior term loan and $9.4 million of the home construction revolver on a property in Palm Beach Gardens, FL, with $9.9 million and $7.4 million currently funded under such loans, respectively.

The loans were purchased at par less remaining unamortized OID plus accrued interest.

We did not pay any fees or premium to the affiliate for our acquisition of the affiliate’s loan commitments.

Following the purchase, we hold $31.9 million in commitments of the senior term loan with $29.8 million in principal outstanding, and $28.1 million in commitments of the home construction revolver with $22.2 million of principal outstanding.

Following the purchase, we hold $31.9 million in commitments of the senior term loan and $28.1 million in commitments of the home construction revolver.

In March 2025, we and an affiliated co-investor entered into a $62.0 million senior secured mortgage loan for the refinance of a class A multi-family residential development in Dallas, Texas.

We committed approximately $46.5 million and the affiliate committed the remaining $15.5 million.

The senior secured loan was issued at a discount of 1.0% and matures in March 2028.

At closing, we funded approximately $44.3 million and the affiliate funded $14.8 million.

The loan bears interest at a rate of SOFR plus 3.65%, with a rate index floor of 3.90%.

The senior secured loan is secured by a lease-hold and fee joinder mortgage on the property and other customary collateral.

The proceeds of the senior secured loan will be used to, among other things, refinance the existing debt and fund reserves and closing expenses.

During the fourth quarter of 2025, conditions for the earn-out were not met and the total loan commitment was reduced by $2.0 million, of which our commitment was reduced $1.5 million.

In March 2025, we and an affiliated co-investor purchased $35.0 million of a $243 million subordinate loan for the construction of a mixed-use property in Miami, Florida.

We committed approximately $26.3 million and the affiliate committed the remaining $8.8 million.

The subordinate loan matures in December 2028.

At closing, we funded approximately $4.4 million and the affiliate funded approximately $1.5 million.

The loan bears interest at a cash rate of SOFR plus 9.5%, with a rate index floor of 4.0%, and interest paid-in kind of 1.0%.

The subordinate loan is secured by the equity interests of the borrower and other customary collateral.

The proceeds of the subordinate loan will be used to, among other things, fund the completion of construction.

During the second quarter of 2025, the borrower exercised their right to curtail the mezzanine loan.

The loan commitment we hold was reduced by approximately $1.2 million.

In June 2025, we and an affiliated co-investor purchased $14.25 million of a $59.8 million senior loan for the construction of a multi-family residential property in Park City, Utah.

We committed a total of $9.25 million and the affiliate committed the remaining $5.0 million.

The senior loan matures in August 2027.

At closing, we funded approximately $0.3 million and the affiliate funded approximately $0.2 million.

The loan bears interest at a cash rate of U.S.

prime rate plus 3.25%, with a rate index floor of 8.0%.

The senior loan is secured by a first priority lien and security interest in certain real property as described on the loan agreement.

The proceeds of the senior loan will be used to, among other things, fund the completion of construction.

In September 2025, we and affiliated co-investors purchased $60.0 million of a $370.0 million senior first mortgage loan for the construction of a multi-family residential property in Miami, Florida.

We committed a total of $35.0 million and the affiliates committed the remaining $25.0 million.

The senior loan matures in September 2028.

At closing, we funded approximately $13.7 million and the affiliates funded approximately $9.8 million.

The loan bears interest at a cash rate of SOFR plus 4.75%, with a rate index floor of 3.50%.

The senior loan is secured by a first priority lien and security interest in certain real property as described on the loan agreement.

The proceeds of the senior loan will be used to, among other things, fund the completion of construction.

In September 2025, our subordinate loan for a residential property in Sarasota, Florida was repaid in full.

The loan had an original maturity date of May 2027.

The outstanding principal on the date of repayment was approximately $25.5 million.

In October 2025, we and an affiliated co-investor entered into two separate senior secured mortgage loans with the same commercial real estate developer for an aggregate commitment of $36.6 million, comprised of a $13.4 million industrial senior loan in Doral, Florida (the “Doral Loan”), and a $23.2 million industrial senior loan in West Palm Beach, Florida (the “West Palm Beach Loan” and, together, the “Loans”).

We (i) committed $9.4 million and funded $8.6 million upon closing to the Doral Loan, while the affiliated co-investor committed $4.0 million and funded $3.7 million and (ii) committed $16.2 million and funded $1.8 million upon closing to the West Palm Beach Loan, while the affiliated co-investor committed $7.0 million and funded $0.8 million.

The Loans were issued at a discount of 1.0% and mature in October 2027.

The Loans bear interest at a rate of SOFR plus 6.20%, with a rate index floor of 3.75%.

Each Loan is secured by a first mortgage, equity pledge, and other customary collateral with regard to the properties.

The Loans are not cross collateralized and are separately secured by their respective collateral.

The proceeds will be used to finance the development of luxury industrial suites featuring showroom-style layouts, mezzanine lounges, and premium finishes.

The West Palm Beach Loan will be used to finance closing costs, construction, and reserves for a new development, while the Doral Loan will be used to refinance existing debt and repatriate equity associated with a comparable project.

In October 2025, we and an affiliated co-investor entered into a $45.0 million senior bridge loan to refinance a retail property located in Houston, Texas.

We committed a total of $30.0 million, and an affiliated co-investor committed the remaining $15.0 million, funding $21.6 million and $10.8 million, respectively, upon closing.

The senior bridge loan was issued at a discount of 1.0% and matures in October 2028.

The loan bears interest at a rate of SOFR plus 5.75%, with a rate index floor of 3.75%.

The senior bridge loan is secured by a first priority deed of trust and related collateral interests pursuant to the terms of the credit agreement and related loan documents.

The proceeds of the senior bridge loan will be used to refinance existing debt and fund tenant improvements, leasing costs, reserves, and closing expenses.

Revolving Credit Facility

On November 6, 2024, we entered into the Revolving Credit Facility, which contained an initial aggregate commitment of $50.0 million, which may be borrowed, repaid and redrawn (subject to a borrowing base based on eligible loan obligations held by us and subject to the satisfaction of other conditions provided under the Revolving Credit Agreement).

During the year ended December 31, 2025, we entered into a series of amendments to the Revolving Credit Facility that, among other things, increased the aggregate commitment from $50.0 million to $140.0 million.

The amount of total commitments under the Revolving Credit Facility may be increased to up to $200.0 million in aggregate, subject to available borrowing base and lenders’ commitment to provide additional commitments.

As amended, the Revolving Credit Facility modified certain financial covenants, requiring us to, among other things:

(i) maintain liquidity equal to the greater of (A) $5 million and (B) an amount equal to 10% of the outstanding obligations thereunder so long as we maintain at least $5 million in qualified cash (ii) maintain a quarterly debt service coverage ratio of at least 1.50 to 1.0 and (iii) maintain a leverage ratio of not more than 3.25x measured as of the end of each fiscal quarter.

Interest is payable on the Revolving Credit Facility in cash in arrears at the rate per annum of SOFR plus 2.75%, with a SOFR floor of 2.63%;

provided, however, that the interest rate will increase by an additional 0.25% during any Increase Rate Month (as defined in the Revolving Credit Agreement).

In connection with the Revolving Credit Agreement and related amendments, we incurred certain closing costs of approximately $0.5 million, which were included in prepaid expenses and other assets on our consolidated balance sheets and amortized over the life of the Revolving Credit Facility .

SRTF Credit Facility

On December 9, 2024, we entered into the SRTF Credit Facility, which provides for an unsecured revolving credit facility with a $75.0 million commitment, which may be borrowed, repaid and redrawn, subject to a draw fee and the other conditions provided in the SRTF Credit Agreement.

In December 2025, we entered into Amendment Number One to the SRTF Credit Agreement (“Amendment Number One”), by and among the Company, as borrower, the lenders party thereto from time to time, and SRT Finance LLC, as agent and lender party thereto.

Amendment Number One modified the 1.00% annual fee such that the fee is payable quarterly rather than annually, with no change to the total fee.

Interest is payable on the SRTF Credit Facility at a rate per annum equal to 8.00%.

In connection with the SRTF Credit Agreement and related amendments, the Company incurred certain closing costs of approximately $25.5 thousand, which were included in prepaid expenses and other assets on the Company’s consolidated balance sheets and amortized over the life of the SRTF Revolving Credit Facility.

At-the-Market Offering Program (“ATM Program”)

On August 1, 2025, we filed a shelf registration statement on Form S-3 (File No.

333-289188) (the “Shelf Registration Statement”), which was declared effective on August 6, 2025.

Under the Shelf Registration Statement, we may, from time to time, issue and sell up to $500.0 million of our common stock, preferred stoc k, debt securities, warrants and rights (including as part of a unit) to purchase shares of our common stock or preferred stock.

The Shelf Registration Statement also included a prospectus for the ATM Program to sell up to an aggregate of $50.0 million of shares of our Common Stock that may be issued and sold from time to time under the Equity Distribution Agreement, dated August 13, 2025 (the “Agreement”), by and among the Company, our Manager and Raymond James & Associates, Inc., as Sales Agent.

Under the terms of the Agreement, we have agreed to pay the Sales Agent a commission of up to 2.0% of the gross proceeds from each sale of Common Stock under the Agreement.

During the year ended December 31, 2025, we did not sell any shares of our Common Stock under the Agreement.

Dividend Reinvestment Plan

On September 3, 2025, we established a dividend reinvestment plan (the “DRIP”).

The DRIP allows shareholders to reinvest all or a portion of their cash dividends in additional shares of our common stock (which shares, at our option, are either newly issued directly from the Company or purchased by the plan administrator in the open market).

A total of 1,000,000 shares of common stock has been registered for issuance under the DRIP.

There were no shares issued under the DRIP during the year ended December 31, 2025.

Dividends Declared Per Share

During the years ended December 31, 2025 and 2024, we declared the following cash dividends:

Date Declared Payable to Shareholders of Record at the Close of Business on Payment Date Amount per Share Total Amount

August 14, 2024 September 30, 2024 October 15, 2024 $ 0.21 $ 1,454,333

August 14, 2024 December 31, 2024 January 15, 2025 0.42 2,941,964

2024 Period Subtotal

$ 0.63 $ 4,396,297

March 4, 2025 March 31, 2025 April 15, 2025 $ 0.30 $ 4,026,448

June 13, 2025 June 30, 2025 July 15, 2025 0.30 4,026,353

September 15, 2025 September 30, 2025 October 15, 2025 0.30 4,026,296

December 15, 2025 December 31, 2025 January 15, 2026 0.30 4,026,296

2025 Period Subtotal

$ 1.20 $ 16,105,393

Recent Developments

In January 2026, the Company and an affiliated co-investor entered into and exited a $21.6 million senior bridge loan to finance the acquisition of a ranch located in Colorado.

The Company committed a total of $14.0 million, and an affiliated co-investor committed the remaining $7.6 million, funding $14.0 million and $7.6 million, respectively, upon closing.

The senior bridge loan was issued at a discount of 3.0% and matures in July 2026.

The senior bridge loan was fully paid off four days after closing in January 2026.

In December 2025, TCG RE Agent LLC (“TCG RE Agent”) delivered a notice of default on behalf of the lenders with respect to our senior hospitality loan in San Antonio, Texas (the “San Antonio Loan”) based on certain payment defaults, including failure to make its November interest payment when due, for which we determined foreclosure was probable.

The San Antonio Loan was placed on nonaccrual status effective October 10, 2025.

In connection with the event of default, TCG RE Agent took control of cash escrows held by TCG RE Agent of $0.6 million that were available for capital expenditure reserves to the loan and applied it toward a principal repayment in accordance with the terms of the loan agreement, of which we were proportionally allocated $0.4 million during the year ended December 31, 2025.

December 31, 2025, our portion of the San Antonio Loan had an unpaid principal balance of approximately $26.4 million and amortized cost of $26.2 million.

Additionally, in anticipation of a potential foreclosure, the Company formed a joint venture entity with the affiliate co-lender on the San Antonio Loan in proportion to their holdings in the San Antonio Loan, with the Company owning 65.0% of the joint venture.

In March 2026, the co-lenders exercised their right to foreclose on the hotel property that was the underlying collateral for the San Antonio Loan.

The joint venture acquired the hotel property through a credit bid equal to the aggregate unpaid principal balance of approximately $40.6 million.

The timing and outcome of the proceedings and the amount of any recovery remain uncertain.

In February 2026, we and an affiliated co-investor entered into a $69.3 million subordinate B-note secured by a portfolio of hotel properties.

We committed approximately $48.3 million, and an affiliated co-investor committed the remaining $21.0 million, funding $45.3 million and $19.7 million, respectively, upon closing.

The financing also included approximately $336.7 million of Senior A-note debt held by an unaffiliated third party and will refinance existing indebtedness on the properties.

The loan bears interest at a rate of SOFR plus 8.25%, with a rate index floor of 3.00%.

The subordinate B-note is secured by a first mortgage (and lease-hold mortgage on two properties) and related collateral interests pursuant to the terms of the credit agreement and related loan documents.

The proceeds of the loan will be used to refinance existing debt, provides an “earn out” and stabilizes the assets.

In February 2026, we entered into Amendment Number Seven to the Loan and Security Agreement (“Amendment Number Seven”), by and among the Company and certain subsidiaries, as borrowers, the lenders party thereto, and East West Bank, which, among other things (i) facilitated the entry of an additional lender;

(ii) increased the aggregate commitment by $25.0 million, for a total maximum revolver usage of $165.0 million;

and (iii) revised the required consent from certain lenders to advance additional funds under the Revolving Credit Agreement.

In March 2026, the Company’s Board of Directors declared a regular cash dividend of $0.30 per outstanding share of common stock for the first quarter of 2026 to shareholders of record as of March 31, 2026, which will be paid on April 15, 2026.

Key Financial Measures and Indicators

As a commercial real estate finance company, we believe the key financial measures and indicators for our business are Distributable Earnings (as defined below), book value per share and dividends declared per share.

Book Value Per Share

We believe that book value per share is helpful to shareholders in evaluating our growth as we scale our equity capital base and continue to invest in our target investments.

The book value per share of our Common Stock as of December 31, 2025 and 2024 was approximately $13.56 and $16.29, respectively.

Non-GAAP Metrics

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We define Distributable Earnings as, for a specified period, the net income (loss) computed in accordance with GAAP, excluding (i) stock-based compensation expense, (ii) depreciation and amortization, (iii) any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss);

provided that Distributable Earnings does not exclude, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash, (iv) provision for (reversal of) current expected credit losses, (v) TRS (income) loss, net of any dividends received from TRS and (vi) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between our Manager and our independent directors and after approval by a majority of such independent directors.

provided that Distributable Earnings does not exclude, in the case of

investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash, (iv) provision for (reversal of) current expected credit losses, (v) TRS (income) loss, net of any dividends received from TRS and (vi) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between our Manager and our independent directors and after approval by a majority of such independent directors.

We believe providing Distributable Earnings on a supplemental basis to our net income as determined in accordance with GAAP is helpful to shareholders in assessing the overall performance of our business.

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The following table provides a reconciliation of GAAP net income to Distributable Earnings:

December 31, 2024 Period from August 28, 2023 to December 31, 2023

Net income $ 12,142,409 $ 6,868,421

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Unrealized (gains) losses, or other non-cash items — —

Provision for (reversal of) current expected credit losses 40,180 —

Provision for current expected credit losses 2,029,056 40,180

TRS (income) loss — —

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Distributable earnings per basic weighted average share $ 1.19 $ 1.07

Book Value Per Share

We believe that book value per share is helpful to shareholders in evaluating our growth as we scale our equity capital base and continue to invest in our target investments.

The book value per share of our Common Stock as of December 31, 2024 and 2023 was approximately $16.29 and $4.53, respectively, on a post-split share basis.

Factors Impacting our Operating Results

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Our operating results may also be impacted by credit losses in excess of initial anticipations or unanticipated credit events experienced by our borrowers.

Results of Operations f or the year ended December 31, 2024

We were formed on August 28, 2023 with limited operational activity during the period from August 28, 2023 to December 31, 2023.

We did not make our first investment until January 2024;

and therefore, we have no period to compare results for the year ended December 31, 2024.

Our net income allocable to our common shareholders for the year ended December 31, 2024, was approximately $6.9 million, or $1.01 per basic weighted average common share.

Net interest income was comprised of interest income earned of approximately $10.8 million, net of interest expense of approximately $(0.2) million.

For the year ended December 31, 2024, operating expenses were approximately $3.7 million, mainly relating to approximately $1.3 million in general and administrative expenses, $1.3 million in professional fees and $0.8 million in management fees.

As a result of our Management Agreement with SUNS Manager, SUNS management fee was approximately $0.8 million and no incentive fee was incurred for the year ended December 31, 2024.

Reimbursable shared expenses under the Management Agreement were approximately $1.1 million for the year ended December 31, 2024.

Results of Operations f or the years ended December 31, 2025 and 2024

The following table summarizes our consolidated results of operations for the years ended December 31, 2025 and 2024:

Interest income $ 26,373,418 $ 10,844,718

Interest expense (4,801,984) (216,268)

Net interest income 21,571,434 10,628,450

Management and incentive fees 2,454,130 815,301

General and administrative expenses 2,896,724 1,291,021

Stock-based compensation 1,019,168 338,404

Professional fees 1,029,947 1,275,123

Total expenses 7,399,969 3,719,849

Provision for current expected credit losses (2,029,056) (40,180)

Net income before income taxes 12,142,409 6,868,421

Income tax expense — —

Net income $ 12,142,409 $ 6,868,421

Our net income allocable to our common shareholders for the year ended December 31, 2025, was approximately $12.1 million, or $0.93 per basic common share, compared to net income allocable to our common shareholders of approximately $6.9 million, or $1.01 per basic common share, for the year ended December 31, 2024.

Interest income.

Interest income increased approximately $15.5 million, or 143.2%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

The increase was due to the expansion of our portfolio from nine loans to sixteen loans as we deploy capital.

Interest expense.

Interest expense increased approximately $4.6 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024, due to the lines of credit available in the current period and increase in related borrowings.

Management and incentive fees.

Management fees increased approximately $1.3 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024.

Incentive Fees increased approximately $0.4 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024.

The Management Agreement was not in place until the completion of the Spin-Off in July 2024, while the current period year-to-date amounts were reduced by the fee waiver in conjunction with the January 2025 Offering during the first and second quarters of 2025.

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

General and administrative expenses .

General and administrative expenses increased $1.6 million during the year ended December 31, 2025, as compared to the year ended December 31, 2024.

The increase was primarily due to reimbursable shared expenses under the Management Agreement, which did not take effect until the completion of the Spin-Off in July 2024.

Reimbursable shared expenses recorded within general and administrative expenses increased approximately $1.3 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, respectively.

Stock-based compensation.

Stock-based compensation increased $0.7 million during the year ended December 31, 2025, as compared to the year ended December 31, 2024, driven by restricted stock awards granted and restricted stock awards converted as part of the Spin-Off.

Professional fees.

Professional fees decreased $(0.2) million during the year ended December 31, 2025, as compared to the year ended December 31, 2024.

Professional fees included approximately $0.6 million in Spin-Off costs incurred during the year ended December 31, 2024.

No Spin-Off costs were incurred during the year ended December 31, 2025.

Other costs within professional fees related to legal, audit, and board of director fees.

Stock-based compensation was approximately $0.3 million for the year ended December 31, 2024, driven by restricted stock awards granted and restricted stock awards converted as part of the Spin-Off.

Provision for Current Expected Credit Losses

The provision for current expected credit losses for the year ended December 31, 2024 was approximately $40.2 thousand.

The CECL Reserve balance as of December 31, 2024 was approximatel y $40.2 thousand, or 0.03%, of our total loans held at carrying value of approximately $130.7 million and was bifurcated between (i) the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value of $21.8 thousand and (ii) a liability for unfunded commitments of approximately $18.4 thousand .

The provision for current expected credit losses increased $2.0 million for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

The CECL Reserve balance as of December 31, 2025 was approximately $2.1 million, or 0.68%, of our total loans held at carrying value of approximately $302.7 million and was bifurcated between (i) the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value of $1.9 million and (ii) a liability for unfunded commitments of approximately $0.2 million.

The CECL Reserve balance as of December 31, 2024 was approximately $40.2 thousand, or 0.03%, of our total loans held at carrying value balance of approximately $130.7 million and was bifurcated between (i) the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value of $21.8 thousand and (ii) a liability for unfunded commitments of approximately $18.4 thousand.

The liability is based on the unfunded portion of loan commitments over the full contractual period over which we are exposed to credit risk through a current obligation to extend credit.

Management considered the likelihood that funding will occur, and if funded, the expected credit loss on the funded portion.

Management considered the likelihood that funding will occur, and if funded, the expected credit loss on the funded portion when determining the amount to allocate to its CECL Reserve.

We continuously evaluate the credit quality of each loan by assessing the risk factors of each loan.

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The table below summarizes our total loan portfolio as of December 31, 2025, unless otherwise specified.

Loan Type Location Original Funding Date Loan Maturity Current Commitments as of 12/31/2024 % of Total SUNS Principal Balance as of 12/31/2024 Cash Interest Rate Fixed/

Loan Type Location Original Funding Date Loan Maturity Current Commitments as of 12/31/2025 % of Total Principal Balance as of 12/31/2025 Cash Interest Rate PIK Fixed/

Floating Amortization During Term YTM (1)

Senior mortgage loans:

Mixed-use Houston, TX 1/4/2024 2/26/2026 $ 6,345,411 3.3% $ 5,120,604 12.50% Fixed No 22%

Residential Austin, TX 7/3/2024 7/3/2027 14,087,288 7.4% 13,186,390 9.00% Floating No 10%

Hospitality San Antonio, TX 7/31/2024 8/9/2027 27,300,000 14.3% 26,073,292 10.85% Floating No 13%

Residential Austin, TX 7/3/2024 7/3/2027 $ 14,087,288 3.3% $ 14,087,288 9.8% N/A Floating No 11%

Hospitality San Antonio, TX (2)

7/31/2024 8/9/2027 26,885,919 6.4% 26,379,740 10.9% N/A Floating No —%

Residential PBG, FL (3)

8/5/2024 9/1/2027 21,250,000 11.1% 18,855,922 12.58% Floating No 13%

8/5/2024 9/1/2027 31,875,000 7.6% 30,980,393 12.3% N/A Floating No 14%

Residential PBG, FL (3)

8/5/2024 9/1/2027 18,750,000 9.8% 12,300,793 10.58% Floating No 12%

Residential Fort Lauderdale, FL 11/1/2024 12/30/2026 30,000,000 15.7% 3,868,815 11.42% Floating No 14%

Hospitality Austin, TX 12/12/2024 12/11/2027 32,000,000 16.8% 29,894,737 9.83% Floating No 11%

8/5/2024 9/1/2027 28,125,000 6.7% 25,033,676 10.3% N/A Floating No 12%

Residential Fort Lauderdale, FL (4)

11/1/2024 12/30/2026 30,000,000 7.1% 13,623,628 11.5% N/A Floating No 15%

Hospitality Austin, TX 12/12/2024 12/11/2027 32,000,000 7.6% 32,000,000 9.5% N/A Floating No 12%

Residential Aventura, FL 1/27/2025 1/27/2027 30,750,872 7.3% 30,750,872 9.0% N/A Floating No 11%

Net Leased Tenant New Orleans, LA (4)

1/30/2025 1/30/2028 44,000,000 10.5% 10,241,076 10.1% N/A Floating No 11%

Residential Dallas, TX 3/14/2025 3/14/2028 45,000,000 10.7% 44,822,482 7.6% N/A Floating No 8%

Residential Park City, UT 6/11/2025 8/1/2027 9,250,000 2.2% 3,269,089 11.3% N/A Floating No 13%

Residential Miami, FL 9/26/2025 9/25/2028 35,000,000 8.3% 19,094,668 8.4% N/A Floating No 10%

Industrial Doral, FL 10/6/2025 10/6/2027 9,380,000 2.2% 8,653,728 10.0% N/A Floating No 12%

Industrial West Palm Beach, FL 10/16/2025 10/16/2027 16,240,000 3.9% 1,770,103 10.0% N/A Floating No 12%

Retail Houston, TX 10/24/2025 10/24/2028 30,000,000 7.1% 21,972,177 9.5% N/A Floating No 11%

Subordinate debt:

Residential Sarasota, FL 1/31/2024 5/12/2027 28,188,776 14.8% 23,121,470 13.00% Fixed No 14%

Residential Miami, FL 11/15/2024 11/15/2027 13,000,000 6.8% 134,266 13.25% Fixed No 15%

Residential Miami, FL 11/15/2024 11/15/2027 13,000,000 3.1% 10,920,110 13.3% N/A Fixed No 15%

Residential Miami, FL 3/21/2025 12/13/2028 25,113,445 6.0% 11,914,155 13.5% 1.0% Floating No 15%

$ 420,707,524 100.0% $ 305,513,185 10.0% 0.0% 12%

(1) YTM excludes loans on nonaccrual status.

Estimated YTM includes a variety of fees and features that affect the total yield, which may include, but is not limited to, OID, exit fees, prepayment fees, unused fees and contingent features.

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Actual results could differ from those estimates and assumptions.

(2) Effective October 10, 2025, the Company placed the borrower on nonaccrual status.

(3) This loan is structured as a senior term loan and home construction revolver, of which the proceeds will be used to fund varying development projects.

Under each credit facility, the borrower is able to re-draw funds after repayment through maturity.

(3) The interest subtotal rate is a weighted average rate.

(4) If the Company holds both the A-note and B-note, the loan is categorized as a senior mortgage loan.

(5) The interest and PIK subtotal rates are weighted average rates.

Loans Held for Investment at Carrying Value

As of December 31, 2024 and December 31, 2023, our portfolio included nine and zero loans held at carrying value, respectively.

The aggregate originated commitment under these loans was approximately $190.9 million and zero, respectively, and outstanding principal was approximately $132.6 million and zero, respectively, as of December 31, 2024 and December 31, 2023 .

During the year December 31, 2024 , we funded approximately $165.7 million of new loans and additional principal and had approximately $33.2 million of principal repayments of loans held at carrying value.

As of December 31, 2024 and December 31, 2023, approximately 79% and zero , respectively, of our loans held at carrying value had floating interest rates.

As of December 31, 2024, t hese floating benchmark rates included one-month SOFR subject to a weighted average floor of 4.2% and quoted at 4.3%.

The following tables summarize our loans held at carrying value as of December 31, 2024:

As of December 31, 2025 and 2024 , our portfolio included sixteen and nine loans held at carrying value, respectively.

The aggregate originated commitment under these loans was approximately $420.7 million and $190.9 million, respectively, and outstanding principal was approximately $305.5 million and $132.6 million, respectively, as of December 31, 2025 and 2024 .

During the year ended December 31, 2025 , we funded approximately $224.4 million of new loans and additional principal on existing loans and had approximately $51.5 million of principal repayments of loans held at carrying value.

As of December 31, 2025 and 2024 , approximately 96% and 79%, respectively, of our loans held at carrying value had floating interest rates.

As of December 31, 2025, t hese floating benchmark rates included one-month Secured Overnight Financing Rate (“SOFR”) quoted at 3.7% and subject to a weighted average floor of 4.1%, and U.S.

prime rate quoted at 6.75% and subject to a weighted average floor of 8.0% based on outstanding principal.

The following tables summarize our loans held at carrying value as of December 31, 2025 and 2024 :

As of December 31, 2025

Principal (1)

Discount Carrying

Premium Carrying

Remaining Life

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Total loans held at carrying value $ 305,513,185 $ (2,838,442) $ 302,674,743 1.9

(1) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted OID and loan origination costs.

(2) Weighted average remaining life is calculated based on the carrying value of each respective group of loans as of December 31, 2024.

As of December 31, 2024

Principal (1)

Premium Carrying

Remaining Life

Senior mortgage loans (3)(4)

$ 109,300,553 $ (1,495,512) $ 107,805,041 2.6

Subordinate debt 23,255,736 (327,147) 22,928,589 2.4

Total loans held at carrying value $ 132,556,289 $ (1,822,659) $ 130,733,630 2.6

(1) The difference between the carrying value and the outstanding principal amount of the loans consists of unaccreted OID or premium and loan origination costs.

(2) Weighted average remaining life is calculated based on the carrying value of each respective group of loans as of December 31, 2025 and 2024 .

(3) Senior mortgage loans include senior loans that also have a contiguous subordinate loan because as a whole, the expected credit quality of the subordinate loan is more similar to that of a senior loan.

(4) If the Company holds both the A-note and B-note, the loan is categorized as a senior mortgage loan.

The following table presents changes in loans held at carrying value as of and for the year ended December 31, 2025:

Principal Original Issue

Discount Carrying Value

Premium Carrying Value

Total loans held at carrying value at December 31, 2024 $ 132,556,289 $ (1,822,659) $ 130,733,630

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Interest drawn on loans 17,354,062 — 17,354,062

Accretion of original issue discount — 263,102 263,102

Accretion of original issue discount and premium, net — 1,481,495 1,481,495

Loan repayments (51,516,841) — (51,516,841)

PIK interest 45,722 — 45,722

Total loans held at carrying value at December 31, 2025 $ 305,513,185 $ (2,838,442) $ 302,674,743

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The sources of financing for our target investments are described below.

Our primary sources of cash generally consist of net proceeds of future debt or equity offerings, debt financing, including borrowings under the Revolving Credit Facility and the SRTF Credit Facility, payments of principal and interest we receive on our portfolio of assets and cash generated from our operating results.

Our primary sources of cash generally consist of net proceeds of future debt or equity offerings, debt financing, including borrowings under the Revolving Credit Facility and the SRTF Credit Facility, the net proceeds of future debt or equity offerings, including in connection with our ATM Program, payments of principal and interest we receive on our portfolio of assets and cash generated from our operating results.

As of December 31, 2025 and 2024, all of our cash was unrestricted and totaled approximately $6.4 million and $184.6 million, respectively.

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We incurred approximately $1.8 million of expenses in connection with the offering.

After giving effect to the partial exercise of the over-allotment option, the total number of shares sold by us in the public offering was 6,400,000 shares and total gross proceeds, before deducting underwriting discounts and commissions, and other offering expenses payable by us, were approximately $76.8 million.

The net proceeds totaled approximately $70.8 million .

Our registration statement on Form S-3 (File No.

333-289188) (the “Shelf Registration Statement”) became effective on August 6, 2025, allowing us to issue and sell, from time to time in one or more offerings, up to $500.0 million of our securities, including common stock, preferred stock, debt securities, warrants and rights (including as part of a unit) to purchase shares of our common stock or preferred stock.

The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.

We may also access liquidity through our at-the-market offering program (the “ATM Program”),

which was established in August 2025, pursuant to which we may offer and sell, from time to time, up to $50.0 million of our common stock.

During the year ended December 31, 2025, we did not sell any shares of our common stock under the ATM Program.

On September 3, 2025, the Company also established a dividend reinvestment plan ( the “DRIP”).

The DRIP allows shareholders to reinvest all or a portion of their cash dividends in additional shares of the Company’s common stock (which shares, at the Company’s option, are either newly issued directly from the Company or purchased by the plan administrator in the open market).

A total of 1,000,000 shares of common stock has been registered for issuance under the DRIP.

There were no shares issued under the DRIP during the year ended December 31, 2025.

We intend to raise future equity capital and issue debt securities in order to fund our future investments in loans.

Revolving Credit Facility

On November 6, 2024, the Company entered into the Revolving Credit Facility, which contains initial aggregate commitments of $50.0 million, which may be borrowed, repaid and redrawn (subject to a borrowing base based on eligible loan obligations held by the Company and subject to the satisfaction of other conditions provided under the Revolving Credit Agreement).

The amount of total commitments under the Revolving Credit Facility may be increased to up to $200.0 million in aggregate, subject to available borrowing base and lenders’ willingness to provide additional commitments.

See “Developments During the Year Ended December 31, 2024— Revolving Credit Facility” above.

Subsequently, we entered into a series of amendments to the Revolving Credit Facility that, among other things, increased the aggregate commitment from $50.0 million to $165.0 million.

As amended, the Revolving Credit Facility requires us to, among other things:

As of December 31, 2025, we had $102.3 million of outstanding borrowings under the Revolving Credit Facility and $37.7 million availability under our Revolving Credit Facility, which may be borrowed, repaid and redrawn (subject to a borrowing base based on eligible loan obligations held by the Company and subject to the satisfaction of other conditions provided under the Revolving Credit Agreement).

To the best of our knowledge, as of December 31, 2025 , we were in compliance in all material respects with all covenants contained in our Revolving Credit Agreement.

SRTF Credit Facility

On December 9, 2024, the Company entered into the SRTF Credit Facility, which provides for an unsecured revolving credit facility with a $75.0 million commitment, which may be borrowed, repaid and redrawn, subject to a draw fee and the other conditions provided in the SRTF Credit Agreement .

See “Developments During the Year Ended December 31, 2024— SRTF Credit Facility” above.

As of December 31, 2025, we had $19.8 million outstanding borrowings under the SRTF Credit Facility and $55.2 million availability under our SRTF Credit Facility.

Other Credit Facilities, Warehouse Facilities and Repurchase Agreements

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As of December 31, 2025 , we believe that our cash on hand, capacity available under our Revolving Credit Facility and SRTF Credit Facility, and cash flows from operations will be sufficient to service our outstanding debt during the next twelve months.

The following table sets forth changes in cash and cash equivalents for the year ended December 31, 2024 and during the period from August 28, 2023 to December 31, 2023 :

Year ended December 31, 2024 Period from August 28, 2023 to December 31, 2023

Net cash provided by (used in) operating activities $ 1,640,535 $ 244,622

Net cash (used in) provided by investing activities (125,178,913) —

Net cash provided by (used in) financing activities 276,920,526 31,000,000

The following table sets forth changes in cash and cash equivalents for the years ended December 31, 2025 and 2024:

Net cash (used in) provided by operating activities $ (3,430,578) $ 1,640,535

Net cash used in investing activities (153,059,834) (125,178,913)

Net cash (used in) provided by financing activities (21,691,030) 276,920,526

Change in cash and cash equivalents $ (178,181,442) $ 153,382,148

Net Cash Provided by (Used in) Operating Activities

Net cash provided by operating activities during the year ended December 31, 2024 was approximately $1.6 million, compared to approximately $0.2 million for the period from August 28, 2023 to December 31, 2023.

The increase of approximately $1.4 million during the period from August 28, 2023 to December 31, 2023 to the year ended December 31,

2024 was primarily due to an increase in net income of approximately $6.6 million, partially offset by changes in net working capital.

The most significant items in working capital were an increase in non-cash interest income capitalized of $(5.3) million, an increase in interest receivable of approximately $(1.1) million, increase in prepaid expenses and other assets of approximately $(0.5) million, partially offset by an increase in accrued management and incentive fees of $0.4 million, increase in accrued direct administrative expenses of $0.7 million and increase in accounts payable and other liabilities of approximately $0.3 million.

Net Cash (Used in) Provided by Investing Activities

Net cash used in investing activities during the year ended December 31, 2024 was approximately $(125.2) million, compared to zero for the period from August 28, 2023 to December 31, 2023.

The decrease of approximately $(125.2) million was primarily due to an increase in issuance and fundings on loans of approximately $(158.3) million, partially offset by an increase in principal repayments of loans of approximately $33.2 million.

Net Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities during the year ended December 31, 2024 was approximately $276.9 million, compared to $31.0 million for the period from August 28, 2023 to December 31, 2023.

The increase of approximately $245.9 million during the period from August 28, 2023 to December 31, 2023 to the year ended December 31, 2024 was primarily due to an increase in net transfers and distributions from our Former Parent of approximately $49.1 million and an increase of $248.8 million in borrowings on the revolving credit facilities, offset by $(50.0) million in repayments on the SRTF Revolving Credit Facility.

Net Cash (Used in) Provided by Operating Activities

Net cash used in operating activities during the year ended December 31, 2025 was approximately $(3.4) million, compared to net cash provided by operating activities of approximately $1.6 million for the year ended December 31, 2024.

The decrease of approximately $(5.1) million period over period was primarily due to an increase in interest income paid from interest drawn on loans, offset by related incoming cash payments from our borrowers due to the expansion of our portfolio.

Net Cash Used in Investing Activities

Net cash used in investing activities during the year ended December 31, 2025 was approximately $(153.1) million, compared to $(125.2) for the year ended December 31, 2024.

The increase in net cash used of approximately $(27.9) million was primarily due to an increase in issuance and fundings on loans of approximately $(46.2) million, offset by an increase in principal repayments of loans of approximately $18.4 million.

Net Cash (Used in) Provided by Financing Activities

Net cash used in financing activities during the year ended December 31, 2025 was approximately $(21.7) million, compared to net cash provided by financing activities of $276.9 million for the year ended December 31, 2024.

The decrease of approximately $(298.6) million was primarily due to an increase of $(240.9) million in repayments on the revolving credit facilities and decrease in net transfers and distributions from our Former Parent of approximately $(80.1) million, partially offset by an decrease of $(34.8) million in borrowings on the revolving credit facilities and an increase of $72.6 million from offering proceeds relating to the January 2025 Offering.

Contractual Obligations, Other Commitments, and Off-Balance Sheet Arrangements

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Further, we have not guaranteed any obligations of unconsolidated entities or entered into any commitment to provide, nor do we intend to provide, additional funding to any such entities.

We intend to elect 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 the taxable year ending December 31, 2024, and, as such, intend to annually distribute to our shareholders at least 90% of our REIT taxable income, prior to the deduction for dividends paid and excluding our net capital gain.

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We accrete or amortize any discounts or premiums on loans held for investment over the life of the related loan held for investment utilizing the effective interest method.

ASC 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) expands the application of fair value accounting and defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure of fair value measurements.

ASC 820-10, Fair Value Measurement (“ASC 820-10”), part of the FASB Accounting Standards Codification (“ASC”), expands the application of fair value accounting and defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure of fair value measurements.

ASC 820-10 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date.

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Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

In accordance with ASC 820-10, if we elected the ASC 825-10 fair value option, we would consider its principal market as the market in which we exit our investments with the greatest volume and level of activity.

ASC 820-10 specifies a

hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable.

In accordance with ASC 820-10, if we elected the fair value option under ASC 825-10, Financial Instruments, we would consider its principal market as the market in which we exit our investments with the greatest volume and level of activity.

ASC 820-10 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable.

In accordance with ASC 820-10, these inputs are summarized in the three broad levels listed below:

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We may make exceptions to placing a loan on nonaccrual status if the loan has sufficient collateral value and is in the process of collection.

Delayed draw loans earn interest or unused fees on the

undrawn portion of the loan, which is recognized as interest income in the period earned.

Delayed draw loans earn interest or unused fees on the undrawn portion of the loan, which is recognized as interest income in the period earned.

Other fees, including prepayment fees and exit fees, are also recognized as interest income when received.

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To maintain our status as a REIT, this non-cash source of income is included in taxable income and will increase the dividend paid to shareholders for the year earned, even though we have not yet collected the cash.

We are a Maryland corporation and intend to elect to be taxed as a REIT under the Code, commencing with our taxable year ended December 31, 2024.

We are a Maryland corporation and have elected to be taxed as a REIT under the Code, commencing with our taxable year ended December 31, 2024.

We believe we have qualified, and our method of operation will enable us to continue to qualify, as a REIT.

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Generally, a TRS can engage in activities that, if conducted by us other than through a TRS, could result in the receipt of non-qualified income or the ownership of non-qualified assets.

However, several provisions regarding the arrangements between a REIT and its TRSs ensure that a TRS will be subject to an appropriate level of U.S.

However, several provisions regarding the arrangements between a REIT and its TRSs

ensure that a TRS will be subject to an appropriate level of U.S.

federal income taxation.

For example, we will be obligated to pay a 100% penalty tax on some payments that we receive or certain other amounts or on certain expenses deducted by the TRS if the economic arrangements among us, our borrowers and/or the TRS are not comparable to similar arrangements among unrelated parties.

FASB ASC Topic 740, Income Taxes (“ASC 740”), prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

ASC Topic 740, Income Taxes (“ASC 740”), prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

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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 7. Management’s Discussion and Analysis