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Item 2. Management’s Discussion and Analysis

2026-05-14 compared with 2025-11-13 · 120 added, 145 removed, 176 unchanged (60% of the section changed)

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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes and other information included in this Quarterly Report on Form 10-Q (the “Quarterly Report”).

This discussion and analysis contains forward-looking statements that involve risks and uncertainties which could cause our actual results to differ materially from those anticipated in these forward-looking statements, including, but not limited to, risks and uncertainties discussed under the heading “Cautionary Note Regarding Forward-Looking Statements,” in this Form 10-Q, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and Item 1A.

“Risk Factors” in our subsequently filed Quarterly Reports on Form 10-Q.

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 and that 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”).

We are led by a veteran team of commercial real estate investment professionals and our external manager, Sunrise Manager LLC (our “Manager”), which, alongside other TCG platform asset managers pursuing similar or adjacent opportunities, are supported by the marketing, reporting, legal and other non-investment support services provided by the team of professionals within the TCG platform.

Our and our Manager’s relationship with TCG provide us with investment opportunities through a robust relationship network of commercial real estate owners, operators and related businesses as well as significant back-office personnel to assist in management of loans.

Our focus is on originating and investing in secured commercial real estate (“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.

SUNS intends to further diversify its investment portfolio, targeting investments in senior mortgage loans, mezzanine loans, B-notes, commercial mortgage-backed securities (“CMBS”) and debt-like preferred equity securities across CRE asset classes.

We intend for SUNS’ 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.

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 the Tannenbaum Capital Group (“TCG”).

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., Secured Overnight Financing Rate (“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.

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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.

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.

The Spin-Off of SUNS into an independent, publicly traded company was completed on July 9, 2024 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.

Developments During the Third Quarter Ended September 30, 2025:

Updates to Our Loan Portfolio During the Third Quarter Ended September 30, 2025

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 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 the residential property in Sarasota, Florida was repaid in full.

The loan had an original maturity date of May 2027.

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.

In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have elected to take advantage of the extended transition period.

As a result, we will not be subject to the same implementation timing for new or revised accounting standards as other public companies that are not emerging growth companies, which may make comparison of our financials to those of other public companies more difficult.

We will remain an “emerging growth company” until the earliest to occur of the following:

(1) the last day of the fiscal year (a) following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act, (b) in which we have total annual revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which generally means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter;

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

Developments During the First Quarter March 31, 2026:

Updates to Our Loan Portfolio During the First Quarter March 31, 2026

In January 2026, we 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.

We 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 February 2026, we and an affiliated co-investor entered into a $69.3 million subordinate B-note secured by a portfolio of 15 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 and the affiliate co-lender on our senior hospitality loan in San Antonio, Texas (the “San Antonio Loan”) San Antonio loan, formed 123 Lex Ave Holdings LLC (the “Lex Ave JV”).

In connection with the formation of the Lex Ave JV, the underlying hotel property securing the loan was acquired through a credit bid equal to the aggregate unpaid principal balance of approximately $40.6 million.

Upon foreclosure, legal title to the property was obtained by the lenders and was contemporaneously contributed to the Lex Ave JV.

Following the contribution, we hold a 65.0% ownership interest in the Lex Ave JV.

As a result of these transactions, we derecognized the San Antonio loan from its consolidated balance sheet.

In March 2026, our secured mortgage loan for a class A multi-family residential development in Dallas, Texas was repaid in full.

The outstanding principal on the date of repayment was approximately $45.0 million.

We received and recognized approximately $1.2 million relating to the repayment premium.

Dividends Declared Per Share

During the nine months ended September 30, 2025, we declared the following cash dividends:

During the three months ended March 31, 2026 and 2025, 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

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

2025 Period Subtotal $ 0.30 $ 4,026,448

$ 0.90 $ 12,079,097

March 10, 2026 March 31, 2026 April 15, 2026 $ 0.30 $ 4,055,897

2026 Period Subtotal $ 0.30 $ 4,055,897

Recent Developments

In October 2025, the Company 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”).

The Company (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, the Company and an affiliated co-investor entered into a $45.0 million senior bridge loan to refinance a retail property located in Houston, Texas.

The Company 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.

On April 1, 2026, our senior loan for a residential property in Austin, TX was repaid in full.

The outstanding principal balance of the senior secured term loan on the date of repayment was approximately $14.1 million.

Key Financial Measures and Indicators

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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 September 30, 2025 and December 31, 2024 was approximately $13.76 and $16.29, respectively.

The book value per share of our Common Stock as of March 31, 2026 and December 31, 2025 was approximately $13.50 and $13.56, 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);

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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Three Months Ended

September 30, Nine months ended

September 30,

2025 2024 2025 2024

Net income $ 4,253,350 $ 3,099,437

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

(Reversal of) provision for current expected credit losses (193,865) (47,527) 392,276 24,327

Provision for current expected credit losses 60,283 117,648

TRS (income) loss — —

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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 three and nine months ended September 30, 2025 and 2024

The following table summarizes our consolidated results of operations for the three and nine months ended September 30, 2025 and 2024:

Results of Operations f or the three months ended March 31, 2026 and 2025

The following table summarizes our consolidated results of operations for the three months ended March 31, 2026 and 2025:

Three Months Ended

September 30, Nine months ended

September 30,

2025 2024 2025 2024

Interest income $ 10,272,686 $ 4,958,523

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Total expenses 2,991,416 1,405,279

Reversal of (provision for) current expected credit losses 193,865 47,527 (392,276) (24,327)

Net income before income taxes 4,054,959 1,738,363 10,512,710 5,014,451

Income tax expense — — — —

Provision for current expected credit losses (60,283) (117,648)

Net income $ 4,253,350 $ 3,099,437

Our net income allocable to our common shareholders for the three and nine months ended September 30, 2025, was approximately $4.1 million and $10.5 million, or $0.30 and $0.82 per basic common share, respectively, compared to net income allocable to our common shareholders of approximately $1.7 million and $5.0 million, or $0.26 and $0.74 per basic common share for the three and nine months ended September 30, 2024.

Our net income allocable to our common shareholders for the three months ended March 31, 2026, was approximately $4.3 million, or $0.32 per basic weighted average common share, compared to net income allocable to our common shareholders of approximately $3.1 million, or $0.27 per basic weighted average common share for the three months ended March 31, 2025.

Interest income.

Interest income increased approximately $4.3 million, or 132.7%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

Interest income increased approximately $12.0 million, or 165.8%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

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

Interest income increased approximately $5.3 million, or 107.2%, for the three months ended March 31, 2026, as compared to the same period in the prior year.

The increase reflects a higher average investment balance driven by increased capital deployment.

In addition, the Company recognized approximately $1.2 million of repayment premium income related to the early repayment of a $45.0 million secured mortgage loan in March 2026.

Interest expense.

Interest expense increased approximately $1.4 million and $2.8 million for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, respectively, due to the lines of credit available in the current period and increase in related borrowings.

Interest expense increased approximately $2.6 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily driven by increased utilization of the Company’s lines of credit to support portfolio growth.

Management and incentive fees.

Management fees increased approximately $0.3 million and $1.0 million for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, respectively.

Incentive Fees increased approximately $0.4 million and $0.4 million for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, respectively.

In the prior period, the Management Agreement was not in place in the prior period 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 three and nine months ended September 30, 2025, Base Management Fees waived were zero and $0.6 million, respectively, and Incentive Fees waived were zero and $0.5 million, respectively .

General and administrative expenses .

General and administrative expenses increased $0.1 million and $1.5 million during the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 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 $0.1 million and $1.2 million for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, respectively.

Stock-based compensation.

Stock-based compensation increased $0.1 million and $0.6 million during the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, driven by restricted stock awards granted and restricted stock awards converted as part of the Spin-Off.

Management and incentive fees increased approximately $1.6 million for the three months ended March 31, 2026, compared to the same period in 2025.

Base Management Fees incurred for the three months ended March 31, 2026 were approximately $0.7 million.

Incentive Fees incurred for the three months ended March 31, 2026 were approximately $0.9 million.

For the three months ended March 31, 2025 , approximately $0.6 million of Base Management Fees and $0.3 million of Incentive Fees were waived.

Professional fees.

Professional fees decreased $(0.1) million and decreased $(0.1) million during the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, respectively.

Professional fees included approximately $0.0 million and $0.6 million in Spin-Off costs incurred in the prior periods during the three and nine months ended September 30, 2024, respectively.

No Spin-Off costs were incurred during the three and nine months ended September 30, 2025.

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

Professional fees decreased $(0.2) million during the three months ended March 31, 2026, as compared to the same period in 2025.

Provision for current expected credit losses.

The provision for current expected credit losses decreased $(0.1) million for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

The provision for current expected credit losses increased $0.4 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

The CECL Reserve balance as of September 30, 2025 was approximately $0.4 million, or 0.17%, of our total loans held at carrying value of approximately $250.4 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 $0.1 million and (ii) a liability for unfunded commitments of approximately $0.3 million.

The CECL Reserve balance as of September 30, 2024 was approximately $24.3 thousand, or 0.03%, of our total loans held at carrying value balance of approximately $96.4 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 zero and (ii) a liability for unfunded commitments of approximately $24.3 thousand.

The provision for current expected credit losses for the three months ended March 31, 2026 was approximately $0.1 million.

The CECL Reserve balance as of March 31, 2026 was approximatel y $0.6 million, or 0.19%, of our total loans held at carrying value of approximately $296.8 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 $0.3 million and (ii) a liability for unfunded commitments of approximately $0.2 million .

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.

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Loan Portfolio

The table below summarizes our total loan portfolio as of September 30, 2025, unless otherwise specified.

Loan Type Location Original Funding Date Loan Maturity Current Commitments as of 9/30/2025 % of Total SUNS Principal Balance as of 9/30/2025 Cash Interest Rate PIK Fixed/

The table below summarizes our total loan portfolio as of March 31, 2026, unless otherwise specified.

Loan Type Location Original Funding Date Loan Maturity Current Commitments as of 03/31/2026 % of Total Principal Balance as of 03/31/2026 Cash Interest Rate PIK Fixed/

Floating Amortization During Term YTM (1)

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Residential Austin, TX 7/3/2024 7/3/2027 $ 14,087,288 3.5% $ 14,087,288 9.8% N/A Floating No 11%

Hospitality San Antonio, TX 7/31/2024 8/9/2027 27,300,000 7.4% 26,793,821 10.9% N/A Floating No 12%

Residential PBG, FL (2)

Residential Palm Beach Gardens, FL (2)

8/5/2024 9/1/2027 31,875,000 8.0% 28,637,600 12.3% N/A Floating No 14%

Residential PBG, FL (2)

Residential Palm Beach Gardens, FL (2)

8/5/2024 9/1/2027 28,125,000 7.1% 25,114,339 10.3% N/A Floating No 12%

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1/30/2025 1/30/2028 44,000,000 11.0% 18,196,973 10.1% N/A Floating No 11%

Residential Dallas, TX 3/14/2025 3/14/2028 46,500,000 12.7% 44,690,992 7.8% N/A Floating No 8%

Residential Park City, UT 6/11/2025 8/1/2027 9,250,000 2.3% 4,295,478 11.3% N/A Floating No 13%

Residential Miami, FL 9/26/2025 9/25/2028 35,000,000 8.8% 23,468,054 8.4% N/A Floating No 10%

Industrial Doral, FL 10/6/2025 10/6/2027 9,380,000 2.4% 8,887,586 10.0% N/A Floating No 12%

Industrial West Palm Beach, FL 10/16/2025 10/16/2027 16,240,000 4.1% 1,830,567 10.0% N/A Floating No 12%

Retail Houston, TX 10/24/2025 10/24/2028 30,000,000 7.6% 22,218,757 9.5% N/A Floating No 11%

Subordinate debt:

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Residential Miami, FL 3/21/2025 12/13/2028 25,113,445 6.3% 16,536,991 13.5% 1.0% Floating No 15%

Hospitality Diversified 2/13/2026 2/13/2029 48,265,092 12.2% 45,293,104 11.3% N/A Floating No 13%

$ 397,086,697 100.0% $ 299,286,738 10.5% 0.1% 12%

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The estimated YTM calculations require management to make estimates and assumptions, including, but not limited to, the timing and amounts of loan draws on delayed draw loans, the timing and collectability of exit fees, the probability and timing of prepayments and the probability of contingent features occurring.

For example, certain credit agreements contain provisions

pursuant to which certain interest rates and fees earned by us under such credit agreements will decrease upon the satisfaction of certain specified criteria which we believe may improve the risk profile of the applicable borrower.

For example, certain credit agreements contain provisions pursuant to which certain interest rates and fees earned by us under such credit agreements will decrease upon the satisfaction of certain specified criteria which we believe may improve the risk profile of the applicable borrower.

To be conservative, we have not assumed any prepayment penalties or early payoffs in our estimated YTM calculation.

Estimated YTM is based on current management estimates and assumptions, which may change.

Estimated YTM is calculated using the interest rate as of September 30, 2025 applied through maturity.

Estimated YTM is calculated using the interest rate as of March 31, 2026 applied through maturity.

Actual results could differ from those estimates and assumptions.

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Loans Held for Investment at Carrying Value

As of September 30, 2025 and December 31, 2024, our portfolio included thirteen and nine loans held at carrying value, respectively.

The aggregate originated commitment under these loans was approximately $367.0 million and $190.9 million, respectively, and outstanding principal was approximately $253.0 million and $132.6 million, respectively, as of September 30, 2025 and December 31, 2024 .

During the nine months ended September 30, 2025 , we funded approximately $163.1 million of new loans and additional principal on existing loans and had approximately $42.7 million of principal repayments of loans held at carrying value.

As of September 30, 2025 and December 31, 2024, approximately 96% and 79%, respectively, of our loans held at carrying value had floating interest rates.

As of September 30, 2025, t hese floating benchmark rates included one-month SOFR quoted at 4.1% and subject to a weighted average floor of 4.1% and U.S.

As of March 31, 2026 and December 31, 2025, our portfolio included 15 and 16 loans held at carrying value, respectively.

The aggregate originated commitment under these loans was approximately $397.1 million and $420.7 million, respectively, and outstanding principal was approximately $299.3 million and $305.5 million, respectively, as of March 31, 2026 and 2025 .

During the three months ended March 31, 2026 , we funded approximately $90.2 million of new loans and additional principal on existing loans and had approximately $70.1 million of principal repayments of loans held at carrying value.

As of March 31, 2026 and December 31, 2025, approximately 96% and 96%, respectively, of our loans held at carrying value had floating interest rates.

As of March 31, 2026, t hese floating benchmark rates included one-month SOFR quoted at 3.7% and subject to a weighted average floor of 3.9% and U.S.

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

The following tables summarize our loans held at carrying value as of September 30, 2025 and December 31, 2024 :

As of September 30, 2025

The following tables summarize our loans held at carrying value as of March 31, 2026 and December 31, 2025 :

As of March 31, 2026

Principal (1)

Premium Carrying

Discount Carrying

Remaining Life

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Principal (1)

Premium Carrying

Discount 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 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 September 30, 2025 and December 31, 2024 .

(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 March 31, 2026 and December 31, 2025 .

(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 nine months ended September 30, 2025:

The following table presents changes in loans held at carrying value as of and for the three months ended March 31, 2026:

Principal Original Issue

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Loan repayments (70,099,302) — (70,099,302)

Foreclosure and contribution to real estate joint venture (26,379,740) 166,833 (26,212,907)

PIK interest 32,847 — 32,847

Total loans held at carrying value at September 30, 2025 $ 252,987,103 $ (2,608,376) $ 250,378,727

Total loans held at carrying value at March 31, 2026 $ 299,286,738 $ (2,445,708) $ 296,841,030

Collateral Overview

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While we believe that the appraised value of any real estate assets or other collateral securing our loans may impact the amount of the recovery in each such scenario, the amount of any such recovery from the sale of such real estate or other collateral may be less than the appraised value of such collateral and the sale of such collateral may not be sufficient to pay off the remaining balance on the defaulted loan.

If we do not or cannot sell a foreclosed property, we would then come to own and operate it as “real estate owned.”

If we do not or cannot sell a foreclosed property, we would then come to own and operate it as “real estate owned” (“REO”).

During the three months ended March 31, 2026 , the Company acquired one REO asset through foreclosure proceedings and contemporaneously contributed such asset to the Lex Ave JV (see Note 6).

We may pursue a sale of a defaulted loan if we believe that a sale would yield higher proceeds or that a sale could be accomplished more quickly than a foreclosure proceeding while yielding proceeds comparable to what would be expected from a foreclosure sale.

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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.

As of September 30, 2025 and December 31, 2024, all of our cash was unrestricted and totaled approximately $5.5 million and $184.6 million, respectively.

As of September 30, 2025, we believe that our cash on hand, capacity available under the Revolving Credit Facility, SRTF Credit Facility and cash flows from operations will be sufficient to satisfy the operating requirements of our business through at least the next twelve months.

Our primary sources of cash generally consist of net proceeds of future debt or equity offerings, debt financing, including borrowings under a senior secured revolving credit facility (the “Revolving Credit Facility”) and an unsecured revolving credit facility (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 March 31, 2026 and December 31, 2025, all of our cash was unrestricted and totaled approximately $5.7 million and $6.4 million, respectively.

As of March 31, 2026, we believe that our cash on hand, capacity available under the Revolving Credit Facility, SRTF Credit Facility and cash flows from operations will be sufficient to satisfy the operating requirements of our business through at least the next twelve months.

Capital Markets

Given the nature of our business, we constantly explore both the public and private capital markets to raise capital, subject to market and other considerations.

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, 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.

We incurred approximately $1.3 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 $71.3 million.

There were no capital markets transactions completed during the three months ended March 31, 2026.

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.

333-289188) (the “Shelf Registration Statement”) became effective on August 6, 2025 and allows us to offer and sell, from time to time, 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 three and nine months ended September 30, 2025, we did not sell any shares of our common stock under the ATM Program.

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

No shares were sold under the ATM Program during the three months ended March 31, 2026 .

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

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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 three and nine months ended September 30, 2025.

No shares were issued under the DRIP during the three months ended March 31, 2026.

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

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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).

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 $140.0 million.

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:

In February 2026, we entered into Amendment Number Seven to the Revolving Credit Facility (“Amendment Number Seven”), by and among the Company and certain subsidiaries, as borrowers, the lenders party thereto, and East West Bank as administrative agent, 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.

As amended, the Revolving Credit Facility requires 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.

As of September 30, 2025, we had $67.2 million outstanding borrowings under the Revolving Credit Facility and $72.8 million availability under our Revolving Credit Agreement, 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 September 30, 2025 , we were in compliance in all material respects with all covenants contained in our Revolving Credit Agreement.

As of March 31, 2026, we had $88.1 million of outstanding borrowings under the Revolving Credit Facility and $76.9 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 March 31, 2026 , we were in compliance in all material respects with all covenants contained in our Revolving Credit Agreement.

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 .

As of September 30, 2025, we had no outstanding borrowings under the SRTF Credit Facility and $75.0 million availability under our SRTF Credit Agreement.

As of March 31, 2026, we had $51.4 million of outstanding borrowings under the SRTF Credit Facility and $23.6 million availability under our SRTF Credit Facility.

Other Credit Facilities, Warehouse Facilities and Repurchase Agreements

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We expect that these facilities will typically have maturities ranging from two to five years and may accrue interest at either fixed or floating rates.

As of September 30, 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 nine months ended September 30, 2025 and 2024:

Nine months ended

September 30,

Net cash (used in) provided by operating activities $ (1,893,601) $ 2,685,307

Net cash (used in) provided by investing activities (105,558,522) (93,862,907)

Net cash (used in) provided by financing activities (71,627,279) 130,104,097

As of March 31, 2026 , 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 three months ended March 31, 2026 and 2025:

Three Months Ended

Net cash provided by (used in) operating activities $ 1,165,237 $ (914,591)

Net cash used in investing activities (15,092,627) (95,727,807)

Net cash provided by (used in) financing activities 13,140,901 (86,341,592)

Change in cash and cash equivalents $ (786,489) $ (182,983,990)

Net Cash (Used in) Provided by Operating Activities

Net cash used in operating activities during the nine months ended September 30, 2025 was approximately $(1.9) million, compared to net cash provided by operating activities of approximately $2.7 million for the nine months ended September 30, 2024.

The decrease of approximately $(4.6) million period over period was primarily due to an increase in interest income paid from interest drawn on loans and related incoming cash payments from our borrowers due to the expansion of our portfolio.

Net Cash (Used in) Provided by Investing Activities

Net cash used in investing activities during the nine months ended September 30, 2025 was approximately $(105.6) million, compared to $(93.9) for the nine months ended September 30, 2024.

The decrease of approximately $(11.7) million was primarily due to an increase in issuance and fundings on loans of approximately $(29.5) million, offset by an increase in principal repayments of loans of approximately $17.8 million.

Net Cash (Used in) Provided by Financing Activities

Net cash used in financing activities during the nine months ended September 30, 2025 was approximately $(71.6) million, compared to net cash provided by financing activities of $130.1 million for the nine months ended September 30, 2024.

The increase of approximately $(201.7) million was primarily due to an increase of $(269.9) 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 increase of $88.2 million in borrowings on the revolving credit facilities and an increase of $72.6 million from offering proceeds relating to the January 2025 Offering.

Net Cash Provided by (Used in) Operating Activities

Net cash provided by operating activities during the three months ended March 31, 2026 was approximately $1.2 million, compared to net cash used in operating activities of approximately $(0.9) million for the three months ended March 31, 2025.

The increase of approximately $2.1 million period over period was primarily due to an increase in interest income, partially offset by higher management and incentive fees paid.

Net Cash Used in Investing Activities

Net cash used in investing activities during the three months ended March 31, 2026 was approximately $(15.1) million, compared to $(95.7) for the three months ended March 31, 2025.

The decrease in net cash used of approximately $80.6 million was primarily due to an increase in principal repayments on loans of approximately $61.1 million and a decrease in issuance and fundings on loans of approximately $19.6 million.

Net Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities during the three months ended March 31, 2026 was approximately $13.1 million, compared to net cash used in financing activities of $(86.3) million for the three months ended March 31, 2025.

The decrease in cash used in financing activities of approximately $99.5 million was primarily due to an increase of $167.0 million in repayments on the revolving credit facilities, partially offset by a decrease of $(72.6) million from offering proceeds relating to the January 2025 Offering.

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

Our contractual obligations as of September 30, 2025 are as follows:

As of September 30, 2025

Our contractual obligations as of March 31, 2026 are as follows:

As of March 31, 2026

1 year 1-3 years 3-5 years More than

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Total $ 13,327,326 $ 84,578,043 $ — $ — $ 97,905,369

As of September 30, 2025 , all unfunded commitments were related to our total loan commitments and were available for funding in less than four years.

As of March 31, 2026 , all unfunded commitments were related to our total loan commitments and were available for funding in less than three years.

We may enter into certain contracts that may contain a variety of indemnification obligations.

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Many of these accounting policies require judgment and the use of estimates and assumptions when they are applied in the preparation of our financial statements.

On a quarterly basis, we evaluate these estimates and judgments based on historical experience as well as other factors that we believe to be

reasonable under the circumstances.

On a quarterly basis, we evaluate these estimates and judgments based on historical experience as well as other factors that we believe to be reasonable under the circumstances.

These estimates are subject to change in the future if underlying assumptions or factors change.

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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-Q

Item 2. Management’s Discussion and Analysis