Sunrise Realty Trust, Inc. 10-Q

Item 1. Financial Statements SUNRISE REALTY TRUST, INC. CONSOLIDATED BALANCE SHEETS As of June 30, 2026 December 31, 2025 (unaudited) Assets Loans held for investment at carrying value, net $ 296,753,498 $ 302,674,743 Current expected credit loss reserve ( 932,221 ) ( 1,891,170 ) Loans held for investment at carrying value, net of current expected credit loss reserve 295,821,277 300,783,573 Cash and cash equivalents 5,593,575 6,445,328 Interest receivable 2,539,215 2,264,133 Investment in unconsolidated real estate joint venture 25,925,934 — Prepaid expenses and other assets 843,591 735,230 Total assets $ 330,723,592 $ 310,228,264 Liabilities Accrued interest $ 809,047 $ 730,644 Dividends payable 4,055,220 4,026,296 Current expected credit loss reserve 176,639 178,066 Accrued management and incentive fees 878,995 692,716 Accrued direct administrative expenses 891,346 282,296 Accounts payable and other liabilities 414,260 355,865 Line of credit payable 82,550,000 102,250,000 Line of credit payable to affiliate 59,100,000 19,750,000 Total liabilities 148,875,507 128,265,883 Commitments and contingencies (Note 8) Shareholders' equity Preferred stock, par value $ 0.01 per share, 10,000 shares authorized at June 30, 2026 and December 31, 2025 and 0 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively — — Common stock, par value $ 0.01 per share, 50,000,000 shares authorized at June 30, 2026 and December 31, 2025 and 13,517,402 and 13,420,986 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively 135,174 134,210 Additional paid-in capital 187,411,971 186,745,489 Accumulated (deficit) earnings ( 5,699,060 ) ( 4,917,318 ) Total shareholders' equity 181,848,085 181,962,381 Total liabilities and shareholders' equity $ 330,723,592 $ 310,228,264 See accompanying notes to the unaudited interim consolidated financial statements 1 Index SUNRISE REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Revenue Interest income $ 8,564,695 $ 6,752,679 $ 18,837,381 $ 11,711,202 Interest expense ( 2,745,781 ) ( 1,083,212 ) ( 5,713,418 ) ( 1,419,371 ) Net interest income 5,818,914 5,669,467 13,123,963 10,291,831 Expenses Management and incentive fees 878,995 689,140 2,514,131 689,140 General and administrative expenses 809,783 659,957 1,552,882 1,413,083 Stock-based compensation 297,484 259,066 667,446 502,687 Professional fees 231,666 234,497 474,885 643,029 Total expenses 2,217,928 1,842,660 5,209,344 3,247,939 Provision for current expected credit losses ( 557,248 ) ( 468,493 ) ( 617,531 ) ( 586,141 ) Equity in earnings of unconsolidated real estate joint venture 32,287 — 32,287 — Net income before income taxes 3,076,025 3,358,314 7,329,375 6,457,751 Income tax expense — — — — Net income $ 3,076,025 $ 3,358,314 $ 7,329,375 $ 6,457,751 Earnings per common share: Basic $ 0.23 $ 0.25 $ 0.54 $ 0.52 Diluted $ 0.23 $ 0.25 $ 0.54 $ 0.52 Weighted average number of common shares outstanding: Basic 13,329,968 13,235,823 13,324,626 12,227,520 Diluted 13,346,375 13,259,762 13,335,822 12,245,128 See accompanying notes to the unaudited interim consolidated financial statements 2 Index SUNRISE REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (unaudited) Three Months Ended June 30, 2026 Common Stock Additional Paid-In Capital Accumulated Earnings (Deficit) Total Shareholders' Equity Shares Amount Balance as of March 31, 2026 13,519,655 $ 135,197 $ 187,114,464 $ ( 4,719,865 ) $ 182,529,796 Stock-based compensation, net of forfeitures ( 2,253 ) ( 23 ) 297,507 — 297,484 Dividends declared on common shares ($ 0.30 per share) — — — ( 4,055,220 ) ( 4,055,220 ) Net income — — — 3,076,025 3,076,025 Balance as of June 30, 2026 13,517,402 $ 135,174 $ 187,411,971 $ ( 5,699,060 ) $ 181,848,085 Three Months Ended June 30, 2025 Common Stock Additional Paid-In Capital Accumulated Earnings (Deficit) Total Shareholders' Equity Shares Amount Balance as of March 31, 2025 13,421,494 $ 134,215 $ 186,555,228 $ ( 1,881,345 ) $ 184,808,098 Stock-based compensation, net of forfeitures ( 318 ) ( 3 ) 259,069 — 259,066 Dividends declared on common shares ($ 0.30 per share) — — — ( 4,026,353 ) ( 4,026,353 ) Issuance of common stock, net of offering costs ( 76,524 ) — ( 76,524 ) Net income — — — 3,358,314 3,358,314 Balance as of June 30, 2025 13,421,176 $ 134,212 $ 186,737,773 $ ( 2,549,384 ) $ 184,322,601 See accompanying notes to the unaudited interim consolidated financial statements 3 Index SUNRISE REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (unaudited) Six Months Ended June 30, 2026 Member's Equity Common Stock Additional Paid-In Capital Accumulated Earnings (Deficit) Total Shareholders' Equity Shares Amount Balance as of December 31, 2025 $ — 13,420,986 $ 134,210 $ 186,745,489 $ ( 4,917,318 ) $ 181,962,381 Issuance of common stock, net of offering costs — — — — — — Stock-based compensation, net of forfeitures — 96,416 964 666,482 — 667,446 Dividends declared on common shares ($ 0.60 per share) — — — — ( 8,111,117 ) ( 8,111,117 ) Net income — — — — 7,329,375 7,329,375 Balance as of June 30, 2026 $ — 13,517,402 $ 135,174 $ 187,411,971 $ ( 5,699,060 ) $ 181,848,085 Six Months Ended June 30, 2025 Member's Equity Common Stock Additional Paid-In Capital Accumulated Earnings (Deficit) Total Shareholders' Equity Shares Amount Balance as of December 31, 2024 $ — 7,004,676 $ 70,047 $ 115,022,034 $ ( 954,334 ) $ 114,137,747 Issuance of common stock, net of offering costs — 6,400,000 64,000 71,213,217 — 71,277,217 Stock-based compensation, net of forfeitures — 16,500 165 502,522 — 502,687 Dividends declared on common shares ($ 0.60 per share) — — — — ( 8,052,801 ) ( 8,052,801 ) Net income — — — — 6,457,751 6,457,751 Balance as of June 30, 2025 $ — 13,421,176 $ 134,212 $ 186,737,773 $ ( 2,549,384 ) $ 184,322,601 See accompanying notes to the unaudited interim consolidated financial statements 4 Index SUNRISE REALTY TRUST, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six months ended June 30, 2026 2025 Operating activities: Net income $ 7,329,375 $ 6,457,751 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for current expected credit losses 617,531 586,141 Amortization of deferred financing costs 700,360 173,931 Accretion of deferred loan original issue discount and premium, net ( 1,663,895 ) ( 615,227 ) Stock-based compensation 667,446 502,687 Interest drawn on loans ( 6,364,993 ) ( 8,103,971 ) PIK interest ( 78,549 ) ( 10,405 ) Equity in earnings of unconsolidated real estate joint venture ( 32,287 ) — Changes in operating assets and liabilities: Interest receivable ( 275,082 ) ( 971,333 ) Prepaid expenses and other assets ( 295,831 ) 248,624 Accrued interest 78,403 241,492 Accrued management and incentive fees 186,279 296,077 Accrued direct administrative expenses 609,050 ( 40,337 ) Accounts payable and other liabilities 58,395 ( 2,768 ) Net cash provided by (used in) operating activities 1,536,202 ( 1,237,338 ) Cash flows from investing activities: Issuance of and fundings on loans ( 108,315,156 ) ( 120,416,392 ) Contributions to unconsolidated real estate joint venture ( 1,258,647 ) — Principal repayment of loans 96,130,931 11,542,613 Net cash used in investing activities ( 13,442,872 ) ( 108,873,779 ) Cash flows from financing activities: Proceeds from sale of common stock — 72,588,000 Payment of offering costs - equity offering — ( 455,889 ) Payment of financing costs ( 512,890 ) ( 217,731 ) Borrowings on revolving credit facilities 115,750,000 106,360,000 Repayment of revolving credit facilities ( 96,100,000 ) ( 240,250,000 ) Dividends paid to common shareholders ( 8,082,193 ) ( 6,968,412 ) Net cash provided by (used in) financing activities 11,054,917 ( 68,944,032 ) Net decrease in cash and cash equivalents ( 851,753 ) ( 179,055,149 ) Cash and cash equivalents, beginning of period 6,445,328 184,626,770 Cash and cash equivalents, end of period $ 5,593,575 $ 5,571,621 Supplemental disclosure of non-cash activity: OID withheld from funding of loans $ 903,136 $ 1,366,528 Non-cash investment in unconsolidated real estate joint venture $ 24,635,000 $ — Dividends declared and not yet paid $ 4,055,220 $ 4,026,353 Supplemental information: Interest paid during the period $ 4,934,655 $ 1,003,948 Income taxes paid during the period $ — $ — See accompanying notes to the unaudited interim consolidated financial statements 5 Index SUNRISE REALTY TRUST, INC. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS As of June 30, 2026 (unaudited) 1. ORGANIZATION Sunrise Realty Trust, Inc. (the “Company” or “SUNS”) was formed on August 28, 2023, and converted from a Delaware limited liability company to a Maryland corporation in February 2024. The Company is an institutional lender that provides debt capital solutions to the commercial real estate (“CRE”) market in the Southern United States, with a primary focus on opportunities in Arizona, Florida, Georgia, Nevada, North Carolina, South Carolina, Tennessee and Texas. The Company focuses on originating, underwriting and managing 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. The Company 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. The Company intends for its 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. The Company operates in one operating segment. SUNS is externally managed and advised by Sunrise Manager LLC (“SUNS Manager” or the “Manager”), a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) . The Company consolidates all of its subsidiaries, which are consolidated within the Company’s consolidated financial statements. The Company has elected to be taxed as a REIT for United States federal income tax purposes under the Internal Revenue Code (the “Code”), commencing with the taxable year ending December 31, 2024. The Company generally will not be subject to United States federal income taxes on its REIT taxable income as long as it annually distributes all of its REIT taxable income prior to the deduction for dividends paid to shareholders and complies with various other requirements as a REIT. 2. SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited financial statements and results of operations included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the U.S. Securities and Exchange Commission (“SEC”) on March 12, 2026 (“Annual Report on Form 10-K”). Refer to Note 2 to the Company’s Annual Report on Form 10-K for a description of the Company’s significant accounting policies. The Company has included disclosures below regarding basis of presentation and other accounting policies that (i) are required to be disclosed quarterly, (ii) have material changes or (iii) the Company views as critical as of the date of this report. Basis of Presentation The accompanying unaudited interim consolidated financial statements and related notes have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and in conformity with the rules and regulations of the SEC applicable to interim financial information and include the accounts of the Company and its wholly-owned subsidiaries. The unaudited interim consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant estimates include the current expected credit losses reserve (“CECL Reserve”) and the valuation of real estate owned (“REO”) acquired through foreclosure proceedings. 6 Index Equity Method Investments The Company accounts for its investment in unconsolidated real estate joint ventures over which it has the ability to exercise significant influence, but does not control, under the equity method of accounting in accordance with ASC 323, Investments—Equity Method and Joint Ventures. Under the equity method, the Company initially records the investment at cost and subsequently adjusts the carrying value of the investment to recognize the Company’s proportionate share of the investee’s earnings or losses, which are included in equity in earnings (loss) of unconsolidated joint ventures in the consolidated statements of operations. For certain equity method investments, the Company records its share of earnings and losses on a one-quarter reporting lag when financial information of the investee is not available on a timely basis. Distributions received from equity method investees are recorded as reductions of the investment balance to the extent they represent returns of investment. In instances where the Company acquires real estate through foreclosure proceedings and contributes such real estate to an unconsolidated real estate joint venture, the Company initially records its investment in the joint venture at the fair value of the real estate contributed on the date of contribution. Fair value is generally determined based on the appraised value of the underlying real estate, less estimated costs to sell, as applicable. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying value of the investment may not be recoverable or that a decline in value may be other-than-temporary. In evaluating whether an other-than-temporary impairment exists, the Company considers various qualitative and quantitative factors, including the financial condition and near-term prospects of the investee, the underlying collateral and asset quality, expected holding period, market conditions and other relevant factors. If the Company determines that a decline in value is other-than-temporary, the investment is written down to its estimated fair value, with the resulting impairment recognized in earnings. Recent Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03—Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) and in January 2025, the FASB issued ASU 2025-01—Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”), which requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The adoption of ASU 2024-03 is not expected to have a material impact on the Company’s consolidated financial statements. 3. LOANS HELD FOR INVESTMENT AT CARRYING VALUE As of June 30, 2026 and December 31, 2025, t he Company’s portfolio included 14 and 16 loans held at carrying value, respectively. The aggregate originated commitment under these loans was approximately $ 377.4 million and $ 420.7 million, resp ectively, and outstanding principal was approximately $ 298.7 million and $ 305.5 million, respectively, as of June 30, 2026 and December 31, 2025. During the six months ended June 30, 2026, the Company funded approximately $ 115.6 million of new loans and additional principal on existing loans and had approximately $ 96.1 million of principal repayments of loans held at carrying value. As of June 30, 2026 and December 31, 2025, approximately 96.1 % and 96.4 % , respectively, of the Company’s loans held at carrying value had floating interest rates. As of June 30, 2026, 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 3.9 %, and U.S. prime rate quoted at 6.75 % and subject to a weighted average floor of 8.0 % based on outstanding principal. 7 Index The following tables summarizes the Company’s loans held at carrying value as of June 30, 2026 and December 31, 2025: As of June 30, 2026 Outstanding Principal (1) Original Issue (Discount) Premium Carrying Value (1) Weighted Average Remaining Life (Years) (2) Senior mortgage loans (3)(4) $ 222,838,841 $ ( 1,474,956 ) $ 221,363,885 1.4 Subordinate debt 75,825,507 ( 435,894 ) 75,389,613 2.4 Total loans held at carrying value $ 298,664,348 $ ( 1,910,850 ) $ 296,753,498 1.6 As of December 31, 2025 Outstanding Principal (1) Original Issue (Discount) Premium Carrying Value (1) Weighted Average Remaining Life (Years) (2) Senior mortgage loans (3)(4) $ 282,678,920 $ ( 2,803,998 ) $ 279,874,922 1.9 Subordinate debt 22,834,265 ( 34,444 ) 22,799,821 2.4 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 June 30, 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 six months ended June 30, 2026: Principal Original Issue (Discount) Premium Carrying Value Total loans held at carrying value at December 31, 2025 $ 305,513,185 $ ( 2,838,442 ) $ 302,674,743 New fundings 109,218,292 ( 903,136 ) 108,315,156 Interest drawn on loans 6,364,993 — 6,364,993 Accretion of original issue discount and premium, net — 1,663,895 1,663,895 Loan repayments ( 96,130,931 ) — ( 96,130,931 ) Foreclosure and contribution to real estate joint venture ( 26,379,740 ) 166,833 ( 26,212,907 ) PIK interest 78,549 — 78,549 Total loans held at carrying value at June 30, 2026 $ 298,664,348 $ ( 1,910,850 ) $ 296,753,498 As of June 30, 2026, there were no loans in the Company’s portfolio on nonaccrual status. As of December 31, 2025, the Company had one loan held at carrying value on nonaccrual status. In March 2026, the Company derecognized its senior hospitality loan in San Antonio, Texas (the “San Antonio Loan”) in connection with the foreclosure on the underlying collateral and the contemporaneous contribution of the acquired real estate to a newly formed unconsolidated joint venture. In exchange, the Company received an equity interest in the joint venture, which is accounted for under the equity method. The contribution was recorded based on the fair value of the 8 Index underlying collateral of approximately $ 24.6 million. See Note 6 included in these consolidated financial statements for additional information. A more detailed listing of the Company’s loans held at carrying value portfolio based on information available as of June 30, 2026 is as follows: Loan Type Location Outstanding Principal (1) Original Issue (Discount) Premium Carrying Value (1) Interest Rate Maturity Date (2) Payment Terms (3) Senior mortgage loans: Residential Palm Beach Gardens, FL 31,239,158 ( 157,511 ) 31,081,647 12.25 % (4) 9/1/2027 I/O Residential Palm Beach Gardens, FL 23,609,542 ( 138,980 ) 23,470,562 10.25 % (5) 9/1/2027 I/O Residential Fort Lauderdale, FL 19,803,590 ( 69,231 ) 19,734,359 11.50 % (6) 12/30/2026 I/O Hospitality Austin, TX 32,000,000 ( 188,889 ) 31,811,111 9.50 % (7) 12/11/2027 I/O Residential Aventura, FL 30,750,872 ( 80,220 ) 30,670,652 9.00 % (8) 1/27/2027 I/O Net Leased Tenant New Orleans, LA 25,294,251 ( 232,222 ) 25,062,029 10.10 % (9) 1/30/2028 I/O Residential Park City, UT 4,965,932 ( 115,625 ) 4,850,307 11.25 % (10) 8/1/2027 I/O Residential Miami, FL 26,643,711 ( 131,250 ) 26,512,461 8.40 % (11) 9/25/2028 I/O Industrial Doral, FL 3,902,832 ( 19,428 ) 3,883,404 9.95 % (12) 10/6/2027 I/O Industrial West Palm Beach, FL 1,893,394 ( 108,267 ) 1,785,127 9.95 % (12) 10/16/2027 I/O Retail Houston, TX 22,735,559 ( 233,333 ) 22,502,226 9.50 % (13) 10/24/2028 I/O Subordinate debt: Residential Miami, FL 11,693,918 ( 57,778 ) 11,636,140 13.25 % (14) 11/15/2027 I/O Residential Miami, FL 19,848,963 37,500 19,886,463 14.50 % (15) 12/13/2028 I/O Hospitality Diversified 44,282,626 ( 415,616 ) 43,867,010 11.25 % (16) 2/13/2029 I/O Total loans held at carrying value $ 298,664,348 $ ( 1,910,850 ) $ 296,753,498 (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) Certain loans are subject to contractual extension options and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications. (3) I/O = interest-only. (4) Base interest rate of 8.25 % plus SOFR (SOFR floor of 4.00 %). (5) Base interest rate of 6.25 % plus SOFR (SOFR floor of 4.00 %). (6) Cash interest rate represents a blended rate of differing cash interest rates applicable to each of the A-Notes and B-Notes to which the Company is a lender under the credit agreements. The A-Notes bear interest at a base interest rate of 4.75 % plus SOFR (SOFR floor of 4.75 %) and the B-Notes bear interest at a base interest rate of 11.00 % plus SOFR (SOFR floor of 4.75 %). (7) Base interest rate of 5.50 % plus SOFR (SOFR floor of 4.00 %). (8) Base interest rate of 5.00 % plus SOFR (SOFR floor of 4.00 %). (9) Base interest rate of 5.60 % plus SOFR (SOFR floor of 4.50 %). (10) Base interest rate of 3.25 % plus U.S. prime rate (U.S. prime floor of 8.00 %). (11) Base interest rate of 4.75 % plus SOFR (SOFR floor of 3.50 %). (12) Base interest rate of 6.20 % plus SOFR (SOFR floor of 3.75 %). (13) Base interest rate of 5.75 % plus SOFR (SOFR floor of 3.75 %). (14) Base interest rate of 13.25 %. (15) Base interest rate of 9.50 % plus SOFR (SOFR floor of 4.00 %) and PIK interest rate of 1.00 %. (16) Base interest rate of 8.25 % plus SOFR (SOFR floor of 3.00 %) 9 Index 4. CURRENT EXPECTED CREDIT LOSSES As of June 30, 2026 and December 31, 2025, the Company’s CECL Reserve for its loans held at carrying value was approximately $ 1.1 million and $ 2.1 million, respectively, or 0.37 % and 0.68 %, respectively, of the Company’s total loans held at carrying value of approximately $ 296.8 million and $ 302.7 million, respectively. The CECL reserve consisted of an allowance on outstanding loan balances of approximately $ 0.9 million and $ 1.9 million, respectively, and a liability for unfunded loan commitments of approximately $ 0.2 million at both June 30, 2026 and December 31, 2025. The liability for unfunded commitments represents expected credit losses on the unfunded portion of loan commitments over the contractual period during which the Company is exposed to credit risk through its obligation to extend credit. In estimating this liability, management considered the likelihood that commitments will be funded and, if funded, the expected credit losses on the funded portion of those commitments. Activity related to the CECL Reserve for outstanding balances and unfunded commitments on the Company’s loans held at carrying value as of and for the three and six months ended June 30, 2026 was as follows: Outstanding (1) Unfunded (2) Total Balance at March 31, 2026 $ 322,786 $ 228,826 $ 551,612 Provision for current expected credit losses 609,435 ( 52,187 ) 557,248 Write-offs — — — Recoveries — — — Balance at June 30, 2026 $ 932,221 $ 176,639 $ 1,108,860 Outstanding (1) Unfunded (2) Total Balance at December 31, 2025 $ 1,891,170 $ 178,066 $ 2,069,236 Provision for current expected credit losses 618,958 ( 1,427 ) 617,531 Write-offs (3) ( 1,577,907 ) — ( 1,577,907 ) Recoveries — — — Balance at June 30, 2026 $ 932,221 $ 176,639 $ 1,108,860 (1) As of June 30, 2026 and December 31, 2025 , the CECL Reserve related to outstanding balances on loans held at carrying value is recorded within current expected credit loss reserve in the Company’s consolidated balance sheets. (2) As of June 30, 2026 and December 31, 2025 , the CECL Reserve related to unfunded commitments on loans held at carrying value is recorded within current expected credit loss reserve as a liability in the Company’s consolidated balance sheets. (3) During the six months ended June 30, 2026 , the Company wrote off the provision for credit losses associated with the San Antonio Loan that was derecognized in connection with the foreclosure and contribution to a joint venture. The Company continuously evaluates the credit quality of each loan by assessing the risk factors of each loan and assigning a risk rating based on a variety of factors. Such factors may include property type, geographic and local market dynamics, physical condition, projected cash flow, loan structure and exit plan, loan-to-value ratio, fixed charge coverage ratio, project sponsorship, and other factors deemed necessary by the Company. Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from less risk to greater risk, which ratings are defined as follows: Rating Definition 1 Very Low Risk — Investment exceeds performance expectations. Trends and risk factors since time of investment are favorable. 2 Low Risk — Investment performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. 3 Medium Risk — Performing investments requiring closer monitoring. Trends and risk factors show some deterioration. 4 High Risk/ Potential for Loss — Investment underperforming with the potential of some interest loss. Trends and risk factors are negative. 5 Impaired/ Loss Likely — Investment underperforming with expected loss of interest, and full recovery of principal is unlikely. 10 Index The risk ratings are primarily based on historical data as well as taking into account future economic conditions. As of June 30, 2026, the carrying value, excluding the CECL Reserve, of the Company’s loans held at carrying value within each risk rating by year of origination is as follows: Risk Rating: 2026 2025 2024 Total 1 $ — $ — $ — $ — 2 43,867,010 135,152,669 117,733,819 296,753,498 3 — — — — 4 — — — — 5 — — — — Total $ 43,867,010 $ 135,152,669 $ 117,733,819 $ 296,753,498 Gross write-offs $ — $ — $ ( 1,577,907 ) $ ( 1,577,907 ) In March 2026, the Company and its affiliate co-lender exercised their rights to foreclose on the hotel property underlying the San Antonio Loan. Upon foreclosure, the Company derecognized the loan and the related CECL reserve of approximately $ 1.6 million. At the time of foreclosure, the San Antonio Loan had an outstanding principal balance of approximately $ 26.4 million and an amortized cost basis of approximately $ 26.2 million. Prior to foreclosure, the loan had a risk rating of “5.” The amortized cost basis of the loan, net of the related CECL reserve, approximated the fair value of the acquired collateral of approximately $ 24.6 million, which was subsequently contributed to a newly formed unconsolidated joint venture. See Note 6 included in these consolidated financial statements for additional information. 5. INTEREST RECEIVABLE The following table summarizes the interest receivable balance for the Company as of June 30, 2026 and December 31, 2025: As of June 30, 2026 As of December 31, 2025 Interest receivable $ 2,516,570 $ 2,251,700 Unused fees receivable 6,451 2,203 PIK receivable 11,554 7,037 Other fees receivable 4,640 3,193 Total interest receivable $ 2,539,215 $ 2,264,133 6. INVESTMENT IN UNCONSOLIDATED REAL ESTATE JOINT VENTURE In February 2026, the Company and the affiliate co-lender to the San Antonio Loan formed 123 Lex Ave Hotel Holdings LLC (the “Lex Ave JV”) based on their respective interests in the San Antonio Loan. On March 3, 2026, following the lenders' exercise of their foreclosure rights, the Lex Ave JV acquired the San Antonio hotel property that served as the underlying collateral for the San Antonio Loan through a credit bid equal to the aggregate unpaid principal balance of the San Antonio Loan of approximately $ 40.6 million (the “Lex Ave Hotel Foreclosure”). Following the Lex Ave Hotel Foreclosure, the Company exchanged its 65.0 % interest in the San Antonio Loan for a 65.0 % equity interest in the Lex Ave JV and recognized real estate owned (“REO”) at the lower of the carrying value of the San Antonio Loan and the fair value of the REO. The Company's investment in the Lex Ave JV was initially recognized at the fair value of the contributed REO of approximately $ 24.6 million. 11 Index Following the Lex Ave Hotel Foreclosure, the Company owns a 65.0 % membership interest in the Lex Ave JV. No gain or loss was recognized upon foreclosure and contribution because the Lex Ave Hotel Foreclosure was accounted for as an exchange of the San Antonio Loan for an equity method investment in the Lex Ave JV. During the three and six months ended June 30, 2026 , the Company recognized equity in earnings of approximately $ 32.3 thousand, representing its 65.0 % share of the Lex Ave JV's net income for the month ended March 31, 2026. The Company records its share of earnings and losses from the Lex Ave JV using a one-quarter reporting lag. Activity in the Company's investment in the Lex Ave JV during the six months ended June 30, 2026 was as follows: Activity Six months ended June 30, 2026 Initial contribution of REO $ 24,635,000 Additional capital contributions 1,258,647 Equity in earnings of unconsolidated real estate joint venture 32,287 Ending investment balance at June 30, 2026 $ 25,925,934 Additional capital contributions primarily related to funding operating costs and capital requirements of the hotel property. The following table summarizes the Company’s investment in its unconsolidated real estate joint venture as of June 30, 2026 and December 31, 2025: Entity Date Formed Ownership % As of June 30, 2026 As of December 31, 2025 123 Lex Ave Hotel Holdings LLC 2/27/2026 65 % $ 25,925,934 $ — On May 21, 2026, the Company, through its investment in the Lex Ave JV, entered into a definitive agreement to sell the San Antonio hotel property. See Note 16 for additional information. 7. DEBT Revolving Credit Facility On November 6, 2024, the Company entered into a Loan and Security Agreement (as amended, the “Revolving Credit Agreement”) with the lenders party thereto and East West Bank, as administrative agent. The Revolving Credit Agreement provides for a senior secured revolving credit facility (the “Revolving Credit Facility”) with 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. During the year ended December 31, 2025 , the Company 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. In February 2026, the Company 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. Pursuant to the Revolving Credit Agreement, total commitments may be increased to up to $ 200.0 million, subject to borrowing base availability and lender participation. The Revolving Credit Facility matures on November 8, 2027. Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to SOFR plus 2.75 %, subject to a SOFR floor of 2.63 %, with an additional 0.25 % during any Increase Rate Month (as defined in the Revolving Credit Agreement). 12 Index The Company is required to pay certain fees under the Revolving Credit Agreement, including a $ 75.0 thousand agent fee and a 0.25 % per annum unused commitment fee, payable semi-annually in arrears, subject to waiver if specified utilization thresholds are met. Unused commitment fees were $ 17.8 thousand and $ 21.9 thousand during the six months ended June 30, 2026 and 2025, respectively. In connection with the Revolving Credit Agreement and related amendments, the Company incurred certain closing costs of approximately $ 0.5 million, which were included in prepaid expenses and other assets on the Company’s consolidated balance sheets and amortized over the life of the Revolving Credit Facility . The Revolving Credit Facility is guaranteed by certain material subsidiaries of the Company and is secured by substantially all assets of the Company; provided that upon the meeting of certain conditions, the Revolving Credit 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. 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 3.25 x measured as of the end of each fiscal quarter. To the best of the Company’s knowledge, as of June 30, 2026, the Company was in compliance in all material respects with these covenants. As of June 30, 2026 and December 31, 2025 , outstanding borrowings under the Revolving Credit Facility were $ 82.6 million and $ 102.3 million, respectively, and $ 82.4 million and $ 37.7 million were available for borrowing as of June 30, 2026 and December 31, 2025 , respectively. As of June 30, 2026 and December 31, 2025 , the interest rate on the Company’s borrowings under the Revolving Credit Facility was 6.40 % and 6.59 %, respectively. SRTF Credit Facility On December 9, 2024, the Company entered into an unsecured revolving credit agreement (the “SRTF Credit Agreement”) with SRT Finance LLC, an affiliate, as agent and lender. The SRTF Credit Agreement provides for an unsecured revolving credit facility (the “SRTF Credit Facility”) with aggregate commitments of $ 75.0 million, which may be borrowed, repaid and redrawn, subject to a draw fee and other customary conditions. Borrowings under the SRTF Credit Facility bear interest at a rate per annum of 8.00 %. The SRTF Credit Facility matures on the earlier of (i) May 31, 2028 and (ii) the closing date of certain Refinancing Indebtedness, as defined in the SRTF Credit Agreement. As amended, beginning January 1, 2026, the Company is required to pay a quarterly fee equal to 0.25 % of the aggregate commitments ratably to the lenders, payable on the first business day of each quarter; provided that the fee due and payable on April 1, 2028 will be prorated on the basis of a year of 360 days for the actual number of days elapsed from and including April 1, 2028 until and excluding May 31, 2028. In connection with the SRTF Credit Agreement, the Company incurred approximately $ 25.5 thousand of deferred financing costs, which are included in prepaid expenses and other assets and are amortized over the term of the facility. As of June 30, 2026 and December 31, 2025 , outstanding borrowings under the SRTF Credit Facility were $ 59.1 million and $ 19.8 million, respectively, and $ 15.9 million and $ 55.2 million were available for borrowing as of June 30, 2026 and December 31, 2025 , respectively. 13 Index The following tables reflect a summary of interest expense incurred during the three and six months ended June 30, 2026 and 2025 : Three months ended June 30, 2026 Revolving Credit Facility SRTF Revolving Credit Facility Total Borrowings Interest expense $ 1,310,576 $ 1,061,133 $ 2,371,709 Unused fee expense 17,821 — 17,821 Amortization of deferred financing costs 166,771 189,480 356,251 Total interest expense $ 1,495,168 $ 1,250,613 $ 2,745,781 Three months ended June 30, 2025 Revolving Credit Facility SRTF Revolving Credit Facility Total Borrowings Interest expense $ 937,773 $ 17,645 $ 955,418 Unused fee expense 21,913 — 21,913 Amortization of deferred financing costs 104,448 1,433 105,881 Total interest expense $ 1,064,134 $ 19,078 $ 1,083,212 Six months ended June 30, 2026 Revolving Credit Facility SRTF Revolving Credit Facility Total Borrowings Interest expense $ 3,012,748 $ 1,982,489 $ 4,995,237 Unused fee expense 17,821 — 17,821 Amortization of deferred financing costs 321,423 378,937 700,360 Total interest expense $ 3,351,992 $ 2,361,426 $ 5,713,418 Six months ended June 30, 2025 Revolving Credit Facility SRTF Revolving Credit Facility Total Borrowings Interest expense $ 1,183,278 $ 40,249 $ 1,223,527 Unused fee expense 21,913 — 21,913 Amortization of deferred financing costs 171,081 2,850 173,931 Total interest expense $ 1,376,272 $ 43,099 $ 1,419,371 14 Index 8. COMMITMENTS AND CONTINGENCIES As of June 30, 2026 and December 31, 2025, the Company had the following commitments to fund various investments: As of June 30, 2026 As of December 31, 2025 Total loan commitments $ 377,421,670 $ 420,707,524 Less: drawn commitments ( 298,513,237 ) ( 305,440,623 ) Total undrawn commitments $ 78,908,433 $ 115,266,901 The Company from time to time may be a party to litigation in the normal course of business. The Company investigates these claims as they arise. If the potential loss from any claim or legal claim is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. As of June 30, 2026, the Company was not aware of any legal claims that could materially impact its business, financial condition or results of operations. 9. SHAREHOLDERS’ EQUITY Preferred Stock As of June 30, 2026 and December 31, 2025, the Company was authorized to issue up to 10,000 shares of Preferred Stock, par value $ 0.01 per share (the “Preferred Stock”), respectively, of which none have been issued. The Board of Directors has the authority, without action by our shareholders, to issue up to 10,000 shares of Preferred Stock in one or more series or classes and to designate the rights, preferences and privileges of each series or class, which may be greater than the rights of Common Stock. There were no shares of Preferred Stock designated or outstanding as of June 30, 2026 and December 31, 2025, respectively. Common Stock As of June 30, 2026 and December 31, 2025, the Company was authorized to issue up to 50,000,000 shares of Common Stock, respectively, and issued 13,517,402 and 13,420,986 shares of Common Stock, respectively. Shelf Registration Statement On August 1, 2025, the Company 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, the Company may, from time to time, issue and sell up to $ 500.0 million of the Company’s common stock, preferred stock, debt securities, warrants and rights (including as part of a unit) to purchase shares of the Company’s common stock or preferred stock. On January 29, 2025, the Company completed a registered public offering of common stock at a public offering price of $ 12.00 per share (the “January 2025 Offering”), including a partial exercise of the underwriters’ over-allotment option. In aggregate, the Company issued 6,400,000 shares and received total net proceeds of approximately $ 70.8 million after underwriting discounts and offering expenses. At-the-Market Offering Program (“ATM Program”) On August 13, 2025, the Company entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) by and among the Company, SUNS Manager and Raymond James & Associates, Inc. (the “Sales Agent”) under which the Company may, from time to time, offer and sell shares of common stock, having an aggregate offering price of up to $ 50.0 million. Under the terms of the Equity Distribution Agreement, the Company has agreed to pay the Sales Agents a commission of up to 2.0 % of the gross sales price of common stock sold through the Sales Agents. Sales of common stock, if any, may be made in transactions that are deemed to be “at-the-market” offerings, as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the “Securities Act”). There were no shares issued under the ATM Program during the six months ended June 30, 2026. 15 Index Dividend Reinvestment Plan On September 3, 2025, the Company established a dividend reinvestment plan (“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). The Company may issue up to 1,000,000 shares of common stock under the DRIP. There were no shares issued under the DRIP during the six months ended June 30, 2026. Stock Incentive Plan The Company maintains the 2024 Stock Incentive Plan (the “2024 Plan”), which provides for the grant of stock options, stock appreciation rights, restricted stock, stock bonuses, stock units and other forms of awards granted or denominated in the Company’s Common Stock or units of Common Stock. The 2024 Plan is intended to provide flexibility to offer competitive incentives and to tailor benefits to specific needs and circumstances. Any award may be structured to be paid or settled in cash. The Company has granted, and currently intends to continue to grant, restricted stock awards to participants in the 2024 Plan, but it may also grant any other type of award available under the 2024 Plan in the future. Persons eligible to receive awards under the 2024 Plan include officers or employees of the Company or any of its subsidiaries, directors of the Company, employees of the Manager and certain directors, consultants and other service providers to the Company or any of its subsidiaries. During the six months ended June 30, 2026 , the Company’s Board of Directors approved grants of restricted stock to the Company’s directors and certain officers, as well as certain employees of the Manager or its affiliates, with an aggregate of 98,669 shares of restricted stock granted to such eligible persons. The restricted stock awards granted during the six months ended June 30, 2026 under the 2024 Plan contain vesting periods that vary from immediately, vesting over a one-year period, and vesting over a three-year period, with approximately 33 % vesting on each of the first, second and third anniversaries of the vesting commencement date. During the six months ended June 30, 2025, the Company’s Board of Directors approved grants of restricted stock to the Company’s directors and certain officers, as well as certain employees of the Manager or its affiliates, with an aggregate of 19,625 shares of restricted stock granted to such eligible persons. The restricted stock awards granted in February 2025 under the 2024 Plan vest over a three-year period, with approximately 33 % vesting on each of the first, second and third anniversaries of the vesting commencement date. As of June 30, 2026 , there were 228,370 shares of restricted stock granted under the 2024 Plan. As of June 30, 2026 , the maximum number of shares of the Company’s Common Stock that may be delivered pursuant to awards under the 2024 Plan (the “Share Limit”) equaled 1,191,122 shares, of which 962,752 shares remained available for future issuance under the 2024 Plan. Stock Compensation The following table summarize s the stock-based compensation expense incurred by the Company for the three and six months ended June 30, 2026 and 2025: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Stock-based compensation $ 297,484 $ 259,066 $ 667,446 $ 502,687 16 Index Restricted Stock The following table summarizes restricted stock (i) converted, (ii) granted, (iii) vested and (iv) forfeited for the Company’s directors and officers and employees of the Manager as of June 30, 2026 and December 31, 2025: As of June 30, 2026 December 31, 2025 Converted 88,685 88,685 Granted 233,938 135,269 Vested ( 130,131 ) ( 76,350 ) Forfeited ( 5,568 ) ( 3,315 ) Balance 186,924 144,289 The fair value of the Company’s restricted stock awards is based on the Company’s stock price on the date of grant. The following tables summarize the restricted stock activity as of and during the six months ended June 30, 2026: Number of shares of restricted stock Weighted-average grant date fair value Balance as of December 31, 2025 144,289 $ 12.88 Granted 98,669 9.34 Vested ( 53,781 ) 11.79 Forfeited ( 2,253 ) 9.34 Balance as of June 30, 2026 186,924 $ 11.37 The total fair value of shares vested during the six months ended June 30, 2026 was approximately $ 0.6 million. During the six months ended June 30, 2025, 19,625 shares of restricted stock were granted with a weighted-average grant date fair value of $ 11.78 . During the six months ended June 30, 2025, 34,671 shares of restricted stock vested with a weighted-average grant date fair value of $ 13.13 . The total fair value of shares vested during the six months ended June 30, 2025 was approximately $ 0.5 million. As of June 30, 2026 , there was approximately $ 1.5 million of total unrecognized compensation cost related to non-vested restricted stock. That cost is expected to be recognized over a weighted-average period of 1.76 years. 10. EARNINGS PER SHARE The following information sets forth the computations of basic and diluted earnings per common share for the three and six months ended June 30, 2026 and 2025 : Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Net income $ 3,076,025 $ 3,358,314 $ 7,329,375 $ 6,457,751 Dividends paid on unvested restricted stock ( 57,623 ) ( 55,701 ) ( 100,910 ) ( 141,181 ) Net income attributable to common shareholders 3,018,402 3,302,613 7,228,465 6,316,570 Divided by: Basic weighted average shares of common stock outstanding 13,329,968 13,235,823 13,324,626 12,227,520 Weighted average unvested restricted stock 16,407 23,939 11,196 17,608 Diluted weighted average shares of common stock outstanding 13,346,375 13,259,762 13,335,822 12,245,128 Basic earnings per common share $ 0.23 $ 0.25 $ 0.54 $ 0.52 Diluted earnings per common share $ 0.23 $ 0.25 $ 0.54 $ 0.52 17 Index Diluted earnings per common share was computed using the treasury stock method for restricted stock. Diluted earnings per common share excluded 95,475 and 81,850 weighted average shares of unvested restricted stock due to anti-dilutive effect for the three and six months ended June 30, 2026, respectively, and 108,488 and 115,125 for the three and six months ended June 30, 2025, respectively . 11. INCOME TAX The Company elected to be taxed as a REIT for U.S. federal income tax purposes, commencing with the taxable year ending December 31, 2024. The Company believes that we have been organized in conformity with the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws, and that our method of operation enables us to satisfy the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws for such taxable year and thereafter. So long as the Company qualifies for taxation as a REIT, the Company generally will not be subject to U.S. federal income tax on the portion of our taxable income or capital gain that is distributed to shareholders annually. The Company had no income tax provision for the three and six months ended June 30, 2026 and 2025. For the three and six months ended June 30, 2026 and 2025, the Company incurred no expense for U.S. federal excise tax. Excise tax represents a 4 % tax on the sum of a portion of the Company’s ordinary income and net capital gains not distributed during the period. If it is determined that an excise tax liability exists for the current period, the Company will accrue excise tax on estimated excess taxable income as such taxable income is earned. The expense is calculated in accordance with applicable tax regulations. The Company does not have any unrecognized tax benefits and the Company does not expect that to change in the next 12 months. 12. FAIR VALUE Fair Value of Financial Instruments GAAP requires disclosure of fair value information about financial instruments, whether or not recognized at fair value in the balance sheets, for which it is practicable to estimate that value. The following table details the carrying value and fair value of the Company’s financial instruments not recognized at fair value in the unaudited interim balance sheets as of June 30, 2026 : As of June 30, 2026 Carrying Value Fair Value Financial assets: Cash and cash equivalents $ 5,593,575 $ 5,593,575 Loans held for investment, net $ 296,753,498 $ 296,694,357 Investment in unconsolidated real estate joint venture $ 25,925,934 $ 25,935,000 Cash and cash equivalents have a carrying value which approximates their fair value due to the short-term nature of these instruments. The Company categorizes the fair value measurement of these assets as Level 1. The Company’s loans held for investment and its investment in unconsolidated real estate joint venture are measured using unobservable inputs, or Level 3 inputs. 13. RELATED PARTY TRANSACTIONS Management Agreement On February 22, 2024, the Company entered into a management agreement (the “Management Agreement”) with SUNS Manager, effective upon the listing of the Company’s common stock. Following the listing of the Company’s Common Stock on July 9, 2024, the Company became managed by its Board of Directors and executive officers and by SUNS Manager, pursuant to the Management Agreement. 18 Index Pursuant to the Management Agreement, the Manager manages the Company’s investment activities and day-to-day operations, subject at all times to the further terms and conditions set forth in the Management Agreement and such further limitations or parameters as may be imposed from time to time by the Board of Directors. The Manager receives base management fees (the “Base Management Fees”), calculated and payable quarterly in arrears, equal to 0.375 % of the Company’s Equity (as defined in the Management Agreement), subject to certain adjustments, less 50 % of the aggregate amount of any other fees (“Outside Fees”), including any agency fees relating to the Company’s loans, but excluding the Incentive Compensation (as defined below) and any diligence fees paid to and earned by the Manager and paid by third parties in connection with the Manager’s due diligence of potential loans. Base Management Fees incurred for the three and six months ended June 30, 2026 were approximately $ 0.7 million and $ 1.4 million, respectively. Base Management Fees incurred for the three and six months ended June 30, 2025 were approximately $ 0.7 million and $ 1.3 million, respectively. As discussed under “Fee Waiver” below, the Manager waived approximately $ 7.3 thousand and $ 0.6 million of Base Management Fees for the three and six months ended June 30, 2025, respectively. In addition to the Base Management Fees, the Manager is entitled to receive incentive compensation (the “Incentive Compensation” or “Incentive Fees”) with respect to each fiscal quarter (or portion thereof that the Management Agreement is in effect) based upon the Company’s achievement of targeted levels of Core Earnings. “Core Earnings” is defined in the Management Agreement as, for a given period, the net income (loss) for such period, computed in accordance with GAAP, excluding (i) non-cash equity compensation expense, (ii) Incentive Compensation, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other non-cash items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income and (v) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between the Manager and the Company’s independent directors and approval by a majority of the independent directors. Incentive Fees incurred for the three and six months ended June 30, 2026 were approximately $ 0.2 million and $ 1.1 million, respectively. Incentive Fees incurred for the three and six months ended June 30, 2025 were approximately $ 0.2 million and $ 0.5 million, respectively. As discussed under “Fee Waiver” below, the Manager waived approximately $ 0.2 million and $ 0.5 million of Incentive Fees for the three and six months ended June 30, 2025, respectively. Fee Waiver From time to time, the Manager may waive fees it would otherwise be entitled to under the terms of the Management Agreement. The Manager agreed to waive (i) the inclusion of the net proceeds from the January 2025 Offering in the Company’s Equity for purposes of calculating the management fee until the earlier of (a) December 31, 2025 and (b) the quarter in which the total amount of the net proceeds of the January 2025 Offering have been utilized to fund loans in our portfolio and (ii) an additional $ 1.0 million in fees. For the three and six months ended June 30, 2026 , no Base Management Fees or Incentive Fees were waived. For the three and six months ended June 30, 2025 , Base Management Fees waived were $ 7.3 thousand and $ 0.6 million, respectively, and Incentive Fees waived were $ 0.2 million and $ 0.5 million, respectively . Administrative Services Agreement In July 2024, SUNS Manager entered into the Administrative Services Agreement with TCG Services LLC, an affiliate of SUNS Manager. The Administrative Services Agreement sets forth the terms on which TCG Services LLC will provide SUNS certain administrative services, including providing personnel, office facilities, information technology and other equipment and legal, accounting, human resources, clerical, bookkeeping and record keeping services at such facilities as well as other services. Services Agreement In July 2024, SUNS Manager entered into a Services Agreement with SRT Group LLC, an affiliate of SUNS Manager and certain officers. The Services Agreement sets forth the terms on which SRT Group LLC will provide SUNS the services of its investment personnel. The Company is required to pay all of its allocable costs and expenses and reimburse the Manager or its affiliates for such expenses paid or incurred on behalf of the Company by the Manager or its affiliates, excepting only those expenses that are specifically the responsibility of the Manager pursuant to the Management Agreement. 19 Index The following table summarizes the related party costs incurred by the Company for the three and six months ended June 30, 2026 and 2025 : Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Affiliate costs Base management fees, net of waivers $ 695,302 $ 689,140 $ 1,393,906 $ 689,140 Incentive fees earned, net of waivers 183,693 — 1,120,225 — General and administrative expenses reimbursable to Manager 692,677 532,262 1,304,918 1,144,827 Professional fees reimbursable to Manager 37,219 12,905 54,442 17,894 Total $ 1,608,891 $ 1,234,307 $ 3,873,491 $ 1,851,861 Amounts payable to the Manager as of June 30, 2026 and December 31, 2025 were approximately $ 1.8 million and $ 1.0 million , respectively, and are recorded within accrued management and incentive fees and accrued direct administrative expenses in the Company’s consolidated Balance Sheets. The Manager is beneficially owned by certain officers and directors as of the date of this Quarterly Report on Form 10-Q. Investments in Loans and Unconsolidated Real Estate Joint Venture From time to time, the Company may co-invest with other investment vehicles managed by the SUNS Manager or its affiliates, including by means of splitting loans, participating in loans or other means of syndicating loans. The Company is not obligated to provide, nor has it provided, any financial support to the other managed investment vehicles. As such, the Company’s risk is limited to the carrying value of its investment in any such loan. Additionally, SUNS Manager or its affiliates, including TCG RE Agent, may from time to time serve as administrative and collateral agents to the lenders under the loans in the Company’s portfolio. As of June 30, 2026, there were 14 co-invested loans held by the Company and affiliates of the Company. In March 2026, in connection with the foreclosure of the San Antonio Loan, the Company formed a joint venture with an affiliate co-lender to acquire the underlying hotel property. The Company holds a 65.0 % ownership interest in the joint venture. Refer to Note 6 for more information. Unsecured Revolving Credit Facility with Affiliate The Company maintains an unsecured revolving credit facility with SRT Finance LLC, an affiliate of the Company. Refer to Note 7 for more information. 14. DIVIDENDS AND DISTRIBUTIONS The following table summarizes the Company’s dividends declared during the six months ended June 30, 2026 and 2025 : Declaration Date Record Date Payment Date Per Common Share Distribution Amount Total Distribution Amount Regular cash dividend 3/4/2025 3/31/2025 4/15/2025 $ 0.30 $ 4,026,448 Regular cash dividend 6/13/2025 6/30/2025 7/15/2025 0.30 4,026,353 2025 Period Subtotal $ 0.60 $ 8,052,801 Regular cash dividend 3/10/2026 3/31/2026 4/15/2026 $ 0.30 $ 4,055,897 Regular cash dividend 6/15/2026 6/30/2026 7/15/2026 $ 0.30 $ 4,055,220 2026 Period Subtotal $ 0.60 $ 8,111,117 20 Index 15. REPORTABLE SEGMENTS ASC 280, Segment Reporting, establishes standards for reporting financial and descriptive information about an enterprise’s reportable segments. The Company is an institutional lender that provides debt capital solutions to CRE markets in the Southern United States , with a primary focus on opportunities in Arizona, Florida, Georgia, Nevada, North Carolina, South Carolina, Tennessee and Texas. The Company generates revenue from 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. The accounting policies of the institutional lending segment are the same as those described in the summary of significant accounting policies. The presentation of financial results as one reportable segment is consistent with the way the Company operates its business and is consistent with the manner in which the Company’s Chief Operating Decision Maker (“CODM”), the Company’s Chief Executive Officer, evaluates performance and makes resource and operating decisions for the business. The Company has no operations outside of the United States. The Company’s portfolio exhibits similar economic characteristics, similar yields and is operated using consistent business strategies. The Company operates as one operating segment and has one reportable operating segment for activities related to institutional lending. The CODM assesses performance and evaluates the allocation of resources of the Company on a consolidated basis, based on the Company’s net income, which is reported on the Company’s consolidated statements of operations. The CODM is regularly provided with only the consolidated expenses, as noted on the consolidated statement of operations. Significant segment expenses are listed on the accompanying consolidated statement of operations. The measure of segment assets is reported on the consolidated balance sheets as total assets. The CODM uses net income to evaluate income generated from segment assets and in deciding the amount of dividends to be distributed, as well as using net income as a basis for evaluating lender terms for CRE loans with borrowers and sponsors. Interest income earned on the Company’s portfolio was concentrated with two borrowers each comprising more than 10% of consolidated interest income for an aggregate amount of $ 3.0 million, or 35 %, of consolidated interest income during the three months ended June 30, 2026. Interest income earned on the Company’s portfolio was concentrated with six borrowers each comprising more than 10% of consolidated interest income for an aggregate amount of $ 5.7 million, or 85 %, of consolidated interest income during the three months ended June 30, 2025. Interest income earned on the Company’s portfolio was concentrated with three borrowers each comprising more than 10% of consolidated interest income for an aggregate amount of $ 7.7 million, or 41 %, of consolidated interest income during the six months ended June 30, 2026. Interest income earned on the Company’s portfolio was concentrated with five borrowers each comprising more than 10% of consolidated interest income for an aggregate amount of $ 8.8 million, or 75 %, of consolidated interest income during the six months ended June 30, 2025. 16. SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date the consolidated financial statements were available to be issued. There were no material subsequent events, other than those described below, that required disclosure in these unaudited interim financial statements. On July 17, 2026, the Company’s senior term loan and a residential development project revolver for various residential development projects in Palm Beach Gardens, FL, were repaid in full. The outstanding principal balances of the senior term loan and residential development project revolver, on the date of repayment were approximately $ 31.6 million and $ 23.8 million, respectively. In connection with the repayment, the Company recognized approximately $ 0.2 million of default interest and breakage fees. On May 21, 2026, the Company, through its investment in the Lex Ave JV, entered into a definitive agreement (the “Agreement”) to sell its San Antonio hotel property for a purchase price of $ 41.0 million, subject to closing costs and other transaction expenses, and customary closing conditions. Based on the Company's 65.0 % ownership interest in the Lex Ave JV, the Company expects to receive consideration of approximately $ 26.7 million, subject to its proportionate share of such closing costs and transaction expenses. Under the terms of the Agreement, the purchaser paid a $ 4.0 million earnest money deposit upon execution of the agreement, with the remaining purchase price to be funded at closing through approximately $ 5.0 million of purchaser cash and a $ 32.0 million senior secured loan to be originated by the Company and its affiliate co-lender in proportion to their respective ownership interests in the Lex Ave JV, with the Company owning 65.0 %. 21 Index On July 30, 2026, the Company, through its investment in the Lex Ave JV, entered into an amendment to the Agreement granting the purchaser an exclusive option to acquire the San Antonio hotel property on or before September 30, 2026. In connection with the amendment, the $ 4.0 million earnest money deposit was released and the purchaser made an additional $ 2.0 million payment, with the remaining purchase price expected to be funded at closing through $ 3.0 million of purchaser cash and a $ 32.0 million senior secured loan from the Company and its affiliate co-lender. No assurance can be given that the transaction will close on the currently contemplated terms, or at all. See Note 6 for additional information regarding the Lex Ave JV, the Lex Ave Hotel Foreclosure, and related accounting treatment. On August 5, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which the Company will acquire Southern Realty Trust Inc. (“SRT”), subject to the approval of its stockholders and the approval of the SRT stockholders. Under the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of SRT common stock will be converted into the right to receive the following: (i) 1.45 shares, or approximately 8.4 million shares in aggregate, of the Company’s common stock; and (ii) from the Manager, an amount in cash per share equal to $ 0.05 . Further, in the Merger Agreement, the Company has agreed to take all necessary corporate action so that upon and after the effective time of the Merger, the size of its Board of Directors will be increased by one member (the “SRT Director Designee”). The SRT Director Designee will be appointed to the Company’s Board of Directors. 22 Index