What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-14 · 321 added, 196 removed, 246 unchanged (68% of the section changed)

2 unchanged sentences

BALANCE SHEETS

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Loans held for investment at carrying value, net $ 96,405,746 $ —

Current expected credit loss reserve ( 37,421 ) —

Loans held for investment at carrying value, net of current expected credit loss reserve 37,555,803 —

Cash and cash equivalents 70,171,119 31,244,622

2 unchanged sentences

Total assets $ 167,834,524 $ 31,244,622

Due to affiliate $ 2,274 $ —

Accrued interest $ 43,197 $ —

Dividends payable 4,362,999 —

Current expected credit loss reserve 24,327 —

Accrued management and incentive fees 422,238 —

Accrued direct administrative expenses 487,870 —

Accounts payable and other liabilities 355,083 10,000

Line of credit payable to affiliate 50,000,000 —

Total liabilities 55,695,714 10,000

Commitments and contingencies (Note 7)

Shareholder’s equity

Shareholders' equity

Member's equity — 31,234,622

Preferred stock, par value $ 0.01 per share, 10,000 and 0 shares authorized at June 30, 2024 and December 31, 2023, respectively, and 0 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Common stock, par value $ 0.01 per share, 50,000,000 and 0 shares authorized at June 30, 2024 and December 31, 2023, respectively, and 100 and 0 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Preferred stock, par value $ 0.01 per share, 10,000 and 0 shares authorized at September 30, 2024 and December 31, 2023 and 0 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Common stock, par value $ 0.01 per share, 50,000,000 and 0 shares authorized at September 30, 2024 and December 31, 2023 and 6,925,395 and 0 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 114,844,562 —

Accumulated earnings (deficit) 3,510,710 —

Total shareholder’s equity

48,910,710 31,234,622

Total liabilities and shareholder’s equity

$ 49,481,076 $ 31,244,622

Accumulated (deficit) earnings ( 2,775,006 ) —

Total shareholders' equity 112,138,810 31,234,622

Total liabilities and shareholders' equity $ 167,834,524 $ 31,244,622

See accompanying notes to the financial statements

2 unchanged sentences

Three months ended

June 30, 2024

Six months ended

June 30, 2024

Interest income $ 1,979,576 $ 4,005,882

Total revenue

September 30, Period from August 28, 2023 to September 30, Nine months ended

September 30, Period from August 28, 2023 to September 30,

2024 2023 2024 2023

Interest income $ 3,220,930 $ 7,767 $ 7,226,812 $ 7,767

Interest expense ( 43,197 ) — ( 43,197 ) —

Net interest income 3,177,733 7,767 7,183,615 7,767

Management and incentive fees 422,238 — 422,238 —

General and administrative expenses 572,249 — 593,817 —

Stock-based compensation 160,139 — 160,139 —

Professional fees 332,271 — 968,643 —

Total expenses 1,486,897 — 2,144,837 —

(Increase) decrease in provision for current expected credit losses ( 71,854 ) ( 71,854 )

Decrease (increase) in provision for current expected credit losses 47,527 — ( 24,327 ) —

Net income before income taxes 1,738,363 7,767 5,014,451 7,767

Income tax expense — — — —

Net income $ 1,738,363 $ 7,767 $ 5,014,451 $ 7,767

Earnings per common share:

Basic and diluted earnings per common share (in dollars per share) $ 0.22 $ 0.48

Basic earnings per common share $ 0.26 $ — $ 0.74 $ —

Diluted earnings per common share $ 0.25 $ — $ 0.73 $ —

Weighted average number of common shares outstanding:

Basic and diluted weighted average shares of common stock outstanding (in shares) 6,889,032 6,889,032

Basic weighted average shares of common stock outstanding 6,800,500 6,889,032 6,800,500 6,889,032

Diluted weighted average shares of common stock outstanding 6,825,905 6,889,032 6,825,905 6,889,032

See accompanying notes to the financial statements

SUNRISE REALTY TRUST, INC.

STATEMENTS OF SHAREHOLDER’S EQUITY

Three months ended June 30, 2024

Member's Equity Preferred Stock Common Stock Additional Paid-In Capital Accumulated Earnings (Deficit) Total Shareholder's Equity

STATEMENTS OF SHAREHOLDERS’ EQUITY

Three months ended September 30, 2024

Member's Equity Common Stock Additional Paid-In Capital Accumulated Earnings (Deficit) Total Shareholders' Equity

Shares Amount

Balance as of March 31, 2024 $ — $ — 100 $ 1 $ 45,399,999 $ 1,996,967 $ 47,396,967

Net income — — — — — 1,513,743 1,513,743

Balance as of June 30, 2024 $ — 100 $ 1 $ 45,399,999 $ 3,510,710 $ 48,910,710

Six months ended June 30, 2024

Member's Equity Preferred Stock Common Stock Additional Paid-In Capital Accumulated Earnings (Deficit) Total Shareholder's Equity

Stock-based compensation — 36,363 364 148,275 — 148,639

Dividends declared on common shares ($ 0.63 per share)

— — — — ( 4,362,999 ) ( 4,362,999 )

Issuance of common stock in connection with the Spin-Off — 6,888,932 68,889 69,296,288 — 69,365,177

Net transfers and distributions (to) from Former Parent — — — — ( 3,661,080 ) ( 3,661,080 )

Net income — — — — 1,738,363 1,738,363

Balance as of September 30, 2024 $ — 6,925,395 $ 69,254 $ 114,844,562 $ ( 2,775,006 ) $ 112,138,810

Period from August 28, 2023 to September 30, 2023

Member's Equity Common Stock Additional Paid-In Capital Accumulated Earnings (Deficit) Total Shareholders' Equity

Shares Amount

Balance as of August 28, 2023 $ — — $ — $ — $ — $ —

Net transfers and distributions from (to) Former Parent 21,000,000 — — — — 21,000,000

Net income 7,767 — — — — 7,767

Balance as of September 30, 2023 $ 21,007,767 — $ — $ — $ — $ 21,007,767

See accompanying notes to the financial statements

SUNRISE REALTY TRUST, INC.

STATEMENTS OF SHAREHOLDERS’ EQUITY

Nine months ended September 30, 2024

Member's Equity Common Stock Additional Paid-In Capital Accumulated Earnings (Deficit) Total Shareholders' Equity

Shares Amount

Balance as of December 31, 2023 $ 31,234,622 — $ — $ — $ — $ 31,234,622

Capital Contributions — — — — 17,000,000 — 17,000,000

Distributions — — — — ( 2,600,000 ) — ( 2,600,000 )

Effect of corporate conversion on member's equity ( 31,234,622 ) 100 1 30,999,999 234,622 —

Stock-based compensation — 36,363 364 148,275 — 148,639

Dividends declared on common shares ($ 0.63 per share)

— — — — ( 4,362,999 ) ( 4,362,999 )

Issuance of common stock in connection with the Spin-Off — 6,888,932 68,889 69,296,288 — 69,365,177

Net transfers and distributions from (to) Former Parent — — — 14,400,000 ( 3,661,080 ) 10,738,920

Net income — — — — 5,014,451 5,014,451

Balance as of June 30, 2024 $ — $ — 100 $ 1 $ 45,399,999 $ 3,510,710 $ 48,910,710

Balance as of September 30, 2024 $ — 6,925,395 $ 69,254 $ 114,844,562 $ ( 2,775,006 ) $ 112,138,810

Period from August 28, 2023 to September 30, 2023

Member's Equity Common Stock Additional Paid-In Capital Accumulated Earnings (Deficit) Total Shareholders' Equity

Shares Amount

Balance as of August 28, 2023 $ — — $ — $ — $ — $ —

Net transfers and distributions from (to) Former Parent 21,000,000 — — — — 21,000,000

Net income 7,767 — — — — 7,767

Balance as of September 30, 2023 $ 21,007,767 — $ — $ — $ — $ 21,007,767

See accompanying notes to the financial statements

1 unchanged sentence

STATEMENT OF CASH FLOWS

Six months ended

June 30, 2024

Nine months ended

September 30, Period from August 28, 2023 to September 30,

Operating activities:

3 unchanged sentences

Accretion of deferred loan original issue discount and other discounts ( 114,395 ) —

Stock-based compensation 148,639 —

Interest drawn on loans ( 2,428,444 ) —

Changes in operating assets and liabilities:

1 unchanged sentence

Prepaid expenses and other assets ( 250,339 ) —

Accrued interest 43,197 —

Accrued management and incentive fees 422,238 —

Accrued direct administrative expenses 487,870 —

Accounts payable and other liabilities 345,083 —

3 unchanged sentences

Principal repayment of loans 24,912,673 —

Net cash provided by (used in) investing activities ( 37,557,988 )

Net cash (used in) provided by investing activities ( 93,862,907 ) —

Cash flows from financing activities:

Proceeds from capital contributions 17,000,000

Distributions ( 2,600,000 )

Net transfers and distributions from (to) Former Parent 80,104,097 21,000,000

Borrowings on revolving credit facility 50,000,000 —

Net cash provided by (used in) financing activities 130,104,097 21,000,000

Net (decrease) increase in cash and cash equivalents ( 19,959,576 )

Net increase (decrease) in cash and cash equivalents 38,926,497 21,007,767

Cash and cash equivalents, beginning of period 31,244,622 —

2 unchanged sentences

OID withheld from funding of loans $ 1,255,761 $ —

Dividends declared and not yet paid $ 4,362,999 $ —

Supplemental information:

4 unchanged sentences

NOTES TO THE FINANCIAL STATEMENTS

As of June 30, 2024

As of September 30, 2024

Sunrise Realty Trust, Inc.

(the “Company” or “SUNS”) (f/k/a CRE South LLC) was formed on August 28, 2023, and converted from a Delaware limited liability company to a Maryland corporation in February 2024.

As of June 30, 2024 , SUNS was a wholly-owned subsidiary of AFC Gamma, Inc.

(“AFC Gamma”) and an institutional lender to the commercial real estate sector.

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”), to provide debt capital solutions to commercial real estate markets in the Southern United States.

SUNS focuses on originating, underwriting and managing commercial real estate (“CRE”) debt investments and providing capital to high-quality borrowers and sponsors with transitional business plans collateralized by CRE assets with opportunities for near-term value creation, as well as recapitalization opportunities.

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

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

On February 22, 2024, AFC Gamma announced that its Board unanimously approved a plan to spin-off AFC Gamma’s CRE portfolio into an independent, publicly traded company, SUNS (the “Spin-Off”).

SUNS intends to elect to be taxed as a real estate investment trust (“REIT”) for United States federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the taxable year ending December 31, 2024.

The Spin-Off was effected by the transfer of AFC Gamma’s CRE portfolio from AFC Gamma to SUNS and the distribution of all of the outstanding shares of SUNS’ common stock, par value $ 0.01 per share (the “Common Stock”) to all of AFC Gamma’s shareholders of record as of the close of business on July 8, 2024 (the “Record Date”).

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

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

The Company is an institutional lender that provides debt capital solutions to the commercial real estate (“CRE”) market in the Southern United States.

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 create a diversified 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.

The Company conducts its business through the parent company, Sunrise Realty Trust, Inc., and several subsidiaries.

The Company consolidates all of its subsidiaries under generally accepted accounting principles in the United States of America (“GAAP”).

The Company intends to elect 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.

On July 9, 2024, Advanced Flower Capital Inc.

(f/k/a AFC Gamma, Inc.) (“AFC” or the “Former Parent”) announced the completion of the previously announced separation and spin-off of AFC’s CRE portfolio into an independent, publicly traded company, SUNS (the “Spin-Off”).

The Spin-Off was effected by the transfer of AFC’s CRE portfolio from AFC to SUNS and the distribution of all of the outstanding shares of SUNS’ common stock, par value $ 0.01 per share (the “Common Stock”) to all of AFC’s shareholders of record 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 SUNS Common Stock for every three shares of AFC common stock held as of the Record Date.

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

On the Distribution Date, SUNS became an independent, publicly traded company, trading on the Nasdaq Capital Market under the symbol “SUNS”.

AFC Gamma retained no ownership interest in the Company following the Spin-Off.

SUNS has historically operated as a part of AFC Gamma;

consequently, stand-alone financial statements have not historically been prepared.

In connection with the Spin-Off, the Company entered into several agreements with AFC Gamma that govern the relationship between the Company and AFC Gamma following the Spin-Off, including the Separation and Distribution Agreement and the Tax Matters Agreement.

These agreements provide for the allocation between AFC Gamma and SUNS of the assets, liabilities and obligations (including, among others, investments, property and tax-related assets and liabilities) of AFC Gamma and its subsidiaries attributable to periods prior to, at and after the Spin-Off.

AFC retained no ownership interest in the Company following the Spin-Off.

In connection with the Spin-Off, the Company entered into several agreements with AFC that govern the relationship between the Company and AFC following the Spin-Off, including the Separation and Distribution Agreement and the Tax Matters Agreement.

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

Moreover, in preparation for the Spin-Off, the management of SUNS entered into a new management agreement with SUNS Manager, which became effective concurrently with the completion of the Spin-Off.

The Manager also entered into an Administrative Services Agreement (the “Administrative Services Agreement”) with TCG Services LLC, an affiliate of the Manager and Leonard Tannenbaum, the Company’s Executive Chairman, and Robyn Tannenbaum, the Company’s President.

The Company operates in one operating segment and is primarily focused on originating CRE debt investments and providing capital to high-quality borrowers and sponsors with transitional business plans collateralized by CRE assets with opportunities for near-term value creation, as well as recapitalization opportunities.

The Company intends to create a diversified investment portfolio, targeting investments in senior mortgage loans, mezzanine loans, whole loans, B-notes, 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 communities, retail, office, hospitality, industrial, mixed use and specialty-use real estate.

The Company intends to elect to be taxed as a REIT for United States federal income tax purposes under the Code, commencing with the taxable year ending December 31, 2024.

The Manager also entered into (i) an Administrative Services Agreement (the “Administrative Services Agreement”) with TCG Services LLC, an affiliate of the Manager and Leonard Tannenbaum, the Company’s Executive Chairman, and Robyn Tannenbaum, the Company’s President, and (ii) a Services Agreement (the “Services Agreement”) with SRT Group LLC, an affiliate of the Manager, Mr.

Tannenbaum, Mrs.

Tannenbaum, Mr.

Sedrish and Mr.

SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited interim financial statements should be read in conjunction with the audited financial statements and the related management’s disclosure and analysis of financial condition and results of operations included in the Company’s final Information Statement included as Exhibit 99.1 to the Company’s Registration Statement on Form 10, initially filed on February 22, 2024, as amended, and declared effective July 2, 2024 (File No.

001-41971) by the U.S.

3 unchanged sentences

Basis of Presentation

The historical financial statements of SUNS are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

In accordance with GAAP, certain situations require management to make estimates based on judgments and assumptions, which may affect the reported amounts of assets and liabilities or contingent liabilities at the date of the financial statements.

They also may affect the reported amounts of expenses during the reporting periods.

Actual results could differ from those estimates upon subsequent resolution of identified matters.

The historical financial statements of SUNS are prepared from AFC Gamma’s historical accounting records and are presented on a standalone basis as if SUNS operations have been conducted independently from AFC Gamma.

Intracompany transactions have been eliminated.

Transactions between the Company and AFC Gamma have been included in these financial statements.

For those transactions between the Company and AFC Gamma that have been historically settled in cash, the Company has reflected such balances in the Balance Sheets as Due from Affiliates or Due to Affiliates.

The aggregate net effect of transactions between the Company and related parties that have been historically settled other than in cash are reflected in the Balance Sheets as Member’s Equity and Shareholder’s Equity and in the Statements of Cash Flows as Proceeds from Capital Contributions and Distributions.

For additional information, see Note 10, “Related Party Transactions,” and Note 6, “Shareholder’s Equity.”

The accompanying unaudited interim financial statements and related notes have been prepared on the accrual basis of accounting in conformity with GAAP and in conformity with the rules and regulations of the SEC applicable to interim financial information.

The unaudited interim 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.

The historical financial statements of the Company for the periods prior to the completion of the Spin-Off are prepared from AFC’s historical accounting records and are presented on a standalone basis as if the Company’s operations have been conducted independently from AFC.

The aggregate net effect of transactions between the Company and related parties that have been historically settled other than in cash are reflected in the Balance Sheets as Member’s Equity and Shareholder’s Equity and in the Statements of Cash Flows as Net Transfers and Distributions From (to) Former Parent.

For additional information, see Note 12, “Related Party Transactions,” and Note 8, “Shareholders’ Equity.”

The current period’s results of operations will not necessarily be indicative of results that ultimately may be realized for the year ending December 31, 2024.

Use of Estimates in the Preparation of Financial Statements

3 unchanged sentences

Recent Accounting Pronouncements

The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”).

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.

The Company has elected to take advantage of this extended transition period.

As a result, the Company 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 the Company’s financials to those of other public companies more difficult.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023 - 07— Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, early adoption is permitted.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024;

early adoption is permitted.

The amendments should be applied retrospectively to all prior period s presented in the financial statements.

10 unchanged sentences

LOANS HELD FOR INVESTMENT AT CARRYING VALUE

As of June 30, 2024 and December 31, 2023, t he Company’s portfolio included two and zero loans held at carrying value, respectively.

The aggregate originated commitment under these loans was approximately $ 57.7 million and zero , resp ectively, and outstanding principal was approximately $ 37.8 million and zero , respectively, as of June 30, 2024 and December 31, 2023.

During the six months ended June 30, 2024, the Company funded approximately $ 51.1 million of new loans and additional principal and had approximately $ 13.3 million of principal repayments of loans held at carrying value.

As of June 30, 2024 and December 31, 2023, approximately 43 % and zero , respectively, of the Company’s loans held at carrying value had floating interest rates.

As of June 30, 2024, t hese floating benchmark rates included one-month Secured Overnight Financing Rate (“SOFR”) subject to a floor of 4.0 % and quoted at 5.3 %.

The following table summarizes the Company’s loans held at carrying value as of June 30, 2024:

As of June 30, 2024

As of September 30, 2024 and December 31, 2023, t he Company’s portfolio included six and zero loans held at carrying value, respectively.

The aggregate originated commitment under these loans was approximately $ 121.6 million and zero , resp ectively, and outstanding principal was approximately $ 97.5 million and zero , respectively, as of September 30, 2024 and December 31, 2023.

During the nine months ended September 30, 2024, the Company funded approximately $ 122.5 million of new loans and additional principal and had approximately $ 24.9 million of principal repayments of loans held at carrying value.

As of September 30, 2024 and December 31, 2023, approximately 72 % and zero , respectively, of the Company’s loans held at carrying value had floating interest rates.

As of September 30, 2024, t hese floating benchmark rates included one-month Secured Overnight Financing Rate (“SOFR”) subject to a weighted average floor of 4.2 % and quoted at 4.8 %.

The following table summarizes the Company’s loans held at carrying value as of September 30, 2024:

As of September 30, 2024

Principal (1)

6 unchanged sentences

(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 June 30, 2024.

(2) Weighted average remaining life is calculated based on the carrying value of each respective group of loans as of September 30, 2024.

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

The following table presents changes in loans held at carrying value as of and for the six months ended June 30, 2024:

The following table presents changes in loans held at carrying value as of and for the nine months ended September 30, 2024:

Principal Original Issue

2 unchanged sentences

New fundings 120,031,341 ( 1,255,761 ) 118,775,580

Funded interest 2,428,444 — 2,428,444

Accretion of original issue discount — 114,395 114,395

Loan repayments ( 24,912,673 ) — ( 24,912,673 )

Total loans held at carrying value at June 30, 2024 $ 37,839,876 $ ( 246,652 ) $ 37,593,224

A more detailed listing of the Company’s loans held at carrying value portfolio based on information available as of June 30, 2024 is as follows:

Total loans held at carrying value at September 30, 2024 $ 97,547,112 $ ( 1,141,366 ) $ 96,405,746

A more detailed listing of the Company’s loans held at carrying value portfolio based on information available as of September 30, 2024 is as follows:

Loan Type Location Outstanding

Principal (1)

1 unchanged sentence

Rate Maturity

Mixed-use senior mortgage loan (Houston, TX) $ 16,209,825 $ — $ 16,209,825 20.0 % (4)

Senior mortgage loans:

Mixed-use Houston, TX $ 10,629,036 $ ( 56,668 ) $ 10,572,368 16.5 % (4)

2/26/2026 I/O

Residential subordinate debt (Sarasota, FL) 21,630,051 ( 246,652 ) 21,383,399 13.0 % (5)

Residential Austin, TX 12,079,636 ( 129,133 ) 11,950,503 9.1 % (5)

Hospitality San Antonio, TX 25,342,611 ( 257,833 ) 25,084,778 11.2 % (6)

Residential PBG, FL 18,262,152 ( 250,868 ) 18,011,284 13.1 % (7)

Residential PBG, FL 8,866,115 ( 221,354 ) 8,644,761 11.1 % (8)

Subordinate debt:

Residential Sarasota, FL 22,367,562 ( 225,510 ) 22,142,052 13.0 % (9)

5/12/2027 I/O

6 unchanged sentences

P/I loans may include interest-only periods for a portion of the loan term.

(4) Base weighted average interest rate of 14.7 % plus SOFR (SOFR floor of 4.0 %).

(4) Cash interest rate represents a blended rate of differing cash interest rates applicable to each of the senior and subordinate loans to which the Company is a lender under the credit agreements.

The subordinate loan component bears interest at a base interest rate of 15.31 % plus SOFR (SOFR floor of 4.0 %) and the senior loan component bears interest at a base interest rate of 3.48 % plus SOFR (SOFR floor of 4.0 %).

The subordinate loan component bears interest at a base interest rate of 15.31 % plus SOFR (SOFR floor of 2.42 %) and the senior loan component bears interest at a base interest rate of 12.50 %.

In August 2024, the Company and the borrower entered into an amendment to, among other things, (i) extend the maturity date on both loans from November 2024 to February 2026, (ii) modify the senior loan interest rate from floating ( 3.48 % plus SOFR, SOFR floor of 4.0 %) to fixed 12.5 % and (iii) include a $ 12.0 million upsize to the senior loan, of which the Company has commitments for $ 6.0 million and an affiliate co-investor has commitments for the rest.

(5) Base interest rate of 4.25 % plus SOFR (SOFR floor of 4.75 %).

(6) Base interest rate of 6.35 % plus SOFR (SOFR floor of 4.50 %).

(7) Base interest rate of 8.25 % plus SOFR (SOFR floor of 4.00 %).

(8) Base interest rate of 6.25 % plus SOFR (SOFR floor of 4.00 %).

(9) Base interest rate of 13.0 %.

CURRENT EXPECTED CREDIT LOSSES

The Company estimates its current expected credit losses (“CECL”) on both the outstanding balances and unfunded commitments on loans held for investment and requires consideration of a broader range of historical experience adjusted for current conditions and reasonable and supportable forecast information to inform the “CECL Reserve” using a model that considers multiple datapoints and methodologies that may include discounted cash flows (“DCF”) and other inputs, which may include the risk rating of the loan, how recently the loan was originated compared to the measurement date and expected prepayment, if applicable.

The Company estimates its current expected credit losses on both the outstanding balances and unfunded commitments on loans held for investment and requires consideration of a broader range of historical experience adjusted for current conditions and reasonable and supportable forecast information to inform the “CECL Reserve” using a model that considers multiple datapoints and methodologies that may include discounted cash flows (“DCF”) and other inputs, which may include the risk rating of the loan, how recently the loan was originated compared to the measurement date and expected prepayment, if applicable.

Calculation of the CECL Reserve requires loan specific data, which may include the fixed charge coverage ratio, loan-to-value ratio, property type and geographic location.

2 unchanged sentences

For loans where the Company has deemed the borrower/sponsor to be experiencing financial difficulty, the Company may elect to apply a practical expedient in which the fair value of the underlying collateral is compared to the amortized cost of the loan in determining a specific CECL allowance.

As of June 30, 2024 and December 31, 2023, the Company’s CECL Reserve for its loans held at carrying value is approximately $ 71.9 thousand and zero , respectively, or 0.19 % and zero , respectively, of the Company’s total loans held at carrying value of approximately $ 37.6 million and zero , respectively, and is bifurcated between the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value of approximately $ 37.4 thousand and zero , respectively, and a liability for unfunded commitments of approximately $ 34.4 thousand and zero , respectively.

As of September 30, 2024, the Company’s CECL Reserve for its loans held at carrying value is approximately $ 24.3 thousand, or 0.03 %, of the Company’s total loans held at carrying value of approximately $ 96.4 million, and is bifurcated between the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value of zero , and a liability for unfunded commitments of approximately $ 24.3 thousand.

The Company made its first investment in January 2024 and therefore did not have a CECL Reserve as of December 31, 2023.

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

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

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, 2024 was as follows:

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 nine months ended September 30, 2024 was as follows:

Outstanding (1)

Balance at March 31, 2024 $ — $ — $ —

Increase (decrease) in provision for current expected credit losses 37,421 34,433 71,854

Balance at June 30, 2024 $ 37,421 $ 34,433 $ 71,854

(Decrease) increase in provision for current expected credit losses ( 37,421 ) ( 10,106 ) ( 47,527 )

Write-offs — — —

Recoveries — — —

Balance at June 30, 2024 $ 37,421 $ 34,433 $ 71,854

Balance at September 30, 2024 $ — $ 24,327 $ 24,327

Outstanding (1)

3 unchanged sentences

Recoveries — — —

Balance at June 30, 2024 $ 37,421 $ 34,433 $ 71,854

(1) As of June 30, 2024, 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 balance sheets.

(2) As of June 30, 2024, 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 balance sheets.

Balance at September 30, 2024 $ — $ 24,327 $ 24,327

(1) As of September 30, 2024, 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 balance sheets.

(2) As of September 30, 2024, 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 balance sheets.

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.

Risk factors 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.

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:

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The risk ratings are primarily based on historical data as well as taking into account future economic conditions.

As of June 30, 2024, 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:

As of September 30, 2024, 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:

1 $ 10,572,368 $ 10,572,368

1 unchanged sentence

Total $ 96,405,746 $ 96,405,746

INTEREST RECEIVABLE

The following table summarizes the interest receivable for the Company as of September 30, 2024 and December 31, 2023:

September 30, 2024 As of

December 31, 2023

Interest receivable $ 983,034 $ —

Unused fees receivable 16,473 —

Other fees receivable 7,813 —

Total interest receivable $ 1,007,320 $ —

Revolving Credit Facility

In September 2024, the Company entered into an unsecured revolving credit agreement (the “Credit Agreement”), by and between the Company, as borrower, and SRT Finance LLC, as agent and lender.

SRT Finance LLC is indirectly owned by Leonard M.

Tannenbaum, Executive Chairman of the Company's Board of Directors and one of the Company's officers, and Robyn Tannenbaum, President of the Company, along with their family members and associated family trusts.

The Credit Agreement provides for an unsecured revolving credit facility (the “SRT Revolving Credit Facility”) with a $ 50.0 million commitment, which may be borrowed, repaid and redrawn, subject to a draw fee and the other conditions provided in the Credit Agreement.

Interest is payable on the SRT Revolving Credit Facility at 1-month SOFR (subject to a 3.0 % floor) plus a margin of 2.75 % ( 7.60 % at September 30, 2024 ), with a maturity date of December 31, 2025.

The Company did not incur any fees or costs related to the origination of the SRT Revolving Credit Facility, and the SRT Revolving Credit Facility does not have any unused fees.

As of September 30, 2024 , the Company drew on the full amount of the Revolving Credit Facility, resulting in $ 50.0 million in outstanding borrowings and zero available for borrowing.

Interest expense incurred for the three and nine months ended September 30, 2024 was approximately $ 43.2 thousand.

The borrowings were subsequently repaid on October 1, 2024.

The SRT Revolving Credit Facility was terminated on November 6, 2024.

COMMITMENTS AND CONTINGENCIES

As of June 30, 2024 and December 31, 2023, the Company had the following commitments to fund various investments:

June 30, 2024 As of

As of September 30, 2024 and December 31, 2023, the Company had the following commitments to fund various investments:

September 30, 2024 As of

December 31, 2023

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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, 2024, the Company is not aware of any legal claims that could materially impact its business, financial condition or results of operations.

As of September 30, 2024, the Company is not aware of any legal claims that could materially impact its business, financial condition or results of operations.

SHAREHOLDER’S EQUITY

Corporate Conversion

On February 20, 2024, the Company completed a corporate conversion, converting from a Delaware limited liability company to a Maryland corporation.

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Preferred Stock

As of June 30, 2024 and December 31, 2023, the Company authorized 10,000 and zero shares of preferred stock, par value $ 0.01 per share (the “Preferred Stock”), respectively, of which none have been issued.

The Company’s 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 SUNS’ Common Stock.

There were no shares of Preferred Stock designated or outstanding as of June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024 and December 31, 2023, the Company authorized 50,000,000 and zero shares of Common Stock, respectively, and issued 100 and zero of Common Stock, respectively.

On July 1, 2024, the SUNS Board approved a forward stock split of shares of the Company’s Common Stock, at a ratio of 68,890.32 -for-one (to be effected in the form of a stock dividend for purposes of the Maryland General Corporation Law), pursuant to which 68,890.32 additional shares of SUNS Common Stock shall be issued for each outstanding share of SUNS Common Stock (the “Forward Stock Split”), payable prior to the consummation of the Spin-Off.

The Forward Stock Split took effect immediately prior to the distribution of the shares of common stock of SUNS to the shareholders of AFC Gamma common stock.

As a result of the Forward Stock Split, the number of outstanding shares of SUNS Common Stock increased to 6,889,032 shares outstanding as of July 8, 2024.

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

AFC Gamma’s shareholders of record as of the Record Date received one share of SUNS Common Stock for every three shares of AFC Gamma common stock held as of the close of business July 8, 2024, the Record Date for the distribution, as well as a cash payment in lieu of any fractional shares.

The Spin-Off was completed July 9, 2024.

Immediately after the Spin-Off, the Company was no longer a wholly owned subsidiary of AFC Gamma.

As of September 30, 2024 and December 31, 2023, the Company authorized 10,000 and zero shares of Preferred Stock, par value $ 0.01 per share (the “Preferred Stock”), respectively, of which none have been issued.

The Company’s Board of Directors (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 SUNS’ Common Stock.

There were no shares of Preferred Stock designated or outstanding as of September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024 and December 31, 2023, the Company authorized 50,000,000 and zero shares of Common Stock, respectively, and issued 6,925,395 and zero shares of Common Stock, respectively.

On July 1, 2024, the Board of Directors approved a forward stock split of shares of the Company’s Common Stock, at a ratio of 68,890.32 -for-one (to be effected in the form of a stock dividend for purposes of the Maryland General Corporation Law), pursuant to which 68,890.32 additional shares of the Company’s Common Stock were issued for each outstanding share of the Company’s Common Stock (the “Forward Stock Split”), payable prior to the consummation of the Spin-Off.

The Forward Stock Split took effect immediately prior to the distribution of the shares of the Company’s common stock to the shareholders of AFC common stock.

As a result of the Forward Stock Split, the number of outstanding shares of the Company’s Common Stock increased to 6,889,032 shares outstanding as of July 9, 2024, of which 88,685 were restricted shares at the time of Spin-Off.

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

AFC’s shareholders of record as of the Record Date received one share of SUNS Common Stock for every three shares of AFC common stock held as of the close of business on July 8, 2024, the Record Date for the distribution, as well as a cash payment in lieu of any fractional shares.

The Spin-Off was completed on July 9, 2024.

Immediately after the Spin-Off, the Company was no longer a wholly owned subsidiary of AFC.

On July 9, 2024, AFC non-vested restricted stock awards that were outstanding on the Distribution Date were converted into AFC restricted stock awards and SUNS restricted stock awards.

Upon completion of the Spin-Off, the AFC restricted stock awards were converted into 88,685 shares of SUNS restricted stock.

The vesting schedule remains the same as the original awards.

Stock Incentive Plan

The Company has established the 2024 Stock Incentive Plan (the “2024 Plan”).

The 2024 Plan authorizes 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 retains 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.

In July 2024, the Board of Directors approved grants of 36,363 shares of restricted stock to Brian Sedrish in connection with his appointment as CEO, which vest over a three-year period with approximately 33 % vesting on each of the first, second and third anniversaries of July 9, 2024.

As of September 30, 2024 , there were 36,363 shares of restricted stock granted under the 2024 Plan.

As of September 30, 2024 , 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”) equals 551,122 shares.

Shares that are subject to or underlie awards that expire or, for any reason, are cancelled, terminated, forfeited, fail to vest or are not paid or delivered under the 2024 Plan will not be counted against the Share Limit and will again be available for subsequent awards under the 2024 Plan.

The stock-based compensation expense for the Company was approximately $ 0.2 million for the three and nine months ended September 30, 2024 and zero during the period from August 28, 2023 to September 30, 2023, respectively.

The following table summarizes restricted stock (i) converted upon Spin-Off, (ii) granted, (iii) vested and (iv) forfeited for the Company’s directors and officers and employees of the Manager as of September 30, 2024.

There was no stock award activity during the period from August 28, 2023 (date of formation) to December 31, 2023.

September 30, 2024

Converted upon Spin-Off 88,685

Granted 36,363

Vested ( 805 )

Balance 124,243

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 nine months ended September 30, 2024:

Number of shares of restricted stock Weighted-average

grant date fair value

Balance as of July 9, 2024 (1)

88,685 $ 13.00

Granted 36,363 13.75

Vested ( 805 ) 21.64

Forfeited — —

Balance as of September 30, 2024 124,243 $ 13.16

(1) Effective date of conversion upon Spin-Off.

The total fair value of shares vested during the three and nine months ended September 30, 2024 was approximately $ 11.8 thousand.

During the three months ended September 30, 2024 , 36,363 shares of restricted stock were granted with a weighted-average grant date fair value of $ 13.75 .

There were no shares of restricted stock that were granted or that vested during the period from August 28, 2023 to September 30, 2023.

As of September 30, 2024 , there was approximately $ 1.3 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 2.23 years.

EARNINGS PER SHARE

On July 8, 2024, the date of the Spin-Off, all of the outstanding shares of SUNS Common Stock were distributed to AFC Gamma’s shareholders of record as of the close of business on July 8, 2024 and AFC Gamma’s shareholders received one share of SUNS Common Stock for every three shares of AFC Gamma common stock held.

As a result, the number of outstanding shares of SUNS Common Stock increased to 6,889,032 shares outstanding as of July 8, 2024.

In connection with the Spin-Off, all of the outstanding shares of the Company’s Common Stock were distributed to AFC’s shareholders of record as of the close of business on July 8, 2024 and AFC’s shareholders received one share of the Company’s Common Stock for every three shares of AFC common stock held.

As a result, on July 9, 2024, the Company had 6,889,032 shares of Common Stock outstanding.

This share amount is utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Spin-Off.

For the three and six months ended June 30, 2024, these shares are treated as issued and outstanding for purposes of calculating historical earnings per share.

For periods prior to the Spin-Off, it is assumed that there are no dilutive equity instruments, as there were no equity awards of SUNS outstanding prior to the Spin-Off.

The following information sets forth the computations of basic and diluted weighted average earnings per common share for the three and six months ended June 30, 2024:

For periods prior to the Spin-Off, there were no dilutive equity instruments, as there were no equity awards of the Company outstanding prior to the Spin-Off.

After the Spin-Off, actual outstanding shares are used to calculate both basic and diluted weighted average number of common shares outstanding.

The following information sets forth the computations of basic and diluted weighted average earnings per common share for the three and nine months ended September 30, 2024 and for the period from August 28, 2023 to September 30, 2023 :

Three months ended

June 30, 2024

Six months ended June 30, 2024

September 30, Period from August 28, 2023 to September 30, Nine months ended

September 30, Period from August 28, 2023 to September 30,

2024 2023 2024 2023

Net income attributable to common shareholders $ 1,738,363 $ 7,767 $ 5,014,451 $ 7,767

Basic and diluted weighted average shares of common stock outstanding 6,889,032 6,889,032

Basic and diluted weighted average earnings per common share $ 0.22 $ 0.48

Historically, the Company was a wholly-owned subsidiary of AFC Gamma, and was a disregarded entity for tax purposes.

Basic weighted average shares of common stock outstanding 6,800,500 6,889,032 6,800,500 6,889,032

Weighted average unvested restricted stock 25,405 — 25,405 —

Diluted weighted average shares of common stock outstanding 6,825,905 6,889,032 6,825,905 6,889,032

Basic weighted average earnings per common share $ 0.26 $ — $ 0.74 $ —

Diluted weighted average earnings per common share $ 0.25 $ — $ 0.73 $ —

Diluted earnings per common share was computed using the treasury stock method for restricted stock.

Diluted weighted average earnings per common share excluded 33,998 and 33,998 weighted average unvested restricted stock due to anti-dilutive effect for the three and nine months ended September 30, 2024, respectively, and zero for the period from August 28, 2023 to September 30, 2023 .

Prior to the Spin-Off, the Company was a wholly-owned subsidiary of AFC, and was a disregarded entity for tax purposes.

As such, the Company did not file a tax return.

The Company’s entire share of taxable income or loss was previously included in the tax return of AFC Gamma.

The Company’s entire share of taxable income or loss was previously included in the tax return of AFC.

The Company was formed on August 28, 2023 and converted from a Delaware limited liability company to a Maryland corporation in February 2024.

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federal income tax on the portion of our taxable income or capital gain that is distributed to stockholders annually.

The income tax provision for the Company was zero for the three and six months ended June 30, 2024 .

For the three and six months ended June 30, 2024 , the Company incurred no expense for U.S.

The income tax provision for the Company was zero for the three and nine months ended September 30, 2024 .

For the three and nine months ended September 30, 2024 , the Company incurred no expense for U.S.

federal excise tax.

5 unchanged sentences

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 book 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, 2024 :

As of June 30, 2024

The following table details the book value and fair value of the Company’s financial instruments not recognized at fair value in the unaudited interim balance sheets as of September 30, 2024 :

As of September 30, 2024

Carrying Value Fair Value

5 unchanged sentences

RELATED PARTY TRANSACTIONS

As of June 30, 2024 , SUNS was a wholly-owned subsidiary of AFC Gamma and was externally managed and advised by AFC Management, LLC, (“AFCG’s Manager”), a registered investment adviser under the Advisers Act, and an affiliate of Leonard Tannenbaum, SUNS’ Executive Chairman, and Robyn Tannenbaum, SUNS’ President.

Each of the Company’s officers was employed by AFCG’s Manager and certain of the Company’s officers are members of AFCG’s Investment Committee.

Concurrent with the completion of the Spin-Off, SUNS is externally managed by SUNS Manager, an investment adviser with overlapping ownership to AFCG’s Manager and an affiliate of Mr.

Tannenbaum and Mrs.

Until the completion of the Spin-Off, there was no management fee or incentive fee incurred by the Company.

Management Agreement

On February 22, 2024, SUNS and its external manager, SUNS Manager, entered into a management agreement (the “Management Agreement”), effective upon the listing of SUNS Common Stock.

Following the completion of the Spin-Off, the Company is managed by its Board of Directors and the Company’s executive officers and by SUNS Manager, as provided for under our Management Agreement.

Pursuant to the Management Agreement, the Manager manages the loans and day-to-day operations of the Company, 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 Company’s Board.

On February 22, 2024, the Company and the Manager, entered into a management agreement (the “Management Agreement”), effective upon the listing of the Company’s Common Stock.

Following the completion of the Spin-Off on July 9, 2024, the Company is managed by its Board of Directors and the Company’s executive officers and by SUNS Manager, as provided for under our Management Agreement.

The Manager receives base management fees (the “Base Management Fees”) that are calculated and payable quarterly in arrears, in an amount 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.

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 approved by a majority of the independent directors.

There was no Incentive Compensation incurred for the three and nine months ended September 30, 2024 or during the period from August 28, 2023 to September 30, 2023.

Administrative Services Agreement

On July 8, 2024, SUNS Manager entered into the Administrative Services Agreement with TCG Services LLC, an affiliate of SUNS Manager, Mr.

In July 2024, SUNS Manager entered into the Administrative Services Agreement with TCG Services LLC, an affiliate of SUNS Manager, Mr.

Tannenbaum and Mrs.

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.

The Company shall pay all of its allocable costs and expenses or shall 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.

Due to Affiliate

Amounts due to an affiliate of the Company as of June 30, 2024 and December 31, 2023 were approximately $ 2.3 thousand and zero , respectively.

Services Agreement

In July 2024, SUNS Manager entered into a Services Agreement with SRT Group LLC, an affiliate of SUNS Manager, Mr.

Tannenbaum, Mrs.

Tannenbaum, Mr.

Sedrish and Mr.

The Services Agreement sets forth the terms on which SRT Group LLC will provide SUNS 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.

Until the completion of the Spin-Off, there were no Base Management Fees or Incentive Fees incurred by the Company.

The following table summarizes the related party costs incurred by the Company for the three and nine months ended September 30, 2024 and for the period from August 28, 2023 to September 30, 2023 :

Three months ended

September 30, Period from August 28, 2023 to September 30, Nine months ended

September 30, Period from August 28, 2023 to September 30,

2024 2023 2024 2023

Affiliate costs

Base management fees $ 422,238 $ — $ 422,238 $ —

Incentive fees earned — — — —

General and administrative expenses reimbursable to Manager 492,870 — 492,870 —

Total $ 915,108 $ — $ 915,108 $ —

Amounts payable to the Company’s Manager as of September 30, 2024 and December 31, 2023 were approximately $ 0.9 million and zero , respectively.

Investments in Loans

3 unchanged sentences

Additionally, SUNS Manager or its affiliates, may from time to time serve as administrative and collateral agents to the lenders under our co-investments.

As of June 30, 2024, there were two co-invested loans held by the Company and affiliates of the Company.

As of September 30, 2024, there were six co-invested loans held by the Company and affiliates of the Company.

Unsecured Revolving Credit Facility with Affiliate

The Company entered the Revolving Credit Facility with SRT Finance LLC, an affiliate of the Company and Mr.

Refer to Note 6 for more information.

DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the Company’s dividends declared during the nine months ended September 30, 2024.

No dividends were declared during the period from August 28, 2023 to September 30, 2023 :

Declaration Date Record Date Payment Date Per Common Share Distribution Amount Total Distribution Amount

Regular cash dividend 8/14/2024 9/30/2024 10/15/2024 $ 0.21 $ 1,454,333

Regular cash dividend 8/14/2024 12/31/2024 1/15/2025 0.42 2,908,666

2024 Period Subtotal

$ 0.63 $ 4,362,999

SUBSEQUENT EVENTS

1 unchanged sentence

There were no material subsequent events, other than those described below, that required disclosure in these unaudited interim financial statements.

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

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

The senior loan was issued at a discount of 1.0 % and matures in three years .

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

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

The credit facility is secured by a deed of trust on the property and any deposit and reserve accounts established by the terms of the credit facility.

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

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

SUNS committed a total of approximately $ 27.3 million , and the affiliate committed the remaining $ 14.7 million .

The senior loan was issued at a discount of 1.0 % and matures in three years .

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

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

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

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

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

SUNS committed a total of approximately $ 18.8 million and $ 21.3 million to the revolving loan and term loan, respectively, and funded $ 8.8 million and $ 18.8 million towards each respective loan at close.

Affiliates committed the remaining $ 56.3 million and $ 63.8 million towards the revolving loan and term loan, funding $ 26.3 million and $ 56.3 million , respectively, at close.

The term loan and secured revolver were each issued at a discount of 1.25 %.

The revolving loan bears interest at a rate of SOFR plus 6.25 % , with a rate index floor of 4.0 % , and unused fee of 2.0 %.

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

The term loan bears an interest rate of SOFR plus 8.25 % , with a rate index floor of 4.0 % .

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

The term loan and the secured revolver each mature in three years .

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

Brian Sedrish was appointed as Chief Executive Officer (“CEO”), effective July 1, 2024.

In connection with his recent appointment as CEO, the Company granted Mr.

Sedrish 36,363 shares of restricted stock, which vest over a three-year period with approximately 33 % vesting on each of the first, second and third anniversaries of July 9, 2024.

In August 2024, the Company’s Board of Directors declared a partial quarter cash dividend of $ 0.21 per common share for the quarter ending September 30, 2024, which will be paid on October 15, 2024 to shareholders of record as of September 30, 2024, and a regular cash dividend of $ 0.42 per common share for the quarter ending December 31, 2024, which will be paid on January 15, 2025 to shareholders of record as of December 31, 2024.

On July 9, 2024, Sunrise Realty Trust, Inc.

became an independent, publicly traded company, trading on the Nasdaq Capital Market under the symbol “SUNS”.

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

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

AFC Gamma retained no ownership interest in the Company following the Spin-Off.

Prior to the Spin-Off, AFC Gamma contributed approximately $ 115 million to the Company in connection with the Spin-Off, comprised of SUNS’ loan portfolio and cash.

Moreover, in connection with the Spin-Off, the management of SUNS will be assigned to Sunrise Manager LLC and SUNS entered into a new management agreement with SUNS Manager, which became effective concurrently with the completion of the Spin-Off on July 9, 2024.

SUNS Manager also entered into the Administrative Services Agreement with TCG Services LLC, an affiliate of SUNS Manager and Mr.

Tannenbaum and Mrs.

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

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

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

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

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

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

The A-Notes bear interest at a rate of SOFR plus 4.75 %, with a rate index floor of 4.75 %.

The B-Notes bear interest at a rate of SOFR plus 11.00 %, with a rate index floor of 4.75 %.

The A-Notes and B-Notes were issued at a discount of 1.0 % and mature in 26 months, subject to two , six-month extension options.

Revolving Credit Facility

On November 6, 2024, the Company entered into the Loan and Security Agreement (the “Revolving Credit Agreement”) by and among the Company, the lenders party thereto (the “Lenders”), and East West Bank, as Agent, Joint Lead Arranger, Joint Book Runner, Co-Syndication Agent and Co-Documentation Agent.

The Revolving Credit Agreement provides for a senior secured revolving credit facility (the “Revolving Credit Facility”) with $ 50.0 million in initial aggregate commitments, 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 in the Revolving Credit Agreement.

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

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

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

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

The Company is required to pay certain fees to the agent and the lenders under the Revolving Credit Agreement, including a $ 75,000 agent fee payable to the agent and an 0.25 % per annum loan fee payable ratably to the lenders, in each case, payable on the closing date and on the annual anniversary thereafter.

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

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

The Revolving Credit Facility contains customary covenants, including covenants that limit or restrict the Company’s and its subsidiaries’ ability to incur liens, incur indebtedness, make certain restricted payments, merger or consolidate or make dispositions of assets.

In addition, the Company and its subsidiaries are subject to certain financial covenants, including a liquidity and debt service coverage ratio covenant.

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

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

Relationships

Certain of the lenders and their affiliates may in the future engage in investment banking, commercial banking and other financial advisory and commercial dealings with the Company and its affiliates.

Termination of SRT Revolving Credit Facility

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

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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”), filed by Sunrise Realty Trust, Inc.

(the “Company,” “SUNS,” “we,” “us,” and “our”), and the information incorporated by reference in it, or made in other reports and filings with the SEC contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we intend such statements to be covered by the safe harbor provisions contained therein.

(the “Company,” “SUNS,” “we,” “us,” and “our”), and the information incorporated by reference herein, or made in other reports and filings with the SEC contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we intend such statements to be covered by the safe harbor provisions contained therein.

Some of the statements contained in this Quarterly Report, other than statements of current or historical facts, are forward-looking statements and are based on our current intent, belief, expectations and views of future events.

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(iv) our expectations and estimates regarding certain tax, legal and accounting matters, including the impact on our financial statements and/or those of our borrowers;

(v) our expectations regarding our portfolio companies and their businesses, including demand, sales volume, profitability, and future growth;

(vi) the amount, collectability and timing of cash flows, if any, from our loans;

(vii) our expected ranges of originations and repayments;

(viii) estimates relating to our ability to make distributions to our shareholders in the future;

and (ix) our investment strategy.

(v) the amount, collectability and timing of cash flows, if any, from our loans;

(vi) our expected ranges of originations and repayments;

(vii) estimates relating to our ability to make distributions to our shareholders in the future;

and (viii) our investment strategy.

These forward-looking statements reflect management’s current views about future events, and are subject to risks, uncertainties and assumptions.

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The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:

• we have no recent history of operating as an independent company, and our historical and pro forma financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results;

• following the Spin-Off, our financial profile will change, and we will be a smaller, less diversified company than AFC Gamma prior to the Spin-Off;

• the ability of our Manager to locate suitable loan opportunities for us and to monitor and actively manage our portfolio and implement our investment strategy;

• we have limited history of operating as an independent company, and our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results;

• our ability to identify a successful business and investment strategy and execute on our strategy;

• the ability of our Manager to locate suitable loan opportunities for us and to monitor and actively manage our portfolio and implement our investment strategy;

• our expected ranges of originations and repayments;

• our ability to meet our expected ranges of originations and repayments;

• the allocation of loan opportunities to us by our Manager;

• our projected operating results;

• changes in general economic conditions, in our industry and in the commercial finance and real estate markets;

• changes in general economic conditions, in our industry and in the commercial finance and commercial real estate markets;

• the state of the U.S.

economy generally or in specific geographic regions;

economy generally or in specific geographic regions in which we operate, including as a result of the impact of natural disasters;

• the impact of a protracted decline in the liquidity of credit markets on our business;

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• changes in the value of our loans;

• losses that may arise due to the concentration of our portfolio in a limited number of loans and borrowers;

• losses that may be exacerbated due to the concentration of our portfolio in a limited number of loans and borrowers;

• our expected investment and underwriting process;

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• impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar matters;

• the impact of a changing interest rate environment;

• our ability to maintain our exemption from registration under the Investment Company Act (as defined below);

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• that the Distribution will not qualify for tax-free treatment;

• we may have indemnification liabilities to AFC Gamma under the Separation and Distribution Agreement;

• we cannot be certain that an active trading market for SUNS Common Stock will develop or be sustained after the Distribution and, following the Distribution, our stock price may fluctuate significantly;

• we may have indemnification liabilities to AFC under the Separation and Distribution Agreement;

• there had been no public market for SUNS Common Stock prior to the Distribution and an active trading market may not be sustained or be liquid in the future, which may cause the market price of SUNS Common Stock to decline significantly and make it difficult for investors to sell their shares;

• we may issue shares of preferred or common stock in the future, which could dilute your percentage ownership of SUNS;

• shareholder litigation in connection with the Spin-Off, may result in significant costs of defense, indemnification and liability

• litigation, including costs associated with prosecuting or defending claims and any adverse outcomes.

The above list of factors is not exhaustive or necessarily in order of importance.

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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 1. Financial Statements