What changed in this filing

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Item 1. Financial Statements

2025-05-07 compared with 2024-11-07 · 253 added, 208 removed, 359 unchanged (56% of the section changed)

1 unchanged sentence

SUNRISE REALTY TRUST, INC.

BALANCE SHEETS

September 30, 2024 December 31, 2023

CONSOLIDATED BALANCE SHEETS

March 31, 2025 December 31, 2024

Loans held for investment at carrying value, net $ 230,494,191 $ 130,733,630

Current expected credit loss reserve ( 13,713 ) ( 21,782 )

Loans held for investment at carrying value, net of current expected credit loss reserve 230,480,478 130,711,848

Cash and cash equivalents 1,642,780 184,626,770

8 unchanged sentences

Accounts payable and other liabilities 1,491,170 357,417

Line of credit payable 43,200,000 123,840,000

Line of credit payable to affiliate — 75,000,000

2 unchanged sentences

Shareholders' equity

Member's equity — 31,234,622

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

Preferred stock, par value $ 0.01 per share, 10,000 and 0 shares authorized at March 31, 2025 and December 31, 2024 and 0 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Common stock, par value $ 0.01 per share, 50,000,000 shares authorized at March 31, 2025 and December 31, 2024 and 13,421,494 and 7,004,676 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

134,215 70,047

Additional paid-in capital 186,555,228 115,022,034

2 unchanged sentences

Total liabilities and shareholders' equity $ 234,442,565 $ 317,535,780

See accompanying notes to the financial statements

See accompanying notes to the consolidated financial statements

SUNRISE REALTY TRUST, INC.

STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS

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

Interest income $ 4,958,523 $ 2,026,306

6 unchanged sentences

Total expenses 1,405,279 263,961

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

(Provision for) reversal of current expected credit losses ( 117,648 ) —

Net income before income taxes 3,099,437 1,762,345

7 unchanged sentences

Diluted weighted average shares of common stock outstanding 11,221,016 6,889,032

See accompanying notes to the financial statements

See accompanying notes to the consolidated financial statements

SUNRISE REALTY TRUST, INC.

STATEMENTS OF SHAREHOLDERS’ EQUITY

Three months ended September 30, 2024

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Three months ended March 31, 2025

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

Shares Amount

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

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 71,289,741 — 71,353,741

Stock-based compensation — 16,818 168 243,453 — 243,621

1 unchanged sentence

— — — — ( 4,026,448 ) ( 4,026,448 )

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 — — — — 3,099,437 3,099,437

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

Balance as of March 31, 2025 $ — 13,421,494 $ 134,215 $ 186,555,228 $ ( 1,881,345 ) $ 184,808,098

Three months ended March 31, 2024

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

1 unchanged sentence

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 — — — — 1,762,345 1,762,345

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

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

See accompanying notes to the consolidated financial statements

SUNRISE REALTY TRUST, INC.

STATEMENT OF CASH FLOWS

Nine months ended

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

CONSOLIDATED STATEMENT OF CASH FLOWS

Three months ended

Operating activities:

1 unchanged sentence

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Increase (decrease) in provision for current expected credit losses 24,327 —

Provision for (reversal of) current expected credit losses 117,648 —

Amortization of deferred financing costs 68,050 —

Accretion of deferred loan original issue discount and other discounts ( 292,672 ) ( 14,094 )

15 unchanged sentences

Net transfers and distributions from (to) Former Parent — 17,000,000

Borrowings on revolving credit facility 50,000,000 —

Proceeds from sale of common stock 72,588,000 —

Payment of offering costs - equity offering ( 313,421 ) —

Distributions — ( 2,600,000 )

Payment of financing costs ( 34,207 ) —

Borrowings on revolving credit facilities 81,060,000 —

Repayment of revolving credit facilities ( 236,700,000 ) —

Dividends paid to common shareholders ( 2,941,964 ) —

Net cash provided by (used in) financing activities ( 86,341,592 ) 14,400,000

5 unchanged sentences

Dividends declared and not yet paid $ 4,026,448 $ —

Offering costs included in accounts payable and other liabilities $ 920,838 $ —

Supplemental information:

1 unchanged sentence

Income taxes paid during the period $ — $ —

See accompanying notes to the financial statements

See accompanying notes to the consolidated financial statements

SUNRISE REALTY TRUST, INC.

NOTES TO THE FINANCIAL STATEMENTS

As of September 30, 2024

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2025

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.

(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.

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 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.

2 unchanged sentences

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 consolidates all of its subsidiaries, which are consolidated within the Company’s consolidated financial statements.

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.

15 unchanged sentences

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 on July 2, 2024 (File No.

001-41971) by the U.S.

Securities and Exchange Commission (the “SEC”), the final version of which was included as Exhibit 99.1 to the Current Report on Form 8-K filed with the SEC on July 3, 2024 (the “Information Statement”).

Refer to Note 2 to the Company’s financial statements in the Information Statement for a description of the Company’s significant accounting policies.

The accompanying unaudited interim 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, 2024 filed with the U.S.

Securities and Exchange Commission (“SEC”).

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 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 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.

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.

This Quarterly Report on Form 10-Q includes financial information of the Company through July 9, 2024 (prior to consummation of the Separation, the Distribution and the Spin-Off) and the period from July 9, 2024 to March 31, 2025 (from and after consummation of the Separation, the Distribution and the Spin-Off), and does not fully reflect what the Company’s results of operations, cash flows and financial condition would have been had it been an independent company for prior periods presented.

The aggregate net effect of transactions between the Company and related parties that hav e 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.”

3 unchanged sentences

Actual results could differ from those estimates.

Significant estimates include the current expected credit losses (“CECL”).

Significant estimates include the current expected credit losses (“CECL”) reserve.

Recent Accounting Pronouncements

4 unchanged sentences

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.

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

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

The Company is currently evaluating the impact of the update on the Company’s future financial statements.

In December 2023, the FASB issued ASU 2023-09—Income Taxes (Topic 740):

4 unchanged sentences

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The amendments should be applied prospectively, however retrospective application is permitted.

The Company does not currently anticipate that adoption of ASU 2023-09 will have a material impact on the financial statements.

amendments should be applied prospectively, however, retrospective application is permitted.

The adoption of ASU 2023-09 is not expected to have a material impact on the Company’s consolidated financial statements.

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.

LOANS HELD FOR INVESTMENT AT CARRYING VALUE

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

As of March 31, 2025 and December 31, 2024, t he Company’s portfolio included twelve and nine loans held at carrying value, respectively.

The aggregate originated commitment under these loans was approximately $ 352.1 million and $ 190.9 million, resp ectively, and outstanding principal was approximately $ 233.4 million and $ 132.6 million, respectively, as of March 31, 2025 and December 31, 2024.

During the three months ended March 31, 2025, the Company funded approximately $ 109.8 million of new loans and additional principal on existing loans and had approximately $ 9.0 million of principal repayments of loans held at carrying value.

As of March 31, 2025 and December 31, 2024, approximately 89 % and 79 % , respectively, of the Company’s loans held at carrying value had floating interest rates.

As of March 31, 2025, t hese floating benchmark rates included one-month Secured Overnight Financing Rate (“SOFR”) quoted at 4.3 % and subject to a weighted average floor of 4.1 % based on outstanding principal.

The following tables summarizes the Company’s loans held at carrying value as of March 31, 2025 and December 31, 2024:

As of March 31, 2025

Principal (1)

5 unchanged sentences

Total loans held at carrying value $ 233,380,706 $ ( 2,886,515 ) $ 230,494,191 2.5

As of December 31, 2024

Principal (1)

Discount Carrying

Remaining Life

Senior mortgage loans (3)

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

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

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

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

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

(2) Weighted average remaining life is calculated based on the carrying value of each respective group of loans as of March 31, 2025 and December 31, 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 nine months ended September 30, 2024:

(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 three months ended March 31, 2025:

Principal Original Issue

2 unchanged sentences

New fundings 106,100,104 ( 1,356,528 ) 104,743,576

Funded interest 2,428,444 — 2,428,444

Interest drawn on loans 3,740,082 — 3,740,082

Accretion of original issue discount — 292,672 292,672

Loan repayments ( 9,015,769 ) — ( 9,015,769 )

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:

Total loans held at carrying value at March 31, 2025 $ 233,380,706 $ ( 2,886,515 ) $ 230,494,191

A more detailed listing of the Company’s loans held at carrying value portfolio based on information available as of March 31, 2025 is as follows:

Loan Type Location Outstanding

3 unchanged sentences

Senior mortgage loans:

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

2/26/2026 I/O

Residential Austin, TX $ 13,818,709 $ ( 105,655 ) $ 13,713,054 9.0 % (4)

2 unchanged sentences

Residential PBG, FL 24,321,302 ( 273,438 ) 24,047,864 10.6 % (7)

Residential Fort Lauderdale, FL 4,964,427 ( 242,308 ) 4,722,119 11.4 % (8)

12/30/2026 I/O

Hospitality Austin, TX 30,635,540 ( 355,556 ) 30,279,984 9.8 % (9)

12/11/2027 I/O

Residential Aventura, FL 28,711,352 ( 280,769 ) 28,430,583 9.3 % (10)

1/27/2027 I/O

Net Leased Tenant New Orleans, LA 599,378 ( 415,556 ) 183,822 10.1 % (11)

1/30/2028 I/O

Residential Dallas, TX 44,250,000 ( 452,083 ) 43,797,917 8.0 % (12)

3/14/2028 I/O

Subordinate debt:

1 unchanged sentence

5/12/2027 I/O

Residential Miami, FL 2,246,271 ( 111,944 ) 2,134,327 13.3 % (14)

11/15/2027 I/O

Residential Miami, FL 4,533,185 56,250 4,589,435 14.8 % (15)

12/13/2028 I/O

Total loans held at carrying value $ 233,380,706 $ ( 2,886,515 ) $ 230,494,191

5 unchanged sentences

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

(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 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.

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

2 unchanged sentences

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

(8) 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 %).

(9) Base interest rate of 5.50 % plus SOFR (SOFR floor of 4.00 %).

(10) Base interest rate of 5.00 % plus SOFR (SOFR floor of 4.00 %).

(11) Base interest rate of 5.60 % plus SOFR (SOFR floor of 4.50 %).

(12) Base interest rate of 3.65 % plus SOFR (SOFR floor of 3.90 %).

(13) Base interest rate of 13.00 %.

(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 %.

CURRENT EXPECTED CREDIT LOSSES

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.

Estimating the CECL Reserve also requires significant judgment with respect to various factors, including but not limited to, the expected timing of loan repayments and the Company’s current and future view of the macroeconomic environment.

The Company may consider loan-specific qualitative factors on certain loans to estimate its CECL Reserve, which may include (i) whether cash from the borrower’s operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan and (iii) the liquidation value of collateral.

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 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.

As of March 31, 2025 and December 31, 2024, the Company’s CECL Reserve for its loans held at carrying value is approximately $ 157.8 thousand and $ 40.2 thousand, respectively, or 0.07 %, and 0.03 %, respectively, of the Company’s total loans held at carrying value of approximately $ 230.5 million and $ 130.7 million, 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 $ 13.7 thousand and $ 21.8 thousand, respectively, and a liability for unfunded commitments of approximately $ 144.1 thousand and $ 18.4 thousand, respectively.

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 nine months ended September 30, 2024 was as follows:

Outstanding (1)

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

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 months ended March 31, 2025 was as follows:

Outstanding (1)

Balance at December 31, 2024 $ 21,782 $ 18,398 $ 40,180

Increase (decrease) in provision for current expected credit losses — 24,327 24,327

Provision for (reversal of) current expected credit losses ( 8,069 ) 125,717 117,648

Write-offs — — —

Recoveries — — —

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.

Balance at March 31, 2025 $ 13,713 $ 144,115 $ 157,828

(1) As of March 31, 2025 and December 31, 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 consolidated balance sheets.

(2) As of March 31, 2025 and December 31, 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 consolidated 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 by the Company.

Risk 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:

10 unchanged sentences

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

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:

As of March 31, 2025, 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:

2025 2024 Total

1 $ — $ — $ —

2 unchanged sentences

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

The following table summarizes the interest receivable balance for the Company as of March 31, 2025 and December 31, 2024:

March 31, 2025 As of

December 31, 2024

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Revolving Credit Facility

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

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

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

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

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

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

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

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

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

Based on the terms of the Revolving Credit Agreement, the Company did not incur an unused line fee during the three months ended March 31, 2025.

In connection with the Revolving Credit Agreement and related amendments, the Company incurred certain closing costs of approximately $ 0.6 million, which were included in prepaid expenses and other assets on the Company’s consolidated balance sheets and amortized over the life of the 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 facility will be secured only by certain

assets of the Company comprising of or relating to loan obligations designed for inclusion in the borrowing base.

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

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

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

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

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

As of March 31, 2025 and December 31, 2024, outstanding borrowings under the Revolving Credit Facility were $ 43.2 million and $ 123.8 million, respectively, and $ 6.8 million and $ 1.2 million were available for borrowing as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025 , the interest rate on the Company’s borrowings under the Revolving Credit Facility was 7.07 %.

SRTF 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.

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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.

The Credit Agreement provides for an unsecured revolving credit facility (the “SRTF 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 SRTF Revolving Credit Facility at 1-month SOFR (subject to a 3.0 % floor) plus a margin of 2.75 %, with a maturity date of December 31, 2025.

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

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

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

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

SRT Finance LLC continues to be indirectly owned by Mr.

Tannenbaum and Mrs.

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

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

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

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

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

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

In connection with the SRTF Credit Agreement, the Company incurred certain closing costs of approximately $ 20.0 thousand, which were included in prepaid expenses and other assets on the Company’s consolidated balance sheets and amortized over the life of the facility.

As of March 31, 2025 and December 31, 2024, outstanding borrowings under the SRTF Credit Facility were zero and $ 75.0 million, respectively, and $ 75.0 million and zero were available for borrowing as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025 , the interest rate on the Company’s borrowings under the SRTF Credit Facility was 8.00 %.

The Company did not incur any interest expense during the three months ended March 31, 2024.

The following table reflects a summary of interest expense incurred during the three months ended March 31, 2025:

Three Months Ended

March 31, 2025

Revolving Credit Facility SRTF Revolving Credit Facility Total Borrowings

Interest expense $ 245,505 $ 22,604 $ 268,109

Unused fee expense — — —

Amortization of deferred financing costs 66,633 1,417 68,050

Total interest expense $ 312,138 $ 24,021 $ 336,159

COMMITMENTS AND CONTINGENCIES

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

September 30, 2024 As of

As of March 31, 2025 and December 31, 2024, the Company had the following commitments to fund various investments:

March 31, 2025 As of

December 31, 2024

Total original loan commitments $ 121,570,101 $ —

Total loan commitments $ 352,076,936 $ 190,921,475

drawn commitments ( 233,380,706 ) ( 132,556,289 )

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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 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

As of March 31, 2025, the Company is not aware of any legal claims that could materially impact its business, financial condition or results of operations.

SHAREHOLDERS’ EQUITY

Corporate Conversion

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Preferred Stock

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.

As of March 31, 2025 and December 31, 2024, 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.

There were no shares of Preferred Stock designated or outstanding as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025 and December 31, 2024, the Company authorized 50,000,000 shares of Common Stock, respectively, and issued 13,421,494 and 7,004,676 shares of Common Stock, respectively.

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

Tannenbaum, the Company’s Executive Chairman, at the public offering price.

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

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

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

The Company incurred approximately $ 1.2 million of expenses in connection with the offering.

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

The net proceeds to the Company totaled approximately $ 71.4 million.

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.

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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.

In February 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 March 31, 2025 , there were 132,462 shares of restricted stock granted under the 2024 Plan.

As of March 31, 2025 , 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 1,058,660 shares remained available for future issuance under the 2024 Plan.

At the discretion of the Company’s Board of Directors, the Company waived the evergreen provision in connection with the Minimum Annual Increase (as defined in the 2024 Plan) under the 2024 Plan for the 2024 fiscal year.

In January 2025, the Company completed an offering of the Company’s Common Stock and pursuant to the evergreen provision in the 2024 Plan with respect to the public offerings, the total number of shares reserved for issuance under the 2024 Plan automatically increased by ten percent of the total number of shares of Common Stock sold by the Company in the January 2025 Offering, which equaled 640,000 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

The stock-based compensation expense for the Company was approximately $ 0.2 million and zero for the three months ended March 31, 2025 and 2024, respectively.

March 31, 2025

December 31, 2024

Converted upon Spin-Off 88,685 88,685

1 unchanged sentence

Vested ( 35,476 ) ( 805 )

Forfeited ( 2,807 ) —

Balance 185,671 203,524

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:

The following tables summarize the restricted stock activity as of and during the three months ended March 31, 2025:

Number of shares of restricted stock Weighted-average

grant date fair value

Balance as of July 9, 2024 (1)

88,685 $ 13.00

Balance as of December 31, 2024 203,524 $ 13.16

Granted 19,625 11.78

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Forfeited ( 2,807 ) 13.27

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.

Balance as of March 31, 2025 185,671 $ 13.02

The total fair value of shares vested during the three months ended March 31, 2025 was approximately $ 0.5 million.

During the three months ended March 31, 2025 , 19,625 shares of restricted stock were granted with a weighted-average grant date fair value of $ 11.78 .

There were no shares of restricted stock that were granted or that vested during the three months ended March 31, 2024.

As of March 31, 2025 , there was approximately $ 2.1 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 2.30 years.

5 unchanged sentences

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 :

The following information sets forth the computations of basic and diluted weighted average earnings per common share for the three months ended March 31, 2025 and 2024:

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

Net income attributable to common shareholders $ 3,099,437 $ 1,762,345

Dividends paid on unvested restricted stock ( 85,480 ) —

Net income attributable to common shareholders 3,013,957 1,762,345

Basic weighted average shares of common stock outstanding 11,208,015 6,889,032

4 unchanged sentences

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 .

Diluted weighted average earnings per common share excluded 87,463 and zero weighted average unvested restricted stock due to anti-dilutive effect for the three months ended March 31, 2025 and 2024, respectively.

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

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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 stockholders annually.

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

The income tax provision for the Company was zero for the three months ended March 31, 2025 .

For the three months ended March 31, 2025 , 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 September 30, 2024 :

As of September 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 March 31, 2025 :

As of March 31, 2025

Carrying Value Fair Value

10 unchanged sentences

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.

There was no Base Management Fees incurred for the three months ended March 31, 2025 and 2024.

Refer to fee waiver below.

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.

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.

There was no Incentive Compensation incurred for the three months ended March 31, 2025 and 2024.

Refer to fee waiver below.

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

The Manager has agreed to waive (i) the inclusion of the net proceeds from the January 2025 Offering 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 months ended March 31, 2025, $ 568,790 of Base Management Fees and $ 298,306 of Incentive Fees were waived.

Administrative Services Agreement

10 unchanged sentences

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 :

The following table summarizes the related party costs incurred by the Company for the three months ended March 31, 2025 and 2024:

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

3 unchanged sentences

Total $ 617,554 $ —

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

Amounts payable to the Company’s Manager as of March 31, 2025 and December 31, 2024 were approximately $ 0.6 million and $ 1.1 million , respectively.

The Company’s Manager is beneficially owned by certain officers as of the date of this Quarterly Report on Form 10-Q :

63.1 %, by Mr.

Tannenbaum, the Company’s Executive Chairman, 8.1 % by Mrs.

Tannenbaum, the Company’s President, 9.3 % by other Tannenbaum family members and trusts, and 7.0 % by Mr.

Sedrish, the Company’s Chief Executive Officer.

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

As of March 31, 2025, there were twelve co-invested loans held by the Company and affiliates of the Company.

Unsecured Revolving Credit Facility with Affiliate

2 unchanged sentences

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 :

The following table summarizes the Company’s dividends declared during the three months ended March 31, 2025.

No dividends were declared during the three months ended March 31, 2024 .

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

2025 Period Subtotal

$ 0.30 $ 4,026,448

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.

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 five borrowers each comprising more than 10% of consolidated interest income for an aggregate amount of $ 4.0 million, or 81 %, of consolidated interest income during the three months ended March 31, 2025.

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 $ 2.0 million, or 98 %, of consolidated interest income during the three months ended March 31, 2024.

SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date the 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.

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.

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

The Company has evaluated subsequent events through the date the consolidated financial statements were available to be issued.

There were no material subsequent events that required disclosure in these unaudited interim financial statements.

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 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.

(the “Company,” “SUNS,” “we,” “us,” and “our”), and the information incorporated by reference herein, or made in other reports, filings with the SEC, and press releases 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.

These forward-looking statements are based on our current intent, belief, expectations and views of future events.

The forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results or performance, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “project,” “could,” “would,” “will,” “can,” “continuing,” “may,” “aim,” “intend,” “ongoing,” “plan,” “predict,” “potential,” “should,” “seeks,” “likely to” or words or phrases of similar meaning.

Specifically, this report includes forward-looking statements regarding (i) our portfolio and strategies for the growth of our commercial real estate lending business;

Specifically, this Quarterly Report includes forward-looking statements regarding (i) our portfolio and strategies for the growth of our commercial real estate lending business;

(ii) our working capital, liquidity and capital requirements;

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Our actual results may differ materially from the future results and events expressed or implied by the forward-looking statements.

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 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;

Key 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:

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

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

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

• our ability to obtain our target mix of loan and collateral types with our expected ranges of yields;

• the allocation of loan opportunities to us by our Manager and our ability to close those loans;

• 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 in which we operate, including as a result of the impact of natural disasters;

economy generally or in the 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;

• the amount, collectability and timing of our cash flows, if any, from our loans;

• our ability to obtain and maintain financing arrangements;

• our expected leverage;

• our ability to obtain and maintain competitive financing arrangements;

• our ability to achieve our expected leverage;

• changes in the value of our loans;

• 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;

• our investment and underwriting process;

• the rates of default or recovery rates on our loans;

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• the availability of investment opportunities in mortgage-related and real estate-related instruments and other securities;

• changes in interest rates and impacts of such changes on our results of operations, cash flows and the market value of our loans;

• interest rate mismatches between our loans and our borrowings used to fund such loans;

• the departure of any of the executive officers or key personnel supporting and assisting us from our Manager or its affiliates;

• 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);

• our ability to qualify and maintain our qualification as a REIT for U.S.

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

• the impact of a changing interest rate environment on our results of operations, cash flows and the market value of our loans;

• our ability to maintain our exemption from registration under the Investment Company Act of 1940 (the “Investment Company Act”);

• our ability to qualify and maintain our qualification as a real estate investment trust (a “REIT”) for U.S.

federal income tax purposes;

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• we may not achieve some or all of the expected benefits of the Spin-Off;

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

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

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

• use of proceeds of our securities offerings;

• 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.

Please see the section entitled “ Risk Factors ” located in our final Information Statement on Form 10, the final version of which was included as Exhibit 99.1 on our Form 8-K filed with the SEC on July 3, 2024, for a further discussion of these and other risks and uncertainties which could affect our future results.

Please see the section entitled “ Risk Factors ” located in our Annual Report on Form 10-K, filed with the SEC on March 6, 2025 , for a further discussion of these and other risks and uncertainties which could affect our future results.

These forward-looking statements apply only as of the date of this report and we undertake no obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by applicable law.

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