Hello and welcome to Sunrise Realty Trust fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you would need to press star one one on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. I would now like to turn the conference over to Chief Legal Officer, Gabriel Katz. You may begin.

Good morning, and thank you all for joining Sunrise Realty Trust earnings call for the quarter and fiscal year ended December 31, 2024. I'm joined this morning by Leonard Tannenbaum, our Executive Chairman, Brian Sedrish, our Chief Executive Officer, and Brandon Hetzel, our Chief Financial Officer. Before we begin, I would like to note that this call is being recorded. Replay information is included in our February 12, 2025 press release and is posted on the Investor Relations portion of our website at sunriserealtytrust.com along with our fourth quarter and fiscal year 2024 earnings release and investor presentation. Today's conference call includes forward-looking statements and projections that reflect the current views with respect to, among other things, market developments, our investment pipeline, anticipated portfolio yield, and financial performance and projections in 2025 and beyond. These statements are subject to inherent uncertainties in predicting future results. Please refer to Sunrise Realty Trust's most recent periodic filings with the SEC, including our annual report on Form 10-K filed earlier this morning, for certain conditions and significant factors that could cause actual results to differ materially from these forward-looking statements and projections. During today's conference call, management will refer to non-GAAP financial measures including distributable earnings. Please see our fourth quarter and fiscal year earnings release uploaded to our website for reconciliations of this non-GAAP financial measure with the most directly comparable GAAP measures. The format for today's call is as follows. Len will provide a general business and capital markets overview. Next, Brian will cover our view on the state of the commercial real estate lending markets, discuss our existing portfolio, and provide an outlook for our investment pipeline. Then, Brandon will provide an update on our financial position. After that, we'll open the line for Q&A. With that, I will now turn the call over to our Executive Chairman, Leonard Tannenbaum.

Thank you, Gabe. Good morning, and welcome to our fourth quarter and fiscal year 2024 earnings conference. As we finished 2024 and began 2025, we've continued the strong momentum since our public listing in July. For the quarter ended December 31, 2024, SUNS generated distributable earnings of $0.30 per weighted average share of common stock. When declaring SUNS quarterly dividend, distributable earnings is the primary metric the Board of Directors considers. As such, the Board of Directors has declared a $0.30 dividend per share for the quarter ended March 31, 2025. Looking ahead, we are focused on paying a dividend that is consistent with the earnings power of the business over the medium term. As we continue to invest our capital and use leverage provided by our senior and unsecured credit lines, we believe the $0.30 dividend should be on or close to our first quarter distributable earnings. As a reminder, SUNS is an important part of TCG real estate platform. The platform consists of a number of funds focused on sourcing, underwriting, and investing in commercial real estate loans. The affiliation with this platform provides SUNS with a scalable infrastructure, debt and equity capital markets expertise, and the ability to pursue larger transactions than it could currently pursue on its own. During the fiscal year ending December 31, 2024, the TCG real estate platform originated $538 million of loans, of which SUNS committed $220 million and funded $162 million. As of December 31, 2024, $133 million of principal remained outstanding. As of March 1, the TCG real estate platform has originated $115 million of loans this year, with SUNS committing $75 million of that total. With market dynamics in the southern US creating opportunities for commercial real estate lenders, our direct origination platform continues to source attractive opportunities. The TCG real estate platform currently has an active pipeline of $1.4 billion, which includes two signed term sheets currently in documentation. Subsequent to year-end, we successfully completed an offering for SUNS, raising approximately $77 million of gross proceeds. We believe that this equity raise was an important step in scaling the company, has allowed us to capture a greater share of this attractive commercial real estate vintage, gain additional research analyst coverage, significantly increase liquidity, and increased the potential of accessing more attractive financing sources to continue our growth. In conjunction with the equity raise, our manager has agreed to waive at least $1 million of future fees to mitigate the earnings drag as we deploy equity and debt capital. We expect the manager to waive all management fees and all incentive fees in the first quarter of this year. We are excited about the opportunity ahead of us and look forward to meeting many investors and analysts in the upcoming months. With that, I'll turn the call over to our CEO, Brian Sedrish.

Thank you, Len, and good morning. We continue to remain excited about the current opportunity to provide credit to sponsors of transitional commercial real estate projects located within our target markets. With short-term interest rates forecasted to remain elevated for a longer period of time than previously expected, we believe that the need for real estate credit will remain elevated. Therefore, we believe that this will continue to present attractive opportunities for us to help solve borrowers' near-term financing needs at attractive loan-to-value ratios. Against the backdrop of many lenders continuing to remain preoccupied with legacy portfolio positions and commercial banks remaining conservative in their leverage levels, we believe that it is an ideal time to be on offense, selecting high-quality assets located in growing markets and backed by highly qualified sponsors. Turning to our portfolio, in the fourth quarter of 2024, SUNS successfully closed on $75 million of commitments, which include $30 million in a senior loan for a condominium development in Fort Lauderdale, Florida, $32 million in a senior loan for a luxury hotel in Austin, Texas, and $13 million in a supported loan for a Class A multifamily asset in Miami, Florida. From year-end through March 1, SUNS committed $75 million to two transactions originated by the TCG real estate platform. One was a $44 million commitment to a senior loan for Shell Plaza in the River District in New Orleans, and the other was a $31 million commitment on a residential asset in Florida. These investments reflect our broader strategy of partnering with top-tier sponsors who share our vision for creating and investing in high-quality real estate in key southern US markets. Additionally, subsequent to year-end, we were repaid on our loan to a mixed-use property in Houston, Texas. The loan was closed in January 2024, reaching a peak commitment by SUNS of $35.5 million and generating a strong risk-adjusted return for our investors. As of March 1, the SUNS portfolio has $259 million of commitments with $162 million funded. Many of the unfunded commitments relate to construction loans, which will continue to fund throughout this year and into 2026. These loans were structured with attractive rates and floors, which should benefit our future earnings. Currently, 83% of our loan commitments are in Florida and Texas, which are two of the largest markets in the US. In addition to these states, we are also pursuing opportunities in other southern states like Georgia, South Carolina, and Tennessee, and we recently closed a deal in Louisiana. We believe that the SUNS portfolio is well-positioned from an interest rate perspective, as 85% of our current portfolio's outstanding principal is floating rate with floors of, on a weighted average, 4.2%. Given these floors in place across our loan book, our credit line with an approximate floor of 2.6% presents a potential opportunity to expand SUNS' net interest margin. We continue to remain bullish on the opportunity set in front of us as we look to source and close attractive commercial real estate credit opportunities within the Southern United States, as demand from borrowers continues to exceed available capital. We believe this market dynamic will continue to afford us the opportunity to carefully curate an attractive loan portfolio. We expect in the near to medium term, our portfolio composition will remain similar to our current composition, with an emphasis on well-located residential and mixed-use assets, backed by experienced and well-capitalized sponsors. Unlike most mortgage REITs, our portfolio consists entirely of new vintage assets. All loans are current and performing. As Len described earlier, the TCG Real Estate platform pipeline remains strong with approximately $1.5 billion in active deals under review. From inception through March 1, 2025, we, along with our affiliated funds on the TCG real estate platform, and our syndicate partners, have successfully closed approximately $650 million with SUNS committing approximately $295 million. We believe that the current market environment will continue to create attractive entry points for SUNS to invest capital over the coming quarters, as elevated interest rates should lead to a slower market recovery and a need for transitional capital. To further bolster our senior leadership sourcing and execution capabilities, I'm pleased to announce the addition of Alfred Tribulino to the TCG real estate platform and the SUNS investment team. Joining us as a managing director, Alfred brings over three decades of real estate credit and equity investing experience. Most recently, Alfred was a managing director and head of US real estate finance at CPQ, and prior to that, worked with me at Related Fund Management for over eight years. We are excited to have him round out our investment team and help position us to take advantage of the attractive lending environment. Looking ahead, we remain focused on constructing a portfolio of new vintage assets by leveraging our local market expertise, our strong relationships across the Southern United States, and our ability to provide sponsors with appropriately leveraged loans for their short to medium-term needs. With that, I will now turn the call over to Brandon Hetzel, our Chief Financial Officer.

Thank you, Brian. For the quarter ended December 31, 2024, we generated net interest income of $3.4 million and distributable earnings of $2 million or $0.30 per basic weighted average common share, and had GAAP net income of $1.9 million or $0.27 per basic weighted average common share. We believe that providing distributable earnings is helpful to shareholders in assessing the overall performance of the SUNS business. Distributable earnings represent net income computed in accordance with GAAP excluding non-cash items such as stock compensation expense, unrealized gains or losses, and the provision for current expected credit losses. We ended the fourth quarter and fiscal year of 2024 with $190.9 million of current commitments and $132.6 million of principal outstanding, spread across nine loans. As of March 1, 2025, our portfolio consisted of $259.3 million of current commitments, and $162.1 million of principal outstanding across ten loans, with a weighted average portfolio yield to maturity of 12.4%. I'd also like to note that as of December 31, 2024, our CECL reserve is approximately $40,000 or three basis points for our loans at carrying value. As of December 31, 2024, we had total assets of $317.5 million and our total shareholder equity was $114.1 million or a book value of $16.29 per share. When we include the equity raise completed in January 2025, our pro forma book value would have been approximately $13.93. As Len mentioned earlier, the Board of Directors has declared a $0.30 dividend per share for the quarter ended March 31, 2025. The dividend will be paid on April 15, 2025, to shareholders of record as of March 31, 2025. With that, I will now turn it back over to the operator to start the Q&A.

Thank you. Ladies and gentlemen, as a reminder to ask a question, then wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Randy Binner with B. Riley Securities. Your line is open.

Hey. Good morning. Thanks. I just had one on the debt profile and maybe some timing issues or questions. The first part of the question was the interest expense was lower than we've modeled in the fourth quarter, but there was a lot of change happening in the company. So if there are any notable timing issues of how the actual interest expense came through, I'd like to hear what that is. It'd be helpful for modeling. And then looking forward, I think that the revolver has been pulled down for $75 million, but the East West line had an outstanding balance and then was subsequently paid down. I just want to make sure we're thinking of the pieces of the debt structure correctly with that last part of the question.

Sure. So the reason your interest might have been a little higher in your models is the investments were deployed a little later in December, later in the quarter. And so we didn't get into leverage until mid-December. We did have the Swiss bank line drawn at year-end, which was partially repaid at year-end and then fully repaid after the equity raise in January.

Okay. So East West is paid, and the revolver was pulled down for the full seventy-five. Is it reasonable to think the seventy-five would just stay pulled down and then East West would grow with the origination ramp? Is that the seventy-five million revolver was repaid right after year-end as well?

Yes. That's correct.

Okay. Good. That's super helpful. Thanks. Otherwise, it was well covered. So that was just our one question. Thank you.

Sure. Thank you.

Please stand by for our next question. Our next question comes from the line of Stephen Laws with Raymond James. Your line is open.

Hi. Good morning. Brian, I wanted to touch on the pipeline. It looks like the portfolio mix to date is about eighty-five percent senior loans. Can you talk about what the mix looks like in your pipeline of senior versus mezzanine, and what you view as the relative attractiveness between the two? Along the same lines, as you think about funding up the portfolio and deploying the new capital, is it reasonable to think you can be fully deployed by the third quarter, or do you have any thoughts on the investment pace and pipeline for deploying that capital?

Hey, Steve. Thanks for the questions. So in terms of the mix between senior and subordinate, I would say the expectation is we'll obviously stay with a significant portion of our book as senior versus subordinate. We think that represents, for the time being, the best opportunity set for us to deploy attractive capital at lower leverage levels. I say that because for the types of transitional assets we are looking to finance, we see senior lenders continuing to pull back, and so it's created a real opportunity for us to provide that whole loan. That being said, strategically and opportunistically, as we find interesting subordinate tranches that we can participate in, we'll do so, particularly since we're seeing many senior lenders also reaching out to us to potentially team because they're not getting to higher leverage. But I do think, from a go-forward basis, a substantial majority of our book will be on the senior side.

Steve, let me address your question about pipeline conversion and when we're going to be fully deployed. It's a nuanced answer. When we determine we're fully deployed, we may not be fully drawn. Many of our loans are construction loans. In fact, we've got some terrific ones that are starting to draw midyear. Differently than other companies I've been chairman of, this one has a lot of visibility into 2026. This is very exciting. So when we say fully deployed, we may not see the full earnings impact from that full deployment until 2026. We're actually very excited about 2026 given what we already have on our books. 2025 really depends on that pace of draw and pace of closings, so it's a combination of things, which makes 2025 a little harder to predict. 2026 is actually easier to predict for us right now than 2025.

That's helpful. Appreciate the color there. One follow-up: I wanted to circle back to your comments on the loan floors versus the financing line floors. I think that's a unique situation. If I heard correctly, the loan floor is at 4.2%, SOFR is at 4.33%, and your line floor is sub-3%. So either way interest rates move, you should get some benefit — if they move higher, you've got floating rate investments; if they move lower, the loans are floored but financing costs continue to get cheaper. Am I thinking about that correctly or is there additional color?

Yes. Correct. You got it right.

Thank you. Please stand by for our next question. Our next question comes from the line of Jade Ramani with KBW. Your line is open.

Just to start off with, on the dividend — is the idea to set it conservatively and hopefully, you said you expect first quarter earnings to be around thirty cents, so that matches the dividend. Your return targets are a little higher, so is the idea to gradually out-earn the dividend and eventually increase it?

You should read the forward-looking statement literally: the first quarter dividend will be at or near the earnings, which is the statement I made and that is reflected in the 10-K. As for ramping it over time, yes, I think the dividend should grow over time. I'm personally excited about 2026. I don't know the exact pace of earnings growth in 2025; we know it gets there, but we need to see the pace. Given our visibility — which is very high because these are high visibility construction loans — the board felt very comfortable with the thirty cent dividend, and yes, it should grow over time, though I don't know the exact pace.

What attributes drive the improved visibility in 2026 versus this year?

The main reason is that when we started a year ago, TCG stepped up and backstopped a lot of loans. These are terrific construction loans done at what I think was the best vintage last year. We're seeing this year's vintage is a little tighter already. Those loans are delayed fundings with protections like minimum multiples. Those loans will start really funding midyear and continue into 2026. We have other loans that start a little now and then start in November, and those will also contribute. So the draws will happen over time, which is why visibility for 2026 is strong while 2025 depends on draw timing.

That makes sense. Turning to originations, could you put any parameters around what you expect SUNS to commit to and fund in the next one to two quarters, aggregated?

We have signed term sheets we're working on, so we definitely have deals we are going to do, but we won't forward-forecast exact quarterly numbers. To provide helpful context: some of our deals will go on our senior credit line and some will not. We are forecasting twenty to thirty-three percent could be mezzanine, but some amount will be actual mezz loans. Sometimes we'll take down a large whole loan and then use back leverage (note-on-note financing) to lay off exposure, which currently has a very active and competitive market. That can allow us to generate whole loans while appropriately leveraging them to achieve attractive returns on the note we retain. For example, you may see us take down a large $100+ million position that shows on our balance sheet, but we'd lay off a portion via back leverage. These examples are illustrative, not exact numbers. Given these dynamics, it's difficult to predict exact origination and funded amounts each quarter; you'll see activity quarter by quarter. We have a very active pipeline and are excited about executing it.

Thank you. Please stand by for our next question. Our next question comes from the line of Gaurav Mehta with Alliance Global Partners. Your line is open.

Thank you. Good morning. I wanted to clarify your comments around management and incentive fee waivers. In your prepared remarks, you said you expect to waive all the management and incentive fees in Q1. Is that right?

Yes. We're not taking any management fee or any incentive fee in the first quarter.

And so a little bit of additional fee waiver could potentially spill into the second quarter.

And that Q1 waiver goes towards the one million dollar waiver you talked about?

Yes.

Second question on your credit line: the East West line is $200 million total capacity. What are the criteria you need to meet to expand from a lower drawn amount to the full $200 million?

You'll see us expand that line over the next quarter or two. There's a lot of interest from banks and we believe we will expand the line towards the $200 million level. Remember our target model: with roughly $180–200 million of equity, our goal is about forty percent equity and sixty percent debt. Think of it hypothetically as two hundred million equity, two hundred million subordinated debt, two hundred million senior capacity, with one hundred million drawn. Senior leverage shouldn't be a holdup. We also plan to pursue an unsecured raise this year to replace any short-term draws (for example, the $75 million revolver) so we don't have cash drag once the unsecured capital comes in. That's the goal we're working on for the rest of the year.

Okay. Thank you. That's what I have.

Ladies and gentlemen, at this time, I would now like to turn the call back over to CEO, Brian Sedrish, for closing remarks.

Thank you all for joining our call today. Appreciate it, and we look forward to talking to you again in the near future.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.