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Sunrise Realty Trust, Inc. (SUNS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered steady distributable earnings of $0.31 per share, covering the $0.30 dividend, while GAAP EPS was $0.30; EPS beat S&P Global consensus by $0.01, but revenue missed consensus as reported by S&P Global estimates data (see Financial Results) .*
  • Net interest income increased quarter-over-quarter to $6.10M from $5.70M on portfolio growth; book value per share edged up to $13.76 from $13.73 .
  • Pipeline quality and activity improved: two signed term sheets (~$170M) and $56M of commitments closed post-quarter (Houston retail bridge loan and Florida industrial/collection suites), with platform focus on transitional CRE across the U.S. South .
  • Management reiterated a conservative funding model (no repo), targeting 1.0x–1.5x leverage over time (vs ~0.4x currently) and evaluating preferred/unsecured issuance as markets allow (management indicated preferred could price near ~8%) .

What Went Well and What Went Wrong

  • What Went Well

    • Dividend coverage and improving earnings base: DE/share of $0.31 covered the $0.30 dividend; NII rose q/q to $6.1M, with GAAP net income of $4.05M .
    • Pipeline momentum and deployment: Signed ~$170M of term sheets; closed $56M in commitments post-quarter including a $30M senior bridge for a fully-leased Houston Class A retail property and ~$26M across Florida projects .
    • Strategic positioning for NIM expansion: “About 95% of our loans are floating rate, with an average SOFR floor … about 4%… our credit lines’ much lower floor at approximately 2.6% … we have the potential to earn additional income through the expansion in … net interest margin.” — Executive Chairman .

  • What Went Wrong

    • Revenue shortfall vs consensus: Q3 revenue came in below S&P Global consensus (see Financial Results); while NII grew sequentially, topline trailed Street expectations.*
    • Subdued Q3 originations timing: Originations “partly reflected the slower market dynamics” during the quarter, with activity picking up late-Q3 and post-quarter .
    • Near-term ROE drag from low leverage and funding uncertainty: Leverage at ~0.4x remains well below the 1.0–1.5x target, and management is “watching the market” for preferred/unsecured issuance, with pricing sensitivity noted (~8%) .

Financial Results

P&L Trends (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
GAAP Net Income ($M)$3.10 $3.36 $4.05
GAAP EPS (Basic)$0.27 $0.25 $0.30
Distributable Earnings ($M)$3.46 $4.09 $4.12
DE per Share$0.31 $0.31 $0.31
Net Interest Income ($M)n/a$5.70 $6.10

Actual vs S&P Global Consensus (Q3 2025)

MetricActualConsensusSurprise
Revenue ($M)$6.25*$6.81*Miss*
GAAP EPS (Basic)$0.30 $0.29*Beat*

Values retrieved from S&P Global.*

YoY Comparison (Q3 2025 vs Q3 2024)

MetricQ3 2024Q3 2025
GAAP Net Income ($M)$1.74 $4.05
Distributable Earnings ($M)$1.85 $4.12
DE per Share$0.27 $0.31
Basic Weighted Avg Shares (M)6.80 13.25

KPIs and Balance Sheet

KPIQ2 2025Q3 2025
Portfolio Commitments ($M)$360.2 $367.0
Principal Outstanding ($M)$251.0 $253.0
Loans (Count)13 13
Book Value per Share ($)$13.73 $13.76
CECL Reserve$0.626M (25 bps) $0.400M (17 bps)
% Floating-Rate Loans86% ~95%
Weighted Avg SOFR Floor~4.1% ~4.0%
Portfolio YTM (%)~12.2% (8/1/25) ~11.8% (11/3/25)
Leverage (Debt/Equity)n/a~0.4x

Post-quarter (as of 11/3/25): Commitments $421.1M; Principal outstanding $295.2M; Loans 16 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per ShareQ3 2025$0.30 (Q1, Q2) $0.30 declared; paid Oct 15, 2025 Maintained
DRIPEffective post 9/15/25n/aDRIP implemented; dividends declared after 9/15 eligible New
Distributable EPSQ1–Q2 2025“At or close to $0.30” per share (prior indication) Achieved: Q1 $0.31; Q2 $0.31 Achieved
Capital Markets (Preferred/Unsecured)Q4 2025–Q1 2026Monitoring; intend to access when market open “We do intend to be there this quarter or next” (watching pricing; ~8% preferred cited) Maintained
Leverage TargetMulti-year1.0–1.5x target Current ~0.4x; expected to rise with funding Maintained

Earnings Call Themes & Trends

TopicQ1 2025 MentionsQ2 2025 MentionsQ3 2025 MentionsTrend
NIM expansion via SOFR floors vs funding floorsn/aLoan floors ~4.1%; credit line floor ~2.6% 95% floating; loan floors ~4%, SOFR <4%; potential NIM expansion Improving setup
Capital structure: avoid repo; unsecured/preferred nextn/aAdded banks; unsecured next; credit facility +2.75% SOFR, 2.63% floor Reiterated no repo; preferred/unsecured under evaluation; preferred ~8% Consistent
Market activity & pipelinen/a5 term sheets ~$275M; commitment to Park City senior loan 2 term sheets ~$170M; $56M commitments closed post-Q3 Strengthening
Competition and focusn/aCompetition tighter at near-stabilized; SUNS focuses transitional Transitional focus reiterated Stable
Geographyn/aOpportunistic Intermountain West; core Southern U.S. Focus on FL, TX, Carolinas, GA, TN; opportunistic beyond Broadening within South
Credit performance & reservesn/aCECL 25 bps CECL 17 bps; projects on track Improving

Management Commentary

  • “Our accomplishments during the third quarter… delivering a consistent and stable dividend, diversifying our portfolio… and utilizing efficiently priced senior and unsecured financing to support prudent growth.” — CEO .
  • “As of September 30, 2025, our leverage was approximately 0.4x… below our targeted leverage of 1–1.5x… About 95% of our loans are floating rate… average SOFR floor… about 4%… credit lines… approximately 2.6%… potential to earn additional income through the expansion in… net interest margin.” — Executive Chairman .
  • “We… generated net interest income of $6.1M… DE of $4.12M ($0.31/share)… GAAP net income of $4.05M ($0.30/share)… portfolio… $367M commitments and $253M principal across 13 loans… as of 11/3/25… $421.1M commitments and $295.2M outstanding across 16 loans; YTM ~11.8%.” — CFO .

Q&A Highlights

  • Funding strategy and cost of capital: Management reiterated no interest in repo/warehouse; exploring preferred (~8%) or unsecured debt/baby bond to scale prudently without over-levering .
  • Geographic focus: Pipeline broadening within the Southern U.S. (FL, TX, Carolinas, GA, TN) with opportunistic deals elsewhere .
  • Portfolio performance: Construction progress and pre-sales/lease-up broadly “as expected,” with some pickup in for-sale projects in South Florida; overall steady credit .
  • Competitive dynamics: Heavier competition at near-stabilized multifamily due to CLO back-leverage returning; SUNS remains focused on less-contested transitional projects .

Estimates Context

  • Q3 2025: EPS beat by $0.01 vs S&P Global consensus ($0.30 vs $0.29); revenue missed ($6.25M vs $6.81M). The mix of deployment timing and transitional focus likely contributed to the revenue shortfall despite sequential NII growth .*
  • Forward look: Street modeling a gradual step-up in EPS and revenue as deployment and leverage scale (Q4 2025 EPS ~$0.307; revenue ~$7.13M; Q1 2026 EPS ~$0.313; revenue ~$8.61M). Estimate counts remain thin (EPS: 3; Revenue: 1–2), implying potential for revisions as the funding path and originations crystallize.* Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Coverage intact, growth runway ahead: DE/share ($0.31) covered the $0.30 dividend; pipeline conversion plus modest leverage build should support earnings trajectory .
  • Conservative balance sheet is the feature: ~0.4x leverage, no repo, and bank credit lines with favorable floors provide resilience and NIM upside as SOFR drifts lower .
  • Deployment is accelerating post-quarter: $56M of commitments closed after Q3 and signed term sheets (~$170M) position SUNS well into Q4/Q1 .
  • Watch capital markets access: Preferred/unsecured execution at acceptable costs (~8% for preferred indicated) is a near-term catalyst/variable for scaling returns .
  • Expect Street revisions to focus on topline: Q3 revenue miss vs consensus contrasts with EPS beat; as leverage and deployment rise, estimates could migrate toward DE-driven stability rather than pure revenue optics.*
  • Credit remains steady: CECL reserve fell to 17 bps and management reported projects on track; early-vintage portfolio (no loans pre-2024) and low loan-to-cost (56% at close, per remarks) reduce downside risk .
  • Regional focus persists with selective expansion: Core Southern U.S. exposure (FL/TX/Carolinas/GA/TN) plus opportunistic high-quality projects like Houston retail and Miami condo towers supports diversified growth .

Footnote: Values retrieved from S&P Global.*