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Sunrise Realty Trust, Inc. (SUNS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 GAAP net income was $1.85M ($0.27 basic EPS) and Distributable Earnings were $2.05M ($0.30 per share), with net interest income of $3.44M; sequentially stronger than Q3 on both GAAP EPS ($0.27 vs $0.26) and DE/share ($0.30 vs $0.27) .
  • The Board declared a $0.30 per share dividend for Q1 2025, with management indicating DE should be “on or close” to that level due to fee waivers and pipeline deployment; the prior quarter dividend was $0.42 (Q4 2024) and Q3 2024 partial dividend $0.21 reflecting ramp timing .
  • SUNS committed $75M in Q4 and an additional $74.8–75M subsequent to quarter-end through March 1, expanding funded principal to $162.1M across 10 loans, with a 12.4% weighted average yield to maturity; portfolio is 85% floating-rate with 4.2% average floors, supporting NIM resiliency versus a credit line floor ~2.6% .
  • Near-term earnings ramp depends on construction loan draw schedules; management highlighted stronger visibility into 2026 earnings, fee waivers in Q1 (and potentially Q2), and intent to expand the East West line toward $200M and pursue unsecured debt later in 2025—key potential stock catalysts .

What Went Well and What Went Wrong

What Went Well

  • “SUNS successfully committed to $75.0 million in deals, and subsequent to quarter-end through March 1, we committed to another $74.8 million in deals,” demonstrating origination momentum and pipeline conversion .
  • NIM protection from floors: “loan floors ~4.2%” versus financing line floor “~2.6%,” implying margin support regardless of rate direction; management confirmed this dynamic .
  • Equity raise (~$77M gross) completed post-year-end with first-quarter fee waivers, increasing liquidity and mitigating earnings drag during deployment; management expects to waive all management/incentive fees in Q1 .

What Went Wrong

  • Interest expense modeled by analysts came in lower due to late-quarter deployment and leverage timing, complicating comparability and forecasting; revolver and East West balances were repaid after year-end .
  • Dividend reset from $0.42 (Q4) to $0.30 (Q1), reflecting deployment cadence and conservative posture; management aims to align dividend with DE near-term, with growth tied to 2025–2026 draw schedules .
  • Limited YoY comparability: portfolio is “new vintage” (first loan January 2024), constraining traditional YoY quarterly trend analysis; emphasis shifts to sequential progress and pipeline quality .

Financial Results

Quarterly Comparison (oldest → newest)

MetricQ3 2024Q4 2024
Interest Income ($)—$3,617,906
Interest Expense ($)—$173,071
Net Interest Income ($)$3,200,000 $3,444,835
GAAP Net Income ($)$1,738,363 $1,853,970
Basic EPS ($)$0.26 $0.27
Diluted EPS ($)—$0.27
Distributable Earnings ($)$1,850,975 $2,048,088
Distributable Earnings per Share ($)$0.27 $0.30
Dividends Declared per Share ($)$0.21 (partial for Q3) $0.42 (declared for Q4)

Notes:

  • Q3 interest income/expense detail was not disclosed in the 8-K; CFO provided net interest income in prepared remarks .
  • Q4 includes full consolidated statement detail and reconciliation to Distributable Earnings .

KPIs and Balance Sheet

KPI / Balance SheetQ3 2024Q4 2024Subsequent/As of Mar 1, 2025
Commitments ($)$120.0M (end Q3) $190.9M (end FY) $259.3M
Funded Principal ($)$98.0M (end Q3) $132.6M (end FY) $162.1M
Number of Loans6 (end Q3) 9 (end FY) 10
Weighted Avg Yield to Maturity13% (as of Nov 1) —12.4%
Floating-rate % of Principal——85%
Loan Floors (W.A.)——4.2%
Credit Line Floor——~2.6% (East West)
CECL Reserve$24,000 (3 bps) ~$40,000 (3 bps) —
Total Assets ($)—$317.5M —
Total Equity ($)$112.1M $114.1M —
Book Value / Share ($)$16.19 (Q3) $16.29 (FY) ~$13.93 pro forma with Jan equity raise

Segment/Composition (informational)

  • Geographic concentration: ~83% of commitments in FL and TX .
  • Mix: majority senior loans; management targets continued emphasis on senior with opportunistic mezz participation .

Guidance Changes

MetricPeriodPrevious Guidance/DisclosureCurrent Guidance/DisclosureChange
Dividend per ShareQ4 2024$0.42 declared for Q4 2024 ——
Dividend per ShareQ1 2025—$0.30 declared; Board focused on aligning with DE near-term Lowered
Management & Incentive FeesQ1 2025Normal fees historicallyExpect to waive all management and incentive fees in Q1; potentially spill into Q2 Lowered (waived)
Credit Facility Capacity (East West)OngoingInitial $50M; expandable to $200M; SOFR + 2.75%, floor ~2.63% Management expects to expand toward $200M over next 1–2 quarters Raised (planned)
Capital Structure (Unsecured Debt)2025 planIntent discussed in Q3 Plan to pursue unsecured raise in 2025; use $75M line to avoid cash drag New/Expanded
Earnings Ramp Visibility2025–2026Ramp depends on draw pace 2026 visibility stronger than 2025 due to construction draw schedules and minimum multiples Clarified trajectory

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Portfolio Vintage/QualityNew vintage portfolio; first loan in 2024 “All loans are current and performing” Stable/Positive
Geographic FocusSouthern U.S.; pipeline ~$1.2B 83% commitments in FL/TX; additional Southern states pursued Increasing concentration
Mix: Senior vs MezzEmphasis on senior; opportunistic mezz Majority senior expected; opportunistic sub-debt tranches Consistent
Pipeline Size~$1.2B (Q3) ~$1.4–1.5B active deals Growing
Funding/Draw TimingRamp over next 3–6 months; depends on closings Visibility stronger in 2026; earnings impact delayed by construction draws Deferred earnings realization
Capital StructureEast West line $50M initial; expandable Plan to expand toward $200M; intent for unsecured raise Expanding
NIM Dynamics (Floors)Attractive terms; floors noted Loan floors ~4.2% vs line floor ~2.6%; NIM resilient to rate moves Supportive to margins
Risk/InsuranceHurricane exposure mitigated; fully insured (Q3) —Stable risk management

Management Commentary

  • CEO: “In the fourth quarter, SUNS successfully committed to $75.0 million in deals, and subsequent to quarter-end through March 1, we committed to another $74.8 million in deals.”
  • Executive Chairman: “We expect the manager to waive all management fees and all incentive fees in the first quarter of this year.”
  • CEO: “Currently, 83% of our loan commitments are in Florida and Texas…85% of our current portfolio’s outstanding principal is floating rate, with floors…4.2%.”
  • CFO: “As of March 1, 2025, our portfolio consisted of $259.3 million of current commitments and $162.1 million of principal outstanding…weighted average portfolio yield to maturity of 12.4%.”
  • Executive Chairman: “2026 is actually easier to predict for us right now than 2025,” reflecting construction draw timing and vintage quality .

Q&A Highlights

  • Debt/Interest expense modeling: Interest expense was lower than modeled due to later December deployment; leverage picked up mid-December; Swiss/East West lines repaid after equity raise .
  • Revolver and East West line: $75M revolver repaid right after year-end; East West will be the primary draw for future debt .
  • Senior vs Mezz: Majority of book will remain senior; opportunistic mezz where attractive; senior lenders pulling back creating whole-loan opportunities .
  • Deployment timeline: “Fully deployed” may precede “fully drawn”; earnings impact shifts into 2026 with construction draws and minimum multiples .
  • NIM resiliency: Analyst confirmed floors dynamic; management agreed that either way rates move, SUNS benefits via asset floors and lower-cost financing floors .
  • Fee waivers and capital plan: Q1 fee waivers count toward ~$1M commitment; intent to expand East West toward $200M and pursue unsecured raise, replacing the $75M line to avoid cash drag .

Estimates Context

  • S&P Global Wall Street consensus for SUNS (Q2–Q4 2024 EPS/Revenue/EBITDA and target price) was unavailable at time of request due to data access limits. As a result, comparisons vs consensus cannot be provided and should be treated as unavailable pending SPGI access restoration.

Key Takeaways for Investors

  • Dividend reset to $0.30 for Q1 aligns with DE and fee waivers; watch for dividend growth as construction draws accelerate into 2026 .
  • Pipeline conversion is robust (~$1.4–1.5B), with $75M committed in Q4 and ~$75M post-quarter; sustained origination cadence is a near-term catalyst .
  • NIM protection via asset and financing floors positions SUNS to benefit in both higher or lower rate scenarios—supportive for margin stability and DE .
  • Capital structure optionality: expansion of East West toward $200M and potential unsecured raise in 2025 can scale assets while managing funding costs—monitor timing and terms .
  • 2026 earnings visibility is stronger than 2025 due to construction loan draw profiles; expect a staggered ramp, not a linear quarterly step-up .
  • Portfolio risk profile: new vintage, current and performing loans with concentration in FL/TX; geographic focus benefits from growth fundamentals but warrants monitoring for regional macro/catastrophe risks .
  • Near-term trading watchpoints: fee waiver fade into Q2, pace of deployment/draws, East West line expansion progress, unsecured debt execution, and any additional dividend color as DE trajectory firms .

Appendix: Source Documents

  • Q4 2024 8-K 2.02 earnings press release and exhibits including financial tables, non-GAAP reconciliation, and dividend announcement .
  • Q4 2024 earnings call transcript: prepared remarks and Q&A (two sources) - -.
  • Q3 2024 8-K 2.02 earnings press release and dividend disclosures -.
  • Q3 2024 earnings call transcript -.