Good day, and thank you for standing by. Welcome to the Sunrise Realty Trust Second Quarter 2025 Earnings Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today, Gabriel Katz, Chief Legal Officer. Please go ahead.

Good morning, and thank you all for joining Sunrise Realty Trust's earnings call for the quarter ended June 30, 2025. 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 June 24, 2025 press release and is posted on the Investor Relations portion of our website at sunriserealtytrust.com, along with our second quarter 2025 earnings release and investor presentation. Today's conference call includes forward-looking statements and projections that reflect the company's current view 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 quarterly report on Form 10-Q 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 second quarter earnings release uploaded to our website for reconciliations of the non-GAAP financial measures 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 results. After that, we'll open the lines 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 second quarter 2025 earnings conference call. I am pleased with all the progress that SUNS has made over the course of the year. For the quarter ended June 30, 2025, SUNS generated distributable earnings of $0.31 per share of common stock, which covered our dividend of $0.30 per share. Turning to our senior secured revolving credit facility. I am pleased to announce that during the second quarter, we added $90 million of additional commitments from City National Bank of Florida and EverBank. We now have $140 million of commitments under our senior secured credit facility, which can expand to $200 million. I believe that having 3 institutional banks in our credit facility highlights the strength of SUNS' lending platform and the trust that we have built with our financing partners. As a reminder, this facility carries a very attractive interest rate at 2.75% over SOFR with a 2.63% floor. This facility provides us the financial flexibility to pursue attractive opportunities and drive continued growth in our target markets. As we look ahead in our capital structure, we believe the next avenue for debt capital will be in the unsecured markets. I will now turn it over to Brian to discuss the market and our portfolio.

Thank you, Len, and good morning. Before turning to our current portfolio and pipeline, I wanted to take a minute to discuss what we're seeing generally in the real estate market. Beginning in Q1 2025, we saw a noticeable pickup in the U.S. commercial real estate market, which somewhat slowed in Q2 due to tariffs and macroeconomic conditions. Recently, this investment activity has picked up again, leading to an increased demand for capital with many borrowers seeking debt for refinancings or acquisitions. We believe that this increase in activity is attributable to 2 main factors: one, supply clearing the market as previously construction activity was somewhat muted; and two, an expectation that short-term interest rates will begin a slow path downward. As interest rates eventually begin to creep downward, we believe that this will continue to act as a catalyst for new deal activity. As noted, during the second quarter, we saw a decrease in transaction activity, which we attribute in part to global uncertainty around tariffs as lenders and borrowers analyze how this may impact construction projects and business activity in general. As we have moved into the third quarter, along with the increase in transaction volume, we have also seen an increase in competitors reentering the market. Many of these competitors are focused on financing complete or near complete business plans where the underlying real estate is already producing cash flow. At SUNS, we primarily focused on transitional real estate projects that have yet to reach stabilization or near stabilization. In this segment of the market, we are still seeing robust deal flow, and we continue to see less competition. Our focus remains on this segment as we believe this part of the market still provides the strongest risk-adjusted returns. SUNS originations for the quarter ended June 30,…

Thank you, Brian. For the quarter ended June 30, 2025, we generated net interest income of $5.7 million and distributable earnings of $4.1 million or $0.31 per basic weighted average common share and had GAAP net income of $3.4 million or $0.25 per basic weighted average common share. We believe that providing distributable earnings is helpful to shareholders in assessing the overall performance of SUNS' business. Distributable earnings represents net income computed in accordance with GAAP, excluding noncash items such as stock compensation expense, unrealized gains or losses and the provision for current expected credit losses. For the quarter ended June 30, 2025, the Board of Directors declared a $0.30 dividend per share. The dividend was paid on July 15, 2025, to shareholders of record as of June 30, 2025. We anticipate that the Board of Directors will declare the third quarter dividend on or about September 15, 2025. We ended the second quarter of 2025 with $360.2 million of current commitments and $251 million of principal outstanding spread across 13 loans. As of August 1, 2025, our portfolio consisted of $360.2 million of current commitments and $253.2 million of principal outstanding across 13 loans with a weighted average portfolio yield to maturity of approximately 12.2%. I'd also like to note that as of June 30, 2025, our CECL reserve was approximately $626,000 or 25 basis points for our loans at carrying value. As of June 30, 2025, we had total assets of $256.5 million, and our total shareholder equity was $184.3 million with a book value of $13.73 per share. With that, I will turn it back to the operator to start the Q&A.

[Operator Instructions] First question comes from Randy Binner with B. Riley Securities.

Okay. So a quick question, and I'm probably going to look at Slide 13 on the deck with the portfolio detail. But related to the 5 term sheets for $275 million that's in the pipeline, can you kind of size where that kind of interest rate profile is on that?

Sure. Thanks for the question. Yes, so the 5 that we're talking about are, firstly, all first mortgages. And then as it relates to the spread, and we've seen spreads stay relatively strong, they are currently above the current blended portfolio rate of our existing loans.

Okay. Awesome. And then on the -- so the Park City loan is smaller. But it was interesting in that maybe that has a spread that's higher. And it's also in a new geography. So could you speak to if there was something interesting about that one from a return perspective? And then if you're kind of broadening the aperture on geographies you're looking at?

I think -- it's Len speaking. I think the Park City loan is a much bigger loan. We took part of it. So we did not lead or agent that one, but we found an attractive value, and we were brought in as a syndicate partner.

Okay. Is it -- should we think of the West or the Intermountain West as being an attractive area in general? Or was that just more opportunistic?

I would say that as we sort of think about the southern half of the U.S., right, there are certain pockets where it matches up with our growth expectations. And those are the areas that we'll go to. I think expect that we'll continue to see a substantial percentage of our portfolio in the current states that we're operating in, sprinkle in Georgia, sprinkle in the Carolinas, a couple of Tennessee, but that will be the majority of what we're doing. But we will see opportunistically deals that still fit those -- the profile of the opportunity set that we think is interesting, and we'll take advantage of that. And this one was one of those we're really good about -- we felt really good about the risk in this deal given coverage, and we felt great about the rate of return. And so we opportunistically went for it.

Our next question comes from Jason Sabshon with KBW.

Yes, it would be great to get more color on your origination targets for the second half of 2025 and 2026. And within that, what's the split of senior and subordinate loans?

Yes. Jason -- do you want to go ahead, Len?

Look, we try not to forecast, as you can see from the loans slipping from the second -- the last quarter to this one. These loans can take a long time to close. It's kind of -- can be kind of frustrating at times. You can think a loan closing can be anywhere from a month or 2 to one of them is 8 months. And so you've seen one loan slip from quarter-to-quarter. What I'm really pleased about is the 5 loans that we've signed and in documentation, which means they're in active underwriting. I can't tell you whether they close in the third quarter or the fourth quarter or all of them close, but we certainly -- most of them will close. And we'll have those closings going on this year. Beyond that, I'm pretty excited, too. I think we've got a number of other ones in the wings that we're contemplating, but they're not signed. So much higher chance of a loan closing after it's signed and we have to deposit and documentation.

Yes. And I would just say generally, we're seeing real interesting activity. But as Len said, it's just unclear, right, from a transaction closing perspective as to when they actually close. But I do feel really encouraged by our pipeline and what we're seeing out in the marketplace.

Got it. That makes sense. And then on the loans that are currently on your books, the Florida condo loans, in your view, how is that market performing overall? And specifically, how are those projects progressing?

Sure. Yes. Right now, the projects that you're talking about are performing as expected. There hasn't been any noticeable decrease in activity. I mean the nice thing certainly about a couple of our loans in the Florida area that you're talking about is the price points are on the more "affordable" side of the space which is obviously opening up the aperture to a lot more buyers. So to date, we're seeing that activity relatively stay the same. There's been some moderation, but the business plan for the most part is on track there.

Great. And then separately, you talked about your leverage target at scale being 1.5x with part of that coming from a credit facility and another portion from unsecured debt. So I guess what's like the target time line for scaling leverage and any potentially unsecured issuance?

As you know, we have a $75 million line that's not drawn, right, Brandon?

It's not.

Yes, that's not drawn. So we want that line drawn to make it more cost efficient of capital. We're monitoring the unsecured market. As I said in my remarks, that's where we're going to go next or that's where we plan to go next, assuming the market cooperates. You also have to do deal timing. We have these deals that are closing in the ones and the wings. And to the extent that we have funded deals that need additional firepower, we're going to have to go to the unsecured market and raise it. So that's the project for the fourth quarter.

And just to clarify, the $75 million line is an unsecured line on top of our $140 million East West Bank-led credit facility.

Our next question comes from Tyler Batory with Oppenheimer.

I got disconnected earlier, so I apologize if these were already addressed. But my first question is on the macro and the market backdrop in terms of more competitors in the market. It sounds like that's not something that's impacting you right now, but it's also something that you've called out. So I'm curious if you can just talk a little bit more about what you're seeing from the competition. I'm not sure if there's perhaps a dynamic where that gets even more intense as the year goes on, just given there's more opportunities out there, perhaps drawing some additional interest in where you're operating here.

Tyler, it's Brian. Thanks for the question. Yes. So the heaviest competition that we have seen has been in the near stabilized, stabilized part of the financing markets and a large part of that has been on the multi side. That's trading much tighter right now. I think largely based upon the fact that the back leverage CLO securitization markets have come back, and that has really enabled guys to compress yields competitors. That has been a smaller component of our business. We certainly like using with it across our portfolio, having the ability to do deals like that, but it's been a smaller component. And really more of the stuff that we're playing in is more transitional where we can use our expertise in structuring. There's definitely been more competitors come into that space, but we still have seen, for the most part, a good chunk of opportunities there. I expect that, that will continue. Sure, I think there'll be more competitors coming in. But in terms of the opportunity set and as the market more normalizes, I think the opportunity set is going to increase. So I think overall, I feel really good about us continuing to be able to lean into the opportunities in that place. And then, look, as loans are looking to be refinanced from a bridge financing perspective, right, prior to a more securitized, stabilized takeout financing, I think that's really where also there'll be some opportunities to do some stuff.

Okay. I also wanted to double-click on the interest rate topic, and this is something that's come up in some conversations with the clients. I want to be sure that it gets picked up. This is also something that you briefly mentioned in the prepared remarks. But just thinking about this environment where potentially, hopefully, interest rates are going to be gliding lower -- what does that mean in terms of your business? What does that mean potentially in terms of your financials? How do you think about net interest margin expanding if that does play out the rest of this year in the back half?

So that's the really good way -- good thing about how we're positioned is these construction loans take a long time to fund. I think we've said that in previous quarters, and they're locked in on really good floors. I think our average floor is about 4.1%. And if you think about floors, maybe in the new deals, they've come down a little bit because you're right, there people are anticipating interest rate cuts. I think maybe the average floor in the newer deals, I'm not saying any of them close, I'm not saying we're able to complete any of them, are around 3.75%. So they're coming down a little bit, but that leaves a lot of room against our credit line at 2.6% floor to capture some really nice net interest margin. Of course, you have to get drawn first as you don't get the margin. The other thing, I think a drop in interest rates really helps us with as we continue to commit the portfolio to really good lien loans. I think Brian said, these are first mortgage loans really that are in the pipeline today is we'll be able to do better in the unsecured markets. So look, the fourth quarter, we're keeping our eyes open and we watch Ladder Financial. Congratulations to them getting their first investment-grade rating that I've seen in the mortgage REIT market. I think they're going to set a great benchmark for the industry. Remember, I come out of the business development companies, the BDCs, and we were one of the top 5 investment-grade rated BDCs. And that industry compressed. So I think the good mortgage REITs are going to start moving towards Ladder's type of cost of capital, obviously not Ladder's, but towards Ladder's cost of capital. And that's really going to benefit all of the good mortgage REITs that are going for the lower leverage like we are. Remember, we don't have any repos. We're going through a traditional leverage model. The basic leverage model, which we said over and over again, is about 1/3 equity, 1/3 sub debt, 1/3 senior with the senior half drawn for a target leverage of 1.5x. And so we're right on track with performing on that.

And I'm not showing any further questions at this time. I'd like to turn the call back over to Brian for any further remarks.

Well, thank you all for joining the call today. We are encouraged by this increased deal activity in our pipeline in the areas that we're seeing, and we look forward to sharing our progress with all of you on the next quarter call. Goodbye.

Thank you. Ladies and gentlemen, this does concludes today's presentation. You may now disconnect, and have a wonderful day.