Sunrise Realty Trust (NASDAQ:SUNS) used its fourth-quarter and full-year 2025 earnings call to outline portfolio activity, credit developments, and its view of a commercial real estate lending market the company described as increasingly bifurcated. Management also addressed the recent foreclosure of a hospitality-backed loan and provided updated figures on commitments, earnings, and its revolving credit facility.
Management: A transitional year for real estate markets
Executive Chairman Leonard Tannenbaum said the company remained focused on providing loans to sponsors pursuing transitional real estate business plans, “primarily in the Southern United States.” He said portfolio construction remained similar to how the year began, emphasizing residential loans that are mainly senior secured and floating rate.
Within the TCG platform, management reported that during the fiscal year ended December 31, 2025, the platform closed on $368 million of loans, with Sunrise committing $247 million and funding $224 million. The company also received $52 million of repayments during 2025. As of February 27, management said the TCG platform had closed on $91 million of loans in 2026, with Sunrise committing $62 million.
Fourth-quarter earnings, dividend declaration, and credit facility update
For the quarter ended December 31, 2025, Sunrise reported distributable earnings of $0.27 per basic weighted average common share. Tannenbaum said results were affected by the company placing a loan tied to Thompson Hotels in San Antonio on non-accrual during the fourth quarter, reducing distributable earnings by about $0.03 per share. He said distributable earnings would have been approximately $0.30 per share had the loan remained on accrual.
Looking ahead, the board declared a dividend of $0.30 per share for the quarter ended March 31, 2026. In the Q&A portion of the call, Tannenbaum said the board’s goal was “not to overpay” the dividend and that it felt comfortable the payout would be covered “over the course of the next 6-12 months in aggregate.”
Management also disclosed that after quarter-end it increased its revolving credit facility to $165 million with the addition of Customers Bank, which committed $25 million. The facility, originally established in November 2024, remains expandable to $200 million and carries an interest rate of 2.75% over SOFR with a 2.63% floor, according to Tannenbaum.
Market backdrop: bifurcated lending and a focus on structured transitional loans
CEO Brian Sedrish said the company has observed a “clear bifurcation” across the commercial real estate lending market between lenders that have largely worked through problem loans and those still constrained by legacy issues. He noted that many lenders “on offense” remain focused on multifamily and industrial assets, where spreads are tight and continue to compress.
Sedrish said Sunrise’s approach is to originate commercial mortgage loans for sponsors executing transitional business plans that require more “structured bespoke” solutions. He argued that the company’s focus on “structuring complexity and asset-level expertise” allows it to generate stronger unlevered returns and reduces reliance on financial leverage to meet yield targets.
In response to questions about early-2026 market volatility and rising rates, Sedrish said recent volatility has created uncertainty and could affect whether deals “make sense,” but he also said dislocation can create opportunity for the company’s strategy. He cited tightening spreads in multifamily and industrial as not being a core area of focus for Sunrise, and said that dynamic can widen the gap for transitional deals.
Originations and portfolio activity
Sedrish said Sunrise closed on $56 million of commitments in the fourth quarter of 2025. That included:
- About $26 million in a financing package comprised of two senior loans for Collection Suites, described as a small-bay industrial for-sale development with two projects in Doral and West Palm Beach, Florida.
- A $30 million senior bridge loan to finance a seven-story Class A retail property in the Galleria section of Houston, Texas.
From year-end through March 1, management said Sunrise committed approximately $62 million to two loans originated by the TCG real estate platform: a $14 million senior bridge loan commitment for the acquisition of a premier ranch property in Southern Colorado (which management said has already been repaid), and a $48 million B-note to refinance a 15-property portfolio of Graduate by Hilton Hotels.
In the Q&A, Sedrish said the company’s reported loan pipeline declined to $652 million from $1.7 billion in the prior quarter, reflecting a more focused approach that removed items that could create “noise and distraction.” He said management viewed the $650 million pipeline as “really strong,” particularly relative to the amount of capital available to invest.
Thompson Hotel foreclosure and interest-rate positioning
Management devoted significant attention to the Thompson Hotel in San Antonio, with Sedrish stating that on March 3 the company took ownership of the property. He described the asset as a 20-story mixed-use hotel and condominium with 162 hotel rooms, delivered and opened in 2021, located along the Riverwalk, and viewed as a Class A hotel.
Sedrish attributed the foreclosure to slower-than-expected ramp in operations, a wave of recent hotel deliveries in the market that has constrained cash flows, and what he described as challenges around management of the hotel. He said the sponsor’s ability to continue supporting the asset became more difficult over time and that the sponsor ultimately did not have the capacity to continue servicing the loan until cash flow improved.
Sedrish also said the loan carries a personal guarantee from the borrower covering certain shortfalls, which the company intends to pursue. He added that prior to and after the foreclosure, multiple hospitality companies had inquired about acquiring the asset, and management expects to hire a “premier broker” to market the property within about a week.
Tannenbaum said the loan had been on the company’s watch list and that the foreclosure was “clean” with no delay. He said the company believes it will find a buyer and suggested the asset should not remain unresolved into the next quarter. He also noted that the non-accrual asset is removed from the borrowing base, affecting both availability under the credit facility and earnings, and said resolving it would help restore momentum and expand the borrowing base.
Separately, Sedrish said Sunrise’s portfolio was positioned favorably for interest rates, with 97% of outstanding principal floating rate and floors that are 3.9% weighted average. He said those loan floors, combined with the company’s credit line floor of roughly 2.6%, could present an opportunity to expand net interest margin.
On the financial side, CFO Brandon Hetzel reported net interest income of $5.2 million in the fourth quarter and $21.6 million for the full year. The company generated distributable earnings of $3.5 million, or $0.27 per basic share, in the quarter and $15.2 million, or $1.19 per basic share, for the year. GAAP net income was $1.6 million, or $0.12 per basic share, for the quarter and $12.1 million, or $0.93 per basic share, for the year.
Hetzel said the company ended the fourth quarter with $420.7 million of current commitments and $305.5 million of principal outstanding across 16 loans. As of February 27, 2026, excluding Thompson Hotels, he said the portfolio consisted of $442.1 million of current commitments and $337 million of principal outstanding across 16 loans, with a weighted average yield to maturity of about 12%.
He also said the CECL reserve was approximately $2.1 million, or 68 basis points, for loans held at carrying value as of December 31, 2025. Total assets were $310.2 million at year-end, with total shareholder equity of $182 million and book value of $13.56 per share.
About Sunrise Realty Trust (NASDAQ:SUNS)
Sunrise Realty Trust is a real estate investment trust (REIT) that focuses on acquiring, owning and leasing convenience store and fuel retail properties under long-term net leases. The company targets sale-leaseback transactions and joint-venture investments with high-credit tenants in the convenience retail sector. Sunrise Realty Trust’s portfolio comprises single-tenant properties that benefit from predictable cash flows, structured lease agreements and tenant-driven site improvements, providing exposure to a segment of the retail real estate market that aligns closely with consumer essentials.
The company’s primary business activities include sourcing and underwriting new property investments, negotiating sale-leaseback and ground lease transactions, and managing asset performance throughout the lease term.
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