Sunrise Realty Trust (SUNS) 7 Nov 242024 Q3 Earnings call transcript

Good morning, and welcome to Sunrise Realty Trust's Third Quarter Earnings Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to 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 September 30, 2024. by Executive our our Officer; Officer. morning Sedrish, Chairman; Chief this Chief our and joined Leonard Executive Tannenbaum, Brian Financial I'm Brandon Hetzel,

for we the our October that XXXX, investment other developments, press beyond. anticipated to market to financial recorded. Before is information future portion X, would results posted and and is things, cause on Replay projections. in Sunrise call and Relations that being note are included is refer performance release statements could I projections begin, differ Investor this factors like that current our inherent call our and release pipeline, and earnings to with certain XXXX our conditions Please of portfolio includes forward-looking predicting statements in recent Realty among results. quarter forward-looking third the in Trust's most yield website statements actual company's at sunriserealtytrust.com XXXX significant uncertainties reflect and from periodic to, respect projections presentation. Today's views materially these subject along and to filings and SEC These conference the with with investor

for our the open Executive that, position. will Q&A. With provide and financial over earnings non-GAAP During the now follows, our uploaded Brandon for remarks, and Brian most refer call, management quarter pipeline. Leonard introductory financial will our as measures. today's non-GAAP Tannenbaum. turn for will including to outlook directly earnings. financial The provide the measures cover conference GAAP Please I lines Len with we'll our reconciliations is comparable Chairman, third on to of distributable website to see an will for call today's measures, will release then that, After the our format call update portfolio

strong part company. of and is a important Gabe. Good with the This I'm funds larger public ability independent of platform consists estate we sourcing, public entity. an estate as in since SUNS platform this underwriting standalone to loans. as earnings the affiliation to you, real with call investing real of SUNS platform. are share first number transactions. we on a continuing pursue our to morning, listing momentum have an commercial the provides that excited Thank TCG conference focused built our welcome and The

sponsors observing continue estate on the had and impact fast-growing United points market. pulling have opportunities SUNS interest refinance borrower see market, We to returns. on commercial positive acquire Southern the noticeable our and portfolios from XX of in debt in With the invest the existing risk-adjusted and real deals rate many to opportunity Reserve's assets either with States Federal back of benefiting seeking buyer strong new conditions to in team the sentiment a or alternative The are in favorable lenders from the focused number cut increase existing September basis banks loans. their providers like a with

We as gradually. for its interest expect outpace estate to down these real tailwinds persist come rates debt continues and demand commercial supply to

pipeline origination its deals, of platform which Given to billion. the SUNS of and $XXX maintained estate active $X.X platform have have deals, trends, attractive partners these and committed approximately continues we positive Year-to-date, an direct real in million closed TCG million. $XXX source our syndicate

the We platform million also signed sheets term X across documentation. have totaling in $XXX

to for, to forward transaction our term we is sheet To-date, have and November look we our X.Xx future. Currently, announcing portfolio. the signed of ratio in a X. we closed had target SUNS leverage closings in additional have X deals As X, every

shareholder largest capital I the and spend of amount a Chairman of Executive SUNS, structure. time our thinking considerable As about

States. West Bank's thrilled and senior to debt. closed just secured East credit West with I'll $XX cost have shareholder balance enhanced I'm future. With up a our Bank an credit secured unsecured As provides a can that capacity. across turn This at us over mine With to facility the SOFR management, commitment expand up that borrowing assets, I competitive revolving yesterday, million $XX the East the we expand an years. believe allow a favorable capital facility to our to stepped am grow to that this has assets valued they with to call giving partner for a million initial offers pleased we credit announce of been in a $XXX expect I floor, that, billion plus in of X.XX% attractive we facility agent. United for terms strategically with facility under returns of over flexibility should Brian. in that Southern the us portfolio with

good Len, everyone. and Thanks, morning,

trading have third company started as productive traded an X. quarter and on We had independent publicly a July we as busy

the quarter, per earnings distributable basic share of average For third generated of stock. weighted common SUNS $X.XX

record and partial previously a paid October As reflected on partial dividend XXXX. we we XX, to disclosed of capital. that quarter were public only experienced quarter the third we XXXX, SUNS on of the dividend cash company drag of as part an common we share XX, September fact shareholders per the independent The for $X.XX for invested

of have Given the for visibility the of $X.XX quarter into per ramping the of we Board the closed SUNS also a Directors August XXXX, XXXX. declared and regular fourth common additional portfolio, deals in dividend share

San and Thompson $XXX commitment Austin, project commitment senior with to developers week, of million Jovie share million Antonio, National to who for a Hotel $XX.X in million $XX.X In $X condominium that senior senior to quarter, a third in to for a a & vision portfolio. million agented real $XX real include million key southern SUNS premier successfully our commitment million $XX.X committed Now Rio, upsize for deals, million of Texas; to was platform commitment million loan loan TCG in estate a quarter by Allen Fort Florida. end closed creating Texas; Panther $XX markets. for to a senior The the our senior in $XX loan a a XXXX, Gardens, million strategy Belterra we $XX.X for Beach in $XX which Texas in a in in turning million Palm Houston, last loan to the of our $XX third Florida. Subsequent reflects the fact, investment just development Lauderdale, estate the the million top-tier for partnering high-quality loan U.S. This of broader the Sixth

opportunities properties. continue which office find the now We residential Notably, XX% portfolio. to our exposure sector, attractive X in we have of to currently comprises

first Our deal assets All in loans portfolio current January is with of and new our comprised are closed XXXX. performing. vintage

described million. funds active our have pipeline our earlier, SUNS million, closing we, successfully TCG through estate in November approximately billion inception $X.X platform totaling and the $XXX partners Len term deals. From As sheets real along committing X, strong remains executed syndicate our affiliated with $XXX on with $XXX million with

are of part To-date, every due the focus sheet will the that and end term documentation transaction We the a deals to to this Additionally, team's on amount for. signed documentation several in fund $XXX credit closed the of extensive year. we with expected in this anticipate the portion preliminary in of line have SUNS in close million allocation policy. selectivity. have We TCG that we with a by diligence borrower its

our Florida, recent like Hurricane were home materially state I'd Finally, investments that impacted. not events Milton our in of in stakeholders of like state the our to reassure light at

the our and This tailoring by insured, and to risks with steps States we mitigate insurance protected. take of risks to proactive All remain of both our the across investments fully align each the coverage company borrowers ensures Southern specific are United investment. well

space lending will Hetzel, knowledge witnessing identify deep the assets, us for ahead, particularly lending that today market foreseeable and my across lending markets. that the our our is I I new environment to now of CFO. call observed act are the focused unique of and best markets. strong the Brandon believe estate will U.S. turn on team geographic I southern the early that, allow that the in over one opportunities attractive opportunities continue vintage future, the we building we have local decisively market leveraging These Looking competitive remain optimistic My XX-plus year our expertise, a to commercial in in relationships across I that remain real career. With portfolio target continue and to strengths

Thank you, Brian.

X and income shareholders across non-cash compensation million average excluding average common million current share $X.X XXXX, net and business. overall distributable per weighted common represents accordance income GAAP, performance gains stock quarter million expense, and of losses. net or basic believe $X.XX as income outstanding For third the of principal basic provision with $XX the for $X.X quarter million commitments weighted Distributable of ended share. GAAP or generated losses had interest of items with of the providing per we September and of SUNS ended XX, to XXXX earnings We distributable expected $X.XX helpful $X.X such of computed net credit spread We is the in in $XXX or current million earnings unrealized loans. earnings assessing

November that X, XX, our X of XX%. for points of of basis or $XXX of and also of approximately loans million loans consisted a current As XXXX, $XXX our to X as weighted is of maturity to with across portfolio outstanding XXXX, million carrying $XX,XXX I'd principal value. commitments yield reserve average like portfolio at note our September CECL

XX, as to Directors of January $XXX million, for facility facility available $XX dividend of to quarter XXXX, with needed, paid revolving on I'm a future December to Len support of flexibility with million option on to subject $X.XX commitment and on provides initial East X, The of a paid share that the credit on The the common portfolio a secured September commitments participation. as we XX, fourth of in dividend XXXX. regular XXXX. record pleased repay increase the declared October XXXX, enhancing to Board collateral $X.XX share facility borrow growth to XXXX, and matures will earlier, of report closed shareholders dividend of This to senior to up for and Bank. third XX, As per lender XXXX successfully mentioned November XXXX. capitalize our quarter has SUNS West allows financial us an of record total and further opportunities. On XX, be shareholders also This per

over As shareholder start our value dividend, declaration back $XXX.X fourth the book XX, million, turn the of was and to the quarter XXXX, value will our was have book our September total approximately of now to Q&A. been share I would operator Absent it that, $XX.XX. equity $XX.XX. With the per

[Operator the [Operator Instructions] Kaur Our Raymond of Jasmeen from comes with question line first James. Instructions]

lenders environment competitive are in talk the which the the don't But have. legacy about markets are active? of given you James. you guess, talk lot with seeing come in? I Laws Raymond back I Stephen environment? competitive on I know wanted pipeline the follow-up you you is to first, Are anybody guys can the sidelines still Southeast portfolio guys maybe question. you issues, on This a where about can

sure. group Southern we their goes we've that back to around of been Yes, after. it's are advisors we type is noticeable I'd market. of it's stayed in pickup very for a that the not last the say are months. number seen definitely bumping positive the What which about the to on -- side seen if looking we still into sponsors groups few going the the we've in the in current or any consistent out fact Stephen, transactions on excited we competition. the for in guess of sole haven't more same seen pickup we're this opportunities, as There really pipeline. that several U.S. that there We've a are are have seeing the refinance I but there, basis what been

-- And portion residential even big sort so encouraging is that's with the encouraging. further those of of which on a that's side,

at of view from loans? looking attractive kind us new what you're then debt to as about a get risk-reward senior versus you standpoint? in development Appreciate trying And Is think really acquisition And most a you do or of new the it along the refinance? you Is little of it what seeing And seeing? as pipeline? financing? those lines, investments relative then subordinated provide the pipeline, you value kind the color of construction Just there. what's comments opportunities? an idea between stuff, Are can new that

the groups stuff additional refinance starting come put and what has a majority step to more been right we've that on us, slowly of that equity to finding transactions they now is the these us commitment that it, the are as prepared down. we've the into peaked exciting to who been has because outlook rates we're the positive most that That meant value that seen time there. borrowers Yes, their for have because really And long-term have and is are now most on refinance much is now sure. have up, side. The spending --

lot It's relatively does transaction that sellers, a the is there and refinancing opportunities. buyers I so from From be result, muted. up. but disconnect a as say new of a have the picking And that to And it still bit would side, encouraged the values that's does really bottomed. There's it pickup. seem seem more still

really we're seen the been most then we've on focusing of in senior composition that and helpful. And that's side. So is between is terms sub, senior stuff that the of best the that the risk-adjusted on lastly,

getting paid really to to be speak valuable. You're capital entire It's the able for stack.

our closing West our facility helpful of So East we've been towards is that. that announced doing Certainly, very effort.

-- skewing the say, is of is senior side. stuff, I would skewing the most So certainly towards

may. I if more, one And Great.

say, initial kind and your as see end by over due think as diligence, ramp the and pipeline of about the how guys kind it ramping at months? to expect X look to takes first I to quarter? Or portfolio, close time feel the still do the you that, you you deals the of X do of next portfolio the do Just good

going that and we we closed to deals, documentation. the give to forward we forward projections have the want to deal have longer when a not and not something Len. is signed we're single always term have actionable things don't We're -- take mislead. give or sheet we going every this because But say we Well,

months. were of to know guess the the that, in So just we that If fully happens. next expect somewhere X those. I you timeline And close never all to

can I you job was make hoping easy. my Well,

Yes.

is just billion, billion So I get $X news But to job to plenty The make deal right, a there. flow. don't took you, lot good get there's pipeline, this remind your of $XXX though easier. to it's even

is our So selectivity running still about X%.

is we X% XX team actually for the deals do, X through deal X%. every So going to that

selectivity. really So it's a low

Len, QX was on are for numbers of looking I there, sheet a right top my but activity. cheat investment

congratulations a and ramp comfortable. this And So your results on the as first quarter I it. in Appreciate feel solid public entity period.

Thanks, Steve.

with from question Citizens Muller JMP. comes next Our the Chris of line

Good with you here. to public be on call for first

I So little Stephen maybe a at bit question take I'll a from Laws. guess different stab

current you timing, size guys kind in not place, can the So and financing base given place what just portfolio support? of equity that's but in right everything Given sizing maybe now?

might will who a good So is lot is another what it, know firm it doing space, think in structuring we this the like about really job you think structuring I a where you in the leverage X/X ultimately equity, X/X X.Xx medium-term, which of the drawn. about half sub-debt and And be of that's X/X target. that to senior, how senior will be get sort

step is at debt sub partner you seek a that is And and think as great entity, get attractive utilize then in we'd very the first before ultimately, East line which And know. line. them get we've I and West the this another do public So point. to market, done with in

is that will distributable it in Got forward in that already, be I $X.XX the it. run fourth going you that dividend, ballpark area? to $X.XX fair EPS on declared And guys and that quarter then that given rate, guess assume

we get Again, we've should we invested, forward. But that already process. clearly, numbers as and going ramp that more and can't -- earnings the go up forecast portfolio started

Thank conference I'm no participation. call. showing this questions Thank does your you. for This And you further today's conclude time. at

disconnect. now may You