Sunrise Realty Trust, Inc.

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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes and other information included in this Quarterly Report on Form 10-Q (the “Quarterly Report”). This discussion and analysis contains forward-looking statements that involve risks and uncertainties which could cause our actual results to differ materially from those anticipated in these forward-looking statements, including, but not limited to, risks and uncertainties discussed under the heading “Cautionary Note Regarding Forward-Looking Statements” in this Form 10-Q, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “Annual Report on Form 10-K”) and our other filings with the SEC.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report, filed by Sunrise Realty Trust, Inc. (the “Company,” “SUNS,” “we,” “us,” and “our”), and the information incorporated by reference herein, or made in other reports, filings with the SEC, and press releases contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we intend such statements to be covered by the safe harbor provisions contained therein. These forward-looking statements are based on our current intent, belief, expectations and views of future events. The forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results or performance, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “project,” “could,” “would,” “will,” “can,” “continuing,” “may,” “aim,” “intend,” “ongoing,” “plan,” “predict,” “potential,” “should,” “seeks,” “likely to” or words or phrases of similar meaning. Specifically, this Quarterly Report includes forward-looking statements regarding the Merger (as defined below), including the benefits and financial and operational impact thereof; our portfolio and strategies for the growth of our commercial real estate lending business; our working capital, liquidity and capital requirements; potential state and federal legislative and regulatory matters; our expectations and estimates regarding certain tax, legal and accounting matters, including the impact on our financial statements and/or those of our borrowers; the amount, collectability and timing of cash flows, if any, from our loans; our expected ranges of originations and repayments; estimates relating to our ability to make distributions to our shareholders in the future; and our investment strategy.

These forward-looking statements reflect management’s current views about future events, and are subject to risks, uncertainties and assumptions. Our actual results may differ materially from the future results and events expressed or implied by the forward-looking statements. Key factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:

•our ability to identify a successful business and investment strategy and execute on our strategy;

•the ability of our Manager to locate suitable loan opportunities for us and to monitor and actively manage our portfolio and implement our investment strategy;

•our ability to successfully realize all of the expected benefits of the Merger or that such benefits may take longer to realize than expected;

•our ability to meet our expected ranges of originations and repayments;

•our ability to obtain our target mix of loan and collateral types with our expected ranges of yields;

•the allocation of loan opportunities to us by our Manager and our ability to close those loans;

•changes in general economic conditions, in our industry and in the commercial finance and commercial real estate markets;

•our future repurchases of our common stock under our Repurchase Program (as defined below);

•we have limited history of operating as an independent company, and our historical financial information is not necessarily representative of the results that we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results;

•the state of the U.S. economy generally or in the specific geographic regions in which we operate, including as a result of the impact of natural disasters;

•the impact of a protracted decline in the liquidity of credit markets on our business;

•the amount, collectability and timing of our cash flows, if any, from our loans and other investments, including investments in real estate acquired through foreclosure and held or sold through joint ventures;

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•our ability to obtain and maintain competitive financing arrangements;

•our ability to achieve our expected leverage;

•changes in the value of our loans and other investments, including investments in real estate acquired through foreclosure and held or sold through joint ventures;

•losses that may be exacerbated due to the concentration of our portfolio in a limited number of loans and borrowers;

•our investment and underwriting process;

•the rates of default or recovery rates on our loans, including our ability to realize value from collateral and real estate acquired through foreclosure;

•the degree to which our hedging strategies may or may not protect us from interest rate volatility;

•the availability of investment opportunities in mortgage-related and real estate-related instruments and other securities, and our ability to reinvest proceeds from loan repayments, sales and other realizations in a timely manner and on favorable terms;

•interest rate mismatches between our loans and our borrowings used to fund such loans;

•the departure of any of the executive officers or key personnel supporting and assisting us from our Manager or its affiliates;

•impact of and changes in governmental regulations, tax law and rates, accounting guidance, tariffs and similar matters;

•the impact of a changing interest rate and inflation environment on our results of operations, cash flows and the market value of our loans;

•our ability to maintain our exemption from registration under the Investment Company Act of 1940 (the “Investment Company Act”);

•our ability to qualify and maintain our qualification as a real estate investment trust (a “REIT”) for U.S. federal income tax purposes;

•estimates relating to our ability to make distributions to our shareholders in the future;

•our understanding of our competition;

•market trends in our industry, interest rates, real estate values, the securities markets or the general economy;

•we may issue shares of preferred or common stock in the future, which could dilute your percentage ownership of SUNS;

•use of proceeds of our securities offerings; and

•litigation, including costs associated with prosecuting or defending claims and any adverse outcomes.

The above list of factors is not exhaustive or necessarily in order of importance.

Actual results may differ materially from those expressed in or implied by these forward-looking statements as a result of various risks and uncertainties, including, without limitation, those described below and elsewhere in this Quarterly Report, including in Part II, Item 1A, “Risk Factors,” and in our Annual Report on Form 10-K, including in the section entitled “Risk Factors,” as well as in our subsequent filings with the SEC. These forward-looking statements speak only as of the date of this Quarterly Report. Except as required by applicable law, we undertake no obligation to update or revise any forward-looking statements contained in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events.

Overview

SUNS is a Maryland corporation that was formed on August 28, 2023 and that made its first investment in January 2024. We are a real estate focused debt fund, actively pursuing opportunities to finance transitional commercial real estate projects located across the Southern U.S. We are an integral part of the platform of affiliated asset managers under the Tannenbaum Capital Group (“TCG”).

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Our investment focus includes originating or acquiring loans backed by single assets or portfolios of assets that typically have (i) an investment hold size of approximately $15-100 million, secured by CRE assets, including transitional or construction projects, across diverse property types, (ii) a duration of approximately 2-5 years, (iii) interest rates that are determined periodically on the basis of a floating base lending rate (e.g., Secured Overnight Financing Rate (“SOFR”)) plus a credit spread, (iv) a loan-to-value (“LTV”) ratio of no greater than approximately 75% on an individual investment basis and (v) no more than approximately 75% LTV across the portfolio, in each case, at the time of origination or acquisition, and are led by experienced borrowers and well-capitalized sponsors with high quality business plans. Our loans typically feature origination fees and/or exit fees. We target a portfolio net internal rate of return (“IRR”) in the low-teens, which we believe may increase to the mid-teens after including total interest and other revenue from the portfolio, including loans funded from drawing on our leverage, net of our interest expense from our portfolio lenders. We are also targeting a near to mid-term target capitalization of one-third equity, one-third secured debt availability and one-third unsecured debt. We do not expect to be fully drawn on our secured debt availability and, as a result, we are targeting an expected leverage ratio of 1.5:1 debt-to-equity.

We are an externally managed Maryland corporation and elected to be taxed as a REIT under Section 856 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2024. We believe our organization and current and proposed method of operation will enable us to qualify as a REIT. However, no assurances can be given that our beliefs or expectations will be fulfilled, since qualification as a REIT depends on our continuing to satisfy numerous asset, income, distribution and other tests, which in turn depends, in part, on our operating results and ability to obtain financing. We also intend to operate our business in a manner that will permit us to maintain our exemption from registration under the Investment Company Act.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period. As a result, we will not be subject to the same implementation timing for new or revised accounting standards as other public companies that are not emerging growth companies, which may make comparison of our financials to those of other public companies more difficult.

We will remain an “emerging growth company” until the earliest to occur of the following: (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act, (b) in which we have total annual revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which generally means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1 billion in non-convertible debt securities during the prior three-year period.

Developments During the Quarter Ended September 30, 2026:

Updates to Our Loan Portfolio During the Quarter Ended September 30, 2026

On July 17, 2026, our senior term loan and a residential development project revolver for various residential development projects in Palm Beach Gardens, FL, were repaid in full. The outstanding principal balances of the senior term loan and residential development project revolver, on the date of repayment were approximately $31.6 million and $23.8 million, respectively. In connection with the repayment, the Company recognized approximately $0.2 million of default interest and breakage fees.

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Dividends Declared Per Share

During the three and nine months ended September 30, 2026 and 2025, we declared the following cash dividends:

Recent Developments

Loan Portfolio Recent Updates

In October 2026, we entered into a $2.1 million senior secured construction loan for an additional residential development in Park City, Utah, in which we have an existing participation interest as previously disclosed, which was fully funded at closing. The loan bears interest at rate of Prime plus 3.25%, and matures on December 1, 2028.

Sale of San Antonio Hotel Property

On October 9, 2026, the Lex Ave JV completed the sale of its San Antonio hotel property for a purchase price of $41.0 million, subject to customary closing adjustments and transaction costs. The transaction was financed through a combination of $9.0 million in cash paid by the buyer and $32.0 million in seller financing provided by the Company and its affiliated co-lender.

In connection with the sale, we and our affiliated co-lender provided $32.0 million of senior secured seller financing to the purchaser (the “Seller’s Note”), of which our share was $20.8 million. We recorded a new loan with a principal balance of $20.8 million and an original issue discount of approximately $0.3 million. The Seller’s Note bears interest at a fixed annual rate of 8.0% through July 31, 2027, increasing to 9.0% from August 1, 2027 through its initial maturity date of July 31, 2028. The borrower has a one-time option to extend the maturity date for an additional 12 months, through July 30, 2029, during which the interest rate increases to 10.0%.

As a result of the sale, we expect to recognize a loss of approximately $0.9 million, primarily attributable to working capital adjustments and the allocation of losses from the Lex Ave JV, partially offset by cash proceeds received in connection with delayed interest payments and loan modification fees collected.

Merger with Southern Realty Trust Inc.

As previously reported, on August 5, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Southern Realty Trust Inc. (“SRT”) will merge with and into Sunrise Merger Sub, LLC, a Maryland limited liability company and a wholly owned subsidiary of SUNS (“Merger Sub”), with Merger Sub continuing as the surviving entity (the “Merger”).

On October 23, 2026, we held a special meeting of the Company’s shareholders (such meeting, the “Special Meeting”). At the Special Meeting, holders of our common stock approved the issuance of approximately 8.5 million shares of our common stock. Approval of the Merger by SRT shareholders was obtained at SRT’s special meeting of shareholders on October 23, 2026.

On November 5, 2026, the Merger was completed pursuant to the terms of the Merger Agreement. At the effective time of the Merger (the “Merger Effective Time”), each outstanding share of SRT common stock, par value $0.01 per share, was converted into the right to receive (i) 1.45 shares of common stock and (ii) from SUNS Manager, an amount in cash per share equal to $0.05. No fractional shares of common stock were issued in connection with the Merger. As a result, we

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issued 8,464,977 shares of common stock as consideration for the Merger resulting in 21,980,828 shares of common stock issued and outstanding as of the Merger Effective Time.

As of the Merger Effective Time, the size of the Company’s Board of Directors increased by one member (the “SRT Director Designee”) and the SRT Director Designee was appointed to the Company’s Board of Directors.

Supplemental Unaudited Pro Forma Financial Information

The following table presents selected unaudited pro forma combined financial information of the Company and SRT as of September 30, 2026, as if the Merger had occurred on such date:

Amended and Restated Management Agreement

At the Merger Effective Time, we and SUNS Manager entered into an Amended and Restated Management Agreement (the “A&R Management Agreement”). The A&R Management Agreement supersedes and replaces the existing Management Agreement by and between us and SUNS Manager, dated February 22, 2024 (the “Existing Management Agreement”).

The A&R Management Agreement includes the following terms and provisions:

•reduces the incentive compensation hurdle rate from 2.0% per fiscal quarter and 8.0% per fiscal year under the Existing Management Agreement to 1.75% per fiscal quarter and 7.0% per fiscal year, respectively;

•reduces SUNS Manager’s incentive compensation from 20% to 17.5% of applicable Core Earnings (as defined therein) and revises the related catch-up threshold from 166 2/3% to 153.85% of the hurdle amount;

•removes Section 15 (internalization of the SUNS Manager);

•provides for an initial term of one year from the effective date of the A&R Management Agreement, after which the A&R Management Agreement will renew automatically for successive one-year periods unless earlier terminated or not renewed in accordance with its terms; and

•provides for a temporary reduction in the base management fee of $250,000 per quarter for each of the first four quarters following the effective date of the A&R Management Agreement, beginning with the first full fiscal quarter thereafter.

Stub Period Dividend

On October 23, 2026, pursuant to the Merger Agreement, the Company’s Board of Directors authorized a prorated dividend on the Company’s common stock in the amount of $0.09 per share, or approximately $1.2 million (the “Stub Period Dividend”) for the calendar quarter in which the closing of the Merger occurs. The Stub Period Dividend was paid on November 5, 2026 to shareholders of record at the close of business on November 2, 2026.

Stock Repurchase Program

On October 12, 2026, the Company's Board of Directors authorized a stock repurchase program pursuant to which, effective as of the Merger Effective Time, the Company may repurchase up to $20.0 million of the Company’s common stock through December 31, 2027 (the “Repurchase Program”). No shares were repurchased under the Repurchase Program as of the date of this report. The timing and amount of repurchases will depend on market conditions, share price, liquidity and other factors. The Repurchase Program does not obligate the Company to repurchase any specific number of shares or dollar amount and may be modified, suspended or terminated at any time.

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Revolving Credit Facility Amendment

On November 5, 2026, the Company entered into Amendment Number Eight to the Revolving Credit Facility (“Amendment Number Eight”), by and among the Company and certain subsidiaries, as borrowers, the lenders party thereto, and East West Bank, as administrative agent, which, among other things, in connection with the Merger and other transactions contemplated therein: (i) provided the administrative agent’s and lenders’ consent to the Merger and the other transactions contemplated therein; (ii) facilitated the entry of Merger Sub as a guarantor under the Amendment Number Eight and related loan documents; (iii) expanded the eligible assets for inclusion in the borrowing base; and (iv) required the Company to pay a one-time amendment fee.

Key Financial Measures and Indicators

As a commercial real estate finance company, we believe the key financial measures and indicators for our business are Distributable Earnings (as defined below), book value per share and dividends declared per share.

Book Value Per Share

We believe that book value per share is helpful to shareholders in evaluating our growth as we scale our equity capital base and continue to invest in our target investments. The book value per share of our common stock as of September 30, 2026 and December 31, 2025 was approximately $13.39 and $13.56, respectively.

Non-GAAP Metrics

Distributable Earnings

In addition to using certain financial metrics prepared in accordance with GAAP to evaluate our performance, we also use Distributable Earnings to evaluate our performance, excluding the effects of certain transactions and GAAP adjustments we believe are not necessarily indicative of our current loan activity and operations. Distributable Earnings is a measure that is not prepared in accordance with GAAP. We use these non-GAAP financial measures both to explain our results to shareholders and the investment community and in the internal evaluation and management of our businesses. Our management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors and shareholders to assess the overall performance of our business using the same tools that our management uses to evaluate our past performance and prospects for future performance. The determination of Distributable Earnings is substantially similar to the determination of Core Earnings under our Management Agreement, provided that Core Earnings is a component of the calculation of any Incentive Compensation earned under the Management Agreement for the applicable time period. Thus, Core Earnings is calculated without giving effect to Incentive Compensation expense, while the calculation of Distributable Earnings accounts for any Incentive Compensation earned for such time period.

We define Distributable Earnings as, for a specified period, the net income (loss) computed in accordance with GAAP, excluding (i) stock-based compensation expense, (ii) depreciation and amortization, (iii) any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss); provided that Distributable Earnings does not exclude, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash, (iv) provision for (reversal of) current expected credit losses, (v) TRS (income) loss, net of any dividends received from TRS and (vi) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between our Manager and our independent directors and after approval by a majority of such independent directors.

We believe providing Distributable Earnings on a supplemental basis to our net income as determined in accordance with GAAP is helpful to shareholders in assessing the overall performance of our business. As a REIT, we are required to distribute at least 90% of our annual REIT taxable income, subject to certain adjustments, and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of such taxable income. Given these requirements and our belief that dividends are generally one of the principal reasons that shareholders invest in our common stock, we generally intend to attempt to pay dividends to our shareholders in an amount at least equal to such REIT taxable income, if and to the extent authorized by our Board of Directors. Distributable Earnings is one of many factors considered by our Board of Directors in authorizing dividends and, while not a direct measure of net taxable income, over time, the measure can be considered a useful indicator of our dividends.

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Distributable Earnings is a non-GAAP financial measure and should not be considered as a substitute for GAAP net income. We caution readers that our methodology for calculating Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our reported Distributable Earnings may not be comparable to similar measures presented by other REITs.

The following table provides a reconciliation of GAAP net income to Distributable Earnings for the three and nine months ended September 30, 2026 and 2025:

Factors Impacting our Operating Results

The results of our operations are affected by a number of factors and primarily depend on, among other things, the level of our net interest margin, the market value of our assets and the supply of, and demand for, commercial real estate debt and other financial assets in the marketplace. Our net interest margin, which includes the accretion and amortization of OID, is recognized based on the contractual rate and the outstanding principal balance of the loans we originate. Interest rates will vary according to the type of loan, conditions in the financial markets, creditworthiness of our borrowers, competition and other factors, some of which cannot be predicted with any certainty. Our operating results may also be impacted by credit losses in excess of initial anticipations or unanticipated credit events experienced by our borrowers.

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