B.Riley sets $15 target on Sunrise Realty Trust stock

On Thursday, B.Riley initiated coverage on Sunrise Realty Trust (NASDAQ:SUNS) with a positive outlook, assigning a Buy rating and setting a price target of $15.00 for the company’s stock, representing a significant upside from its current price of $11.47. The firm highlighted SUNS’s position in the market as part of a newer class of mortgage Real Estate Investment Trusts (mREITs) that are filling a gap left by traditional banks and lenders. InvestingPro data shows the stock currently offers an attractive dividend yield of 14.65%.

SUNS’s focus on properties in the Southeastern U.S., specifically multifamily and hospitality sectors, allows it to generate a blended yield between 12% and 14%. According to B.Riley, this focus is beneficial for the company as it capitalizes on the current lending environment to achieve attractive spreads on its newer originations. With a market capitalization of $146.3 million, SUNS remains a relatively small player with significant growth potential. InvestingPro subscribers can access additional insights and metrics about the company’s growth trajectory.

The firm’s analysis projects that SUNS’s portfolio will likely grow to $297 million by the end of 2025 and further to $463 million by the end of 2026. This growth is expected to be supported by the company’s recent upsized equity offering and available debt capacity. The analyst pointed out that SUNS’s pipeline exceeds $1 billion, and the management’s established partnerships in origination and financing will aid in securing access to capital markets, thus enabling rapid scaling of the business. Investors should note that SUNS will report its next earnings on February 26, which could provide more clarity on these growth initiatives.

B.Riley also noted that SUNS is free from the constraints of legacy assets, which often hinder performance and capital deployment in other companies. The absence of such assets in SUNS’s portfolio is seen as a positive sign for its future growth and operational efficiency.

The report concludes with an expectation that SUNS will enhance its distributable earnings per share by adding leverage to its model, aiming to reach a 1.5x debt leverage level by the end of 2026.

In other recent news, Sunrise Realty Trust has been actively managing its financial structure. The commercial real estate lender announced the pricing of its upsized public offering of common stock, which includes 5,750,000 shares at $12.00 per share, potentially generating gross proceeds of around $69 million. The net proceeds are intended for funding loans, originating new commercial loans, and general corporate purposes, including debt repayment.

Simultaneously, the company has launched a public offering of 5.5 million shares of its common stock, with a 30-day option for underwriters to purchase an additional 825,000 shares.

In addition to these offerings, Sunrise Realty Trust secured a $75 million unsecured revolving credit facility with SRT Finance LLC, a lender and agent indirectly owned by key executives of the company and their family members. This credit facility, which carries an 8% annual interest rate, provides the company with flexible capital for their operations.

These are recent developments for the company. The offerings are managed by several firms, including Raymond (NSE:RYMD) James & Associates, Keefe, Bruyette & Woods, and Oppenheimer & Co. Inc. The offerings and credit agreement mark significant financial moves for Sunrise Realty Trust, underlining its ongoing efforts to manage its capital structure and support its growth initiatives.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.