Sunrise Realty Trust Q3 2026 Earnings Call Transcript

Sunrise Realty Trust (NASDAQ:SUNS) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Sunrise Realty Trust completed a merger with Southern Realty Trust, creating a more efficient public CRE lending platform with approximately $478.6 million in total loan commitments.

The company announced a $20 million share repurchase program and reduced management fees as part of the merger benefits.

Sunrise Realty Trust generated net interest income of $5.8 million and distributable earnings of $3.2 million for Q3 2026, with GAAP net income at $2.9 million.

The company emphasizes strategic, patient capital deployment in volatile markets, focusing on transitional business plans and reducing financing pressures.

Management highlighted a strong pipeline, particularly in residential and mixed-use properties, while maintaining a low leverage and floating rate loan portfolio.

Full Transcript

OPERATOR

Good morning and welcome to the Sunrise Realty Trust Third Quarter 2026 Financial Results Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct the question-and-answer session and instructions will be given at that time. I would now like to turn the call over to Gable Katz, Chief Legal Officer. Please go ahead.

Gable Katz (Chief Legal Officer)

Good morning and thank you all for joining Sunrise Realty Trust’s earnings call for the quarter ended September 30, 2026. I’m joined this morning by Len 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 October 2026 press release and is posted on the Investor Relations portion of our website at sunriserealtytrust.com along with our third quarter 2026 earnings release and investor presentation.

Today’s conference call includes forward-looking statements and projections that reflect the Company’s current views with respect to, among other things, market developments, our investment pipeline, anticipated portfolio yield, financial performance and projections in 2026 and beyond, the anticipated benefits of our merger with Southern Realty Trust, and our share repurchase program. 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 Form 10-Q for the quarter ended September 30, 2026, 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 third quarter earnings release available on our website for reconciliation of the non-GAAP financial measures with our most directly comparable GAAP measures.

The format for today’s call is as follows. Len will discuss our recent merger with SRT and our share repurchase program. Brian will cover the commercial real estate lending market, our portfolio and investment pipeline, and Brandon will review our financial results and position. After that, we’ll open the lines for Q&A. With that, I will now turn the call over to our Executive Chairman, Len Tannenbaum.

Leonard M Tannenbaum (Executive Chairman)

Thank you, Gabriel, and good morning. Since our last earnings call, Sunrise Realty Trust has reached an important milestone. On November 5, we completed our merger with Southern Realty Trust, or SRT, our affiliated private mortgage REIT. At Sunrise Realty Trust’s October 23 special meeting, approximately 91.6% of votes cast approved the issuance of Sunrise Realty Trust’s common stock in connection with the merger, with approximately 60% of the outstanding shares represented.

At SRT’s October 23 special meeting, a majority of SRT’s outstanding shares approved the merger. We thank stockholders of both companies for their support and I am pleased to welcome former SRT stockholders as Sunrise Realty Trust stockholders. We also welcome Howard Sudnow, a former independent SRT director, to the Sunrise Realty Trust Board as an additional independent director. This merger creates a larger, more efficient public CRE lending platform. On an unaudited pro forma basis, as of September 30, 2026, as if the merger had occurred on that date, the combined portfolio would have had approximately $478.6 million of total loan commitments and $393.1 million of outstanding principal. We issued approximately 8.5 million shares at an exchange ratio of 1.45 Sunrise Realty Trust shares per SRT share. The combined company has approximately 22 million shares outstanding, with roughly 38.5% held by former SRT stockholders.

Our amended and restated management agreement is now in effect. It reduces the incentive fee from 20% to 17.5% and the annual hurdle rate from 8% to 7%. Additionally, beginning in the first quarter of 2027, base management fees will be reduced by $250,000 for each quarter of 2027, totaling $1 million for the benefit of Sunrise Realty Trust’s stockholders. With the merger complete, our focus is on realizing the benefits of that scale. We believe our larger equity base can: 1) broaden financing options, potentially including unsecured debt; 2) support greater trading liquidity; and 3) reduce duplicative costs. Given our team’s experience managing both portfolios, which shared 100% overlap in the same loans, we do not anticipate any integration risk. We also believe opportunistic share repurchases can be an attractive use of capital.

In October, our board authorized a $20 million share repurchase program through December 31, 2027. With that, I will now turn it over to Brian Sedrish, our Chief Executive Officer.

Brian Sedrish (Chief Executive Officer)

Thanks, Len, and good morning. I’ll start with the market, then cover new investment activity and the portfolio. Higher rates and renewed volatility created additional pressure for borrowers during the quarter. The Federal Reserve raised its policy rate in September for the first time since 2023, and in early October, the 10-year Treasury yield touched its highest level since 2002 before easing. That volatility comes against a substantial maturity backdrop.

According to the Mortgage Bankers Association, approximately $875 billion of commercial and multifamily mortgages are scheduled to mature in 2027, another $652 billion in 2027. For sponsors with loans coming due, refinancing proceeds can fall short of outstanding debt balances, creating demand for additional equity and structured capital, which increases the value of lenders that can commit and execute with certainty. That environment plays to the house Sunrise Realty Trust is built. We do not seek to compete primarily on price for stabilized assets where banks and other lenders focus. We earn our returns by underwriting transitional business plans and negotiating structure, which allows us to operate with modest corporate leverage and help limit the financing and liquidity pressures that can affect more heavily levered lenders. Subsequent to the completion of the merger, given our low leverage and expanded capital base, we have ample capacity to deploy across new transactions.

We were deliberate with new commitments during a volatile third quarter and we continue to prioritize pricing, structure, and sponsor quality over deployment volume. Since quarter end, our activity has picked up. Subsequent to quarter end, Sunrise Realty Trust closed on approximately $3 million senior secured loan for Buildings A and B of Saint Mont Blanc, a luxury residential project in Park City, Utah. We were already a lender on the adjacent building and, following the merger, Sunrise Realty Trust’s commitment across all three buildings now totals approximately $17 million. The TCG Real Estate platform is advancing transactions under signed term sheets as discussed last quarter.

One is a proposed $93 million senior construction loan for a multifamily development in Texas comprising a $62 million A note with a third-party partner and a $31 million B note expected to be held by Sunrise Realty Trust. We expect this transaction to close shortly. The other transactions, which have signed term sheets, total $169 million. All transactions remain subject to diligence, documentation and customary closing conditions. Turning to our portfolio, on October 9th we completed the $41 million sale of the Thompson San Antonio through our joint venture, consisting of $9 million in purchaser cash and $32 million of senior secured financing now held entirely by Sunrise Realty Trust. Following the merger, the transaction closed in line with our investment’s carrying value before closing costs and transaction expenses. The loan bears interest at a fixed rate, increasing scale from 8% to 10% throughout the term.

The buyer intends to fund additional cash equity towards capital improvements. Separately, Sunrise Realty Trust continues to pursue available remedies under the former sponsor’s guarantee. Following the sale, Sunrise Realty Trust no longer holds any owned real estate. All loans in our portfolio were current and performing at September 30th and remain so today. Looking ahead, we are primarily focused on deploying Sunrise Realty Trust’s capital into loans that meet our underwriting standards, opportunistically executing the share repurchase program, and continuing to fund construction commitments within our existing book. A performing loan portfolio, low leverage, and an expanded equity base support the financial flexibility to pursue these priorities selectively. I will now turn to Brandon Hetzel, our Chief Financial Officer, to review our financial results.

Brandon Hetzel (Chief Financial Officer)

Thank you, Brian. For the quarter ended September 30, 2026, we generated net interest income of $5.8 million and distributable earnings of $3.2 million, or $0.24 per basic weighted average common share. GAAP net income was $2.9 million, or $0.21 per basic weighted average common share. These results included approximately $900,000, or $0.06 per share, of one-time merger-related costs. For the nine months ended September 30, 2026, we generated net interest income of $18.9 million and distributable earnings of $11.8 million, or $0.89 per basic weighted average common share, compared to $0.90 per share of dividends declared for the same period. GAAP net income for the nine months was $10.2 million, or $0.75 per basic weighted average common share. We believe that providing distributable earnings is helpful to stockholders in assessing the overall performance of Sunrise Realty Trust’s business.

Distributable earnings represents net income computed in accordance with GAAP, excluding non-cash items such as stock compensation expense, unrealized gains or losses, and the provision for current expected credit losses. In the third quarter, Sunrise Realty Trust funded $17.1 million of new and existing loans and received $58.9 million of repayments, primarily reflecting the July repayment of the Panther National Senior Term Loan and Construction Revolver. We ended September 30th with $313.9 million of loan commitments and $256.9 million of principal outstanding across 12 loans, all current and performing, with a weighted average estimated portfolio yield to maturity of approximately 12%.

Following the Thompson San Antonio sale and the Summit Block loan, as of October 30, 2026, Sunrise Realty Trust’s standalone portfolio consisted of $336.3 million of current commitments and $283.6 million of principal outstanding across 14 loans. As of September 30, 2026, our CECL reserve was approximately $900,000, or 36 basis points of loans held at carrying value, and all 12 loans in our standalone portfolio were risk-rated 2. As of September 30, 2026, approximately 95% of our loan principal was floating rate with a weighted average SOFR floor of approximately 3.9%. We estimate that a 100 basis point increase in benchmark rates would increase our annual interest income by approximately $1.9 million, while a 100 basis point decrease would only reduce it by approximately $500,000, reflecting the protection provided by our rate floors, in each case before any change in borrowing costs.

As of September 30, 2026, our total debt outstanding was approximately $96.8 million, representing a debt-to-equity ratio of approximately 0.5 times on a standalone basis. As of September 30, 2026, Sunrise Realty Trust had total assets of $285.4 million and our total stockholder equity was $181 million, with a book value of $13.39 per share. For the quarter ended September 30, 2026, the Board of Directors declared a $0.30 common stock dividend per share outstanding, which was paid on October 15, 2026, to stockholders of record as of September 30, 2026.

In connection with the merger, the board declared a prorated stub period dividend of $0.09 per share, or approximately $1.2 million, covering the period from October 1 through November 4, 2026, which was paid on November 5 to stockholders of record as of November 2, 2026. We expect the Board to declare a dividend for the remainder of the fourth quarter covering November 5 through December 31, 2026, with the amount and record date to be announced in the ordinary course.

With that, I will now turn it back over to the operator to start the Q&A.

OPERATOR

Thank you. If you would like to ask a question, please press star 11 on your telephone. You will then hear an automated message advising your hand is raised. If you would like to remove yourself from the queue, please press star 1 again. We also ask that you wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. Our first question will be coming from the line of [Analyst] of Alliance Global Partners.

Please go ahead.

Brian Sedrish (Chief Executive Officer)

Sure. We haven’t disclosed the balance sheet numbers as we’re still working on the purchase price accounting, and due to the timing of the deal closing that has not been complete. But we did put into the investor presentation what the current commitments on a combined basis as of September 30 would have been, which was about commitments of $478.6 million with principal outstanding of about $393.1 million. Sure. Hey, Garb. So those deals are deals we’ve been spending a lot of time on. They are—to answer your question—they are residential plays where in one case there’s an existing very high-end luxury destination home resort where ultimately we would potentially be providing the capital to help improve and build additional homes for sale. So there’s that one. We have another one where, again, a very successful residential community—we’d be helping, very similar, in the capital to help continue to add value in that site.

And then lastly, another play—again, all residential as well. These are both condos and single-family homes—where, again, the sponsor needs the requisite capital to help them continue to deliver product to their clients. I think generally, broadly what I’ll say is we found a lot of interest in those types of transactions and we think we’re leaning into those, really take advantage of our expertise. So we’ve been spending a lot of time in those. And then the other thing I might add is just much less competition in that type of market. So I think we find that we can deliver pretty interesting, attractive returns to our shareholders through those types of deals.

The answer to that question is if we do extend out, it would be for a relatively short period of time. That deal is a deal that we put on nearly three years ago. The sponsor has done exactly what they said they were going to do in terms of delivering on time—actually ahead of time—and on budget. They pre-sold, of those for-sale condos, a little over 50% of those. The units look great and the inventory’s there. So the logical takeout is an inventory loan.

The question just is, because the loan is maturing in December, whether the sponsor needs a couple more months. They’re going to have a signed term sheet shortly. So we may end up extending out for a couple months. If we do, we look at that as extremely positive. Alternatively, the sponsor may just decide to just pay us out. It’s just a question of timing as to how quickly they can bring it all together. Ideally, we’d like to have the opportunity to keep it out a little bit longer.

It’s been a great performing loan for us and we really like the sponsorship.

OPERATOR

Thank you. One moment for the next question, please. Our next question will be coming from the line of Jade Romani of KBW. Please go ahead.

Jade Romani (Analyst)

Thank you very much. Could you provide a book value estimate pro forma for the merger close?

Brian Sedrish (Chief Executive Officer)

We have not disclosed the pro forma book value due to not having the final purchase price accounting finished due to the timing of the recent close of the merger. But we did, I believe in the proxy, we did have an estimate as of 6/30.

Jade Romani (Analyst)

Okay. Just thinking about the dividend beyond the next declaration, which would be for a partial period. What’s a reasonable range to assume?

Brian Sedrish (Chief Executive Officer)

I think that we are going to pay a stub dividend. The board still hasn’t determined it. The intention is to pay out close to our income for the year. So I think that’s going to be the balance this year. And then we’ll look at the pro forma results for next year and make a determination next year.

Jade Romani (Analyst)

Is there a target ROE we could apply to what we think pro forma book value is to make an estimate?

Brian Sedrish (Chief Executive Officer)

I think the tough part of where we are today is—and I think you can see it in the numbers—is we’re underlevered and we have a lot of capacity. The good news, we have a lot of capacity to do deals. The bad news is a lot of these deals that Brian was talking about earlier I would have expected to close already. Everything takes longer. And so what’s going to drive earnings is getting us back to appropriate leverage and driving the right ROE for our stockholders.

And so I think that’s the main indicator that I’d be looking for over the next three to four months is, as we announce deals as they close and we close them, that’s going to be driving—that should be driving—our stock and future ROE.

Jade Romani (Analyst)

What’s a reasonable target for annual originations and debt-to-equity ratio?

Brian Sedrish (Chief Executive Officer)

Target debt-to-equity ratio is at least one to one. Right. And so we’re not anywhere close to that, unfortunately. But that’s still very low for mortgage REITs to have a one-to-one debt-to-equity ratio. And we’ve approximately—I’m now rounding numbers—$300 million of equity and drawn—what are we, $400-something million… I mean actual draws. Yeah, 393. So we should be $200 more million dollars outstanding drawn for us to achieve the ROE targets that we really are looking for, not connecting with actual draw targets.

I don’t have specific targets. I just wanted to say, like, we are definitely too low today given early $100 million of leverage on a $300 million-ish equity base. So we need another $200 million of deals not only close, but close and fund—or fund existing commitments—for us to achieve a much better ROE.

Jade Romani (Analyst)

Okay, switching gears, when you think of the turmoil that’s playing out in the commercial real estate landscape. So we saw sort of phase one play out from 2022 through late 2024 driven by the Fed rate hikes, as you all well know, plus office uncertainty. Some of that has diminished and the office sector has begun a recovery. Industrial is also doing quite well, as are retail and hotel, which leaves multifamily. Multifamily has been facing plenty of supply challenges across the Sun Belt, including in Florida.

But we could be, you know, perhaps close to a trough there, although everyone’s been thinking that for the last year. Nevertheless, at the same time rates are going higher, so multifamily could be sort of the next wave of stress. And then you look at where commercial mortgage REITs are trading at 50% of book value. So I guess what are your high-level thoughts on the landscape we’re facing and where Sunrise Realty Trust can really move the needle, if it’s going to just be on direct originations or if you see that there could be potential consolidation opportunities.

Leonard M Tannenbaum (Executive Chairman)

So the good news is our headquarters is in a place called Palm Beach, Florida. And Palm Beach, Florida is an A market according to many, many different indicators. So, look, we are definitely experiencing, in southern Florida—certainly on the Treasure Coast—some absorption issues. Multifamily, we’re not really seeing it right where we are, and that’s… So you really have to have pockets of one and the other. Brian and his team do an excellent job understanding the submarkets, the markets, and a lot of our analysis is over-absorption, absorption trends.

So we’re definitely on top of it. And as I said to you over the past year, look, it was terrible to get the REO that we had. We were fortunate that we sold the hotel, and currently we really just don’t have any other stressed assets at all. So that’s the good news. And then I think that’s part one, right. And two is, how do we take advantage of stuff? You know, we actually agree with you: there are pockets of real distress out there and distressed REITs. And I think we should be looking at their assets and them also for potential opportunities for our shareholders.

So, you know, we’ll be out there looking at opportunities—we’re opportunistic lenders—and we’ll be opportunistic also with trying to find distressed assets or distressed managers and help them get through this cycle.

Brian Sedrish (Chief Executive Officer)

Yeah, obviously. Hey Jay, it’s Brian. I obviously agree with Len. I think clearly what’s happening in the markets right now, just from our competitor perspective—you know better than us—you’re seeing a lot of groups opting to either exit the business and/or dealing with asset management issues. I think that you’re definitely seeing consolidation in the type of REITs that are focused much more on the flow-type business, which, as you know, is not what we focus on.

It’s much more value-add type opportunities. And what we’ve seen is a significant pullback in the groups doing those types of deals, which I think largely is what’s opened it up for us. I think the biggest thing for us is being patient. I think deals are coming to us. I think the biggest risk is acting too expeditiously on a transaction. I mean, as Len sort of hit on, we are seeing some of these groups who have been competitors of ours currently struggling and, therefore, are looking to offload some of their portfolio.

So I think we are in offensive mode based upon everything we said in terms of our availability of capital, and we’re just being super strategic in what we’re going after. On the multifamily side, as you know, I think there’s going to continue to be a lot of issues. Rates going up is exactly the wrong move for groups that are sitting on transactions that they originated in 2021 and 2022. That vintage multifamily is now definitely the epicenter of the problem. And so, fortunately, we don’t have those types of assets, so I think we’re feeling pretty good there on a go-forward basis. As you know, that cliff of development has dropped off precipitously, and that will, in markets like Len mentioned—Palm Beach and other growth markets—certainly allow groups to start building again because there’s growth behind it.

So I think there are a lot of pockets of opportunity we’ll keep going after, and it’s a combination of all those. And I think the biggest thing for us is just staying patient and going after the pockets that we think are really interesting returns for our investors.

Jade Romani (Analyst)

Thank you very much.

OPERATOR

Thank you. One moment for the next question. Our next question is coming from the line of Timothy D’Agostino of B. Riley. Please go ahead.

Timothy D’Agostino (Analyst)

Yeah, hi. Thanks for taking the question today, and congrats on the merger. I guess with the combined portfolio now, and just looking forward, could you maybe talk to or quantify the potential annual G&A savings and when those might show up, if there are any? Thank you.

Brandon Hetzel (Chief Financial Officer)

Sure. And you can find this in the proxy as well. So we estimated that the annual G&A savings would be about $1.2 million. And that relates to combined personnel, less audit—no duplicate audits or tax returns—less board fees. So that’s what’s really driving the G&A, the duplicate items of having similar funds.

Timothy D’Agostino (Analyst)

And should we expect to see that in—will they fully show up in 4Q, or is that more like a 1Q event?

Brandon Hetzel (Chief Financial Officer)

I mean, since the merger just happened, it’s going to be more of a forward-looking 2027 event. And then also wanted to point out that in 2027 we also do have the management fee waiver of $250,000 per quarter.

Brian Sedrish (Chief Executive Officer)

Okay, that’s helpful. I guess just in regards to the pipeline, I was wondering if you could just provide maybe any color on what that looks like. I guess maybe in terms of location, property type, as well as investment size. It might be hard to comment on, but just looking at the one deal that closed in the third quarter, I believe it was the Park City, Utah residential for—I think the current component is about $2.1 million. So it would just be good to kind of hear a little bit more about what’s in the pipeline.

Yeah, sure, Tim, it’s Brian. So largely the type of deals we’re going after is exactly the type we’ve historically gone after. So, big focus on the southern U.S., right. That’s not changing. But as we’ve always said, strategically and opportunistically we may follow a borrower or a pre-existing relationship into another market, and we are certainly willing to do that. But the core has always been and will continue to be focusing on where those paths of growth are.

And so that’s what comprises the current pipeline for the substantial majority of the deals we’re going after. Like I said earlier, I think you should think about residential will continue to remain a key focus of ours. I think particularly for us where we’re seeing the pockets of opportunities—both from a rate of return, because as I mentioned earlier some of our competitors are pulling back in that area, and then just also from a division of where the opportunity set is—are those higher-end, sort of K-shaped type recovery opportunities where we’re still seeing a lot of demand for residential product.

And so we want to keep leaning into that. We obviously had our Panther deal; we have several others we’re working on. So those are some big focuses. And then outside of that, where we do really well is in some mixed-use properties where there’s more complication and we can lean in and hopefully bring our expertise. Those are what I would say are the really big areas of focus. From a deal-size perspective, look, we have to be cognizant of concentration, and so we often are playing in the bigger deal sizes. And so what that typically means is, if they get too large and chunky, we will bring in co-investors to help us with those deals while still maintaining certainly a big important control position in those deals.

So I think that’s sort of what we’re mindful of. And as we obviously can expand and grow, we can continue to hold and eat more of that cooking ourselves. But I think the pipeline is pretty strong. The other one I’ll say is one that you’ve heard many times, and we’re certainly seeing this, is now, clearly with rates expected to go up—let alone stay in their elevated state—that is absolutely reducing the amount of sales that are happening, and that is resulting in additional calls that we’re getting, providing those gap equity—or I should say those gap capital—needs, where we would come in and either take out the senior and expand out or, alternatively, provide a sub-debt tranche.

And so we’re seeing a lot of those types of recaps. I definitely expect that those will continue, particularly as we move towards year-end.

Timothy D’Agostino (Analyst)

Okay, great. And if I could just ask one more. I know I believe Len talked a little bit about in the prepared remarks, but with the deal now behind you and you have more scale at the platform, I guess when we think about unsecured financing, it seems like that’s probably the next step here. Could you just provide a timeline on that? Has anything changed around when you’re thinking about a potential unsecured deal?

Leonard M Tannenbaum (Executive Chairman)

I mean, the problem with the unsecured markets, and as we talk to our partners, is it’s too expensive. There’s too many rates—borrowing in the low double digits—and somehow you get broad-brushed with that. Even though we have lower leverage, we don’t have the nonaccruals everybody else has, you know, we have a really good, solid portfolio, it doesn’t matter. And I think the combination, at least we get a little bit bigger and we get more scale, which is part of what we need.

But the other thing is we’re going to need, you know, the markets to allow us to get a cost of capital that makes sense. As you know, we currently lend at a 9% all-in cost to sponsors from a mezzanine perspective, right.

Brandon Hetzel (Chief Financial Officer)

Our unsecured. Unsecured. It’s an 8% fixed with a 1% annual fee. Yes.

Leonard M Tannenbaum (Executive Chairman)

So, to get an all-in cost there, right—with OID, broker fees, and everything else—we have to be able to beat that, in my view, to want to access the unsecured market. And so, hopefully, as we grow and we continue to perform and we get a good rating, eventually that can lead to a sub-9% all-in cost of capital, which I think that’s sort of my bogey for being willing to access that market.

Timothy D’Agostino (Analyst)

Okay, understood. That’s helpful. I appreciate it. Thanks for taking the questions today, and congrats again.

Brandon Hetzel (Chief Financial Officer)

Thanks. Sure.

OPERATOR

One moment for the next question. Our next question is coming from the line of Tyler Batari of Oppenheimer. Please go ahead.

Tyler Batari (Analyst)

Good morning. Thanks for taking my questions. First one for me, the share repurchase program—just help us think about how you’re balancing that with originating new loans. Sounded like in the prepared comments you’d like to execute on that before year-end, so just wanted to be sure that I heard that correctly, too.

Brian Sedrish (Chief Executive Officer)

I think we said we want to. We definitely will start it before year-end. I’m not sure we’re going to execute on the whole share buyback.

Brandon Hetzel (Chief Financial Officer)

Yes. I think maybe you heard that the share buyback is currently through December 31st of 2027, so through all of next year as well.

Leonard M Tannenbaum (Executive Chairman)

Right. But I think it’s an important component. Look, the stock is trading at a level that the board determines that could be a very good use of capital to buy back shares. And as long as the stock continues to trade in this area, I think share buybacks have to be considered more than using that equity to do something different. So I think we’re excited to be able to buy back shares at a significant discount to our NAV.

Tyler Batari (Analyst)

Okay. I appreciate the clarification there. And there’ve been a number of questions here just on originations and whatnot. I’m curious, was the merger a hang-up at all in terms of what you could execute on? I don’t know if there was any sort of pause in terms of your process while you were working on that deal, or maybe just the broader environment is just a bigger hurdle in terms of getting stuff across the finish line?

Brian Sedrish (Chief Executive Officer)

Yeah, definitely the latter. It wasn’t the merger that was holding us up. I think it’s back to the commentary before. I think that we have a big focus on patience and picking our spots to get involved in. I think that the biggest risk right now that anyone has is an eagerness to get capital out. We think the opportunity set ahead of us—and like I said, we’re starting to see that—is really strong. And I think you pick your spots and be patient about that.

On top of that, as Len mentioned, there are several deals that we are in heavy diligence on, and these types of deals are just not flow-type deals. So they just take longer to actually execute. So sometimes you just end up with a chunky quarter; sometimes you don’t. So I think it’s a combination of those two things that are the reason why, I think what you’re really asking is, transaction volume was slower in the quarter.

Tyler Batari (Analyst)

Okay, that’s all from me. I’ll pass it on. Thank you.

OPERATOR

Thank you. And that does conclude today’s Q&A session. I would like to turn the call back over to Brian Sedrich, CEO, for closing remarks. Please go ahead. This concludes today’s programming. Thank you all so much for joining. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.