United States securities and exchange commission logo
June 3, 2024
Brandon Hetzel
Chief Financial Officer
Sunrise Realty Trust, Inc.
525 Okeechobee Blvd, Suite 1650
West Palm Beach, FL 33401
Re: Sunrise Realty
Trust, Inc.
Amendment No. 2 to
Registration Statement on Form 10-12B
Filed May 20, 2024
File No. 001-41971
Dear Brandon Hetzel:
We have reviewed your
filing and have the following comments.
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your response and any amendment you may file in
response to this letter,
we may have additional comments. Unless we note otherwise, any
references to prior comments
are to comments in our May 10, 2024 letter.
Amended Exhibit 99.1 to Amendment No. 2 to Registration Statement on
Form 10-12B filed
May 20, 2024
General
1. Please provide a
description of the assets within each category of assets described in the
Information Statement
and in your response to prior comment 3 ( Asset Categories,
which, for the
avoidance of doubt, include real estate assets, senior mortgage loans,
mezzanine loans, whole
loans, B-notes, commercial mortgage backed securities, and debt-
like preferred equity
securities).
2. Your response to prior
comment 3 states that certain Asset Categories will be considered
Real Estate-Related
Assets if they are not considered Qualifying Interests (as such terms
are defined in your
response to prior comment 3). Please (i) confirm whether the company
intends to invest in
any assets that are unrelated to real estate and (ii) provide a detailed
Brandon Hetzel
FirstName LastNameBrandon Hetzel
Sunrise Realty Trust, Inc.
Comapany
June 3, 2024NameSunrise Realty Trust, Inc.
June 3,
Page 2 2024 Page 2
FirstName LastName
legal analysis for each relevant category that provides support for
the position that, when
such assets are not considered Qualifying Interests, they are Real
Estate-Related Assets,
rather than assets that are not related to real estate.
3. With respect to the Asset Category of Senior Mortgage Loans,
please provide a detailed
legal analysis supporting your position that senior mortgage loans and
senior participation
notes in mortgage loans should be treated as Qualifying Interests
when the company or
its subsidiary also owns a majority interest in the B-Note. Please
include citations to any
relevant Commission statements or other applicable precedent.
4. With respect to the Asset Category of B-Notes, please provide a
detailed legal analysis
confirming whether the B-note investments which the company intends to
treat as
Qualifying Interests will exhibit each of the following
characteristics:
The B-Note is a participation interest in a mortgage loan that is
fully secured by real
property;
The company as B-Note holder has the right to receive its
proportionate share of the
interest and the principal payments made on the mortgage loan by
the borrower, and
that the company's returns on the B-Note are based on such
payments;
The company invests in B-Notes only after performing the same type
of due diligence
and credit underwriting procedures that it would perform if it
were underwriting the
underlying mortgage loan;
The company as B-Note holder has approval rights in connection
with any material
decisions pertaining to the administration and servicing of the
loan and with respect
to any material modification to the loan agreements; and
In the event that the loan becomes non-performing, the company as
B-Note holder
has effective control over the remedies relating to the
enforcement of the mortgage
loan, including ultimate control of the foreclosure process, by
having the right to: (a)
appoint the special servicer to manage the resolution of the loan;
(b) advise, direct or
approve the actions of the special servicer; (c) terminate the
special servicer at any
time with or without cause; (d) cure the default so that the
mortgage loan is no longer
non-performing; and (e) purchase the A-Note at par plus accrued
interest, thereby
acquiring the entire mortgage loan. In your response, please
address the role and
appointment of the operating adviser and how that impacts the
ability of the company
to treat a B-Note as a Qualifying Interest under applicable
Commission statements or
other applicable precedent.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Brandon Hetzel
Sunrise Realty Trust, Inc.
June 3, 2024
Page 3
Please contact Frank Knapp at 202-551-3805 or Kristina Marrone at
202-551-3429 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Isabel Rivera at 202-551-3518 or Mary Beth Breslin at 202-551-3625 with
any other
questions.
Sincerely,
FirstName LastNameBrandon Hetzel
Division of
Corporation Finance
Comapany NameSunrise Realty Trust, Inc.
Office of Real Estate
& Construction
June 3, 2024 Page 3
cc: Jeeho M. Lee
FirstName LastName