Company Overview

We are a real estate finance company that specializes in short-term loans secured by mortgages on real estate. We have been publicly traded since 2017. As a real estate investment trust (REIT), we distribute at least 90% of our taxable income annually to shareholders.

First Quarter Performance and Outlook

Metric	Q1 2024	Change from Q1 2023
Revenue	$17.2 million	Increase of 17.0%
Net Income	$3.6 million	Decrease of 13.0%
Earnings Per Share	$0.08	Decrease of $0.02

• Revenue increased due to higher interest rates charged on loans
• Net income decreased due to higher operating expenses, especially provision for potential loan losses
• Interest expenses expected to keep rising in 2024 as debt is refinanced at higher rates
• Optimistic about loan demand and profitability amid real estate market turmoil

Challenges Ahead

• Rising interest rates increase borrowing costs
• Geopolitical conflicts cause market volatility and cybersecurity risks
• Growing competition from non-bank lenders funded by private capital
• Declining commercial real estate values could compromise loan collateral
• Higher expenses from debt load and upcoming debt maturities
• $95.5 million of construction loans have future funding obligations

Response to Challenges

• Maintain prudent leverage ratio of 60% debt / 40% equity
• Increased loan yields to 12.7%, up from 11.69% last year
• Public company status provides access to capital
  
• Various credit facilities provide liquidity ($200 million from Churchill)
• Shift to larger commercial loans with experienced sponsors

Financing Overview

Our strategy is to use debt financing to grow our loan portfolio while protecting shareholder returns. We have an investment-grade rating and strive to maintain a balanced capital structure.

Financing Source	Balance	Terms
Wells Fargo Margin Loan	$27.3 million	1.75% below prime rate
Churchill Facility	$25.9 million	9.4% interest rate currently
Credit Facilities	$35 million	8.25% interest rate currently
Unsecured Notes	$288.4 million	Maturities from 2024-2027

• Intend to refinance using credit facilities and cash rather than issue equity
• No set limits on leverage ratio but remain prudent
• Access to public markets provides flexibility

First Quarter Financial Summary

• Earnings per share $0.08
• Allowance for loan losses increased by $1.3 million
• Operating expenses increased by 30.7%
• Strong balance sheet with 39.7% equity ratio

Outlook

We remain optimistic about loan demand and profitability in 2024 based on:

• Solid balance sheet and credit rating
  
• Ability to charge attractive interest rates on loans
• Strong customer relationships and underwriting standards
• Emphasis on larger borrowers and loans
• Improvement of operations and expense control

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