Company Overview

We are a real estate finance company that specializes in short-term loans secured by properties. We started in 2010 as a limited liability company and became a real estate investment trust (REIT) in 2017. As a REIT, we don’t pay corporate taxes on income we distribute to shareholders.

First Quarter Review and Outlook

Metric	Q1 2024	Q1 2023	Change
Revenue	$17.2 million	$14.7 million	+17.0%
Net Income	$3.6 million	$4.2 million	-13.0%
Earnings Per Share	$0.08	$0.10	-$0.02

Revenue increased due to higher interest rates we can charge borrowers. However, expenses also increased significantly, lowering net income. We expect continued high interest rates and expenses for 2024.

Our strategy is to grow our loan portfolio while protecting capital to provide attractive returns for shareholders. We aim to do this by:

• Targeting loans to experienced real estate developers
• Developing relationships with large-scale brokers
• Improving operational efficiency
  

Challenges

Major challenges we face in 2024:

• High interest rates increasing our borrowing costs
• Geopolitical conflicts causing market volatility
• Increased competition from private lenders
• Potential declines in real estate values
• Rising operating expenses and debt refinancing needs

Despite the challenges, we see opportunities in real estate lending due to lack of liquidity and our flexible loan products.

Financing Strategy

We use debt financing to grow our loan portfolio and increase potential returns. We have credit facilities, loans secured by our securities portfolio, and notes offerings. We may take on more leverage depending on market conditions, but currently have 60.3% debt-to-equity ratio compared to 59.9% last year.

We intend to maintain leverage and reduce borrowing costs to grow while satisfying requirements as a REIT.

Results of Operations

Q1 2024 vs. Q1 2023

• Interest income increased 15.1% due to higher rates
• Expenses increased 30.7% mostly due to higher provision for loan losses
• Net income decreased 13.0% due to higher expenses

Liquidity and Capital Resources

• Cash increased due to equity offerings
• Debt decreased slightly through repayments
• We believe available capital can fund operations for next 12 months
• Two notes offerings totaling $58.2 million mature in 2024 and will need to be refinanced

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Contractual Obligations

Our major contractual obligations are commitments to fund construction loans and investments in partnerships.

Type	Total	Less than 1 year	1-3 years
Construction Loans	$95.5 million	$61.2 million	$34.2 million
Partnerships	$2.4 million	$2.4 million	-

In summary, the report covers the company’s performance, strategies, challenges, financial position, and obligations in an accessible way for general audiences. Key metrics and data are presented in tables. The analysis aims to communicate important details without overly technical terminology.