Advanced Flower Capital

Management executed a 2024 spin-off of Sunrise Realty Trust to separate CRE assets and then converted to a BDC on January 1, 2026 to broaden the investment mandate. AFC repurchased 13 million of 2027 notes in 2025 and sharply reduced the common dividend to 0.05 per share in 2026 to prioritize stability.

These moves are rational given credit stress but also reflect prior capital deployment into riskier credits. As an externally managed BDC, fees are a structural headwind: a 1% to 1.5% base fee on gross assets (excluding cash) and a 17.5% incentive fee over a trailing four-quarter hurdle.

We view near-term capital allocation priorities — de-risking, measured originations, cautious leverage — as appropriate. Demonstrating consistent recoveries and accretive originations will be the litmus test.