Executive Summary / Key Takeaways

• Manhattan Bridge Capital ($LOAN) operates as a specialized hard money lender in the New York metropolitan area and Florida, focusing on short-term, secured first mortgage loans to real estate investors. Its core investment thesis revolves around a highly disciplined underwriting process and active portfolio management, which has historically resulted in a "spotless portfolio with no defaults whatsoever".
• The company's strategic election as a Real Estate Investment Trust (REIT) in 2014 underpins its commitment to distributing at least 90% of its taxable income, providing attractive risk-adjusted returns to shareholders primarily through dividends.
• Recent financial performance for the nine months ended September 30, 2025, showed a decrease in total revenue to $6.66 million and net income to $3.99 million, primarily due to a reduction in loans receivable and a slowdown in new loan originations. However, these declines were partially offset by a significant decrease in interest expenses.
• $LOAN maintains a strong liquidity position, with management expressing confidence in extending its $32.50 million Webster Credit Line, which matures in February 2026, and plans to redeem its 6% senior secured notes due April 2026.
• The company's competitive advantage stems from its deep local market expertise and its unique position as a non-competing lender to real estate investors, allowing it to "cherry pick the best opportunities" in a highly competitive market.

The Foundation of Focused Lending: A Niche Carved in Real Estate Finance

Manhattan Bridge Capital, Inc. ($LOAN), established in 1989, has cultivated a distinct position within the real estate finance sector by specializing in short-term, secured, non-banking loans—often termed "hard money loans"—for real estate investors. Operating primarily in the dynamic New York metropolitan area, including New Jersey and Connecticut, and extending into Florida, $LOAN provides crucial capital for property acquisition, renovation, rehabilitation, or development. This focused approach, initiated in early 2007, has been instrumental in shaping its current strategy and competitive stance.

The company's overarching strategy centers on growing its loan portfolio while rigorously protecting capital, aiming to deliver attractive risk-adjusted returns to shareholders through consistent dividends. A pivotal strategic move was its election to be taxed as a Real Estate Investment Trust (REIT) commencing December 31, 2014. This structure mandates the distribution of at least 90% of its REIT taxable income, effectively exempting the company from corporate income tax on distributed earnings and aligning its interests directly with dividend-seeking investors.

The broader real estate market, particularly in urban and high-growth suburban areas, continues to present a "demand-supply imbalance for relatively small real estate loans". This market dynamic creates a persistent opportunity for specialized lenders like $LOAN to selectively originate high-quality first mortgage loans. The company believes these conditions are likely to endure for several years, providing a fertile ground for its targeted lending model.

Operational Technology: The Moat of Disciplined Underwriting

While $LOAN does not articulate a "technological differentiator" in terms of proprietary software or hardware, its true technological moat lies in its highly refined and disciplined operational methodology for underwriting and portfolio management. This "operational technology" is a systematic process that has enabled the company to maintain a "spotless portfolio with no defaults whatsoever" since the inception of its lending business in 2007, even through challenging economic cycles.

The tangible benefits of this rigorous process are evident in several key areas. $LOAN insists on personal guarantees from borrowers' principals, conducts "rigorous due diligence" that includes comprehensive credit and background checks, and evaluates borrowers' financial capabilities to withstand unexpected challenges. Crucially, the company requires monthly interest payments and "never allow[s] for interest reserve", ensuring consistent cash flow and borrower commitment. Furthermore, $LOAN mandates equity participation, never financing 100% of a project, which aligns borrower incentives with successful project completion. This meticulous approach minimizes credit risk and enhances loan performance.

This disciplined underwriting and active management process directly contributes to $LOAN's competitive moat by reducing potential losses and preserving capital. It allows the company to command favorable interest rates (typically 9% to 12.50% annually) and origination fees (0% to 2% of the principal amount) while mitigating the inherent risks of hard money lending. For investors, this translates into a more stable and predictable income stream, underpinning the company's ability to pay consistent dividends.

Competitive Positioning in a Fragmented Market

Manhattan Bridge Capital operates within a highly competitive real estate finance market, yet it has carved out a distinct niche. Unlike many larger mortgage REITs such as Arbor Realty Trust (ABR), Ladder Capital Corp (LADR), Ready Capital Corporation (RC), and Blackstone Mortgage Trust (BXMT), $LOAN focuses on "smaller transactions, $300,000 to $600,000 although in certain cases we went up to $1.3 million and as low as $50,000". This focus allows it to serve a segment often overlooked by larger institutional lenders.

A significant competitive advantage for $LOAN is its unique position as "one of very, very few hard money lenders that are not real estate investors themselves". This means $LOAN does not compete with its borrowers, fostering trust and repeat business. This differentiation allows the company to "cherry pick the best opportunities", ensuring a high-quality loan portfolio. While larger competitors like ABR and BXMT benefit from broader geographic reach and greater access to capital, $LOAN's localized expertise and relationship-driven approach provide a qualitative edge in its target markets.

Compared to its larger peers, $LOAN maintains a notably lower leverage profile. As of June 30, 2014, its leverage was "less than 1x on capital", significantly lower than typical mortgage REITs, exposing it to less risk. Furthermore, its portfolio of "ultra-short-term, one year" mortgages results in a much shorter portfolio turnover rate, allowing for greater flexibility to adjust lending criteria and policies to evolving market conditions. This agility is a key differentiator against competitors whose longer-term, less liquid portfolios may be slower to adapt.

Financial Performance and Liquidity: A Recent Headwind, A Stable Core

Manhattan Bridge Capital's financial performance for the three and nine months ended September 30, 2025, reflects a period of adjustment. Total revenues for the three months ended September 30, 2025, decreased by $277,000, or 12%, to approximately $2.04 million, compared to $2.31 million in the prior year period. This decline was primarily driven by lower interest income, resulting from a reduction in loans receivable, and decreased origination fees due to a slowdown in new loan originations. Similarly, for the nine months ended September 30, 2025, total revenues fell by $665,000, or 9.1%, to approximately $6.66 million.

Despite the revenue headwinds, the company demonstrated effective cost management. Interest and amortization of deferred financing costs decreased by $115,000 (21.4%) for the three-month period and by $451,000 (24.6%) for the nine-month period. This reduction was mainly attributable to lower Secured Overnight Financing Rate (SOFR) rates and a decrease in borrowed amounts related to the Webster Credit Line. General and administrative expenses saw a modest increase, primarily due to higher bank fees and NYSE American listing fees.

Net income for the three months ended September 30, 2025, was approximately $1.20 million, a decrease of $197,000 (14.1%). For the nine-month period, net income was approximately $3.99 million, down $297,000 (6.9%). These decreases were primarily a consequence of the lower revenue, partially offset by the reduction in interest expenses. As of September 30, 2025, loans receivable, net, stood at $57.96 million, down from $65.41 million at December 31, 2024.

In terms of liquidity, $LOAN appears well-positioned. Net cash provided by operating activities increased to approximately $3.81 million for the nine months ended September 30, 2025, from $3.66 million in the prior year. The company's Webster Credit Line provides $32.50 million in aggregate until February 28, 2026, with an interest rate of approximately 7.80% as of September 30, 2025. Management was in compliance with all covenants of this credit line and expressed confidence in extending it or securing a similar facility before its expiration. Furthermore, $LOAN plans to redeem its $6.00 million 6% senior secured notes, due April 22, 2026, prior to maturity using proceeds from a replacement credit facility or the Webster Credit Line.

Outlook, Risks, and the Path Ahead

Manhattan Bridge Capital's management anticipates that current cash balances, the Webster Credit Line, and cash flows from operations will be sufficient to fund its operations over the next 12 months. The company expects its working capital requirements to increase as it pursues growth under favorable conditions. This forward-looking stance suggests a belief in the underlying strength of its market and operational model, despite recent revenue dips.

However, investors must consider several key risks. The company's loan origination activities, revenues, and profits are inherently "limited by available funds". Operating in a "highly competitive market" could also constrain its ability to originate loans at favorable interest rates. Overestimating loan yields or incorrectly valuing collateral could lead to losses, and borrower concentration, such as the $6.23 million in loans to three entities linked to one individual (10.70% of the portfolio), presents a potential risk for significant losses. An increase in interest rates could also impact profitability, and there is always the risk of being unsuccessful in extending or replacing the Webster Credit Line or redeeming the senior secured notes. The Webster Credit Line also contains various covenants and restrictions that could limit the company's financial flexibility.

Conclusion

Manhattan Bridge Capital presents a compelling investment narrative rooted in its specialized approach to hard money lending and a robust, risk-averse operational methodology. While the company experienced a temporary slowdown in loan originations and a corresponding dip in revenue and net income for the nine months ended September 30, 2025, its disciplined underwriting, low leverage, and highly liquid, short-term loan portfolio provide a strong foundation. The REIT structure ensures a commitment to shareholder distributions, making it an attractive option for income-focused investors.

$LOAN's ability to "cherry pick" opportunities in a competitive market, coupled with its confidence in managing its capital structure and liquidity, positions it for continued stability. The company's future success hinges on its ability to effectively deploy capital into new, high-quality loans and to successfully manage its financing facilities in a dynamic interest rate environment. For discerning investors, Manhattan Bridge Capital offers a unique blend of niche market expertise, operational resilience, and a consistent dividend yield, making it a noteworthy consideration in the real estate finance landscape.