LFT-A Lument Finance Trust Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 12, 2024

 

LUMENT FINANCE TRUST, INC.

(Exact name of registrant as specified in its charter)

 

Maryland		001-35845		45-4966519
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

230 Park Avenue, 20th Floor

New York, New York 10169

(Address of principal executive offices)

 

(212) 317-5700

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value per share		LFT		New York Stock Exchange
7.875% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share		LFTPrA		New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

Item 2.02

Results of Operations and Financial Condition.

 

On August 12, 2024, Lument Finance Trust, Inc. (the “Company”) issued a press release (the “Release”) and supplemental financial information announcing its financial results for the quarter ended June 30, 2024. The Release and supplemental financial information are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.

 

The information disclosed in “Item 2.02 Results of Operations and Financial Condition,” including Exhibits 99.1 and 99.2 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01

Exhibits.

 

(d)       Exhibits.

 

	99.1	Press Release of Lument Finance Trust, Inc., dated August 12, 2024.
	99.2	Supplemental Financial Information for the quarter ended June 30, 2024.
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	LUMENT Finance Trust, Inc.
Date: August 12, 2024	By:	/s/ James A. Briggs
		James A. Briggs
		Chief Financial Officer

 

 

 

Exhibit 99.1

 

Lument Finance Trust Reports Second Quarter 2024 Results

 

NEW YORK, August 12, 2024 /PRNewswire/ — Lument Finance Trust, Inc. (NYSE: LFT) (“we”, “LFT” or “the Company”) today reported its second quarter results. GAAP net income attributable to common shareholders for the second quarter was $3.4 million, or $0.07 per share of common stock. Distributable earnings for the second quarter were $4.8 million, or $0.09 per share of common stock. The Company has also issued a detailed presentation of its results, which can be viewed at www.lumentfinancetrust.com.

 

Conference Call and Webcast Information

 

The Company will also host a conference call on Tuesday, August 13, 2024, at 1:00 p.m. ET to provide a business update and discuss the financial results for the second quarter of 2024. The conference call may be accessed by dialing 1-800-836-8184 (U.S.) or 1-646-357-8785 (international). Note: there is no passcode; please ask the operator to be joined into the Lument Finance Trust call. A live webcast, on a listen-only basis, is also available and can be accessed through the URL:

 

https://app.webinar.net/7ZX4kX7ylog

 

For those unable to listen to the live broadcast, a recorded replay will be available for on-demand viewing approximately one hour after the end of the event through the Company’s website https://lumentfinancetrust.com/ and by telephone dial-in. The replay call-in number is 1-888-660-6345 (U.S.) or 1-646-517-4150 (international) with passcode 58233.

 

Non-GAAP Financial Measures

 

In this release, the Company presents certain financial measures that are not calculated according to generally accepted accounting principles in the United States (“GAAP”). Specifically, the Company is presenting distributable earnings, which constitutes a non-GAAP financial measure within the meaning of Item 10(e) of Regulation S-K and is net income under GAAP. While we believe the non-GAAP information included in this press release provides supplemental information to assist investors in analyzing our results, and to assist investors in comparing our results with other peer issuers, these measures are not in accordance with GAAP, and they should not be considered a substitute for, or superior to, our financial information calculated in accordance with GAAP. The methods of calculating non-GAAP financial measures may differ substantially from similarly titled measures used by other companies. Our GAAP financial results and the reconciliations from these results should be carefully evaluated.

 

Distributable Earnings

 

Distributable Earnings is a non-GAAP measure, which we define as GAAP net income (loss) attributable to holders of common stock computed in accordance with GAAP, including realized losses not otherwise included in GAAP net income (loss) and excluding (i) non-cash equity compensation, (ii) depreciation and amortization, (iii) any unrealized gains or losses or other similar non-cash items that are included in net income for that applicable reporting period, regardless of whether such items are included in other comprehensive income (loss) or net income (loss), and (iv) one-time events pursuant to changes in GAAP and certain material non-cash income or expense items after discussions with the Company’s board of directors and approved by a majority of the Company’s independent directors. Distributable Earnings mirrors how we calculate Core Earnings pursuant to the terms of our management agreement between our manager Lument Investment Management, LLC (“Manager”) and us, or our management agreement, for purposes of calculating the incentive fee payable to our Manager.

 

While Distributable Earnings excludes the impact of any unrealized provisions for credit losses, any loan losses are charged off and realized through Distributable Earnings when deemed non-recoverable. Non-recoverability is determined (i) upon the resolution of a loan (i.e. when the loan is repaid, fully or partially, or in the case of foreclosures, when the underlying asset is sold), or (ii) with respect to any amount due under any loan, when such amount is determined to be non-collectible.

 

 

We believe that Distributable Earnings provides meaningful information to consider in addition to our net income (loss) and cash flows from operating activities determined in accordance with GAAP. We believe Distributable Earnings is a useful financial metric for existing and potential future holders of our common stock as historically, over time, Distributable Earnings has been a strong indicator of our dividends per share of common stock. As a REIT, we generally must distribute annually at least 90% of our taxable income, subject to certain adjustments, and therefore we believe our dividends are one of the principal reasons stockholders may invest in our common stock. Furthermore, Distributable Earnings help us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan portfolio and operations and is a performance metric we consider when declaring our dividends.

 

Distributable Earnings does not represent net income (loss) or cash generated from operating activities and should not be considered as an alternative to GAAP net income (loss), or an indication of GAAP cash flows from operations, a measure of our liquidity, or an indication of funds available for our cash needs.

 

GAAP to Distributable Earnings Reconciliation

 

		Three Months Ended
		June 30, 2024
Reconciliation of GAAP to non-GAAP Information
Net Income attributable to common shareholders		$	3,413,445
Adjustments for non-Distributable Earnings
Unrealized loss (gain) on mortgage servicing rights			10,274
Unrealized provision for credit losses			1,399,703
Subtotal			1,409,977
Other Adjustments
Adjustment for income taxes			(1,030	)
Subtotal			(1,030	)
Distributable Earnings		$	4,822,392
Weighted average shares outstanding - Basic and Diluted			52,266,174
Distributable Earnings per weighted share outstanding - Basic and Diluted		$	0.09

 

About LFT

 

LFT is a Maryland corporation focused on investing in, financing and managing a portfolio of commercial real estate debt investments. The Company primarily invests in transitional floating rate commercial mortgage loans with an emphasis on middle-market multi-family assets.

 

LFT is externally managed and advised by Lument Investment Management LLC, a Delaware limited liability company.

 

Additional Information and Where to Find It

 

Investors, security holders and other interested persons may find additional information regarding the Company at the SEC’s Internet site at http://www.sec.gov/ or the Company website www.lumentfinancetrust.com or by directing requests to: Lument Finance Trust, 230 Park Avenue, 20th Floor, New York, NY 10169, Attention: Investor Relations.

 

 

Forward-Looking Statements

 

Certain statements included in this press release constitute forward-looking statements intended to qualify for the safe harbor contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended. Forward-looking statements are subject to risks and uncertainties. You can identify forward-looking statements by use of words such as "believe," "expect," "anticipate," "project," "estimate," "plan," "continue," "intend," "should," "may," "will," "seek," "would," "could," or similar expressions or other comparable terms, or by discussions of strategy, plans or intentions. Forward-looking statements are based on the Company's beliefs, assumptions and expectations of its future performance, taking into account all information currently available to the Company on the date of this press release or the date on which such statements are first made. Actual results may differ from expectations, estimates and projections. You are cautioned not to place undue reliance on forward-looking statements in this press release and should consider carefully the factors described in Part I, Item IA "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, which is available on the SEC’s website at www.sec.gov, and in other current or periodic filings with the SEC, when evaluating these forward-looking statements. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company's control. Except as required by applicable law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Investor Relations Contact:

James Briggs

Chief Financial Officer

(212) 521-6323

james.briggs@lument.com

 

Media Contact:

Tyler Howard

Associate Director

(513) 403-1911

tyler.howard@lument.com

 

 

Exhibit 99.2

August 2024 Lument Finance Trust Q2 2024 Earnings Supplemental

Disclaimer 2 This presentation contains forward - looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the current views of Lument Finance Trust, Inc. (NYSE: LFT) (“LFT,” the “Company,” “we,” “our,” or “us”) with respect to, among other things, the Company’s operations and financial performance. You can identify these forward - looking statements by the use of words such as “outlook,” “indicator,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “projects,” “intends,” “plans,” “estimates,” or “anticipates,” or the negative version of these words or other comparable words or other statements that do not relate strictly to historical or factual matters. Such forward - looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. The Company believes these factors include but are not limited to those described under the section entitled “Risk Factors” in its Annual Report on Form 10 - K for the year ended December 31, 2023, which is available on the SEC’s website at www.sec.gov . These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this presentation and in the filings. The forward - looking statements contained in this presentation speak only as of August 12th , 2024. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events or circumstances. This presentation includes non - GAAP financial measures, including Distributable Earnings. While we believe the non - GAAP information included in this presentation provides supplemental information to assist investors in analyzing our operating results and to assist investors in comparing our operating results with other peer issuers, these measures are not in accordance with GAAP, and they should not be considered a substitute for, or superior to, our financial information calculated in accordance with GAAP. Please refer to this presentation’s Appendix for a reconciliation of the non - GAAP financial measures included in this presentation to the most directly comparable financial measures prepared in accordance with GAAP.

Company Overview 3 Key Investment Highlights Strong Sponsorship/Ownership • Access to extensive loan origination platform through affiliation with Lument, a premier national mortgage originator and asset manager. • Experienced management team with an average of 20+ years of industry experience across multiple economic cycles. • Affiliation with ORIX Corporation USA, the US subsidiary of ORIX Corporation, the publicly traded Tokyo - based international financial services firm. • The Company is an externally - managed real estate investment trust focused on investing in, financing and managing a portfolio of commercial real estate debt investments. • The Company is externally managed by Lument Investment Management LLC, an affiliate of ORIX Corporation USA. Attractive Investment Profile • Emphasis on middle market multifamily debt investments which are well positioned for the current environment. • Strong credit and asset management capabilities. • Attractive financing source via match term, non - recourse, non mark - to - market, collateralized financing structures.

Q2 2024 Updates 4 Note: (1) We believe that Distributable Earnings provides meaningful information to consider in addition to our net income (los s) and cash flows from operating activities determined in accordance with GAAP. Distributable Earnings mirrors how we calculated Core Earnings in the past. Please see Appendix for reconciliation to GAAP. (2) See Appendix for definition of Book Value Per Share of Common Stock. (3) Based on carrying value. (4) If all extensions are exercised by the borrowers, the CRE loan portfolio will have a weighted average remaining term of 3 1 months. Financial Results • Q2 2024 GAAP net income attributable to common stockholders of $0.07 per share of common stock. • Q2 2024 Distributable Earnings (1) of $0.09 per share of common stock. • On June 13, 2024, the Company declared a cash dividend for the quarter of $0.08 per share of common stock, which represents a 14% increase over the first quarter dividend of $0.07 per share of common stock. • The Company also declared a cash dividend for the quarter of $0.49219 per share of 7.875% Cumulative Redeemable Series A Preferred Stock. • Book Value Per Share of Common Stock was $3.48 (2) as of 6/30/2024. Notable Activity • During the quarter, the Company experienced $98.2 million of loan payoffs. Portfolio Performance • As of June 30, 2024, the Company’s investment portfolio consisted of floating - rate CRE loans of which approximately 93.2% (3) were collateralized by multifamily assets. • As of June 30, 2024, the Company’s $1.2 billion loan portfolio had a weighted average remaining initial term of 9 months (4) , a weighted average note rate of SOFR + 3.59%, and unamortized aggregate purchase discounts of $5.6 million. • Portfolio weighted average risk rating of 3.6, with 62.7% of the portfolio rated “3” (Moderate Risk) or better. Capitalization • The floating - rate CRE loan portfolio was financed primarily through the Company’s two outstanding non - mark - to - market secured financings: • $681.7 million of investment grade notes issued through 2021 - FL1 CLO. • $317.7 million of investment grade notes issued through LMF 2023 - 1. • As of June 30, 2024, the Company held cash and cash equivalents of $65.1 million and its leverage ratio declined quarter - over - quarter from 4.7x to 4.4x. • The Company’s corporate debt does not mature until 2026.

Q2 2024 Balance Sheet Summary 5 Balance Sheet (thousands) June 30, 2024 (1) Commercial mortgage loans held - for - investment (net of allowance for credit losses) $1,186,653 Cash and cash equivalents 65,135 Restricted cash (2) 1,457 Accrued interest receivable 7,761 Investment related receivable 33,360 Other assets (3) 2,593 Total assets $1,296,959 Secured financings (4) $995,895 Credit facility (4) 47,344 Other liabilities 11,525 Total liabilities $1,054,764 Total equity $242,195 Total liabilities / total equity 4.4x Book Value Per Share of Common Stock (5) $3.48 Note: (1) See Appendix for detailed consolidated balance sheet, including the Company’s consolidated variable interest entities (“VIE’s”). (2) Restricted cash held by LMF 2023 - 1 is available for investment in eligible mortgage assets. (3) Includes mortgage servicing rights, carried at fair value of $0.7 million. (4) Outstanding principal amount of investment grade notes issued by 2021 - FL1 CLO and LMF 2023 - 1 is $681.7 million and $317.7 m illion, respectively. The unpaid principal balance of the credit facility is $47.8 million. For GAAP purposes, these liabilities are carried at their outstanding unpaid principal balance, net of any unamortiz ed discounts and debt issuance costs. (5) See Appendix for definition of Book Value Per Share of Common Stock.

Q2 2024 Income Statement Summary 6 Summary Income Statement (thousands) Three Months Ended June 30, 2024 Net interest income $9,523 Total other income (loss) (1,392) Operating expenses (3,534) Benefit (provision) from income taxes 1 Preferred dividends (1,185) Net income attributable to common stockholders $3,413 Weighted average shares outstanding during the period, basic and diluted 52,266,174 Net income attributable to common stockholders per share $0.07 GAAP Net Income to Distributable Earnings Reconciliation (thousands) Three Months Ended June 30, 2024 Net Income attributable to common stockholders $3,413 Adjustments: Unrealized (gains) losses on mortgage servicing rights 10 Unrealized provision for credit losses 1,400 Provision for (benefit from) income taxes (1) Distributable Earnings (1) $4,822 Weighted average shares outstanding during the period, basic and diluted 52,266,174 Distributable Earnings per share of common stock $0.09 Dividend per share of common stock $0.08 Note: (1) See Appendix for definition of Distributable Earnings and reconciliation to GAAP.

Earnings and Book Value Per Share of Common Stock 7 $0.11 $0.10 $0.15 $0.09 $0.07 $0.07 $0.07 $0.08 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Distributable Earnings Dividends $3.46 $3.46 $3.50 $3.48 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Distributable Earnings (1) & Dividends Per Share of Common Share Book Value Per Share of Common Stock (2) Note: (1) See Appendix for definition of Distributable Earnings. (2) See Appendix for definition of Book Value Per Share of Common Stock.

Investment Portfolio 8 Geographic Concentration (2) Multifamily , $1,105.8 , 93.2% Seniors Housing & Healthcare , $74.9 , 6.3% Self Storage , $6.0 , 0.5% Property Type (2) $1,186.7 Note: (1) Based on carrying value. (2) $ In millions, based on carrying value. • On June 30, 2024, the Company owned a portfolio of floating - rate CRE loans with a carrying value of $1.2 billion. 93.2% (1) of the portfolio was invested in loans collateralized by multifamily assets. • The Company anticipates that it will continue to focus on investment opportunities within multifamily credit. The Company does not currently own any hospitality, retail, or office loan assets and has limited exposure to seniors housing and self - storage. TX , $389.8 , 32.8% FL , $210.0 , 17.7% GA , $110.4 , 9.3% NJ , $96.3 , 8.1% NC , $59.3 , 5.0% Other States , $320.9 , 27.0% $1,186.7

Q2 2024 Loan Activity 9 Multifamily , $96.9 , 98.7% Self Storage , $1.3 , 1.3% Q2 Payoffs by Property Type (1) $98.2 • The Company experienced $98.2 million of loan payoffs during the quarter. Note: (1) $ In millions, based on carrying value. (2) Portfolio balances shown based on carrying value net of allowances. “Other Activity” consists of accelerated realization of deferred origination fees and purchase discount accretion in connection with loan payoffs. Portfolio Activity (2) $1,285.5 $(98.2) $(1.4) $0.8 $1,186.7 Q1 2024 Portfolio Payoffs / Sales Provision for Loan Losses Other Activity Q2 2024 Portfolio

Portfolio Credit 10 • As of June 30, 2024, 93.0 % of the Company’s portfolio was performing (1) , with 62.7% of the portfolio rated “3” (Moderate Risk) or better. • Weighted average risk rating (2) of 3.6. • During the quarter, management applied a “5” risk - rating to four loans with an aggregate principal value of $84.2 million. 95.0% 96.7% 97.1% 93.0% 5.3% 5.3% 5.3% 5.3% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 9/30/23 12/31/23 3/31/24 6/30/24 % Performing Average 1M SOFR Asset Performance (1) Weighted Average Risk Rating (2) Note: (1) “Performing” defined as loans that are neither in default nor on non - accrual status. (2)Weighted average risk rating is weighted based on carrying value of portfolio assets. 3.4 3.5 3.5 3.6 2.90 3.00 3.10 3.20 3.30 3.40 3.50 3.60 3.70 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 9/30/2023 12/31/2023 3/31/2024 6/30/2024 1 2 3 4 5 Weighted Avg Risk Rating

Q2 2024 Capital Structure Overview 11 77.5% 14.1% 4.7% 3.7% Secured Financing Common Equity Preferred Equity Term Loan $1,289.2 Capital Structure Composition (1) Capital Structure Detail Note: (1) In millions. LFT total capitalization is a non - GAAP measure which excludes certain Balance Sheet items; Please see App endix for reconciliation to GAAP. (2) Secured financing shown at par value. 2021 - FL1 CLO GAAP carrying value of $681.0 million includes $0.7 million of unamortiz ed debt issuance costs. LMF 2023 - 1 carrying value of $314.9 million includes $2.8 million of unamortized debt issuance costs. (3) Term loan shown at par value. GAAP carrying value of $47.3 million includes $0.4 million of unamortized debt issuance cos ts . (4) Preferred equity shown at $60 million liquidation preference. (5) Noncontrolling interest was $99,500 as of 6/30/2024 and is excluded from common equity above. Match Term Non - Recourse Financing • The Company does not currently utilize repurchase or warehouse facility financing and therefore is not subject to margin calls on any of its loan assets from repo or warehouse lenders. • Primary sources of financing include two secured financings ( 2021 - FL1 CLO and LMF 2023 - 1), preferred stock, and a corporate term loan. ($ in millions) Secured Financings (2) Maturity Date Rate Advance Rate Amount 2021-FL1 CLO July 2032 S + 1.61% 79.5% $681.7 LMF 2023-1 Financing June 2039 S + 3.14% 82.2% $317.7 Credit Facilities Term Loan (3) February 2026 7.25% $47.8 Total Debt $1,047.1 Equity Preferred Equity (4) N/A 7.875% $60.0 Book Value of Common Equity (5) N/A $182.1 Total Capitalization (1) $1,289.2

$0.01 - $0.01 - $0.02 - $0.03 - $0.04 +25 bps 0 bps -25 bps -50 bps -75 bps -100 bps Net Interest Income Sensitivity to Shifts in Term SOFR 12 Floating Rate Assets (2) $1,202 Floating Rate Liabilities (3) - $999 Net Exposure $202 Floating - Rate Exposure (1) Net Interest Income Per Share Sensitivity to Change in SOFR (4) Note: (1) In millions. Net Exposure represents UPB of floating rate portfolio assets net of par value of secured floating rate debt outstanding. (2) Figure reflects unpaid principal balance of floating - rate loan portfolio. (3) Comprised of outstanding securitization notes related to 2021 - FL1 and LMF 2023 - 1, both of which are indexed to one - month SO FR. Figure reflects par value of notes. (4) Annualized impact per common share. Assumes starting 30 - day term SOFR of 5.34%. • 100% floating - rate loan portfolio. • 100% of portfolio is indexed to 30 - day term SOFR.

Appendix

6/30/2024 CRE Loan Portfolio Details 14 Continued on the following page Note: (1) LTV as of the date the loan was originated by an affiliate. LTV has not been updated for any subsequent draws or loan modifications and is not reflective of any changes in value which may have occurred subsequent to the origination date. # Loan Name Closing Date Maturity Date Property Type City State Unpaid Principal Balance Note Spread Unamortized Discount/Premium Initial Term (months) As-Is LTV at Origination (1) 1 Loan 1 12/16/2021 1/3/2025 Multi-Family Daytona FL 51,375,000 3.16% 0 37 71.70% 2 Loan 2 3/22/2022 4/5/2025 Multi-Family Seneca SC 31,876,244 3.35% (507,557) 37 74.54% 3 Loan 3 6/28/2022 7/3/2025 Multi-Family Dallas TX 31,602,808 3.90% (420,206) 36 71.59% 4 Loan 4 12/29/2021 1/6/2025 Multi-Family Multi NC 30,709,146 3.96% 0 36 59.90% 5 Loan 5 6/8/2021 7/5/2024 Multi-Family Miami FL 30,576,666 3.31% 0 37 74.26% 6 Loan 6 8/25/2022 9/5/2025 Multi-Family Wilmington NC 28,653,440 4.00% 0 36 71.45% 7 Loan 7 6/7/2021 7/5/2024 Multi-Family San Antonio TX 27,569,521 3.51% (93) 37 80.00% 8 Loan 8 11/2/2021 11/5/2024 Multi-Family Melbourne FL 26,049,291 3.81% (90,632) 36 72.09% 9 Loan 9 8/26/2021 8/5/2024 Multi-Family Clarkston GA 25,440,413 3.61% (205) 35 79.00% 10 Loan 10 11/15/2021 12/6/2024 Multi-Family El Paso TX 24,330,000 3.21% 0 37 75.96% 11 Loan 11 10/18/2021 11/6/2024 Multi-Family Cherry Hill NJ 23,348,000 3.11% 0 37 72.40% 12 Loan 12 8/26/2021 9/5/2024 Multi-Family Union City GA 22,872,354 3.46% (1,064) 36 70.40% 13 Loan 13 4/27/2022 5/5/2025 Multi-Family North Brunswick NJ 22,071,641 3.40% (93,686) 36 79.90% 14 Loan 14 3/22/2022 4/5/2025 Multi-Family York PA 21,934,375 3.30% (453,881) 37 79.17% 15 Loan 15 11/16/2021 12/5/2024 Multi-Family Dallas TX 21,916,753 3.31% (4,379) 37 73.54% 16 Loan 16 7/8/2022 8/5/2025 Multi-Family Arlington TX 21,818,465 3.75% (269,701) 37 67.10% 17 Loan 17 8/31/2021 9/6/2024 Multi-Family Houston TX 21,644,684 3.41% (624) 36 74.20% 18 Loan 18 11/29/2022 12/5/2025 Healthcare Glendale WI 20,360,000 4.00% 0 36 45.00% 19 Loan 19 6/10/2022 7/5/2025 Multi-Family Various GA 20,250,372 3.75% (274,073) 37 75.79% 20 Loan 20 11/5/2021 11/5/2024 Multi-Family Orlando FL 19,625,274 3.11% (2,325) 36 78.05% 21 Loan 21 4/13/2022 5/5/2025 Multi-Family Decatur GA 18,989,494 3.55% (239,028) 37 75.70%

# Loan Name Closing Date Maturity Date Property Type City State Unpaid Principal Balance Note Spread Unamortized Discount/Premium Initial Term (months) As-Is LTV at Origination (1) 22 Loan 22 11/21/2022 12/5/2025 Healthcare Houston TX 18,920,000 4.00% 0 37 67.00% 23 Loan 23 11/23/2021 12/5/2024 Multi-Family Orange NJ 18,834,024 3.31% (2,603) 36 78.00% 24 Loan 24 2/2/2022 2/6/2025 Multi-Family Houston TX 18,660,822 3.50% (82,398) 36 77.50% 25 Loan 25 2/11/2022 3/5/2025 Multi-Family Tampa FL 18,599,480 3.60% 0 37 77.99% 26 Loan 26 5/26/2022 6/6/2024 Multi-Family Brooklyn NY 17,263,000 3.75% 0 24 64.30% 27 Loan 27 3/31/2022 4/5/2025 Multi-Family Tallahassee FL 16,956,276 3.30% (316,790) 36 74.80% 28 Loan 28 11/10/2022 12/5/2025 Healthcare Austin TX 16,690,000 4.00% 0 37 65.00% 29 Loan 29 12/1/2021 12/5/2024 Multi-Family Horn Lake MS 15,449,323 3.41% (7,480) 36 75.70% 30 Loan 30 2/1/2022 2/5/2025 Multi-Family San Antonio TX 15,400,000 3.45% 0 36 79.79% 31 Loan 31 4/6/2022 4/4/2025 Multi-Family Vineland NJ 15,347,180 3.75% (215,113) 36 77.00% 32 Loan 32 4/6/2022 4/5/2025 Multi-Family Haltom City TX 15,156,425 3.45% (218,796) 36 74.10% 33 Loan 33 12/2/2021 12/6/2024 Multi-Family Colorado Springs CO 15,010,343 3.11% 0 36 72.48% 34 Loan 34 2/22/2022 3/5/2025 Multi-Family Philadelphia PA 15,000,000 3.80% 0 36 80.00% 35 Loan 35 6/15/2022 7/5/2025 Multi-Family Denton TX 14,511,455 3.90% (6,841) 37 73.00% 36 Loan 36 7/26/2022 8/5/2025 Multi-Family Atlanta GA 14,351,599 3.65% (236,881) 36 65.15% 37 Loan 37 4/27/2022 5/5/2025 Multi-Family Houston TX 14,171,704 3.70% (164,096) 36 79.60% 38 Loan 38 1/13/2022 2/5/2025 Multi-Family Indianapolis IN 14,119,842 3.75% (106,566) 37 80.00% 39 Loan 39 11/21/2022 12/5/2025 Healthcare Southlake TX 14,030,000 4.00% 0 37 48.00% 40 Loan 40 12/28/2021 1/3/2025 Multi-Family Houston TX 14,000,000 3.25% (183,078) 36 71.22% 41 Loan 41 5/13/2022 6/5/2025 Multi-Family Decatur AL 13,885,769 3.50% (104,304) 37 59.21% 42 Loan 42 4/12/2021 5/5/2025 Multi-Family Cedar Park TX 13,666,721 3.86% 0 49 66.70% 43 Loan 43 6/10/2022 7/5/2025 Multi-Family Blakely PA 13,625,505 3.90% (87,008) 37 75.00% 44 Loan 44 10/6/2023 10/4/2024 Multi-Family Garfield NJ 13,191,852 4.00% 0 12 65.50% 6/30/2024 CRE Loan Portfolio Details 15 Continued on the following page Note: (1) LTV as of the date the loan was originated by an affiliate. LTV has not been updated for any subsequent draws or loan modifications and is not reflective of any changes in value which may have occurred subsequent to the origination date.

6/30/2024 CRE Loan Portfolio Details 16 Continued on the following page Note: (1) LTV as of the date the loan was originated by an affiliate. LTV has not been updated for any subsequent draws or loan modifications and is not reflective of any changes in value which may have occurred subsequent to the origination date. # Loan Name Closing Date Maturity Date Property Type City State Unpaid Principal Balance Note Spread Unamortized Discount/Premium Initial Term (months) As-Is LTV at Origination (1) 45 Loan 45 12/13/2021 1/5/2025 Multi-Family Evansville IN 12,600,000 3.41% 0 37 74.30% 46 Loan 46 12/28/2021 1/3/2025 Multi-Family Houston TX 12,322,717 3.25% (61,818) 36 71.20% 47 Loan 47 1/25/2022 2/6/2025 Multi-Family Corpus Christi TX 12,249,079 3.55% (127,066) 36 78.76% 48 Loan 48 5/12/2022 6/5/2025 Multi-Family Ypsilanti MI 11,926,591 3.50% (167,741) 37 68.40% 49 Loan 49 12/10/2021 1/5/2025 Multi-Family Los Angeles CA 11,662,582 3.61% (240,982) 37 67.93% 50 Loan 50 3/4/2022 3/5/2025 Multi-Family Houston TX 11,467,505 3.45% (230,134) 36 78.30% 51 Loan 51 4/14/2022 5/5/2025 Multi-Family Irving TX 11,287,602 3.50% (169,515) 37 74.90% 52 Loan 52 10/28/2021 11/6/2024 Multi-Family Tampa FL 11,202,535 3.06% 0 36 75.70% 53 Loan 53 4/23/2021 5/6/2025 Multi-Family Tualatin OR 10,986,357 3.31% 0 49 73.90% 54 Loan 54 5/3/2022 5/5/2025 Multi-Family Port Richey FL 10,818,945 3.55% (200,008) 36 79.05% 55 Loan 55 9/30/2021 10/4/2024 Multi-Family Clearfield UT 10,795,000 3.26% 0 36 67.98% 56 Loan 56 12/29/2021 1/3/2025 Multi-Family Phoenix AZ 10,615,094 3.76% (4,970) 36 75.90% 57 Loan 57 6/28/2022 7/4/2025 Multi-Family Colorado Springs CO 10,531,845 3.90% 0 36 73.06% 58 Loan 58 12/2/2021 12/6/2024 Multi-Family Tomball TX 9,975,000 3.51% 0 36 68.50% 59 Loan 59 11/23/2021 12/5/2024 Multi-Family Atlanta GA 9,856,000 3.46% 0 36 79.50% 60 Loan 60 1/14/2022 2/5/2025 Multi-Family Houston TX 9,609,250 3.60% 0 37 78.76% 61 Loan 61 7/14/2022 8/5/2025 Multi-Family Bradenton FL 9,429,206 3.90% (69,033) 37 74.40% 62 Loan 62 8/5/2022 8/5/2025 Multi-Family San Antonio TX 9,127,649 4.35% (38,426) 36 75.00% 63 Loan 63 10/29/2021 11/5/2024 Multi-Family Riverside MO 8,717,380 3.51% (2,953) 36 76.60% 64 Loan 64 6/22/2022 7/3/2025 Multi-Family Des Moines IA 8,175,500 4.00% 0 36 72.03% 65 Loan 65 5/26/2022 6/5/2025 Multi-Family Haltom City TX 8,116,833 4.00% (67,133) 36 74.38% 66 Loan 66 6/24/2022 7/6/2025 Multi-Family Moncks Corner SC 7,934,160 4.15% 0 36 67.80%

6/30/2024 CRE Loan Portfolio Details 17 Note: (1) LTV as of the date the loan was originated by an affiliate. LTV has not been updated for any subsequent draws or loan modifications and is not reflective of any changes in value which may have occurred subsequent to the origination date. # Loan Name Closing Date Maturity Date Property Type City State Unpaid Principal Balance Note Spread Unamortized Discount/Premium Initial Term (months) As-Is LTV at Origination (1) 67 Loan 67 9/28/2021 10/4/2024 Multi-Family Chicago IL 7,286,000 3.76% 0 36 75.90% 68 Loan 68 7/1/2021 7/5/2024 Multi-Family Harker Heights TX 7,169,838 3.71% 0 36 72.30% 69 Loan 69 10/7/2022 11/5/2024 Multi-Family Fairborn OH 7,000,000 4.10% 0 25 79.10% 70 Loan 70 10/24/2022 11/6/2024 Healthcare Various FL 6,100,000 4.50% 0 24 71.00% 71 Loan 71 4/8/2022 5/5/2025 Multi-Family St. Petersburg FL 6,096,412 4.00% (61,407) 37 75.50% 72 Loan 72 6/3/2022 6/5/2025 Self Storage Deer Park NY 6,067,500 3.60% (45,517) 36 72.50% 73 Loan 73 5/21/2021 6/6/2025 Multi-Family Youngtown AZ 5,994,000 3.76% 0 49 71.40% 74 Loan 74 7/14/2021 8/6/2024 Multi-Family Birmingham AL 5,913,912 3.81% (106) 37 71.69% 75 Loan 75 11/19/2021 12/5/2024 Multi-Family Huntsville AL 5,519,604 3.86% (826) 37 78.75% 76 Loan 76 4/30/2021 5/5/2025 Multi-Family Daytona Beach FL 5,285,500 3.76% 0 48 77.40% 77 Loan 77 12/13/2021 1/5/2025 Multi-Family Evansville IN 5,250,000 3.41% 0 37 73.90% 78 Loan 78 10/6/2023 10/4/2024 Multi-Family Garfield NJ 4,808,148 4.00% 0 12 65.50% Total / Average 1,201,753,002 3.59% (5,577,041) 36 72.62%

Consolidated Balance Sheets 18

Consolidated Statement of Income 19

Detailed Walk of Allowance for Loan Losses 20

Reconciliation of Net Income to Distributable Earnings 21 For the Three Months Ended GAAP to Distributable Earnings Reconciliation June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 Reconciliation of GAAP to non - GAAP Information Net income attributable to common stockholders $3,413,445 $5,795,183 $3,828,893 $5,174,685 Adjustments for non - Distributable earnings Unrealized losses (gains) on mortgage servicing rights 10,274 (4,627) 56,334 (1,573) Unrealized provision for credit losses 1,399,703 1,776,873 1,357,254 791,563 Subtotal 1,409,977 1,772,246 1,413,588 789,990 Other Adjustments Recognized compensation expense related to restricted common stock - - - - Adjustment for income taxes (1,030) 10,892 (4,057) 19,803 Subtotal (1,030) 10,892 (4,057) 19,803 Distributable Earnings $4,822,392 $7,578,321 $5,238,424 $5,984,478 Weighted average shares outstanding, b asic and diluted 52,266,174 52,249,299 52,231,722 52,231,152 Distributable Earnings per share of common stock , b asic and diluted $0.09 $0.15 $0.10 $0.11

Detailed Walk of Capitalization as of 6/30/2024 22 (in 000's) 6/30/2024 Total GAAP liabilities and stockholders' equity (1) $1,296,860 Adjustments for Capitalization ( - ) Accrued interest payable (3,365) ( - ) Dividends payable (5,180) ( - ) Fees and expenses payable to Manager (2,280) ( - ) Other accounts payable and accrued expenses (700) ( + ) Other capitalized financing & issuance costs 3,877 LFT Capitalization $1,289,213 Note: (1) Net of non - controlling interest.

Book Value Per Share of Common Stock as of 6/30/2024 23 (in 000's) Book Value per Share of Common Stock Total stockholders’ equity $242,195 ( - ) Preferred equity (1) (60,000) ( - ) Non - controlling interest (100) Common equity $182,096 Shares outstanding 52,257,230 Book Value Per Share of Common Stock $3.48 Note: (1) Reflects 2.4 million shares of the Company’s 7.875% Series A Cumulative Redeemable Preferred Stock outstanding at a $ 25 liquidation preference per share.

Key Definitions 24 “ Book Value Per Share of Common Stock ” is calculated as: a) total stockholders’ equity computed in accordance with GAAP less the value of the issued and outstanding preferred stock at its stated liquidation preference of $25.00 per share, divided by b) the weight ed average number of shares of common stock issued and outstanding during the period, basic and diluted. “ Distributable Earnings ” is a non - GAAP measure, which we define as GAAP net income (loss) attributable to holders' of common stock, or, without duplication, owners of the Company's subsidiaries, computed in accordance with GAAP, including realized losses not ot her wise included in GAAP net income (loss) and excluding (i) non - cash equity compensation, (ii) depreciation and amortization, (iii) any unrealized gains or losses or other similar non - cash items that are included in net income for that applicable reporting period, regardless of whether such items are included in other comprehensive income (loss) or net income (loss), and (iv) one - time events pursuant to changes in GAAP and certain material non - cash income or expense items after discussions with the Company's board of directors and approved by a majority of the Company's independent directors. We also add back one - time charges such as acquisition costs and one - time gains/losses on the early extinguishment of debt and redemption of preferred stock. Distributable Earnings mirrors how we calculate Core Earnings pursu ant to the terms of our management agreement between our Manager and us, or our Management Agreement, for purposes of calculating the incentive fee payable to our Manager. While Distributable Earnings excludes the impact of any unrealized provisions for credi t l osses, any loan losses are charged off and realized through Distributable Earnings when deemed non - recoverable. Non - recoverability is determine d (i) upon the resolution of a loan (i.e. when the loan is repaid, fully or partially, or in the case of foreclosures, when the underlyi ng asset is sold), or (ii) with respect to any amount due under any loan, when such amount is determined to be non - collectible. We believe that Distributable Earnings provides meaningful information to consider in addition to our net income (loss) and c ash flows from operating activities determined in accordance with GAAP. We believe Distributable Earnings is a useful financial metric for e xis ting and potential future holders of our common stock as historically, over time, Distributable Earnings has been a strong indicator o f o ur dividends per share. As a REIT, we generally must distribute annually at least 90% of our taxable income, subject to certain adjustment s, and therefore we believe our dividends are one of the principal reasons stockholders may invest in our common stock. Refer to Note 16 to ou r c onsolidated financial statements for further discussion of our distribution requirements as a REIT. Furthermore, Distributable Earnings h elp us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indica tiv e of our current loan portfolio and operations and is a performance metric we consider when declaring our dividends. Distributable Earnings does not represent net income (loss) or cash generated from operating activities and should not be con sid ered as an alternative to GAAP net income (loss), or an indication of GAAP cash flows from operations, a measure of our liquidity, or an in dication of funds available for our cash needs. In addition, our methodology for calculating Distributable Earnings may differ from the m eth odologies employed by other companies to calculate the same or similar performance measures, and accordingly, our reported Distributabl e E arnings may not be comparable to the Distributable Earnings reported by other companies.

August 2024

 

v3.24.2.u1

Cover	Aug. 12, 2024
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 12, 2024
Entity File Number	001-35845
Entity Registrant Name	LUMENT FINANCE TRUST, INC.
Entity Central Index Key	0001547546
Entity Tax Identification Number	45-4966519
Entity Incorporation, State or Country Code	MD
Entity Address, Address Line One	230 Park Avenue
Entity Address, Address Line Two	20th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10169
City Area Code	212
Local Phone Number	317-5700
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	LFT
Security Exchange Name	NYSE
Redeemable Preferred Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	7.875% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share
Trading Symbol	LFTPrA
Security Exchange Name	NYSE

---