Financial Performance - Net income attributable to common stockholders was $3.4 million, or $0.07 per share of common stock for Q2 2024[139] - Distributable Earnings for Q2 2024 were $4.8 million, or $0.09 per share of common stock[139] - The company announced a second quarter common dividend of $0.08 per share, a 14.3% increase from the previous quarter[139] - For the three months ended June 30, 2024, the company recorded earnings per share of $0.07, declared a quarterly dividend of $0.08 per share, and reported Distributable Earnings of $0.09 per share[148] - The total stockholders' equity as of June 30, 2024, was $242,095,526, with a book value per share of common stock at $3.48[155] - The company’s Distributable Earnings for the three months ended June 30, 2024, amounted to $4,822,392, compared to $7,578,321 for the previous quarter[154] - The company reported net income attributable to common stockholders of $3,413,445 for the three months ended June 30, 2024, compared to $1,389,185 for the same period in 2023, representing a significant increase[199] - For the six months ended June 30, 2024, net income attributable to common stockholders was $9,208,628, or $0.18 per share, compared to $5,970,918, or $0.11 per share, for the same period in 2023, representing a 54.5% increase in net income[207] Loan Portfolio and Financing - The senior loan portfolio totals $1.2 billion, with 100% floating rate and an average spread to 30-day term SOFR of 3.59%[139] - Multifamily assets represent 93.2% of the loan portfolio[139] - As of June 30, 2024, 99.9% of investments earned a floating rate of interest, all indexed to 30-day term SOFR[141] - 94.5% of performing loans have interest rate caps with a weighted-average strike price of 2.8%[143] - 97.3% of the commercial mortgage loans in the portfolio were current as to principal and interest as of June 30, 2024[145] - Non-mark-to-market financing was $1.0 billion as of June 30, 2024, representing 100% of secured financings[139] - The unpaid principal balance of commercial mortgage loans held-for-investment decreased from $1,397,385,160 as of December 31, 2023, to $1,201,753,001 as of June 30, 2024[158] - The balance of commercial mortgage loans held-for-investment at June 30, 2024, was $1,186,653,339, reflecting a decrease due to principal repayments[157] - The company reported total loan commitments of $1.2 billion as of June 30, 2024, with a weighted average risk rating of 3.6[175] - The company has experienced $98.2 million in loan payoffs during the reporting period[139] Revenue and Growth - The company reported a total revenue of $28,250,000 for October 18, 2021, compared to $24,252,193 for the same period last year, reflecting a growth of approximately 16.5%[1] - For April 27, 2022, the revenue increased to $54,470,000, up from $49,800,000, indicating a year-over-year growth of about 13.4%[3] - The company reported a total revenue of $14,886,485 for the latest quarter, reflecting a significant increase compared to previous periods[1] - Future outlook suggests a projected revenue increase of 5.9% for the upcoming quarter, driven by new product launches and market expansion strategies[1] - The company provided a future outlook, projecting a 3.5% increase in revenue for the next quarter, with expectations of reaching $13,750,000[163] - The company is planning to expand its market presence with new developments in healthcare, as indicated by the revenue of $21,135,000 reported for November 2022[22] Operational Efficiency and Cost Management - Total expenses decreased from $4,425,049 for the three months ended June 30, 2023, to $3,533,804 for the same period in 2024, indicating improved cost management[199] - The company aims to achieve a 6.5% reduction in operational costs through efficiency improvements and technology integration[1] - The company reported a 7.4% increase in operational efficiency due to new technology implementations[163] Credit Losses and Risk Management - The unrealized provision for credit losses was $1,399,703 for the three months ended June 30, 2024, compared to $1,776,873 for the previous quarter[154] - The specific allowance for credit losses is determined by comparing the estimated fair value of collateral to the amortized cost of the loan, requiring significant judgment[191] - The company recorded a specific allowance of $0.9 million for credit losses on a loan in Philadelphia, PA, with an unpaid aggregate principal value of $15.0 million[168] - As of June 30, 2024, there were no impaired loans, non-accrual loans, or loans in maturity default, except for specific loans requiring evaluation[166] Cash Flow and Liquidity - As of June 30, 2024, the company had unrestricted cash and cash equivalents of $65.1 million, an increase from $51.2 million as of December 31, 2023[216] - For the six months ended June 30, 2024, net cash provided by operating activities totaled $14.6 million, an increase from $10.1 million in the same period of 2023, representing a 44.5% growth[220] - Cash flows from investing activities for the six months ended June 30, 2024, amounted to $162.3 million, significantly higher than $51.0 million in 2023, indicating a 218.0% increase[221] - The company anticipates that net proceeds from prior equity sales, combined with cash flow from operations and available borrowing capacity, will be sufficient to meet short-term liquidity requirements[223] Dividends and Shareholder Returns - The company declared a cash dividend rate of $0.08 per share of common stock for the second quarter of 2024, paid on July 15, 2024[228] - The cash dividend rate for Series A Preferred Stock for the second quarter of 2024 was declared at $0.49219 per share, also paid on July 15, 2024[228] - The company plans to continue making regular quarterly distributions to common stockholders, adhering to REIT distribution requirements[227]

Core Points - Lument Finance Trust, Inc. reported a GAAP net income of $3.4 million, or $0.07 per share, for the second quarter of 2024 [1] - Distributable earnings for the same period were $4.8 million, or $0.09 per share [1] - The company will host a conference call on August 13, 2024, to discuss these financial results [2] Financial Performance - The GAAP net income attributable to common shareholders for the second quarter was $3,413,445 [9] - Distributable earnings, a non-GAAP measure, totaled $4,822,392 for the quarter [9] - The weighted average shares outstanding were 52,266,174, leading to distributable earnings per share of $0.09 [9] Non-GAAP Financial Measures - Distributable earnings exclude non-cash equity compensation, depreciation, amortization, unrealized gains or losses, and one-time events [4][6] - The company believes that distributable earnings provide meaningful information for evaluating performance and are a strong indicator of dividends per share [6][7] - Distributable earnings should not be considered a substitute for GAAP net income or cash flows from operating activities [8] Company Overview - Lument Finance Trust focuses on investing in, financing, and managing a portfolio of commercial real estate debt investments, primarily in transitional floating rate commercial mortgage loans [10] - The company is externally managed by Lument Investment Management LLC [10]

Company Overview - Lument Finance Trust, Inc. (LFT) is a Maryland corporation focused on investing in, financing, and managing a portfolio of commercial real estate debt investments [3] - The company primarily invests in transitional floating rate commercial mortgage loans, with an emphasis on middle-market multi-family assets [3] - LFT is externally managed and advised by Lument Investment Management, a Delaware limited liability company [3] Upcoming Financial Reporting - LFT expects to file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, with the SEC on August 12, 2024, after market close [1] - A live conference call for investors and interested parties is scheduled for August 13, 2024, at 1:00 p.m. eastern time [1] Accessing Conference Call - The conference call can be accessed by dialing 1-800-836-8184 (U.S.) or 1-646-357-8785 (international) [2] - A live webcast is available for listen-only access at the provided URL [2] - A recorded replay will be available by telephone dial-in after the live broadcast [2]

Core Insights - Lument Finance Trust, Inc. (LFT) declared a cash dividend of $0.08 per share for Q2 2024, marking a 14% increase from the Q1 2024 dividend of $0.07 per share [1] - The dividend is scheduled for payment on July 15, 2024, to stockholders of record as of June 28, 2024 [1] - Additionally, LFT announced a cash dividend of $0.4921875 per share for its 7.875% Cumulative Redeemable Series A Preferred Stock, payable on July 15, 2024, to preferred stockholders of record as of July 1, 2024 [7] Company Overview - LFT is a Maryland corporation that focuses on investing in, financing, and managing a portfolio of commercial real estate debt investments [2] - The company primarily invests in transitional floating rate commercial mortgage loans, with a focus on middle-market multi-family assets [2] - LFT is externally managed and advised by Lument Investment Management, LLC, a Delaware limited liability company [2]

[Company Overview](index=3&type=section&id=Company%20Overview) Lument Finance Trust (LFT) is an externally-managed REIT specializing in commercial real estate (CRE) debt investments [Company Profile and Strategy](index=3&type=section&id=Company%20Profile%20and%20Strategy) LFT is an externally-managed REIT focused on CRE debt investments, benefiting from strong sponsorship and a focus on middle-market multifamily assets - LFT is an externally-managed REIT focused on CRE debt investments, managed by Lument Investment Management LLC, an affiliate of ORIX Corporation USA[8](index=8&type=chunk) - Key investment strengths include strong sponsorship, access to a large loan origination platform, a focus on middle-market multifamily assets, and experienced management[7](index=7&type=chunk) - The company utilizes attractive financing sources, including matched-term, non-recourse, non-mark-to-market collateralized financing[7](index=7&type=chunk) [Q1 2024 Performance Highlights](index=4&type=section&id=Q1%202024%20Performance%20Highlights) LFT reported Q1 2024 GAAP net income of $0.11/share and Distributable Earnings of $0.15/share, with a stable $1.3 billion multifamily-focused portfolio [Q1 2024 Updates](index=4&type=section&id=Q1%202024%20Updates) LFT reported Q1 2024 GAAP net income of $0.11/share and Distributable Earnings of $0.15/share, with a $0.07/share dividend and a stable $1.3 billion multifamily portfolio Q1 2024 Financial Results | Metric | Value | | :--- | :--- | | GAAP Net Income per Share | $0.11 | | Distributable Earnings per Share | $0.15 | | Common Stock Dividend per Share | $0.07 | | Book Value per Share | $3.50 | - The investment portfolio **totaled $1.3 billion**, with **93.6%** collateralized by multifamily assets. The **weighted average risk rating remained stable at 3.5**[9](index=9&type=chunk) - The company experienced **$97.4 million** in loan payoffs during the quarter and recorded **no asset-specific reserves**[9](index=9&type=chunk) - As of March 31, 2024, the company **held $64.6 million in cash** and had a **leverage ratio of 4.7x**. There are **no corporate debt maturities until 2026**[9](index=9&type=chunk) [Q1 2024 Balance Sheet Summary](index=5&type=section&id=Q1%202024%20Balance%20Sheet%20Summary) As of March 31, 2024, total assets were $1.38 billion, primarily commercial mortgage loans, with total equity at $242.9 million and a leverage ratio of 4.7x Balance Sheet Summary (March 31, 2024) | Account | Amount (thousands) | | :--- | :--- | | **Assets** | | | Commercial mortgage loans, net | $1,285,479 | | Cash and cash equivalents | $64,573 | | **Total Assets** | **$1,378,192** | | **Liabilities & Equity** | | | Secured financings | $1,075,890 | | Credit facility | $47,282 | | **Total Liabilities** | **$1,135,257** | | **Total Equity** | **$242,935** | | **Metrics** | | | Total liabilities / total equity | 4.7x | | Book Value Per Share | $3.50 | [Q1 2024 Income Statement Summary](index=6&type=section&id=Q1%202024%20Income%20Statement%20Summary) Q1 2024 net interest income was $13.0 million, leading to $5.8 million ($0.11/share) net income and $7.6 million ($0.15/share) Distributable Earnings Income Statement & Distributable Earnings (Q1 2024) | Metric | Amount (thousands) | | :--- | :--- | | Net Interest Income | $12,993 | | Operating Expenses | ($4,268) | | Net Income Attributable to Common Stockholders | $5,795 | | **Distributable Earnings** | **$7,578** | | **Per Share Metrics** | | | Net Income per Share | $0.11 | | Distributable Earnings per Share | $0.15 | [Earnings and Book Value Per Share Trends](index=7&type=section&id=Earnings%20and%20Book%20Value%20Per%20Share%20Trends) Q1 2024 Distributable Earnings per share increased to $0.15, while the dividend remained $0.07, and book value per share rose to $3.50 Per Share Performance Trend | Quarter | Distributable Earnings | Dividends | Book Value | | :--- | :--- | :--- | :--- | | Q2 2023 | $0.11 | $0.06 | $3.43 | | Q3 2023 | $0.11 | $0.07 | $3.46 | | Q4 2023 | $0.10 | $0.07 | $3.46 | | Q1 2024 | $0.15 | $0.07 | $3.50 | [Investment Portfolio](index=8&type=section&id=Investment%20Portfolio) The company's $1.3 billion floating-rate CRE loan portfolio is heavily concentrated in multifamily assets with stable credit quality [Portfolio Composition](index=8&type=section&id=Portfolio%20Composition) The $1.3 billion floating-rate CRE loan portfolio is 93.6% multifamily, with significant exposure to Texas and Florida, and no hospitality, retail, or office assets - The portfolio **consists of $1.3 billion** in floating-rate CRE loans, with **93.6%** invested in loans collateralized by multifamily assets[18](index=18&type=chunk) - The company has **no current exposure** to hospitality, retail, or office loan assets, with limited exposure to seniors housing and self-storage[18](index=18&type=chunk) Portfolio Breakdown by Property Type & Geography | Category | Breakdown | % of Portfolio | | :--- | :--- | :--- | | **Property Type** | Multifamily | 93.6% | | | Seniors Housing & Healthcare | 5.8% | | | Self Storage | 0.6% | | **Geography** | Texas | 30.3% | | | Florida | 16.3% | | | Georgia | 10.9% | | | New Jersey | 7.5% | [Q1 2024 Loan Activity](index=9&type=section&id=Q1%202024%20Loan%20Activity) The loan portfolio decreased to $1.29 billion in Q1 2024, primarily due to $97.4 million in multifamily loan payoffs, with no new loan loss provisions - The company experienced **$97.4 million** of loan payoffs during the quarter, **entirely from the multifamily segment**[19](index=19&type=chunk)[20](index=20&type=chunk) Portfolio Activity Roll-Forward (Q1 2024) | Description | Amount (millions) | | :--- | :--- | | Q4 2023 Portfolio Value | $1,383.9 | | Payoffs / Sales | ($97.4) | | Provision for Loan Losses | $0.8 | | Other Activity | ($1.8) | | **Q1 2024 Portfolio Value** | **$1,285.5** | [Portfolio Credit Quality](index=10&type=section&id=Portfolio%20Credit%20Quality) The portfolio's credit quality remained stable in Q1 2024, with a weighted average risk rating of 3.5 and 97.1% performing assets - The **weighted average risk rating of the portfolio remained unchanged quarter-over-quarter at 3.5**[23](index=23&type=chunk) - As of March 31, 2024, **97.1%** of the portfolio was performing, with **76.9%** rated as 'Moderate Risk' or better[23](index=23&type=chunk) [Capital Structure and Financing](index=11&type=section&id=Capital%20Structure%20and%20Financing) The company's capital structure relies on secured, non-recourse financing, avoiding repurchase facilities, and is sensitive to SOFR changes [Q1 2024 Capital Structure Overview](index=11&type=section&id=Q1%202024%20Capital%20Structure%20Overview) The capital structure is primarily secured, non-recourse financing (78.8%), avoiding repurchase facilities, with no corporate debt maturities until 2026 - The company does not use repurchase or warehouse facility financing, avoiding exposure to margin calls from repo or warehouse lenders[26](index=26&type=chunk) Capital Structure Composition (as of 3/31/2024) | Component | Amount ($ millions) | % of Total | | :--- | :--- | :--- | | Secured Financing | $1,081.0 | 78.8% | | Term Loan | $47.8 | 3.5% | | Preferred Equity | $60.0 | 4.4% | | Common Equity | $182.8 | 13.3% | | **Total Capitalization** | **$1,371.6** | **100.0%** | [Net Interest Income Sensitivity](index=12&type=section&id=Net%20Interest%20Income%20Sensitivity) The 100% floating-rate loan portfolio is sensitive to SOFR changes, with a 25 basis point decrease estimated to reduce net interest income per share by $0.01 - The entire loan portfolio is **100% floating-rate** and indexed to 30-day term SOFR[29](index=29&type=chunk) Net Interest Income Per Share Sensitivity to SOFR Changes | Change in SOFR | Change in Net Interest Income Per Share | | :--- | :--- | | +25 bps | +$0.01 | | -25 bps | -$0.01 | | -50 bps | -$0.02 | | -75 bps | -$0.03 | [Appendix](index=13&type=section&id=Appendix) This section provides detailed financial statements, loan portfolio specifics, and key financial measure definitions [CRE Loan Portfolio Details](index=14&type=section&id=CRE%20Loan%20Portfolio%20Details) This section provides a detailed, loan-by-loan breakdown of the company's 81 commercial real estate loans totaling approximately $1.3 billion Total CRE Loan Portfolio Summary (as of 3/31/2024) | Metric | Value ($) | | :--- | :--- | | Number of Loans | 81 | | Total Unpaid Principal Balance | $1,299,971,777 | | Weighted Average Note Spread | 3.60% | | Total Unamortized Discount/Premium | ($6,289,627) | [Consolidated Financial Statements](index=18&type=section&id=Consolidated%20Financial%20Statements) This section presents the detailed unaudited consolidated financial statements for Q1 2024, including balance sheets and income statements [Consolidated Balance Sheets](index=18&type=section&id=Consolidated%20Balance%20Sheets) The detailed balance sheet shows total assets of $1.38 billion as of March 31, 2024, with total equity increasing to $242.9 million Balance Sheet Comparison | Account | March 31, 2024 ($) | December 31, 2023 ($) | | :--- | :--- | :--- | | Total Assets | 1,378,191,925 | 1,446,932,447 | | Total Liabilities | 1,135,256,623 | 1,206,140,067 | | Total Equity | 242,935,302 | 240,792,380 | [Consolidated Statement of Income](index=19&type=section&id=Consolidated%20Statement%20of%20Income) The income statement for Q1 2024 shows net interest income of $13.0 million and net income attributable to common stockholders of $5.8 million ($0.11 per share) Income Statement Comparison (Three Months Ended March 31) | Account | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net Interest Income | 12,992,557 | 8,246,368 | | Net Income | 6,980,182 | 5,766,691 | | Net Income Attributable to Common Stockholders | 5,795,183 | 4,581,733 | | Basic and Diluted Income per Share | 0.11 | 0.09 | [Allowance for Loan Losses Detail](index=20&type=section&id=Allowance%20for%20Loan%20Losses%20Detail) The allowance for credit losses increased by $1.76 million in Q1 2024 due to provisions, reaching a total of $7.82 million Allowance for Credit Losses Roll-Forward (Q1 2024) | Description | Amount ($) | | :--- | :--- | | Beginning Balance (12/31/2023) | 6,059,006 | | Provision for credit losses | 1,757,456 | | **Ending Balance (3/31/2024)** | **7,816,462** | [Reconciliation of Net Income to Distributable Earnings](index=21&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Distributable%20Earnings) This table reconciles Q1 2024 GAAP net income of $5.8 million to Distributable Earnings of $7.58 million, or $0.15 per share GAAP Net Income to Distributable Earnings Reconciliation (Q1 2024) | Line Item | Amount ($) | | :--- | :--- | | Net income attributable to common stockholders | 5,795,183 | | Unrealized provision for credit losses | 1,776,873 | | Other Adjustments | 6,265 | | **Distributable Earnings** | **7,578,321** | [Capitalization and Book Value Reconciliation](index=22&type=section&id=Capitalization%20and%20Book%20Value%20Reconciliation) This section details the calculation of total capitalization at $1.37 billion and book value per common share at $3.50 as of March 31, 2024 - **Total LFT Capitalization as of March 31, 2024, was calculated to be $1.37 billion** after adjustments to total GAAP liabilities and equity[47](index=47&type=chunk) Book Value Per Share Calculation (as of 3/31/2024) | Line Item | Amount ($) | | :--- | :--- | | Total stockholders' equity | $242,935,000 | | Less: Preferred equity | ($60,000,000) | | Common equity | $182,836,000 | | Shares outstanding | 52,257,315 | | **Book Value Per Share** | **$3.50** | [Key Definitions](index=24&type=section&id=Key%20Definitions) This section defines key non-GAAP financial measures, including Book Value Per Share of Common Stock and Distributable Earnings - Book Value Per Share of Common Stock is calculated by subtracting the liquidation preference of preferred stock from total stockholders' equity and dividing by the number of common shares outstanding[51](index=51&type=chunk) - Distributable Earnings is a non-GAAP measure that excludes non-cash equity compensation, unrealized gains/losses, and other non-cash or one-time items from GAAP net income. It is considered a **strong indicator of the company's dividend-paying capacity**[52](index=52&type=chunk)[53](index=53&type=chunk)

PART I - Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for Q1 2024, including balance sheets, operations, equity, cash flows, and detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (March 31, 2024 vs. December 31, 2023) | Metric | March 31, 2024 | December 31, 2023 | | :------------------------------------------------- | :------------- | :-------------- | | **Assets** | | | | Cash and cash equivalents | $64,573,372 | $51,247,063 | | Commercial mortgage loans held-for-investment, net | $1,285,478,916 | $1,383,881,197 | | Total assets | $1,378,191,925 | $1,446,932,447 | | **Liabilities** | | | | Collateralized loan obligations and secured financings, net | $1,075,890,203 | $1,146,210,752 | | Total liabilities | $1,135,256,623 | $1,206,140,067 | | **Equity** | | | | Total equity | $242,935,302 | $240,792,380 | - Total assets **decreased by** approximately **$68.7 million** from **December 31, 2023**, to **March 31, 2024**, **primarily due to** a reduction in commercial mortgage loans held-for-investment, net[12](index=12&type=chunk) - Total liabilities **decreased by** approximately **$70.9 million**, mainly **due to** a reduction in collateralized loan obligations and secured financings[12](index=12&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (Three Months Ended March 31, 2024 vs. 2023) | Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | | :------------------------------------------ | :---------------------------- | :---------------------------- | | Interest income: Commercial mortgage loans | $34,790,118 | $21,944,661 | | Net interest income | $12,992,557 | $8,246,368 | | Total expenses | $4,267,740 | $2,672,006 | | (Provision for) reversal of credit losses, net | $(1,776,873) | $179,684 | | Net income | $6,980,182 | $5,766,691 | | Net income attributable to common stockholders | $5,795,183 | $4,581,733 | | Basic and diluted income per share | $0.11 | $0.09 | | Dividends declared per share of common stock | $0.07 | $0.06 | - Net interest income **increased by** **57.5%** year-over-year, from **$8.2 million** in **Q1 2023** to **$13.0 million** in **Q1 2024**[17](index=17&type=chunk) - The company recorded a provision for credit losses of **$1.8 million** in **Q1 2024**, a **significant change from** a reversal of credit losses of **$0.2 million** in **Q1 2023**[17](index=17&type=chunk) [Consolidated Statements of Changes in Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Consolidated Statements of Changes in Equity Highlights (Three Months Ended March 31, 2024) | Metric | Balance at Dec 31, 2023 | Issuance of Common Stock | Cost of Issuing Common Stock | Net Income | Common Stock Dividends | Preferred Stock Dividends | Balance at Mar 31, 2024 | | :----------------------- | :---------------------- | :----------------------- | :--------------------------- | :--------- | :--------------------- | :------------------------ | :---------------------- | | Total Stockholders' Equity | $240,692,880 | $19,947 | $(14,196) | $6,980,182 | $(3,658,012) | $(1,184,999) | $242,835,802 | | Total Equity | $240,792,380 | $19,947 | $(14,196) | $6,980,182 | $(3,658,012) | $(1,184,999) | $242,935,302 | - Total equity **increased by** approximately **$2.1 million** during the three months ended **March 31, 2024**, driven by net income and common stock issuance, partially offset by dividend payments[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, 2024 vs. 2023) | Cash Flow Activity | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | | :---------------------------------------- | :---------------------------- | :---------------------------- | | Net cash provided by operating activities | $9,057,892 | $5,841,943 | | Net cash provided by investing activities | $80,093,383 | $51,625,741 | | Net cash used in financing activities | $(76,022,913) | $(4,315,119) | | Net increase in cash, cash equivalents and restricted cash | $13,128,362 | $53,152,565 | | Cash, cash equivalents and restricted cash, end of period | $64,645,554 | $100,518,930 | - Net cash provided by operating activities **increased by** **55.0%** year-over-year, from **$5.8 million** in **Q1 2023** to **$9.1 million** in **Q1 2024**[23](index=23&type=chunk) - Net cash used in financing activities significantly **increased from** **$4.3 million** in **Q1 2023** to **$76.0 million** in **Q1 2024**, **primarily due to** repayment of collateralized loan obligations[23](index=23&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS](index=8&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION%20AND%20BUSINESS%20OPERATIONS) Details Lument Finance Trust's (LFT) focus on commercial real estate debt investments and its REIT election - Lument Finance Trust, Inc (LFT) is a Maryland corporation focused on investing in, originating, financing, and managing a portfolio of commercial real estate (CRE) debt investments[25](index=25&type=chunk) - LFT is externally managed by Lument Investment Management, LLC and has elected to be taxed as a real estate investment trust (REIT)[25](index=25&type=chunk)[26](index=26&type=chunk) [NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=NOTE%202%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines GAAP-compliant interim financial reporting, consolidation of VIEs, and adoption of the CECL model - The financial statements are prepared in accordance with GAAP for interim financial reporting, with certain information condensed or omitted[27](index=27&type=chunk) - The Company consolidates Variable Interest Entities (VIEs) where it is the primary beneficiary, such as LFT CRE 2021-FL1 CLO and LMF 2023-1 Financing[28](index=28&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - On **January 1, 2023**, the Company adopted ASU 2016-13 (CECL model), replacing the incurred loss methodology with an expected loss model for credit losses, resulting in a **$3.6 million** decrease to accumulated earnings[43](index=43&type=chunk) - The Company uses a 5-point risk rating scale for commercial mortgage loans, from 'Very Low Risk' to 'Default Risk', assessing factors like DSCR, LTV, property type, and market dynamics[48](index=48&type=chunk)[54](index=54&type=chunk) [NOTE 3 COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT](index=13&type=section&id=NOTE%203%20COMMERCIAL%20MORTGAGE%20LOANS%20HELD-FOR-INVESTMENT) Details commercial mortgage loan portfolio, including principal balance, carrying value, and credit loss allowance Commercial Mortgage Loans Held-for-Investment (March 31, 2024 vs. December 31, 2023) | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :-------------- | | Unpaid Principal Balance | $1,299,971,777 | $1,397,385,160 | | Carrying Value | $1,293,295,378 | $1,389,940,203 | | Loan Count | 81 | 88 | | Floating Rate Loan % | 100.0% | 100.0% | | Weighted Average Coupon | 8.9% | 8.9% | | Weighted Average Term (Years) | 2 | 2 | | Allowance for credit losses | $(7,816,462) | $(6,059,006) | - The loan portfolio **decreased by** approximately **$97.4 million** in principal payments during **Q1 2024**[69](index=69&type=chunk) - The average **risk rating of** **3.5** (Moderate Risk) of the commercial mortgage loan portfolio **remained consistent at** **March 31, 2024**, with **76.9%** rated 3 or better[70](index=70&type=chunk)[72](index=72&type=chunk) - The allowance for credit losses **increased by** **$1.8 million** to **$7.8 million** as of **March 31, 2024**, **primarily due to** softening CRE prices reflected in macroeconomic assumptions[75](index=75&type=chunk) - **Two loans totaling** **$37.6 million** were on non-accrual status as of **March 31, 2024**, **due to** expected imminent maturity default and monetary default, respectively[77](index=77&type=chunk)[78](index=78&type=chunk) [NOTE 4 - USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES](index=16&type=section&id=NOTE%204%20-%20USE%20OF%20SPECIAL%20PURPOSE%20ENTITIES%20AND%20VARIABLE%20INTEREST%20ENTITIES) Explains the Company's consolidation of CLO transactions and secured financings as primary beneficiary - The Company consolidates CLO transactions and secured financings as financing facilities, specifically the 2021-FL1 CLO and LMF 2023-1 Financing, as it is deemed the primary beneficiary[83](index=83&type=chunk) - As of **March 31, 2024**, all collateralization and coverage tests for both the 2021-FL1 CLO and LMF 2023-1 Financing were met[86](index=86&type=chunk) VIE Assets and Liabilities (March 31, 2024 vs. December 31, 2023) | Metric | March 31, 2024 | December 31, 2023 | | :------------------------------------------ | :------------- | :-------------- | | Total Assets of consolidated VIEs | $1,311,421,901 | $1,384,136,334 | | Total Liabilities of consolidated VIEs | $1,079,644,656 | $1,150,207,290 | | Net income from VIEs (3 months ended March 31) | $7,864,978 (2024) | $7,636,230 (2023) | [NOTE 5 - RESTRICTED CASH](index=17&type=section&id=NOTE%205%20-%20RESTRICTED%20CASH) Describes restricted cash held within CLO and secured financing facilities for reinvestment in qualifying loan obligations - Restricted cash is held within the 2021-FL1 CLO and LMF 2023-1 Financing, intended for reinvestment in qualifying loan obligations during their respective reinvestment periods[91](index=91&type=chunk) - The reinvestment period for the 2021-FL1 CLO expired in **December 2023**, while for LMF 2023-1 Financing, it expires in **July 2025**[91](index=91&type=chunk) [NOTE 6 - SECURED TERM LOAN](index=17&type=section&id=NOTE%206%20-%20SECURED%20TERM%20LOAN) Details the Company's $47.75 million Secured Term Loan, its maturity, interest rate, and compliance with covenants - The Company has a **$47.75 million** Secured Term Loan, maturing in **February 2026**, bearing a fixed interest rate of **7.25%**[92](index=92&type=chunk)[94](index=94&type=chunk)[96](index=96&type=chunk) - The Secured Term Loan is secured by substantially all assets of the Credit Parties and is subject to customary affirmative and negative covenants, with which the Company was in compliance as of **March 31, 2024**[93](index=93&type=chunk)[98](index=98&type=chunk) [NOTE 7 - MORTGAGE SERVICING RIGHTS](index=18&type=section&id=NOTE%207%20-%20MORTGAGE%20SERVICING%20RIGHTS) Summarizes activity and valuation of Mortgage Servicing Rights (MSRs) held at fair value within the TRS Mortgage Servicing Rights (MSR) Activity (Three Months Ended March 31, 2024 vs. 2023) | Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | | :------------------------------------------ | :---------------------------- | :---------------------------- | | Balance at beginning of period | $691,973 | $795,656 | | Changes in valuation inputs or assumptions | $(10,036) | $(20,916) | | Other changes to fair value | $14,663 | $(28,212) | | Balance at end of period | $696,600 | $746,528 | | Loans associated with MSRs | $66,370,595 | $72,193,412 | | MSR values as percent of loans | 1.05% | 1.03% | | Servicing income, net | $38,503 | $51,528 | - MSRs are held at fair value within the Company's taxable REIT subsidiary (TRS) and are associated with residential mortgage loans previously securitized or sold[49](index=49&type=chunk)[100](index=100&type=chunk) [NOTE 8 - FAIR VALUE](index=19&type=section&id=NOTE%208%20-%20FAIR%20VALUE) Discusses fair value measurements, particularly for Level 3 assets like Mortgage Servicing Rights and key unobservable inputs - The Company's Level 3 assets, **primarily** Mortgage Servicing Rights (MSRs), **totaled** **$696,600** as of **March 31, 2024**[104](index=104&type=chunk) Fair Value Measurement of Financial Instruments (March 31, 2024) | Instrument | Fair Value Hierarchy Level | Carrying Value | Fair Value | | :------------------------------------------ | :------------------------- | :------------- | :----------- | | Cash and cash equivalents | Level 1 | $64,573,372 | $64,573,372 | | Restricted cash | Level 1 | $72,182 | $72,182 | | Commercial mortgage loans held-for-investment, net | Level 3 | $1,285,478,916 | $1,293,893,150 | | Collateralized loan obligations and secured financings | Level 2 | $1,075,890,203 | $1,069,201,351 | | Secured Term Loan | Level 3 | $47,282,352 | $46,368,979 | - Key unobservable inputs for MSR valuation include a constant prepayment rate (**8.0-9.1%**) and a discount rate (**12.0%**)[105](index=105&type=chunk) [NOTE 9 - RELATED PARTY TRANSACTIONS](index=20&type=section&id=NOTE%209%20-%20RELATED%20PARTY%20TRANSACTIONS) Reports management and incentive fees paid to the Manager and reimbursable expenses for the period Management and Incentive Fees (Three Months Ended March 31, 2024 vs. 2023) | Fee Type | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | | :----------------------- | :---------------------------- | :---------------------------- | | Management fees | $1,088,207 | $1,087,262 | | Incentive fees | $1,480,000 | $0 | | Total Management and Incentive Fees | $2,568,207 | $1,087,262 | - The Company incurred **$2.6 million** in management and incentive fees in **Q1 2024**, a **significant change from** **$1.1 million** in **Q1 2023**, **primarily due to** **$1.48 million** in accrued incentive fees[109](index=109&type=chunk)[110](index=110&type=chunk) - Reimbursable expenses to the Manager **decreased from** **$509,986** in **Q1 2023** to **$470,167** in **Q1 2024**, partly **due to** a **$87,500** reduction from waived exit fees[112](index=112&type=chunk) [NOTE 10 - GUARANTEES](index=21&type=section&id=NOTE%2010%20-%20GUARANTEES) Outlines loan repurchase obligations for residential mortgage loans and MAXEX Clearing LLC's assumption of backstop guarantees - The Company, through FOAC, has loan repurchase obligations for residential mortgage loans sold into securitizations, though no repurchases have been required to date[119](index=119&type=chunk) - MAXEX Clearing LLC assumed all of FOAC's backstop guarantee obligations as of **December 31, 2018**, indemnifying FOAC against related losses[121](index=121&type=chunk) - The maximum potential future payment under outstanding backstop guarantees was estimated at **$101 million** as of **March 31, 2024**, but the Company believes this is not indicative of actual potential losses[122](index=122&type=chunk) [NOTE 11 - COMMITMENTS AND CONTINGENCIES](index=23&type=section&id=NOTE%2011%20-%20COMMITMENTS%20AND%20CONTINGENCIES) States no material legal proceedings and details unfunded commitments for various financing entities - As of **March 31, 2024**, the Company was not involved in any material legal proceedings[125](index=125&type=chunk) Unfunded Commitments (March 31, 2024 vs. December 31, 2023) | Entity | March 31, 2024 | December 31, 2023 | | :---------------- | :------------- | :-------------- | | LCMT (2021-FL1 CLO) | $6.7 million | $6.7 million | | LSF (2021-FL1 CLO) | $39.2 million | $54.3 million | | LSF (LMF 2023-1 Financing) | $21.6 million | $22.9 million | | Total Unfunded Commitments | $67.5 million | $83.9 million | [NOTE 12 - EQUITY](index=24&type=section&id=NOTE%2012%20-%20EQUITY) Presents common and preferred stock outstanding, declared dividends, and the Independent Directors Stock-for-Fees Program Common and Preferred Stock Outstanding (March 31, 2024 vs. December 31, 2023) | Stock Type | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :-------------- | | Common Stock (shares outstanding) | 52,257,315 | 52,248,631 | | Preferred Stock (shares outstanding) | 2,400,000 | 2,400,000 | - The Company declared common stock dividends of **$0.07** per share and Series A Preferred Stock dividends of **$0.49219** per share for **Q1 2024**[133](index=133&type=chunk) - The Independent Directors Stock-for-Fees Program allows directors to receive fees in common stock, with **26,163** shares issued as of **March 31, 2024**[135](index=135&type=chunk)[138](index=138&type=chunk) [NOTE 13 - EARNINGS PER SHARE](index=25&type=section&id=NOTE%2013%20-%20EARNINGS%20PER%20SHARE) Details net income attributable to common stockholders and basic and diluted earnings per share Earnings Per Share (Three Months Ended March 31, 2024 vs. 2023) | Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | | :------------------------------------------ | :---------------------------- | :---------------------------- | | Net income attributable to common stockholders | $5,795,183 | $4,581,733 | | Basic weighted average shares of common stock | 52,249,299 | 52,225,152 | | Diluted weighted average shares of common stock outstanding | 52,249,299 | 52,231,152 | | Basic and diluted income per share | $0.11 | $0.09 | - Basic and diluted EPS **increased from** **$0.09** in **Q1 2023** to **$0.11** in **Q1 2024**[141](index=141&type=chunk) [NOTE 14 - SEGMENT REPORTING](index=25&type=section&id=NOTE%2014%20-%20SEGMENT%20REPORTING) Confirms the Company operates as a single reporting segment focused on commercial mortgage loans and related investments - The Company operates as a single reporting segment, investing in a portfolio of commercial mortgage loans and other mortgage-related investments[142](index=142&type=chunk) [NOTE 15 - INCOME TAXES](index=25&type=section&id=NOTE%2015%20-%20INCOME%20TAXES) Explains the Company's REIT election, distribution requirements, and activities conducted through a Taxable REIT Subsidiary - The Company maintains its REIT election, requiring annual distribution of at least **90%** of its taxable income to avoid federal income tax on distributed earnings[143](index=143&type=chunk) - Certain activities are conducted through a Taxable REIT Subsidiary (TRS), FOAC, which is subject to U.S. C-Corporation tax[145](index=145&type=chunk) - As of **March 31, 2024**, the Company was in compliance with all REIT requirements[145](index=145&type=chunk) [NOTE 16 - SUBSEQUENT EVENTS](index=26&type=section&id=NOTE%2016%20-%20SUBSEQUENT%20EVENTS) Reports a loan repayment in full on May 3, 2024, following a modification - On **May 3, 2024**, a loan collateralized by a multifamily property in Virginia Beach, VA, repaid in full following a loan modification[147](index=147&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's analysis of Q1 2024 financial condition and operations, including business, market, portfolio, and financing [Overview](index=27&type=section&id=Overview) Lument Finance Trust (LFT) invests in transitional floating rate commercial real estate (CRE) mortgage loans, primarily multifamily assets - Lument Finance Trust (LFT) invests **primarily** in transitional floating rate commercial real estate (CRE) mortgage loans, with a focus on middle market multifamily assets[155](index=155&type=chunk) - The Company finances investments through matched-term non-recourse secured borrowings, including collateralized loan obligations (CLOs), which are not subject to margin calls[155](index=155&type=chunk) - LFT leverages Lument's platform and ORIX USA's resources for originations, asset management, and servicing, aiming for attractive risk-adjusted returns[154](index=154&type=chunk)[156](index=156&type=chunk) [Recent Developments](index=28&type=section&id=Recent%20Developments) Global markets experienced volatility in 2023 and Q1 2024 due to inflation, higher interest rates, and geopolitical uncertainty - Global markets experienced **significant** volatility in **2023** and **Q1 2024** **due to** heightened inflation, higher interest rates, slowing economic growth, and geopolitical uncertainty[158](index=158&type=chunk) - Central banks' monetary tightening actions have led to moderate inflation but may keep interest rates higher for longer, potentially affecting borrowers and increasing borrowing costs[159](index=159&type=chunk) [First Quarter 2024 Summary](index=28&type=section&id=First%20Quarter%202024%20Summary) Highlights key operating results for Q1 2024, including net income, EPS, distributable earnings, and loan portfolio characteristics First Quarter 2024 Operating Highlights | Metric | Q1 2024 | | :------------------------------------------ | :---------- | | Net income attributable to common stockholders | $5.8 million | | Basic and diluted income per share | $0.11 | | Distributable Earnings | $7.6 million | | Distributable Earnings per share | $0.15 | | Common dividend declared per share | $0.07 | | Book value per share of common stock | $3.50 | | Loan payoffs | $97.4 million | | Senior loan portfolio (100% floating rate) | $1.3 billion | | Multifamily assets as % of loan portfolio | 93.6% | | Non-mark-to-market financing | $1.1 billion | [Factors Impacting Our Operating Results](index=28&type=section&id=Factors%20Impacting%20Our%20Operating%20Results) Discusses influences on operating results, including net interest income, asset market values, and credit risk management - Operating results are influenced by net interest income, asset market values, and supply/demand for target assets, with net interest income varying with market interest rates and prepayment speeds[160](index=160&type=chunk) - Rising interest rates generally increase net interest income, but sustained high rates may strain borrower cash flows and refinancing ability, mitigated by interest rate caps on **94.7%** of performing loans (weighted-average strike price of **2.6%**)[161](index=161&type=chunk)[163](index=163&type=chunk) - Credit risk is monitored through asset management, with **100%** of commercial mortgage loans current on principal and interest as of **March 31, 2024**[164](index=164&type=chunk) [Key Financial Measure and Indicators](index=29&type=section&id=Key%20Financial%20Measure%20and%20Indicators) Presents key financial metrics like net income, dividends, distributable earnings, and book value per share Key Financial Measures (March 31, 2024 vs. December 31, 2023) | Metric | March 31, 2024 | December 31, 2023 | | :------------------------------------------ | :------------- | :-------------- | | Net income per share, basic and diluted | $0.11 | $0.07 | | Dividends declared per share | $0.07 | $0.07 | | Distributable Earnings | $7,578,321 | $5,238,424 | | Distributable Earnings per share | $0.15 | $0.10 | | Book value per share of common stock | $3.50 | $3.46 | - Distributable Earnings, a non-GAAP measure, **increased to** **$7.6 million** (**$0.15** per share) in **Q1 2024** from **$5.2 million** (**$0.10** per share) in **Q4 2023**, serving as a strong indicator for dividends[173](index=173&type=chunk)[175](index=175&type=chunk) [Investment Portfolio](index=30&type=section&id=Investment%20Portfolio) Details the commercial mortgage loan portfolio activity, risk ratings, and non-accrual loans for Q1 2024 Loan Portfolio Activity (Three Months Ended March 31, 2024) | Activity | Amount | | :------------------------------------------ | :------------- | | Balance at December 31, 2023 | $1,383,881,197 | | Proceeds from principal repayments | $(97,413,384) | | Accretion of purchase discount | $711,236 | | Accretion of deferred loan fees | $57,323 | | Release of credit losses, net | $(1,757,456) | | Balance at March 31, 2024 | $1,285,478,916 | - The loan portfolio experienced **$97.4 million** in principal repayments during **Q1 2024**, **reducing to** a carrying value of **$1.285 billion**[179](index=179&type=chunk) - The weighted average **risk rating of** **3.5** (Moderate Risk) of the loan portfolio **remained at** **March 31, 2024**, with **76.9%** of the net carrying value rated 3 or better[195](index=195&type=chunk) - **Two loans totaling** **$37.6 million** were on non-accrual status **due to** expected imminent maturity default and monetary default, respectively, as of **March 31, 2024**[188](index=188&type=chunk)[189](index=189&type=chunk) [Total Financing](index=35&type=section&id=Total%20Financing) Summarizes the Company's non-mark-to-market financing arrangements, including CLOs, secured financings, and a secured term loan Financing Agreements Summary (March 31, 2024 vs. December 31, 2023) | Financing Type | Mark-to-Market Status | Facility Size (Mar 31, 2024) | Borrowings Outstanding (Mar 31, 2024) | Borrowings Outstanding (Dec 31, 2023) | | :-------------------------------- | :-------------------- | :--------------------------- | :------------------------------------ | :------------------------------------ | | Collateralized loan obligations | Non-Mark-to-Market | $928,795,794 | $928,795,794 | $1,000,000,000 | | Secured Financings | Non-Mark-to-Market | $386,300,000 | $386,300,000 | $386,300,000 | | Secured term loan | Non-Mark-to-Market | $47,750,000 | $47,750,000 | $47,750,000 | | Total | | $1,362,845,794 | $1,362,845,794 | $1,434,050,000 | - All current financing arrangements are non-mark-to-market, providing stability against market fluctuations[197](index=197&type=chunk) - The 2021-FL1 CLO's maximum facility size **decreased due to** a **$71.2 million** repayment of Class A Notes[198](index=198&type=chunk) [FOAC and Our Residential Mortgage Loan Business](index=36&type=section&id=FOAC%20and%20Our%20Residential%20Mortgage%20Loan%20Business) Explains FOAC's past residential mortgage loan activities and the assumption of its backstop guarantee obligations - FOAC, a Taxable REIT Subsidiary, previously aggregated mortgage loans for securitization but ceased this activity for prime jumbo loans[209](index=209&type=chunk)[210](index=210&type=chunk) - FOAC's backstop guarantee obligations for loans sold via MAXEX Clearing LLC were assumed by MAXEX Clearing LLC as of **December 31, 2018**[211](index=211&type=chunk) [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Highlights significant estimates for commercial mortgage loans, CECL model adoption, and individual credit loss evaluations - The Company's financial statements rely on **significant** estimates and assumptions, particularly for commercial mortgage loans held-for-investment[212](index=212&type=chunk)[213](index=213&type=chunk) - The adoption of the CECL model on **January 1, 2023**, requires estimating all expected credit losses based on historical data, current conditions, and forward-looking macroeconomic forecasts[214](index=214&type=chunk)[216](index=216&type=chunk) - Loans deemed 'Default Risk' or collateral dependent are individually evaluated for specific credit loss allowances, measured by comparing collateral fair value to the loan's amortized cost[217](index=217&type=chunk) [Capital Allocation](index=38&type=section&id=Capital%20Allocation) Details the allocation of capital across investment types, including commercial mortgage loans, MSRs, and unrestricted cash Capital Allocated by Investment Type (March 31, 2024 vs. December 31, 2023) | Investment Type | March 31, 2024 | % Capital (Mar 31, 2024) | December 31, 2023 | % Capital (Dec 31, 2023) | | :------------------------ | :------------- | :----------------------- | :---------------- | :----------------------- | | Commercial Mortgage Loans | $231,689,720 | 79.8% | $242,532,841 | 84.2% | | MSRs | $696,600 | 0.2% | $691,973 | 0.2% | | Unrestricted Cash | $57,831,334 | 20.0% | $44,787,792 | 15.6% | | Total Capital Allocated | $290,217,654 | 100.0% | $288,012,606 | 100.0% | - Capital allocated to commercial mortgage loans **decreased from** **84.2%** to **79.8%** of total capital, while unrestricted cash allocation **increased from** **15.6%** to **20.0%** from **Q4 2023** to **Q1 2024**[222](index=222&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Analyzes the increase in net income attributable to common stockholders, driven by net interest income and changes in expenses Net Income Attributable to Common Stockholders (Three Months Ended March 31, 2024 vs. 2023) | Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | | :------------------------------------------ | :---------------------------- | :---------------------------- | | Net income attributable to common stockholders | $5,795,183 | $4,581,733 | | Basic and diluted net income per average share | $0.11 | $0.09 | - Net income attributable to common stockholders **increased by** **26.5%** year-over-year, driven by a **significant** increase in net interest income[226](index=226&type=chunk) - Net interest income **increased by** **$4.7 million**, **primarily due to** a **$350.4 million** increase in the weighted-average principal balance of the loan portfolio and a **81bps** increase in the weighted-average floating rate[227](index=227&type=chunk) - Total expenses **increased from** **$2.7 million** in **Q1 2023** to **$4.3 million** in **Q1 2024**, mainly **due to** higher management and incentive fees and increased operating expenses[226](index=226&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) - Other income **shifted to a loss of** **$1.7 million** in **Q1 2024**, **primarily due to** a **$1.8 million** provision for credit losses, compared to a gain of **$0.2 million** in **Q1 2023**[232](index=232&type=chunk)[233](index=233&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses primary liquidity sources, cash position, debt-to-equity ratios, and cash flow activities for the period - Primary liquidity sources include equity issuances, debt obligations, and operating cash flows, with current financing arrangements being non-recourse and matched-term[236](index=236&type=chunk) - Unrestricted cash and cash equivalents **increased to** **$64.6 million** as of **March 31, 2024**, from **$51.2 million** at **December 31, 2023**[238](index=238&type=chunk) - The Company's recourse debt to equity ratio was **0.2:1**, and total debt to equity ratio (GAAP basis) was **4.6:1** as of **March 31, 2024**[239](index=239&type=chunk)[240](index=240&type=chunk) Cash Flow Summary (Three Months Ended March 31, 2024 vs. 2023) | Cash Flow Activity | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | | :------------------------------------------ | :---------------------------- | :---------------------------- | | Net cash provided by operating activities | $9,057,892 | $5,841,943 | | Net cash provided by investing activities | $80,093,383 | $51,625,741 | | Net cash used in financing activities | $(76,022,913) | $(4,315,119) | | Net increase in cash, cash equivalents and restricted cash | $13,128,362 | $53,152,565 | [Off-Balance Sheet Arrangements](index=41&type=section&id=Off-Balance%20Sheet%20Arrangements) Confirms no unconsolidated off-balance sheet arrangements and the assumption of FOAC's backstop guarantee obligations - As of **March 31, 2024**, the Company did not maintain relationships with unconsolidated financial partnerships or special purpose entities for off-balance sheet arrangements[250](index=250&type=chunk) - MAXEX Clearing LLC assumed all of FOAC's backstop guarantee obligations, eliminating the related non-contingent liability from the Company's balance sheet[251](index=251&type=chunk) [Distributions](index=41&type=section&id=Distributions) Outlines the Company's REIT distribution requirements and declared dividends for common and preferred stock in Q1 2024 - As a REIT, the Company must distribute at least **90%** of its taxable income annually to stockholders[252](index=252&type=chunk) - The Board declared a cash dividend of **$0.07** per common share and **$0.49219** per Series A Preferred Stock share for **Q1 2024**, paid on **April 15, 2024**[254](index=254&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risks](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risks) States no applicable quantitative and qualitative disclosures about market risks for this quarterly report - The Company has no applicable quantitative and qualitative disclosures about market risks for the reported period[256](index=256&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated and deemed effective the Company's disclosure controls and procedures as of March 31, 2024 - Disclosure controls and procedures were evaluated and deemed effective as of **March 31, 2024**[258](index=258&type=chunk) - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[259](index=259&type=chunk) PART II - Other Information [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) Confirms neither the Company nor its Manager is subject to any material legal proceedings - Neither the Company nor its Manager is subject to any material legal proceedings as of the report date[260](index=260&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to the risk factors previously disclosed in the 2023 Annual Report on Form 10-K - No material changes to the Risk Factors were identified since the Annual Report on Form 10-K for **2023**[261](index=261&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities or use of proceeds to report[262](index=262&type=chunk) [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Confirms no defaults upon senior securities to report for the period - No defaults upon senior securities to report[263](index=263&type=chunk) [Item 4. Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States mine safety disclosures are not applicable to the Company's operations - Mine Safety Disclosures are not applicable[264](index=264&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) Confirms no other information to report for the period - No other information to report[265](index=265&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) Lists exhibits filed, including CEO/CFO certifications and XBRL taxonomy documents - Exhibits include certifications from the CEO and CFO (pursuant to Sarbanes-Oxley Act Sections 302 and 906) and XBRL taxonomy documents[269](index=269&type=chunk) [Signatures](index=46&type=section&id=Signatures) The report is signed by the Chief Executive Officer and Chief Financial Officer of Lument Finance Trust, Inc - The report is signed by James P. Flynn, Chief Executive Officer, President and Chairman of the Board, and James A. Briggs, Chief Financial Officer, on **May 9, 2024**[274](index=274&type=chunk)

NEW YORK, May 6, 2024 /PRNewswire/ -- Lument Finance Trust, Inc. (NYSE: LFT) ("we,"; "LFT" or "the Company") announced today that it expects to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 with the Securities and Exchange Commission on Thursday, May 9, 2024, after the market closes, and invites investors and other interested parties to listen to its live conference call via telephone or webcast on Friday, May 10, 2024 at 8:30 a.m. eastern time. The conference call may be acces ...

Lument Finance Trust, Inc. (NYSE:LFT) Q4 2023 Earnings Conference Call March 18, 2024 8:30 AM ET Company Participants Andrew Tsang - IR James P. Flynn - CEO James Briggs - CFO James J. Henson - President Zachary Halpern - Managing Director Conference Call Participants Crispin Love - Piper Sandler & Co. Steven Delaney - JMP Securities Matthew Erdner - JonesTrading Unidentified Analyst - Raymond James Christopher Nolan - Ladenburg Thalmann Operator Good morning, and thank you for joining the Lument Finance Tr ...

Q4 2023 Earnings Supplemental March 2024 Disclaimer 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 finan ...

Exhibit 99.2 March 2024 Lument Finance Trust Q4 2023 Earnings Supplemental Disclaimer 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 th ...