Company Overview Lument Finance Trust (LFT) is an externally-managed REIT specializing in commercial real estate (CRE) debt investments Company Profile and Strategy 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 USA8 - Key investment strengths include strong sponsorship, access to a large loan origination platform, a focus on middle-market multifamily assets, and experienced management7 - The company utilizes attractive financing sources, including matched-term, non-recourse, non-mark-to-market collateralized financing7 Q1 2024 Performance Highlights 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 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 3.59 - The company experienced $97.4 million in loan payoffs during the quarter and recorded no asset-specific reserves9 - 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 20269 Q1 2024 Balance Sheet Summary 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 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 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 The company's $1.3 billion floating-rate CRE loan portfolio is heavily concentrated in multifamily assets with stable credit quality Portfolio Composition 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 assets18 - The company has no current exposure to hospitality, retail, or office loan assets, with limited exposure to seniors housing and self-storage18 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 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 segment1920 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 | $1,285.5 | Portfolio Credit Quality The portfolio's credit quality remained stable in Q1 2024, with a weighted average risk rating of 3.5 and 97.1% performing assets - The weighted average risk rating of the portfolio remained unchanged quarter-over-quarter at 3.523 - As of March 31, 2024, 97.1% of the portfolio was performing, with 76.9% rated as 'Moderate Risk' or better23 Capital Structure and Financing The company's capital structure relies on secured, non-recourse financing, avoiding repurchase facilities, and is sensitive to SOFR changes Q1 2024 Capital Structure Overview The capital structure is primarily secured, non-recourse financing (78.8%), avoiding repurchase facilities, with no corporate debt maturities until 2026 - The company does not use repurchase or warehouse facility financing, avoiding exposure to margin calls from repo or warehouse lenders26 Capital Structure Composition (as of 3/31/2024) | Component | Amount ($ 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 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 SOFR29 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 This section provides detailed financial statements, loan portfolio specifics, and key financial measure definitions CRE Loan Portfolio Details 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 This section presents the detailed unaudited consolidated financial statements for Q1 2024, including balance sheets and income statements Consolidated Balance Sheets 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 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 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 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 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 $1.37 billion after adjustments to total GAAP liabilities and equity47 Book Value Per Share Calculation (as of 3/31/2024) | Line Item | Amount ($) | | :--- | :--- | | 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 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 outstanding51 - 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 capacity5253
Lument Finance Trust(LFT) - 2024 Q1 - Quarterly Results