Financial Data and Key Metrics Changes - For Q3 2025, the company reported a GAAP net income of approximately $700,000 or $0.01 per share, and distributable earnings of approximately $1 million or $0.02 per share [11][4] - Net interest income for Q3 was $5.1 million, down from $7 million in Q2, primarily due to a decline in the average outstanding unpaid principal balance (UPB) of the portfolio and the reversal of certain accrued interest [12][11] - Total operating expenses decreased slightly to $3.1 million in Q3 from $3.2 million in Q2, mainly due to lower fees paid to the manager [12] Business Line Data and Key Metrics Changes - The loan portfolio consisted of 51 floating-rate loans with an aggregate UPB of approximately $840 million, with a weighted average floating rate of SOFR plus 355 basis points [17] - The weighted average risk rating remained flat at 3.5, with 46% of loans rated 3 or better, down from 63% in the previous quarter [17][18] Market Data and Key Metrics Changes - The multifamily sector showed stable fundamentals with modest rent growth and strong occupancy rates, supported by a slowdown in new supply [6] - Year-to-date issuance in the CRECLO market exceeded $25 billion, indicating healthy liquidity and investor confidence [6] Company Strategy and Development Direction - The company aims to redeploy capital into its core lending strategy focused on middle-market multifamily properties, emphasizing active asset management and resolving legacy positions efficiently [10] - The recent financing agreement with J.P. Morgan provides up to $450 million in aggregate advances, enhancing the company's flexibility to manage capital and pursue new financing opportunities [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in having a good handle on the portfolio and identified known issues, with no expectation of further downgrades unless market conditions change [23] - The company remains focused on asset management and cash preservation while looking to add new assets as market conditions stabilize [24] Other Important Information - The company recorded a provision for credit losses of approximately $900,000 and charged off $200,000 against the allowance for an asset that went REO in Q3 [13] - The total equity at the end of the quarter was approximately $230 million, with a total book value of common stock at approximately $170 million or $3.25 per share [15] Q&A Session Summary Question: Have the bulk of the issues in the portfolio been identified? - Management feels confident in their understanding of the portfolio and believes they have identified all known issues, with no expectation of further downgrades unless market conditions change [23] Question: What is the focus for portfolio growth in the coming quarters? - The company plans to focus on asset management while also looking to add new assets, supported by the new financing [24] Question: What is the timing for expectations for REO sales? - REO sales timing is asset-specific, with potential for quick disposals or longer-term holds depending on the asset's condition and management improvements [25][26] Question: Is there any change in the relationship with ORC USA? - There is no change in the relationship, and the acquisition of Hilco is not expected to create any material conflict with LFT's business [31] Question: How does the value increase of REO affect shareholders? - Any increase in value after foreclosure would benefit the shareholders of LFT, as the company owns the REO [32] Question: Can the new financing with J.P. Morgan be used to retire existing debt? - The J.P. Morgan line provides flexibility and liquidity that can indirectly support the retirement of existing debt, but not directly [43]