Lument Finance Trust Q2 2024 Update

TL;DR

**Lument Finance Trust Q2 2024 10-Q filed. Shows common/preferred stock details & subsidiary info. #REIT**

AI Summary

Lument Finance Trust, Inc. filed its 10-Q for the period ending June 30, 2024. The company reported its financial performance and position, including details on its common stock and redeemable preferred stock. The filing also references specific subsidiaries like HuntCRE2017FL1Ltd.AndHuntCRE2018FL2Ltd. and unfunded loan commitments as of June 30, 2024, and December 31, 2023.

Why It Matters

This filing provides investors with an update on Lument Finance Trust's financial health and operational status for the second quarter of 2024, impacting investment decisions.

Risk Assessment

Risk Level: medium — As a real estate investment trust, Lument Finance Trust is subject to market fluctuations and interest rate risks inherent in the real estate and finance sectors.

Key Numbers

• 2024-06-30 — Reporting Period End Date (Indicates the end of the financial quarter being reported.)
• 2023-12-31 — Previous Year End Date (Provides a comparison point for financial performance.)
• 2024-01-01 — Reporting Period Start Date (Marks the beginning of the financial quarter.)

Key Players & Entities

• Lument Finance Trust, Inc. (company) — Filer of the 10-Q
• 20240630 (date) — End of reporting period
• 20240812 (date) — Filing date
• HuntCRE2017FL1Ltd.AndHuntCRE2018FL2Ltd. (company) — Subsidiary mentioned

FAQ

Key Financial Figures

• $0.01 — ch Registered: Common Stock, par value $0.01 per share LFT New York Stock Exchange

Filing Documents

• oaks-20240630.htm (10-Q) — 2115KB
• lft10-q20240630_ex31x1.htm (EX-31.1) — 11KB
• lft10-q20240630_ex31x2.htm (EX-31.2) — 11KB
• lft10-q20240630_ex32x1.htm (EX-32.1) — 5KB
• lft10-q20240630_ex32x2.htm (EX-32.2) — 5KB
• lft10-q20240630_ex99x1.htm (EX-99.1) — 30KB
• oaks-20240630_g1.jpg (GRAPHIC) — 23KB
• 0001628280-24-036809.txt ( ) — 10173KB
• oaks-20240630.xsd (EX-101.SCH) — 72KB
• oaks-20240630_cal.xml (EX-101.CAL) — 63KB
• oaks-20240630_def.xml (EX-101.DEF) — 445KB
• oaks-20240630_lab.xml (EX-101.LAB) — 677KB
• oaks-20240630_pre.xml (EX-101.PRE) — 567KB
• oaks-20240630_htm.xml (XML) — 1583KB

- Financial Information

PART I - Financial Information

Financial Statements

Item 1. Financial Statements Consolidated Balance Sheets as of June 30 , 2024 (unaudited) and December 31, 2023 1 Consolidated Statements of Operations for the three and six months ended June 30 , 2024 (unaudited) and June 3 0 , 2023 (unaudited) 2 Consolidated Statements of Changes in Equity for the three and six months ended June 30 , 2024 (unaudited) and June 30 , 2023 (unaudited) 3 Consolidated Statements of Cash Flows for the six months ended June 30 , 2024 (unaudited) and June 30 , 2023 (unaudited) 5 Notes to Unaudited Consolidated Financial Statements 6

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 24

Quantitative and Qualitative Disclosures about Market Risks

Item 3. Quantitative and Qualitative Disclosures about Market Risks 41

Controls and Procedures

Item 4. Controls and Procedures 42

- Other Information

PART II - Other Information 42

Legal Proceedings

Item 1. Legal Proceedings 42

Risk Factors

Item 1A. Risk Factors 42

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds <#>

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 42

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 42

Other Information

Item 5. Other Information 42

Exhibits

Item 6. Exhibits 43

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements LUMENT FINANCE TRUST, INC. AND SUBSIDIARIES Consolidated Balance Sheets June 30, 2024 (1) December 31, 2023 (1) (unaudited) ASSETS Cash and cash equivalents $ 65,135,065 $ 51,247,063 Restricted cash 1,457,342 270,129 Commercial mortgage loans held-for-investment, at amortized cost 1,195,846,513 1,389,940,203 Less: Allowance for credit losses ( 9,193,174 ) ( 6,059,006 ) Commercial mortgage loans held-for-investment, net of allowance for credit losses 1,186,653,339 1,383,881,197 Mortgage servicing rights, at fair value 686,325 691,973 Accrued interest receivable 7,761,139 8,588,805 Investment related receivable 33,360,000 — Other assets 1,906,206 2,253,280 Total assets $ 1,296,959,416 $ 1,446,932,447 LIABILITIES AND EQUITY LIABILITIES Collateralized loan obligations and secured financings, net 995,895,094 1,146,210,752 Secured term loan, net 47,344,478 47,220,226 Accrued interest payable 3,364,878 4,092,701 Dividends payable 5,179,519 4,654,904 Fees and expenses payable to Manager 2,280,000 1,587,875 Other liabilities (2) 700,421 2,373,609 Total liabilities 1,054,764,390 1,206,140,067 COMMITMENTS AND CONTINGENCIES (NOTES 10 & 11) EQUITY Preferred Stock: par value $ 0.01 per share; 50,000,000 shares authorized; 7.875 % Series A Cumulative Redeemable, $ 60,000,000 aggregate liquidation preference, 2,400,000 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 57,254,935 57,254,935 Common Stock: par value $ 0.01 per share; 450,000,000 shares authorized, 52,275,230 and 52,248,631 shares issued and outstanding, at June 30, 2024 and December 31, 2023, respectively 522,753 522,487 Additional paid-in capital 314,621,082 314,587,299 Cumulative distributions to stockholders ( 189,255,780 ) ( 179,045,749 ) Accumulated earnings 58,952,536 47,373,908 Total stockholders' equity 242,095,526 240,692,880 Noncontrolling interests $ 99,500 $ 99,500 Total equity $ 242,195,026 $ 240,792

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements June 30, 2024 NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS Lument Finance Trust, Inc. (together with its consolidated subsidiaries, the "Company"), is a Maryland corporation that focuses primarily on investing in, originating, financing and managing a portfolio of commercial real estate ("CRE") debt investments. The Company is externally managed by Lument Investment Management, LLC (the "Manager" or "Lument IM"). The Company's common stock is listed on the NYSE under the symbol "LFT." The Company was incorporated on March 28, 2012 and commenced operations on May 16, 2012. The Company began trading as a publicly traded company on March 22, 2013. The Company has elected to be taxed as a real estate investment trust ("REIT") and to comply with Sections 856 through 859 of the Internal Revenue Code of 1986, as amended, (the "Code"). Accordingly, the Company generally will not be subject to U.S. federal income tax to the extent of its distributions to stockholders and as long as certain asset, income and share ownership tests are met. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally included in the financial statements prepared under GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company's financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements June 30, 2024 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents at time of purchase include cash held in bank accounts on an overnight basis and other short term deposit accounts with banks having maturities of 90 days or less at time of acquisition. The Company maintains its cash and cash equivalents in highly rated financial institutions, and at times these balances exceed insurable amounts. Restricted cash includes cash held within 2021-FL1 CLO and LMF 2023-1 Financing as of June 30, 2024 and December 31, 2023, respectively. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the statement of cash flows: June 30, 2024 December 31, 2023 Cash and cash equivalents $ 65,135,065 $ 51,247,063 Restricted cash 2021-FL1 CLO $ 1,300,000 $ 71,826 Restricted cash LMF 2023-1 Financing $ 157,342 $ 198,303 Total cash, cash equivalents and restricted cash $ 66,592,407 $ 51,517,192 Deferred Offering Costs Direct costs incurred to issue shares classified as equity, such as legal and accounting fees, are deducted from the related proceeds and the net amount recorded as stockholders' equity. Accordingly, payments made by the Company in respect of such costs related to the issuance of shares are recorded as an asset in the accompanying consolidated balance sheets in the line item "Other assets", for subsequent deduction from the related proceeds upon closing of the offering. To the extent that certain costs, in particular legal fees, are known to have been accrued but have not yet been invoiced and paid, they are included in "Other accounts payable and accrued expenses" on the accompanying consolidated balance sheets. Fair Value Measurements The "Fair Value Measurements and Disclosures" Topic 820

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements June 30, 2024 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Commercial Mortgage Loans Held-for-Investment Commercial mortgage loans held-for-investment represent floating-rate transitional loans and other commercial mortgage loans purchased or originated by the Company. These loans include loans sold into securitizations that the Company consolidates. Commercial mortgage loans held-for-investment are intended to be held-to-maturity and, accordingly, are carried at their unpaid principal balances, adjusted for net unamortized loan fees and costs (in respect of originated loans), premiums and discounts (in respect of purchased loans) and impairment, if any. Commercial mortgage loans held-for-investment principal repayments received after remittance dates are held by the servicer and reported as "Investment related receivable" in the consolidated balance sheets. Interest income is recognized as revenue using the effective interest method and is recorded on the accrual basis according to the terms of the underlying loan agreement. Any fees, costs, premiums and discounts associated with these loan investments are deferred and amortized over the term of the loan on a straight-line basis approximating the effective interest method. Income accrual is generally suspended and loans are placed on non-accrual status on the earlier of the date at which payment has become 90 days past due or when full and timely collection of interest and principal is considered not probable. The Company may return a loan to accrual status when repayment of principal a

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View this 10-Q filing on SEC EDGAR