Lument Finance Trust, Inc.
For the period ended Jun 30, 2026. Filed Aug 13, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 13, 2026
LFT$4.12+1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001547546-26-000012
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-13.
0001547546-26-000017
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 208 previous paragraphs and 208 current paragraphs.
120 unchanged; 68 reworded; 18 added; 18 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 22 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
2025 was marked by significant volatility in global markets, driven by international trade policy and tariff-related developments, geopolitical uncertainty, political and regulatory developments, elevated interest rates and persistent inflationary pressures. Collectively, these factors contributed to challenging conditions across commercial real estate markets, including lower transaction activity, constrained capital availability and pressure on property values in certain sectors. Despite these challenges, capital markets generally adapted to a higher-for-longer interest rate environment, and improvements in financing market conditions supported greater availability of debt capital for commercial real estate investments.
Current report
Thus far, 2026 has continued to be characterized by uncertainty and market volatility related to international trade policy, geopolitical developments and the future path of monetary policy. While benchmark interest rates have declined form their recent peaks, interest rates remain elevated relative to historical levels, uncertainty persists regarding the timing and magnitude of any future policy actions. As a result, market participants continue to evaluate the potential impact of evolving economic conditions, capital market dynamics and policy developments on commercial real estate fundamentals and financing markets. We continue to closely monitor these factors, as they may affect borrower performance, loan acquisition and origination activity, liquidity, financing and our capital allocation decisions.
Current report
On July 24, 2026, we received notice (the “Notice”) from the New York Stock Exchange (the “NYSE”) that we are not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our common stock was less than $1.00 over a consecutive 30 trading-day period.
Current report
The Notice is a notice of deficiency, not delisting, does not currently impact the listing and trading of our common stock on the NYSE. We may regain compliance at any time during the six-month cure period following receipt of the Notice if, on the last trading day of any calendar month during the cure period, our common stock has a closing share price of at least $1.00 and an average closing share price of at least $1.00 over the 30 trading-day period ending on such date.
Current report
In accordance with NYSE rules, on August 7, 2026, we notified the NYSE of our intent to regain compliance with the minimum share price requirement through a 1-for-10 reverse stock split, which is currently expected to become effective at 5:00 pm Eastern Time on September 9, 2026.
Current report
The reverse stock split is expected to reduce the number of issued and outstanding shares of the Company’s common stock from approximately 52.5 million shares to approximately 5.2 million shares. No fractional shares will be issued in connection with the reverse stock split. Stockholders who would otherwise be entitled to receive a fractional share as a result of the reverse stock split will receive cash in lieu of such fractional share. The Company reserves the right to abandon or delay the reverse stock split.
Current report
Our common stock will continue to be listed and traded on the NYSE during the cure period, subject to our continued compliance with the NYSE's other continued listing standards. There can be no assurance that we will be able to achieve compliance with NYSE's minimum share price requirement within the required time frame.
Current report
Second Quarter 2026 Summary
Current report
•Net loss attributable to common stockholders of $9.2 million, or $0.18 per share of common stock
Current report
•Distributable Loss of $5.3 million, or $0.10 per share of common stock
Current report
In the second quarter of 2026, the $15.5 million Philadelphia, PA ($1.3 million specific allowance) and the $8.6 million Des Moines, IA ($0.5 million specific allowance) loans were paid off. Upon the sale, a $1.8 million charge-off was reflected as a charge-off to the "Allowance for credit losses" in the consolidated balance sheets.
Current report
For the three months ended June 30, 2026, we incurred management and incentive fees of $1,088,516 representing amounts payable to our Manager under our management agreement. We also incurred operating expenses of $2,766,988, of which $623,404 was payable to our Manager and $2,143,584 was payable directly by us.
Current report
For the three months ended June 30, 2026, we incurred other loss of $8,670,876. This loss was driven by provision for credit losses of $8,625,695 primarily due to specific reserves taken on two loans moving to a risk rating of "5" in the quarter, additional specific reserves taken on existing risk rated "5" loans and changes in macroeconomic assumptions employed in determining the Company's model-based general reserve, net expense from real estate owned operations of $210,847 and the impact of unrealized losses on mortgage servicing rights of $17,268 as a result of a reduction in principal balances, which more than offset a realized gain on sale of a real estate owned property of $145,435 and net servicing income of $37,499.
Current report
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Current report
For the six months ended June 30, 2026, we incurred management and incentive fees of $2,183,516 representing amounts payable to our Manager under our management agreement. We also incurred operating expenses of $5,328,578, of which $1,089,835 was payable to our Manager and $4,238,743 was payable directly by us.
Current report
For the six months ended June 30, 2025, we incurred management and incentive fees of $2,415,840 representing amounts payable to our Manager under our management agreement. We also incurred operating expenses of $3,333,478 of which $899,421 was payable to our Manager and $2,434,057 was payable directly by us.
Current report
The period-over-period increase in expenses primarily reflects an increase in accounting, audit, servicing, legal and property fees and expense reimbursement.
Current report
The period-over-period decrease in other loss was primarily due to the change in the provision for credit losses.
Removed paragraphs (18)
Previous report
2025 was marked by significant volatility in global markets, driven by tariffs and international trade policy and disputes, political and regulatory uncertainty, geopolitical conditions, elevated interest rates, and inflation. Collectively, these market dynamics have posed challenges to commercial real estate values and transaction activity. However, the Federal Reserve decreased interest rates in 2024 and 2025, which has contributed to an improvement in the cost and availability of debt.
Previous report
Thus far, 2026 has been marked by additional policy-driven uncertainty and market volatility, including with respect to international trade policy and geopolitical conditions. The Federal Reserve recently held interest rates steady for the first time since July 2025. While some officials have expressed support for additional decreases in interest rates in 2026, other officials have expressed opposition to additional decreases. As a result, significant uncertainty exists with respect to the timing, direction and extent of any future interest rate changes, in addition to uncertainty related to international trade policy, the political and regulatory environment, geopolitical events, and inflation. Our continued monitoring of these and other conditions will continue to inform our loan origination volumes, liquidity, and capital allocation in 2026.
Previous report
First Quarter 2026 Summary
Previous report
•Net loss attributable to common stockholders of $1.0 million, or $0.02 per share of common stock
Previous report
•Distributable Earnings of $1.1 million, or $0.02 per share of common stock
Previous report
•Redeemed the LMF 2023-1 Financing
Previous report
•On February 23, 2026, we drew $2.3 million in incremental secured term loans provided by the Sixth Amendment to our Credit and Guaranty Agreement
Previous report
During the period ended March 31, 2026, the Company remeasured the fair value of one of the San Antonio properties and the Houston property classified as held for sale under ASC 360. As a result, the Company recognized a loss of $1.4 million for the three months ended March 31, 2026, recorded in "Real estate owned impairment expense" within "Other income and expense" in the consolidated statements of operations. The carrying amount of the properties was $23.0 million as of March 31, 2026, compared with $24.1 million as of December 31, 2025.
Previous report
FOAC and Changes to Our Residential Mortgage Loan Business
Previous report
In June 2013, we established FOAC as a Taxable REIT Subsidiary, or TRS, to increase the range of our investments in mortgage-related assets. Until August 1, 2016, FOAC aggregated mortgage loans primarily for sale into securitization transactions, with the expectation that we would purchase the subordinated tranches issued by the related securitization trusts, and that these would represent high quality credit investments for our portfolio. Residential mortgage loans for which FOAC owns the MSRs continue to be directly serviced by two licensed sub-servicers since FOAC does not directly service any residential mortgage loans.
Previous report
We previously determined to cease the aggregation of prime jumbo loans for the foreseeable future, and therefore no longer maintain warehouse financing to acquire prime jumbo loans. We do not expect the previous changes to our mortgage loan business strategy to impact the existing MSRs that we own, nor the securitizations we have sponsored to date.
Previous report
Pursuant to a Master Agreement dated June 15, 2016, as amended on August 29, 2016, January 30, 2017 and June 27, 2018, among MAXEX, LLC ("MAXEX"), MAXEX Clearing LLC, MAXEX's wholly-owned clearinghouse subsidiary and FOAC, FOAC provided seller eligibility review services under which it reviewed, approved and monitored sellers that sold loans via MAXEX Clearing LLC. To the extent that a seller approved by FOAC fails to honor its obligations to repurchase a loan based on an arbitration finding that it breached its representations and warranties, FOAC was obligated to backstop the seller's repurchase obligation. The term of such backstop guarantee was the earlier of the contractual maturity of the underlying mortgage and its repayment in full. However, the incidence of claims for breaches of representations and warranties over time is considered unlikely to occur more than five years from the sale of a mortgage. FOAC's obligations to provide such seller eligibility review and backstop guarantee services terminated on November 28, 2018. Pursuant to an Assumption Agreement dated December 31, 2018, among MAXEX Clearing LLC and FOAC, MAXEX Clearing LLC assumed all of FOAC's obligations under its backstop guarantees and agreed to indemnify and hold FOAC harmless against any losses, liabilities, costs, expenses and obligations under the backstop guarantee. FOAC paid MAXEX Clearing LLC, as the replacement backstop provider, a fee of $426,770 (the "Alternative Backstop Fee"). MAXEX Clearing LLC represented to FOAC in the Assumption Agreement that it (i) is rated at least "A" (or equivalent) by at least one nationally recognized statistical rating agency or (ii) has (a) adjusted tangible net worth of at least $20.0 million and (b) minimum available liquidity equal to the greater of (x) $5.0 million and (y) 0.1% multiplied by the scheduled unpaid principal balance of each outstanding loan covered by the backstop guarantees. MAXEX's chief financial officer is required to certify ongoing compliance by MAXEX Clearing LLC with the aforementioned criteria on a quarterly basis and if MAXEX Clearing LLC fails to satisfy such criteria, MAXEX Clearing LLC is required to deposit into an escrow account for FOAC's benefit an amount equal to the greater of (A) the unamortized Alternative Backstop Fee for each outstanding loan covered by the backstop guarantee and (B) the product of 0.01% multiplied by the scheduled unpaid principal balance of each outstanding loan covered by the backstop guarantees. See Note 12 to our consolidated financial statements included in this Quarterly Report on Form 10-Q for a further description of MAXEX.
Previous report
For the three months ended December 31, 2025, we incurred management and incentive fees of $1,079,659 representing amounts payable to our Manager under our management agreement. We also incurred operating expenses of $2,754,470 of which $371,943 was payable to our Manager and $2,382,527 was payable directly by us.
Previous report
The period-over-period decrease in expenses primarily reflects a decrease to accounting, legal and discontinued deal costs which more than offset an increase in audit fees, CLO expense and professional fees.
Previous report
For the three months ended December 31, 2025, we incurred other loss of $9,282,823. This loss was primarily driven by provision for credit losses of $8,628,157 due to specific reserves taken on risk-rated "5" multifamily loans and changes in macroeconomic assumptions employed in determining the Company's model-based general reserve, realized loss on sale of real estate owned of $547,447, net expense from real estate owned operations of $144,302 and the impact of net unrealized losses on mortgage servicing rights of $95,041 as a result of a reduction of principal balance in the period which more than offset net servicing income of $20,174.
Previous report
For the three months ended March 31, 2025, we incurred management and incentive fees of $1,113,314 representing amounts payable to our Manager under our management agreement. We also incurred operating expenses of $1,479,939 of which $404,620 was payable to our Manager and $1,075,319 was payable directly by us.
Previous report
The period-over-period decrease to other loss was primarily due to the change in the provision for credit losses.
Previous report
In connection with the provision of seller eligibility and backstop guarantee services provided to MAXEX, we previously accounted for the related non-contingent liability at its fair value on our consolidated balance sheet as a liability. As of March 31, 2026, pursuant to an Assumption Agreement dated December 31, 2018, among MAXEX Clearing LLC and FOAC, MAXEX Clearing LLC assumed all of FOAC's obligations under its backstop guarantees and agreed to indemnify and hold FOAC harmless against any losses, liabilities, costs, expenses and obligations under the backstop guarantee, see Note 10 for further information.
Reworded paragraphs (68)
Previous wording
This Quarterly Report on Form 10-Q contains 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. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. In addition, our management may from time to time make oral forward-looking statements. You can identify forward-looking statements by use of words such as "believe," "expect," "anticipate," "estimate," "project," "plan," "continue," "intend," "should," "may," "will," "seek," "would," "could" or the negative of these words and phrases or similar words and phrases, or by discussions of strategy, plans or intentions. Statements regarding the following subjects, among others, may be forward-looking: the return on equity; the yield on investments; the ability to borrow to finance assets; and risks associated with investing in real estate assets, including changes in business conditions, changes in interest rates or inflation and any resulting effect on our borrowers or liquidity, and the general economy. Forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us on the date of this quarterly report. Actual results may differ from expectations, estimates and projections. Readers are cautioned not to place undue reliance on forward-looking statements in this quarterly report and should consider carefully the risk factors described in Part I, Item IA "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2025 in 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 our control. It is not possible to predict or identify all such risks. Additional information concerning these and other risk factors are contained in our 2025 10-K which is available on the Securities and Exchange Commission's website atwww.sec.gov.
Current wording
This Quarterly Report on Form 10-Q contains 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. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. In addition, our management may from time to time make oral forward-looking statements. You can identify forward-looking statements by use of words such as "believe," "expect," "anticipate," "estimate," "project," "plan," "continue," "intend," "should," "may," "will," "seek," "would," "could" or the negative of these words and phrases or similar words and phrases, or by discussions of strategy, plans or intentions. Statements regarding the following subjects, among others, may be forward-looking: statements regarding the Company's plans, intentions, expectations, objectives or ability to regain compliance with the NYSE's continued listing standards, including a potential reverse stock split and intention to consider alternatives to cure the NYSE continued listing requirement deficiency, the return on equity; the yield on investments; the ability to borrow to finance assets; and risks associated with investing in real estate assets, including changes in business conditions, changes in interest rates or inflation and any resulting effect on our borrowers or liquidity, and the general economy. Forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us on the date of this quarterly report. Actual results may differ from expectations, estimates and projections. Readers are cautioned not to place undue reliance on forward-looking statements in this quarterly report and should consider carefully the risk factors described in Part I, Item IA "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2025 in 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 our control. It is not possible to predict or identify all such risks. Additional information concerning these and other risk factors are contained in our 2025 10-K, which is available on the Securities and Exchange Commission's website atwww.sec.gov.
Previous wording
•On March 19, 2026, the Company announced its first quarter common dividend of $0.04 per share of common stock
Current wording
•On June 12, 2026, the Company announced its second quarter common dividend of $0.04 per share of common stock
Previous wording
•On March 19, 2026, the Company announced its first quarter preferred dividend of $0.49219 per share of Series A Preferred Stock
Current wording
•On June 12, 2026, the Company announced its second quarter preferred dividend of $0.49219 per share of Series A Preferred Stock
Previous wording
•Book value of common stock as of March 31, 2026 was $156.0 million, or $2.97 per share of common stock
Current wording
•Book value of common stock as of June 30, 2026 was $144.7 million, or $2.76 per share of common stock
Previous wording
•We acquired two loans with an initial unpaid principal balance of $46.8 million and a weighted average interest rate of 30-day term SOFR plus 2.81% and one funded advance with an initial unpaid principal balance of $1.1 million and a weighted average interest rate of 30-day term SOFR plus 3.60%
Current wording
•We acquired or originated, as applicable, four loans with an initial unpaid principal balance of $67.0 million and a weighted average interest rate of 30-day term SOFR plus 3.0% and three funded advances with an initial unpaid principal balance of $24.0 million and a weighted average interest rate of 30-day term SOFR plus 3.7%
Previous wording
•Experienced $46.8 million in loan payoffs
Current wording
•Experienced $184.0 million in loan payoffs
Previous wording
•$1.1 billion senior loan portfolio is 100% floating rate with an average spread to 30-day term SOFR of 3.31%, excluding unamortized purchase discounts of $1.3 million and deferred loan fees of $1.0 million as of March 31, 2026
Current wording
•$991.7 million senior loan portfolio is 100% floating rate with an average spread to 30-day term Secured Overnight Financing Rate ("SOFR") of 3.30%, excluding unamortized purchase discounts of $0.8 million and deferred loan fees of $0.9 million as of June 30, 2026
Previous wording
•Multifamily assets represent 92.5% of loan portfolio
Current wording
•Multifamily assets represent 91.7% of loan portfolio
Previous wording
•Non-mark-to-market financing is $0.6 billion with an average spread to 30-day term SOFR of 2.00% as of March 31, 2026, representing 66% of our secured financings
Current wording
•Non-mark-to-market financing is $0.6 billion with an average spread to 30-day term SOFR of 1.95% as of June 30, 2026, representing 71% of our secured financings
Previous wording
Market conditions. The results of our operations are and will continue to be affected by a number of factors and primarily depend on, among other things, the level of our net interest income, the market value of our assets and the supply of, and demand for, our target assets in the marketplace. Our net interest income will vary primarily as a result of changes in market interest rates and prepayment speeds, and by the ability of the borrowers underlying our commercial mortgage loans to continue making payments in accordance with the contractual terms of their loans, which may be impacted by unanticipated credit events experienced by such borrowers. During the period ended March 31, 2026, we foreclosed on one multifamily property as a result of the borrowers' inability to make payments, reducing our interest income accordingly. Interest rates vary according to the type of investment, conditions in the financial markets, competition and other factors, none of which can be predicted with any certainty. Our operating results will also be affected by general U.S. real estate fundamentals and the overall U.S. economic environment. In particular, our strategy is influenced by the specific characteristics of the underlying real estate markets, including prepayment rates, credit market conditions and interest rates. This year has been characterized by significant volatility in global markets, driven by investor concerns over inflation, rising interest rates, slowing economic growth, increased tariffs, trade tensions, geopolitical uncertainty and political and regulatory uncertainties.
Current wording
Market conditions. The results of our operations are and will continue to be affected by a number of factors and primarily depend on, among other things, the level of our net interest income, the market value of our assets and the supply of, and demand for, our target assets in the marketplace. Our net interest income will vary primarily as a result of changes in market interest rates and prepayment speeds, and by the ability of the borrowers underlying our commercial mortgage loans to continue making payments in accordance with the contractual terms of their loans, which may be impacted by unanticipated credit events experienced by such borrowers. During the period ended June 30, 2026, we foreclosed on one multifamily property as a result of the borrowers' inability to make payments, reducing our interest income accordingly. Interest rates vary according to the type of investment, conditions in the financial markets, competition and other factors, none of which can be predicted with any certainty. Our operating results will also be affected by general U.S. real estate fundamentals and the overall U.S. economic environment. In particular, our strategy is influenced by the specific characteristics of the underlying real estate markets, including prepayment rates, credit market conditions and interest rates. The past two years have been characterized by significant volatility in global markets, driven by investor concerns over inflation, rising interest rates, slowing economic growth, increased tariffs, trade tensions, geopolitical uncertainty and political and regulatory uncertainties.
Previous wording
Changes in market interest rates. Generally, our business model is such that rising interest rates will increase our net interest income, while declining interest rates will decrease our net interest income. As of March 31, 2026, 99.9% of our investments by total investment exposure earned a floating rate of interest, of which 100.0% were indexed to 30-day term SOFR, and all of our collateralized loan obligations and secured financings were indexed to 30-day term SOFR, and as a result we are less sensitive to variability in our net interest income resulting from interest rate changes. As of March 31, 2026, 100.0% of the loans in our commercial mortgage loan portfolio are structured with SOFR floors with a weighted average SOFR floor of 2.25%, of which 27.5% had an interest rate floor greater than the current spot interest rate. When interest rates are above our average interest rate floor, an increase in interest rates will increase our interest income. Alternatively, when interest rates are below our average interest rate floor, an increase in interest rates will decrease our net interest income until such time as interest rates rise above our average interest rate floor. Although our Manager is currently originating loans with SOFR floors, there can be no assurance that we will continue to obtain SOFR floors on future originations or acquisitions. Similarly, net interest income is also impacted by the spread in our commercial mortgage loan portfolio. As of March 31, 2026, the weighted average spread of our commercial loan portfolio was 3.31%, but there is no assurance that these spreads will be maintained as market environments fluctuate.
Current wording
Changes in market interest rates. Generally, our business model is such that rising interest rates will increase our net interest income, while declining interest rates will decrease our net interest income. As of June 30, 2026, 99.9% of our investments by total investment exposure earned a floating rate of interest, of which 100.0% were indexed to 30-day term SOFR, and all of our collateralized loan obligations and secured financings were indexed to 30-day term SOFR, and as a result we are less sensitive to variability in our net interest income resulting from interest rate changes. As of June 30, 2026, 100.0% of the loans in our commercial mortgage loan portfolio are structured with SOFR floors with a weighted average SOFR floor of 2.70%, of which 24.7% had an interest rate floor greater than the current spot interest rate. When interest rates are above our average interest rate floor, an increase in interest rates will increase our interest income. Alternatively, when interest rates are below our average interest rate floor, an increase in interest rates will decrease our net interest income until such time as interest rates rise above our average interest rate floor. Although our Manager is currently originating loans with SOFR floors, there can be no assurance that we will continue to obtain SOFR floors on future originations or acquisitions. Similarly, net interest income is also impacted by the spread in our commercial mortgage loan portfolio. As of June 30, 2026, the weighted average spread of our commercial loan portfolio was 3.30%, but there is no assurance that these spreads will be maintained as market environments fluctuate.
Previous wording
After a prolonged period of rising interest rates, the Federal Reserve began lowering interest rates on September 18, 2024 by 0.50% and on each of November 7, 2024 and December 18, 2024, respectively, the Federal Reserve lowered interest rates by 0.25%. Additionally, on each of September 17, 2025, October 29, 2025 and December 10, 2025, respectively, the U.S. Federal Reserve lowered the federal funds rate by 0.25% to a current target range of 3.50% - 3.75%. However, to date in 2026, the Federal Reserve has determined to hold interest rates steady. That said, interest rates to remain elevated, and the timing, direction and extent of any future interest rate changes remain uncertain.
Current wording
After a prolonged period of rising interest rates, the Federal Reserve began lowering interest rates on September 18, 2024 by 0.50% and on each of November 7, 2024 and December 18, 2024, respectively, the Federal Reserve lowered interest rates by 0.25%. Additionally, on each of September 17, 2025, October 29, 2025 and December 10, 2025, respectively, the U.S. Federal Reserve lowered the federal funds rate by 0.25% to a current target range of 3.50% - 3.75%. However, to date in 2026, the Federal Reserve has determined to hold interest rates steady. That said, interest rates remain elevated, and the timing, direction and extent of any future interest rate changes remains uncertain.
Previous wording
In addition to the risk related to fluctuations in cash flows associated with movement in interest rates, there is also the risk of non-performance on floating rate assets. In the case of a significant increase in interest rates or the continued elevation in current rates, the additional debt service payments due from our borrowers may strain the operating cash flows of the real estate assets underlying our mortgages and/or impact their ability to be refinanced at such higher interest rates, which could potentially contribute to non-performance or, in severe cases, default. This risk is partially mitigated during the underwriting process, which generally includes a requirement for our borrowers to purchase interest rate cap contracts with an unaffiliated third-party, provide an interest rate reserve deposit, and/or provide other structural protections. As of March 31, 2026, 73.5% of our performing loans have interest rate caps with a weighted-average strike price of 2.9%.
Current wording
In addition to the risk related to fluctuations in cash flows associated with movement in interest rates, there is also the risk of non-performance on floating rate assets. In the case of a significant increase in interest rates or the continued elevation in current rates, the additional debt service payments due from our borrowers may strain the operating cash flows of the real estate assets underlying our mortgages and/or impact their ability to be refinanced at such higher interest rates, which could potentially contribute to non-performance or, in severe cases, default. This risk is partially mitigated during the underwriting process, which generally includes a requirement for our borrowers to purchase interest rate cap contracts with an unaffiliated third-party, provide an interest rate reserve deposit, and/or provide other structural protections. As of June 30, 2026, 67.3% of our performing loans have interest rate caps with a weighted-average strike price of 2.7%.
Previous wording
Credit risk. Our commercial mortgage loans and other investments are also subject to credit risk. The performance and value of our loans and other investments depend upon the sponsor's ability to operate properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, the Manager's asset management team reviews our portfolio and maintains regular contact with borrowers, co-lenders and local market experts to monitor the performance of the underlying collateral, anticipate borrower, property and market issues and, to the extent necessary or appropriate, enforce our rights as lender. The market values of commercial mortgage assets are subject to volatility and may be adversely affected by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. In addition, decreases in property values reduce the value of the collateral and potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses. As of March 31, 2026, 93.0% of the commercial mortgage loans in our portfolio were current as to principal and interest. Additionally, we have reviewed the loans designated as Default Risk for specific credit reserves. Impairment of these loans, which are collateral dependent, is measured by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. We can provide no assurances that our borrowers will remain current as to principal and interest, or that we will not enter into forbearance agreements or loan modifications in order to protect the value of our commercial mortgage loan assets. Should that occur, it could have a material negative impact on our results of operations.
Current wording
Credit risk. Our commercial mortgage loans and other investments are also subject to credit risk. The performance and value of our loans and other investments depend upon the sponsor's ability to operate properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, the Manager's asset management team reviews our portfolio and maintains regular contact with borrowers, co-lenders and local market experts to monitor the performance of the underlying collateral, anticipate borrower, property and market issues and, to the extent necessary or appropriate, enforce our rights as lender. The market values of commercial mortgage assets are subject to volatility and may be adversely affected by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. In addition, decreases in property values reduce the value of the collateral and potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses. As of June 30, 2026, 93.1% of the commercial mortgage loans in our portfolio were current as to principal and interest. Additionally, we have reviewed the loans designated as Default Risk for specific credit reserves. Impairment of these loans, which are collateral dependent, is measured by comparing the estimated fair value of the underlying collateral, less costs to sell, to the book value of the respective loan. We can provide no assurances that our borrowers will remain current as to principal and interest, or that we will not enter into forbearance agreements or loan modifications in order to protect the value of our commercial mortgage loan assets. Should that occur, it could have a material negative impact on our results of operations.
Previous wording
Liquidity and financing markets. Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to pay dividends, fund investments and repay borrowings and other general business needs. Our primary sources of liquidity have been proceeds of common or preferred stock issuance, net proceeds from corporate debt obligations, net cash provided by operating activities and other financing arrangements. We finance our commercial mortgage loans with non-recourse secured borrowings, the maturities of which are matched to the maturities of the loans, and which are not subject to margin calls or additional collateralization requirements, as well as a master repurchase agreement and a term financing agreement. However, to the extent that we seek to invest in additional commercial mortgage loans, outside of our secured borrowings, we will in part be dependent on our ability to issue additional collateralized loan obligations, master repurchase agreements, to secure alternative financing facilities or to raise additional common or preferred equity. The expectation of slower interest rate decreases moving forward and unpredictable geopolitical landscape may cause a further dislocation in the capital markets resulting in a continual reduction of available liquidity and an increase in borrowing costs. A lack of liquidity for a prolonged period could limit our ability to grow our business. Additionally, the CRE CLOs and other secured financings we have entered into, and may in the future enter into, include certain interest coverage tests, overcollateralization coverage tests or other tests that, if not met, may result in a change in the priority of distributions, which may result in the reduction or elimination of distributions to the subordinate debt and equity tranches retained by us until the tests have been met or certain senior classes of securities have been paid in full. Accordingly, if such tests are not satisfied, we, as holders of the subordinate debt and equity interests in the applicable CRE CLO or secured financing, may experience a significant reduction in our cash flow from those interests, which would impact our liquidity. In addition, our secured financing agreements contain margin call provisions following the occurrence of certain mortgage loan credit events. If we are unable to make the required payment or if we fail to meet or satisfy any of the covenants in our financing agreements, we will be in default under these agreements, and our lenders could elect to declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral, including cash to satisfy margin calls, and enforce their interests against existing collateral.
Current wording
Liquidity and financing markets. Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to pay dividends, fund investments and repay borrowings and other general business needs. Our primary sources of liquidity have been proceeds of common or preferred stock issuance, net proceeds from corporate debt obligations, net cash provided by operating activities and other financing arrangements. We finance our commercial mortgage loans through non-recourse secured borrowings, the maturities of which are matched to the maturities of the loans and which are not subject to margin calls or additional collateralization requirements, as well as a master repurchase agreement and a term financing agreement. However, to the extent that we seek to invest in additional commercial mortgage loans, outside of our secured borrowings, we will in part be dependent on our ability to issue additional collateralized loan obligations, master repurchase agreements, to secure alternative financing facilities or to raise additional common or preferred equity. The expectation of slower interest rate decreases moving forward and unpredictable geopolitical landscape may cause a further dislocation in the capital markets resulting in a continual reduction of available liquidity and an increase in borrowing costs. A lack of liquidity for a prolonged period could limit our ability to grow our business. Our liquidity may also be utilized from time to time to acquire or repurchase commercial mortgage loans from our CRE CLO or other financing arrangements, which could reduce capital otherwise available for new investment opportunities. Additionally, the CRE CLOs and other secured financings we have entered into, and may in the future enter into, include certain interest coverage tests, overcollateralization coverage tests or other tests that, if not met, may result in a change in the priority of distributions, which may result in the reduction or elimination of distributions to the subordinate debt and equity tranches retained by us until the tests have been met or certain senior classes of securities have been paid in full. Accordingly, if such tests are not satisfied, we, as holders of the subordinate debt and equity interests in the applicable CRE CLO or secured financing, may experience a significant reduction in our cash flow from those interests, which would impact our liquidity. In addition, our secured financing agreements contain margin call provisions following the occurrence of certain mortgage loan credit events. If we are unable to make the required payment or if we fail to meet or satisfy any of the covenants in our financing agreements, we will be in default under these agreements, and our lenders could elect to declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral, including cash to satisfy margin calls, and enforce their interests against existing colla…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Prepayment speeds. Prepayment risk is the risk that principal will be repaid at a different rate than anticipated, causing the return on certain investments to be less than expected. As we receive prepayments of principal on our assets, any premiums paid on such assets are amortized against interest income. In general, an increase in prepayment rates accelerates the amortization of purchase premiums, thereby reducing the interest income earned on the assets. Conversely, discounts on such assets are accreted into interest income. In general, an increase in prepayment rates accelerates the accretion of purchase discounts, thereby increasing the interest earned on the assets. We have acquired twenty-nine loans and twenty funded loan advances with an initial aggregate unpaid principal balance of $475.2 million with an aggregate purchase discount of $8.3 million. All of our other commercial mortgage loans were acquired at par. As of March 31, 2026, our aggregate unaccreted purchase discount was $1.3 million, and accordingly we do not believe this to be a material risk to interest income for us at present. Additionally, we are subject to prepayment risk associated with the terms of our secured borrowings. Due to shorter maturities of transitional floating-rate commercial mortgage loans, our secured borrowings include a reinvestment period during which principal repayments and prepayments on our commercial mortgage loans may be reinvested in similar assets, subject to meeting certain eligibility criteria. The reinvestment period for LMF 2023-1 Financing expired in July 2025 and LMNT 2025-FL3 remains in place through May 2028. Currently, the interest rate spreads of our secured borrowings are fixed until they are repaid, the terms, including spreads, of newly originated loans are subject to uncertainty based on a variety of factors, including market and competitive conditions, which remain uncertain and volatile in the current inflationary environment. To the extent that such conditions result in lower spreads on the assets in which we reinvest during active reinvestment periods, we may be subject to a reduction in interest income in the future. To the extent any loans are permanently financed by the Manager or any of its affiliates, the prepayment penalties will be waived, resulting in a reduction to reimbursed expense by an amount equal to 50% of the amount of any such waived fee, capped at a waived fee of 1%.
Current wording
Prepayment speeds. Prepayment risk is the risk that principal will be repaid at a different rate than anticipated, causing the return on certain investments to be less than expected. As we receive prepayments of principal on our assets, any premiums paid on such assets are amortized against interest income. In general, an increase in prepayment rates accelerates the amortization of purchase premiums, thereby reducing the interest income earned on the assets. Conversely, discounts on such assets are accreted into interest income. In general, an increase in prepayment rates accelerates the accretion of purchase discounts, thereby increasing the interest earned on the assets. We have acquired twenty-nine loans and twenty funded loan advances with an initial aggregate unpaid principal balance of $475.2 million with an aggregate purchase discount of $8.3 million. All of our other commercial mortgage loans were acquired at par. As of June 30, 2026, our aggregate unaccreted purchase discount was $0.8 million, and accordingly we do not believe this to be a material risk to interest income for us at present. Additionally, we are subject to prepayment risk associated with the terms of our secured borrowings. Due to shorter maturities of transitional floating-rate commercial mortgage loans, our secured borrowings include a reinvestment period during which principal repayments and prepayments on our commercial mortgage loans may be reinvested in similar assets, subject to meeting certain eligibility criteria. The reinvestment period for LMF 2023-1 Financing expired in July 2025 and LMNT 2025-FL3 remains in place through May 2028. Currently, the interest rate spreads of our secured borrowings are fixed until they are repaid, the terms, including spreads, of newly originated loans are subject to uncertainty based on a variety of factors, including market and competitive conditions, which remain uncertain and volatile in the current inflationary environment. To the extent that such conditions result in lower spreads on the assets in which we reinvest during active reinvestment periods, we may be subject to a reduction in interest income in the future. To the extent any loans are permanently financed by the Manager or any of its affiliates, the prepayment penalties will be waived, resulting in a reduction to reimbursed expense by an amount equal to 50% of the amount of any such waived fee, capped at a waived fee of 1%.
Previous wording
As a real estate investment trust, we believe the key financial measures and indicators for our business are earnings per share, dividends declared, Distributable Earnings, and book value per share of common stock. For the three months ended March 31, 2026, we recorded earnings per share of $0.02, declared a quarterly common dividend of $0.04 per share, and reported $0.02 per share of Distributable Earnings. In addition, our book value per share was $2.97.
Current wording
As a real estate investment trust, we believe the key financial measures and indicators for our business are earnings per share, dividends declared, Distributable Earnings, and book value per share of common stock. For the three months ended June 30, 2026, we recorded loss per share of $0.18, declared a quarterly common dividend of $0.04 per share, and reported $0.10 per share of Distributable Loss. In addition, our book value per share was $2.76.
Previous wording
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. 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. Refer to Note 16 to our consolidated financial statements for further discussion of our distribution requirements as a REIT. Furthermore, Distributable Earnings helps 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.
Current wording
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. 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 invest in our common stock. Refer to Note 16 to our consolidated financial statements for further discussion of our distribution requirements as a REIT. Furthermore, Distributable Earnings helps 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.
Previous wording
(1) Book value as of March 31, 2026 and December 31, 2025 includes the impact of an estimated CECL allowance of $19,543,903 or $0.37 per common share and $22,658,121 or $0.43 per common share, respectively.
Current wording
(1) Book value as of June 30, 2026 and December 31, 2025 includes the impact of an estimated CECL allowance of $21,248,582 or $0.40 per common share and $22,658,121 or $0.43 per common share, respectively.
Previous wording
(1) Carrying Value includes $1,255,406 and $1,657,584 in unamortized purchase discounts as of March 31, 2026 and December 31, 2025, respectively.
Current wording
(1) Carrying Value includes $815,303 and $1,657,584 in unamortized purchase discounts as of June 30, 2026 and December 31, 2025, respectively.
Previous wording
(2) Weighted average coupon assumes applicable 30-day term Secured Overnight Financing Rate ("SOFR") of 3.67% and 3.85% as of March 31, 2026 and December 31, 2025, respectively, inclusive of weighted average interest rate floors of 2.25% and 2.18%, respectively. As of March 31, 2026 and December 31, 2025, 100.0% of the investments by total investment exposure earned a floating rate indexed to 30-day term SOFR.
Current wording
(2) Weighted average coupon assumes applicable 30-day term SOFR of 3.61% and 3.85% as of June 30, 2026 and December 31, 2025, respectively, inclusive of weighted average interest rate floors of 2.70% and 2.18%, respectively. As of June 30, 2026 and December 31, 2025, 100.0% of the investments by total investment exposure earned a floating rate indexed to 30-day term SOFR.
Previous wording
(4) LTV as of the date the loan was originated and is calculated after giving effect to capex and earnout reserves, if applicable. 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 origination date.
Current wording
(4) LTV is as of the date the loan was originated and is calculated after giving effect to capex and earnout reserves, if applicable. 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 origination date.
Previous wording
(5) As of March 31, 2026, $655,905,141 of the outstanding senior secured loans were held in VIEs and $452,155,924 of the outstanding senior loans were held outside of VIEs. As of December 31, 2025, $856,064,487 of the outstanding senior secured loans were held in VIEs and $257,983,507 of the outstanding senior secured loans were held outside VIEs.
Current wording
(5) As of June 30, 2026, $642,093,223 of the outstanding senior secured loans were held in VIEs and $349,571,603 of the outstanding senior loans were held outside of VIEs. As of December 31, 2025, $856,064,487 of the outstanding senior secured loans were held in VIEs and $257,983,507 of the outstanding senior secured loans were held outside VIEs.
Previous wording
As of March 31, 2026, we had aggregate specific allowance of credit losses of $15.8 million due to management's: (1) continued identification of one loan collateralized by two multifamily properties in Philadelphia, PA ($1.3 million specific allowance) with an aggregate unpaid balance of $15.5 million as risk rated "5" due to maturity default; (2) identification of two loans collateralized by two multifamily properties in Arlington, TX ($3.6 million specific allowance; non-accrual cash basis) and Cedar Park, TX (no specific allowance; non-accrual cash basis) with an aggregate unpaid balance of $35.5 million as risk rated "5" due to maturity default and (4) identification of four loans collateralized by four multifamily properties in Des Moines, IA ($0.5 million specific allowance; non-accrual cash basis), Tampa, FL ($1.4 million specific allowance; non-accrual cash basis), Tallahassee, FL ($3.0 million specific allowance; non-accrual cash basis) and Ypsilanti, MI ($5.9 million specific allowance; non-accrual cash basis) with an aggregate principal balance of $56.9 million as risk rated "5" due to monetary default.
Current wording
As of June 30, 2026, we had aggregate specific allowance of credit losses of $17.4 million due to management's: (1) continued identification of one loan collateralized by one multifamily property in Cedar Park, TX (no specific allowance; non-accrual cash basis) with an aggregate unpaid balance of $13.7 million as risk rated "5" due to maturity default; (2) continued identification of three loans collateralized by three multifamily properties in Tampa, FL ($3.2 million specific allowance; non-accrual cash basis), Tallahassee, FL ($3.5 million specific allowance; non-accrual cash basis) and Ypsilanti, MI ($5.9 million specific allowance; non-accrual cash basis) with an aggregate principal balance of $48.3 million as risk rated "5" due to monetary default and (3) identified 2 loans collateralized by 2 multifamily properties in Houston, TX ($2.0 million specific allowance; non-accrual cash basis) and Dallas, TX ($2.8 million specific allowance; non-accrual cash basis) with an aggregate principal balance of $36.1 million as risk rated "5" due to monetary default.
Previous wording
We recorded $0.5 million in cash basis income received on non-accrual loans during the period ended March 31, 2026.
Current wording
We recorded $0.3 million in cash basis income received on non-accrual loans during the period ended June 30, 2026.
Previous wording
As discussed in Note 2 to our consolidated financial statements, our Manager performs a quarterly review of our loan portfolio, assesses the performance of each loan, and assigns a risk rating between "1" and "5," from less risk to greater risk. The average risk rating of the portfolio declined during the three months ended March 31, 2026. The change in underlying risk rating consisted of loans that paid off with a risk rating of "3" of $46.8 million during the three months ended March 31, 2026. Additionally, $94.5 million of loans with a risk rating of "3" transitioned to a risk rating of "2," $69.6 million of loans with a risk rating of "3" transitioned to a risk rating of "4" and $9.8 million of loans with a risk rating of "4" transitioned to a risk rating of "3". Further, $10.5 million of loans with a risk rating of "5" were foreclosed and moved to REO.
Current wording
As discussed in Note 2 to our consolidated financial statements, our Manager performs a quarterly review of our loan portfolio, assesses the performance of each loan, and assigns a risk rating between "1" and "5," from less risk to greater risk. The average risk rating of the portfolio declined during the six months ended June 30, 2026. The change in underlying risk rating consisted of loans that paid off with a risk rating of "2" of $15.3 million, a risk rating of "3" of $192.4 million and a risk rating of "5" of $24.1 million during the six months ended June 30, 2026, partially offset by funding of loans with a risk rating of "3" of $137.5 million and a risk rating of "5" of $1.1 million. Additionally, $17.0 million of loans with a risk rating of "2" transitioned to a risk rating of "3," $62.1 million of loans with a risk rating of "3" transitioned to a risk rating of "2," $58.5 million of loans with a risk rating of "3" transitioned to a risk rating of "4," $21.9 million of loans with a risk rating of "3" transitioned to a risk rating of "5," $41.4 million of loans with a risk rating of "4" transitioned to a risk rating of "3" and $14.2 million of loans with a risk rating of "4" transitioned to a risk rating of "5". Further, $32.4 million of loans with a risk rating of "5" were foreclosed and moved to REO.
Previous wording
During the period ended March 31, 2026, Lument Real Estate Capital, LLC ("LREC"), as special servicer for LCMT NPL Warehouse, LLC, an indirect wholly owned subsidiary of the Company, foreclosed on a multifamily bridge loan located in Colorado Springs, CO, with an aggregate net carrying value of $8.2 million, net of specific reserves of $2.4 million, with ownership and deed to the properties being taken by a newly formed subsidiary of the Company.
Current wording
During the six months ended June 30, 2026, Lument Real Estate Capital, LLC ("LREC"), as servicer for LCMT Warehouse, LLC and LCMT NPL Warehouse, LLC, indirect wholly owned subsidiaries of the Company, foreclosed on two multifamily bridge loans located in Colorado Springs, CO and Arlington, TX, with an aggregate net carrying value of $25.2 million, net of specific reserves of $7.5 million, with ownership and deed to the properties being taken by newly formed subsidiaries of the Company.
Previous wording
During the year ended December 31, 2025, LREC, as special servicer for 2021-FL1 CLO foreclosed on two multifamily bridge loans located in San Antonio, TX with an aggregate net carrying value of $39.5 million, net of specific CECL reserves of $2.4 million, with ownership and deed to the properties being taken by newly formed subsidiaries of the Company. Additionally, LREC, as special servicer for LMF 2023-1 Financing foreclosed on two multifamily bridge loans located in Houston, TX and San Antonio, TX with an aggregate net carrying value of $19.9 million, net of specific CECL reserves of $0.7 million, with ownership and deed to the properties being taken by newly formed subsidiaries of the Company.
Current wording
During the year ended December 31, 2025, LREC, as special servicer for 2021-FL1 CLO foreclosed on two multifamily bridge loans located in San Antonio, TX with an aggregate net carrying value of $39.5 million, net of specific CECL reserves of $2.4 million, with ownership and deed to the properties being taken by newly formed subsidiaries of the Company. Additionally, LREC, as special servicer for LMF 2023-1 Financing foreclosed on 2 multifamily bridge loans located in Houston, TX and San Antonio, TX with an aggregate net carrying value of $19.9 million, net of specific CECL reserves of $0.7 million, with ownership and deed to the properties being taken by newly formed subsidiaries of the Company.
Previous wording
The fair value of the REO at time of foreclosure was determined using the income approach, market approach, or a combination thereof. The significant unobservable input for the income capitalization approach is the overall capitalization rate assumption, used in the direct capitalization method, which was 6.25%-7.40%. The significant unobservable input used for the market approach is the price per unit from an appraisal or broker opinion of value.
Current wording
The fair value of the REO at the time of foreclosure was determined using the income approach, market approach, or a combination thereof. The significant unobservable input for the income capitalization approach is the overall capitalization rate assumption, used in the direct capitalization method, which was 7.40%. The significant unobservable input used for the market approach is the price per unit from an appraisal or broker opinion of value.
Previous wording
At March 31, 2026 and December 31, 2025, our REO properties had a weighted average occupancy rate of approximately 72.3% and 69.1%, respectively.
Current wording
At June 30, 2026 and December 31, 2025, our REO properties had a weighted average occupancy rate of approximately 66.7% and 69.1%, respectively.
Previous wording
We recorded depreciation and amortization expense related to the REO assets of $0.3 million for the three months ended March 31, 2026, recorded as "net income (expense) from real estate owned operations" in the consolidated statement of operations. Additionally, we recorded operating income of $1.6 million and operating expense of $1.4 million for the three months ended March 31, 2026, recorded as "Net income (expense) from real estate owned operations" in the consolidated statement of operations.
Current wording
We recorded depreciation and amortization expense related to the REO assets of $0.4 million and $0.7 million for the three months and six months ended June 30, 2026, respectively, recorded as "net income (expense) from real estate owned operations" in the consolidated statement of operations. Additionally, we recorded operating income of $1.7 million and $3.4 million and operating expense of $1.6 million and $3.0 million for the three months and six months ended June 30, 2026, respectively, recorded as "Net income (expense) from real estate owned operations" in the consolidated statement of operations.
Previous wording
(3)LTV as of the date the loan was originated by a ORIX affiliate and is calculated after giving effect to capex and earn-out reserves, if applicable. 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 origination date.
Current wording
(3)LTV is as of the date the loan was originated by an ORIX affiliate and is calculated after giving effect to capex and earn-out reserves, if applicable. 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.
Previous wording
(5)Committed Principal and Current Principal Amount for Real Estate Owned represent the balances at time of foreclosure.
Current wording
(5)Committed Principal and Current Principal Amount for Real Estate Owned represent the balances at the time of foreclosure.
Previous wording
(2) Represents the principal balance of the collateral assets.
Current wording
(2) Represents the principal balance of the collateral assets and cash held by Northeast Bank related to the financing of a loan that paid off on June 30, 2026.
Previous wording
On July 12, 2023, the Company entered into and closed a matched-term, non-recourse collateralized commercial real estate financing (the "LMF 2023-1 Financing"), secured by $386.4 million of first lien floating-rate multifamily mortgage assets and was not subject to margin calls or additional collateralization requirements. In connection with the LMF 2023-1 Financing, approximately $270.4 million of an investment-grade rated senior secured floating rate loan was provided by a private lender and approximately $47.3 million of investment-grade rated notes (collectively, the "Senior Debt") were issued and sold to an affiliate of LFT's external manager, Lument IM. A consolidated subsidiary of LFT retained the subordinate interests in the issuing vehicle of approximately $68.6 million. The Senior Debt had an initial weighted average spread of approximately 314 basis points over 30-day term SOFR, excluding fees and transaction costs. The Senior Debt matured on the payment date in July 2032, unless it was repaid or redeemed sooner in accordance with its terms. The financing had an initial two-year reinvestment period that allowed principal proceeds of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture. Thereafter, the outstanding debt balance was reduced as loans were repaid. On February 20, 2026, the Company redeemed the LMF 2023-1 Financing in full and expensed the remaining $1.2 million of deferred financing costs into loss on extinguishment of debt on the consolidated statements of operations.
Current wording
On July 12, 2023, the Company entered into and closed a matched-term, non-recourse collateralized commercial real estate financing (the "LMF 2023-1 Financing"), secured by $386.4 million of first lien floating-rate multifamily mortgage assets and was not subject to margin calls or additional collateralization requirements. In connection with the LMF 2023-1 Financing, approximately $270.4 million of an investment-grade rated senior secured floating rate loan was provided by a private lender and approximately $47.3 million of investment-grade rated notes (collectively, the "Senior Debt") were issued and sold to an affiliate of LFT's external manager, Lument IM. A consolidated subsidiary of LFT retained the subordinate interests in the issuing vehicle of approximately $68.6 million. The Senior Debt had an initial weighted average spread of approximately 314 basis points over 30-day term SOFR, excluding fees and transaction costs. The Senior Debt matured on the payment date in July 2032, unless it was repaid or redeemed sooner in accordance with its terms. The financing had an initial two-year reinvestment period that allowed principal proceeds of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture. Thereafter, the outstanding debt balance was reduced as loans were repaid. On February 20, 2026, the Company redeemed the LMF 2023-1 Financing in full and expensed the remaining $1.2 million of deferred financing costs as a loss on extinguishment of debt on the consolidated statements of operations.
Previous wording
On December 10, 2025, the Company completed the LMNT 2025-FL3 CLO, issuing eight tranches of CLO notes through a newly formed wholly-owned subsidiary totaling $620.7 million. Of the total CLO notes issued, $585.0 million were investment grade notes issued to third party investors and $35.7 million were below investment-grade and retained by us. In addition, a $43.1 million income note was retained by us. The financing has an initial two-and-a-half year reinvestment period that allows principal proceeds of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture. Thereafter, the outstanding debt balance will be reduced as loans are repaid. Initially, the proceeds of the issuance of the securities included $5.8 million for the purpose of acquiring additional loan obligations for a period up to 180 days from the CLO closing date, resulting in the issuer owning collateral interests with a face value of $663.8 million, representing effective leverage of 88%. The investment grade notes have an initial weighted average spread of approximately 190.5 basis points over 30-day term SOFR, excluding fees and transaction costs. The investment grade notes mature on the payment date in July 2043, unless sooner repaid or redeemed in accordance with their terms.
Current wording
On December 10, 2025, the Company completed the LMNT 2025-FL3 CLO, issuing eight tranches of CLO notes through a newly formed wholly-owned subsidiary totaling $620.7 million. Of the total CLO notes issued, $585.0 million were investment grade notes issued to third party investors and $35.7 million were below investment-grade and retained by us. In addition, a $43.1 million income note was retained by us. The financing has an initial two-and-a-half year reinvestment period that allows principal proceeds of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture. Thereafter, the outstanding debt balance will be reduced as loans are repaid. Initially, the proceeds of the issuance of the securities included $5.8 million for the purpose of acquiring additional loan obligations for a period up to 180 days from the CLO closing date, resulting in the issuer owning collateral interests with a face value of $663.8 million, representing effective leverage of 88%. The investment grade notes have an initial weighted average spread of approximately 190.5 basis points over 30-day term SOFR, excluding fees and transaction costs. The investment grade notes will mature on the payment date in July 2043, unless sooner repaid or redeemed in accordance with their terms.
Previous wording
(1) The carrying value of the collateral is net of allowance for credit loss of $19,543,903 as of March 31, 2026. The carrying value for LMNT 2025-FL3 CLO is net of debt issuance costs of$4,680,172 for March 31, 2026.
Current wording
(1) The carrying value of the collateral is net of allowance for credit loss of $4,315,326 as of June 30, 2026. The carrying value for LMNT 2025-FL3 CLO is net of debt issuance costs of$4,296,482 for June 30, 2026.
Previous wording
(2) Weighted average coupon for loan investments assumes applicable 30-day term SOFR of 3.67% as of March 31, 2026, inclusive of weighted average interest rate floors of 2.66% and spreads of 3.21%. Weighted average coupon for the financings assumes applicable 30-day term SOFR of 3.67% as of March 31, 2026 and spreads of 1.91% as of March 31, 2026.
Current wording
(2) Weighted average coupon for loan investments assumes applicable 30-day term SOFR of 3.61% as of June 30, 2026, inclusive of weighted average interest rate floors of 3.22% and spreads of 3.26%. Weighted average coupon for the financings assumes applicable 30-day term SOFR of 3.64% as of June 30, 2026 and spreads of 1.91% as of June 30, 2026.
Previous wording
On November 3, 2025, LCMT Warehouse, LLC, an indirect wholly owned subsidiary of the Company, entered into an Uncommitted Master Repurchase Agreement ("Repurchase Agreement") with JPMorgan Chase Bank, N.A.. The Repurchase Agreement provides up to $450 million to finance first mortgage loans, controlling loan participations and other commercial mortgage loan debt instruments secured by commercial real estate, as described in more detail in the Repurchase Agreement. Advances under the Repurchase Agreement accrue interest at per annum rates equal to term SOFR plus a spread to be determined on a case-by-case basis. The initial maturity date of the Repurchase Agreement is November 3, 2028, with two (2) one-year extensions at the Company's option, which may be exercised upon the satisfaction of certain conditions as described in more detail in the Repurchase Agreement. Borrowings under the Repurchase Agreement are on a partial (25%) recourse basis. This Agreement contains defined mark-to-market provisions that permit the lender to issue margin calls based on credit marks.
Current wording
On November 3, 2025, LCMT Warehouse, LLC, an indirect wholly owned subsidiary of the Company, entered into an Uncommitted Master Repurchase Agreement ("Repurchase Agreement") with JPMorgan Chase Bank, N.A.. The Repurchase Agreement provides up to $450 million to finance first mortgage loans, controlling loan participations and other commercial mortgage loan debt instruments secured by commercial real estate, as described in more detail in the Repurchase Agreement. Advances under the Repurchase Agreement accrue interest at per annum rates equal to term SOFR plus a spread to be determined on a case-by-case basis. The initial maturity date of the Repurchase Agreement is November 3, 2028, with two (2) one-year extensions at the Company's option, which may be exercised upon the satisfaction of certain conditions as described in more detail in the Repurchase Agreement. Borrowings under the Repurchase Agreement are on a partial (25%) recourse basis. This Agreement contains defined mark-to-market provisions that permit the lender to issue margin calls based on credit marks. On May 14, 2026, the Company and JPMorgan Chase Bank, N.A. entered into an amendment to the Guarantee Agreement which waived the maximum total net leverage ratio covenant for the period ended March 31, 2026, and amended the maximum total net leverage ratio for the remainder of the 2026 fiscal year. On August 12, 2026, the Company and JPMorgan Chase Bank, N.A. entered into a second amendment to the Guarantee Agreement which amended the minimum interest coverage ratio for the periods ending June 30, 2026, September 30, 2026, December 31, 2026 and March 31, 2027. As of June 30, 2026 and December 31, 2025, we were in compliance with these covenants.
Previous wording
(1) Principal value of the Repurchase Agreement was $315,342,045 and the principal value of the Loan Agreement was $35,450,000 as of March 31, 2026.
Current wording
(1) Principal value of the Repurchase Agreement was $248,297,347 and the principal value of the Loan Agreement was $24,700,000 as of June 30, 2026.
Showing the first 40 of 68 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
In the second quarter of 2026, the $22.1 million Arlington, TX ($5.1 million specific allowance) loan was foreclosed on, with ownership and deed to the property being taken by a newly formed subsidiary of the Company. The reversal of the $5.1 million specific allowance is reflected as a charge-off to the "Allowance for credit losses" in the consolidated balance sheets.
Current report — wording carried from elsewhere
On May 4, 2026, the Company sold one of the properties located in San Antonio, TX held by a subsidiary of the Company to a third party for $12.2 million and recognized a $0.1 million realized loss on the sale of the property. The realized loss on the sale of the property was included within realized loss on real estate owned in the Company's consolidated statements of operations.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
Previous report — wording carried elsewhere
For the three months ended March 31, 2026, we incurred management and incentive fees of $1,095,000 representing amounts payable to our Manager under our management agreement. We also incurred operating expenses of $2,561,590, of which $466,431 was payable to our Manager and $2,095,159 was payable directly by us.