Lument Finance Trust, Inc. Q1 FY2025 earnings call

• Welcomed Greg Calvert as new President with extensive experience in multifamily credit.
• Economy has resilience but trade/tariffs impact markets. Multifamily sector shows resilience with steady demand and limited new supply.
• Active asset management with proactive monitoring, loan modifications, and focus on maximizing recovery. Credit risk ratings stable, specific reserves increased.
• Managed liquidity with $64 million unrestricted cash, partially delevered portfolio using principal repayments. Reviewing new secured financing, expecting closure in coming months. Anticipate CRE CLO new issuance in H2 2025.
• Leverage expertise to identify investment opportunities and navigate current environment.

For the first quarter of 2025, Lument Finance Trust reported a GAAP net loss of approximately $1.7 million or $0.03 per share. Distributable earnings were approximately $4 million or $0.08 per share. Net interest income was $7.7 million, down from $9.4 million in Q4 '24. Exit fees were lower with $55 million in payoffs in Q1 vs $144 million in Q4. Total operating expenses were largely flat at $2.6 million. The portfolio had seven loans risk rated '5' with an aggregate principal amount of ~$108 million, and specific reserves increased to $11.1 million.

• Expect new secured financing for the portfolio to close in coming months, providing flexibility to manage seasoned credits and access CRE CLO market.
• Anticipate a new CRE CLO issuance in the second half of 2025 pending market conditions.

• Market volatility related to interest rate policy and trade/tariffs.
• Credit risks in loans with seven loans risk rated '5' and potential deterioration if not properly managed.
• Uncertainty in achieving expected outcomes for challenged credits without proper sponsor support.

Q: Can you talk about the pipeline today and net originations to maintain dividend capacity?

A: There are assets originated at Lument to deploy into LFT when there's capacity. Origination of lease up, new construction assets is desirable but recapping/bridge-to-bridge deals have slowed. Expect turnover in wall of maturities for reinvestment opportunities.

Q: Comments on financing options before next CLO?

A: There are opportunities in bank and private credit, including interim facilities with flexibility. CLO remains most attractive for floating rate multifamily assets but alternatives are being explored as interim steps.

Q: Near term resolution of '5' rated loans?

A: There's potential for resolutions in next 3-6 months. Sponsorship is key; potential to gain control or bring in new sponsors for asset improvement. Legacy portfolio's problem assets are declining as they're worked through.