Cover
Cover - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 14, 2022 | Jun. 30, 2021 | |
Entity Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-35845 | ||
Entity Registrant Name | LUMENT FINANCE TRUST, INC. | ||
Entity Incorporation, State or Country Code | MD | ||
Entity Tax Identification Number | 45-4966519 | ||
Entity Address, Address Line One | 230 Park Avenue | ||
Entity Address, Address Line Two | 20th Floor | ||
Entity Address, City or Town | New York | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 10169 | ||
City Area Code | 212 | ||
Local Phone Number | 317-5700 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 74 | ||
Entity Common Stock, Shares Outstanding | 52,225,152 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001547546 | ||
Redeemable Preferred Stock | |||
Entity Information [Line Items] | |||
Title of 12(b) Security | 7.875% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share | ||
Trading Symbol | LFTPrA | ||
Security Exchange Name | NYSE | ||
Common Stock | |||
Entity Information [Line Items] | |||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | LFT | ||
Security Exchange Name | NYSE |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Audit Information [Abstract] | |
Auditor Name | KPMG LLP |
Auditor Location | New York, NY |
Auditor Firm ID | 185 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 | |
ASSETS | |||
Cash and cash equivalents | [1] | $ 14,749,046 | $ 11,375,960 |
Restricted cash | [1] | 57,999,396 | |
Commercial mortgage loans held-for-investment, at amortized cost | [1] | 1,001,825,294 | 547,345,334 |
Mortgage servicing rights, at fair value | [1] | 551,997 | 919,678 |
Accrued interest receivable | [1] | 3,977,752 | 2,015,617 |
Investment related receivable | [1] | 22,400,000 | 0 |
Other assets | [1] | 1,889,258 | 1,833,794 |
Total assets | [1] | 1,048,923,353 | 621,489,779 |
LIABILITIES: | |||
Collateralized loan obligations, net | [1] | 826,782,543 | 463,060,090 |
Secured term loan | [1] | 46,845,502 | 39,556,198 |
Accrued interest payable | [1] | 704,055 | 432,936 |
Dividends payable | [1] | 3,242,809 | 3,242,640 |
Fees and expenses payable to Manager | [1] | 1,825,142 | 1,156,340 |
Other accounts payable and accrued expenses | [1] | 147,802 | 338,423 |
Total liabilities | [1] | 879,547,853 | 507,786,627 |
Commitments and contingencies | [1] | ||
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 and 0 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively | [1] | 57,254,935 | 0 |
Common Stock: par value $0.01 per share; 450,000,000 shares authorized, 24,947,883 and 24,943,383 shares issued and outstanding, at December 31, 2021 and December 31, 2020, respectively | [1] | 249,434 | 249,389 |
Additional paid-in capital | [1] | 233,833,749 | 233,850,271 |
Cumulative distributions to stockholders | [1] | (143,449,310) | (131,355,978) |
Accumulated earnings | [1] | 21,387,192 | 10,859,970 |
Total stockholders' equity | [1] | 169,276,000 | 113,603,652 |
Noncontrolling interests | [1] | 99,500 | 99,500 |
Total equity | [1] | 169,375,500 | 113,703,152 |
Total liabilities and equity | [1] | $ 1,048,923,353 | $ 621,489,779 |
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | ||
Variable Interest Entity [Line Items] | |||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | |
Preferred stock, dividend rate (percentage) | 7.875% | 7.875% | |
Preferred Stock, Liquidation Preference, Value | $ 60,000,000 | $ 60,000,000 | |
Preferred stock, shares issued (in shares) | 2,400,000 | 0 | |
Preferred stock, shares outstanding (in shares) | 2,400,000 | 0 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares authorized (in shares) | 450,000,000 | 450,000,000 | |
Common stock, shares issued (in shares) | 24,947,883 | 24,943,383 | |
Common stock, shares outstanding (in shares) | 24,947,883 | 24,943,383 | |
Assets | [1] | $ 1,048,923,353 | $ 621,489,779 |
Liabilities | [1] | 879,547,853 | 507,786,627 |
Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. | |||
Variable Interest Entity [Line Items] | |||
Assets | 1,003,896,995 | 591,318,506 | |
Liabilities | $ 827,390,435 | $ 463,411,967 | |
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Interest income: | ||
Commercial mortgage loans held-for-investment | $ 36,162,050 | $ 33,570,949 |
Cash and cash equivalents | 28,779 | 45,782 |
Interest expense: | ||
Collateralized loan obligations | (12,178,545) | (12,047,300) |
Secured term loan | (3,333,536) | (3,138,917) |
Net interest income | 20,678,748 | 18,430,514 |
Other income: | ||
Realized loss on mortgage servicing rights | (10,910) | 0 |
Change in unrealized loss on mortgage servicing rights | (356,772) | (1,780,528) |
Loss on extinguishment of debt | (1,663,926) | 0 |
Servicing income, net | 398,939 | 709,565 |
Other income | 0 | 2 |
Total other (loss) | (1,632,669) | (1,070,961) |
Expenses: | ||
Management and incentive fees | 3,041,600 | 2,524,139 |
General and administrative expenses | 2,879,655 | 3,518,500 |
Operating expenses reimbursable to Manager | 2,038,130 | 1,644,886 |
Other operating expenses | 280,970 | 1,493,214 |
Compensation expense | 200,608 | 205,292 |
Total expenses | 8,440,963 | 9,386,031 |
Net income before provision for income taxes | 10,605,116 | 7,973,522 |
(Provision for) benefit from income taxes | (77,894) | 476,248 |
Net income | 10,527,222 | 8,449,770 |
Dividends to preferred stockholders | (3,112,500) | (15,000) |
Net income attributable to common stockholders (basic and diluted) | 7,414,722 | 8,434,770 |
Earnings per share: | ||
Net income attributable to common stockholders (basic) | 7,414,722 | 8,434,770 |
Net income attributable to common stockholders (diluted) | $ 7,414,722 | $ 8,434,770 |
Weighted average number of shares of common stock outstanding (in shares) | 24,945,824 | 24,934,505 |
Basic income per share (in dollars per share) | $ 0.30 | $ 0.34 |
Diluted income per share (in dollars per share) | 0.30 | 0.34 |
Dividends declared per weighted average share of common stock (in dollars per share) | $ 0.36 | $ 0.37 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Total | Total Stockholders' Equity | Preferred Stock | Common Stock | Additional Paid in Capital | Cumulative Distributions to Stockholders | Accumulated Earnings | Noncontrolling interests | |
Balance (in shares) at Dec. 31, 2019 | 0 | 23,692,164 | |||||||
Balance at Dec. 31, 2019 | $ 108,644,712 | $ 108,545,212 | $ 0 | $ 236,877 | $ 228,135,116 | $ (122,236,981) | $ 2,410,200 | $ 99,500 | |
Issuance of common stock (in shares) | 1,251,219 | ||||||||
Issuance of common stock | 5,762,360 | 5,762,360 | $ 12,512 | 5,749,848 | |||||
Cost of issuing common stock | (40,000) | (40,000) | (40,000) | ||||||
Restricted stock compensation expense | 5,307 | 5,307 | 5,307 | ||||||
Net income | 8,449,770 | 8,449,770 | 8,449,770 | ||||||
Common dividends declared | (9,103,997) | (9,103,997) | (9,103,997) | ||||||
Preferred dividends declared | (15,000) | (15,000) | (15,000) | ||||||
Balance (in shares) at Dec. 31, 2020 | 0 | 24,943,383 | |||||||
Balance at Dec. 31, 2020 | 113,703,152 | [1] | 113,603,652 | $ 0 | $ 249,389 | 233,850,271 | (131,355,978) | 10,859,970 | 99,500 |
Issuance of common stock (in shares) | 4,500 | ||||||||
Issuance of common stock | 11,700 | 11,700 | $ 45 | 11,655 | |||||
Cost of issuing common stock | (32,085) | (32,085) | (32,085) | ||||||
Issuance of preferred stock, net (in shares) | 2,400,000 | ||||||||
Issuance of preferred stock, net | 57,254,935 | 57,254,935 | $ 57,254,935 | ||||||
Restricted stock compensation expense | 3,908 | 3,908 | 3,908 | ||||||
Net income | 10,527,222 | 10,527,222 | 10,527,222 | ||||||
Common dividends declared | (8,980,832) | (8,980,832) | (8,980,832) | ||||||
Preferred dividends declared | (3,112,500) | (3,112,500) | (3,112,500) | ||||||
Balance (in shares) at Dec. 31, 2021 | 2,400,000 | 24,947,883 | |||||||
Balance at Dec. 31, 2021 | $ 169,375,500 | [1] | $ 169,276,000 | $ 57,254,935 | $ 249,434 | $ 233,833,749 | $ (143,449,310) | $ 21,387,192 | $ 99,500 |
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 10,527,222 | $ 8,449,770 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Accretion of purchase discount | (46,088) | 0 |
Amortization of premiums on held-for-investment loans | 457,749 | 0 |
Accretion of collateralized loan obligations discounts, net | 207,767 | 1,137,156 |
Amortization of deferred offering costs | (32,085) | (40,000) |
Amortization of deferred financing costs | 1,953,465 | 1,029,899 |
Realized loss on mortgage servicing rights | 10,910 | 0 |
Loss on extinguishment of debt | 1,663,926 | 0 |
Unrealized loss on mortgage servicing rights | 356,772 | 1,780,528 |
Restricted stock compensation expense | 15,608 | 20,292 |
Net change in: | ||
Accrued interest receivable | (1,962,135) | 326,737 |
Deferred offering costs | 0 | 40,000 |
Other assets | (55,464) | (286,607) |
Accrued interest payable | 271,119 | (372,190) |
Fees and expenses payable to Manager | 668,802 | 164,359 |
Other accounts payable and accrued expenses | (190,621) | (30,735) |
Net cash provided by operating activities | 13,846,947 | 12,219,209 |
Cash flows from investing activities: | ||
Purchase of commercial mortgage loans held-for-investment | (983,694,326) | (57,601,572) |
Principal payments from commercial mortgage loans held-for-investment | 506,402,705 | 145,516,658 |
Net cash (used in) provided by investing activities | (477,291,621) | 87,915,086 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 0 | 5,747,375 |
Net proceeds from issuance of preferred stock | 57,254,935 | 0 |
Dividends paid on common stock | (9,978,162) | (7,638,270) |
Dividends paid on preferred stock | (2,115,000) | (15,000) |
Proceeds from collateralized obligations | 833,750,000 | 0 |
Proceeds from secured term loan | 7,500,000 | 0 |
Payment of collateralized loan obligations | (465,316,126) | (44,864,874) |
Payment of deferred financing costs | (8,747,277) | 0 |
Net cash provided by (used in) financing activities | 412,348,370 | (46,770,769) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (51,096,304) | 53,363,526 |
Cash, cash equivalents and restricted cash, beginning of period | 69,375,356 | 16,011,830 |
Cash, cash equivalents and restricted cash, end of period | 18,279,052 | 69,375,356 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 13,079,740 | 13,386,816 |
Cash paid for income taxes | 0 | 180,898 |
Non-cash investing and financing activities information | ||
Dividends declared but not paid at end of period | $ 3,426,559 | $ 3,242,650 |
ORGANIZATION AND BUSINESS OPERA
ORGANIZATION AND BUSINESS OPERATIONS | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS OPERATIONS | ORGANIZATION AND BUSINESS OPERATIONS Lument Finance Trust, Inc. (together with its consolidated subsidiaries, the "Company”), formerly Hunt Companies Finance Trust, Inc., is a Maryland corporation that focuses primarily on investing in, financing and managing a portfolio of commercial real estate ("CRE") debt investments. Effective January 3, 2020, the Company is externally managed by OREC Investment Management, LLC, doing business as Lument Investment Management (the "Manager" or "Lument IM"), who replaced the prior manager, Hunt Investment Management, LLC ("HIM"). On December 28, 2020, the Company changed its name from Hunt Companies Finance Trust, Inc. to Lument Finance Trust, Inc., and its common stock began trading on the NYSE under the symbol "LFT." Previously, the Company's common stock was listed on the NYSE under the symbol "HCFT." 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. On January 3, 2020, the Company and HIM entered into a termination agreement pursuant to which the Company and HIM agreed to mutually and immediately terminate that certain management agreement dated January 18, 2018. The Company simultaneously entered into a new management agreement with Lument IM. Pursuant to the terms of the termination agreement between the Company and HIM, the termination of the management agreement did not trigger, and HIM was not paid, a termination fee by the Company. See Note 9 for further discussion. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These financial statements have been prepared in accordance with U.S. GAAP and are expressed in United States dollars. The consolidated financial statements of the Company include the accounts of its subsidiaries. Principles of Consolidation The accompanying consolidated financial statements of the Company include the accounts of the Company and all subsidiaries which it controls (i) through voting or similar rights or (ii) by means other than voting rights if the Company is the primary beneficiary of a variable interest entity ("VIE"). Entities which the Company does not control and entities which are VIEs in which the Company is not the primary beneficiary are accounted for under the equity method or other appropriate GAAP. All significant intercompany transactions have been eliminated on consolidation. VIEs An entity is considered a VIE when any of the following applies: (1) the equity investors (if any) lack one or more essential characteristics of a controlling financial interest; (2) the equity investment at risk is not sufficient to finance that entity's activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined as the entity having both the following characteristics: (1) the power to direct activities that, when taken together, most significantly impact the VIE performance; and (2) the obligation to absorb losses and right to receive returns from the VIE that would be significant to the VIE. The Company evaluates quarterly its junior retained notes and preferred shares of LFT CRE 2021-FL1, Ltd. for potential consolidation, and prior to their unwinding in the second quarter of 2021, Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. At December 31, 2021, the Company determined it was the primary beneficiary of LFT CRE 2021-FL1, Ltd. based on its obligation to absorb losses derived from ownership of its preferred shares, and prior to the second quarter of 2021 determined it was the primary beneficiary of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. Accordingly, the Company consolidated the assets, liabilities, income and expenses of the underlying issuing entities. The Company's maximum exposure to loss from collateralized loan obligations ("CLO") was $166,250,000 and $124,046,671 at December 31, 2021 and December 31, 2020. Use of Estimates The financial statements have been prepared on the accrual basis of accounting in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires the Company to make a number of significant estimates. As of December 31, 2021, the novel coronavirus, or COVID-19, pandemic is ongoing. During 2020, the COVID-19 pandemic created disruption in global supply chains, increased rates of unemployment and adversely impacted many industries, including industries related to the collateral underlying certain of our loans. In 2021, the global economy has, with certain setbacks, begun reopening and wider distribution of vaccines will likely encourage greater economic activity. Nonetheless, the recovery could remain uneven, particularly given uncertainty with respect to the distribution and acceptance of the vaccines and their effectiveness with respect to new variants of the virus, including the Delta and Omicron variants which are believed to be more contagious than previous variants of the virus. We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of December 31, 2021, however uncertainty over the ultimate impact of COVID-19 on the global economy generally, and our business in particular, makes any estimates and assumptions as of December 31, 2021 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results could differ from its estimates and the differences may be material. 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 LFT CRE 2021-FL1, Ltd. as of December 31, 2021 and Hunt CRE 2018-FL2, Ltd. as of December 31, 2020. 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. December 31, 2021 December 31, 2020 Cash and cash equivalents $ 14,749,046 $ 11,375,960 Restricted cash CRE 2018-FL2, Ltd. $ — $ 57,999,396 Restricted cash CRE 2021-FL1, Ltd. $ 3,530,006 $ — Total cash, cash equivalents and restricted cash $ 18,279,052 $ 69,375,356 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 of the FASB, or ASC 820, defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurement under GAAP. Specifically, the guidance defines fair value based on exit price, or the price that would be received upon the sale of an asset or the transfer of a liability in an orderly transaction between market participants at measurement date. ASC 820 specifies a hierarchy of valuation techniques based on the inputs used in measuring fair value. Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable market data from independent sources, while unobservable inputs reflect the Company's market assumptions. The three levels are defined as follows: • Level 1 Inputs - Quoted prices for identical instruments in active markets • Level 2 Inputs - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. • Level 3 Inputs - Instruments with primarily unobservable value drivers. Pursuant to ASC 820 we disclose fair value information about financial instruments, which are not otherwise reported at fair value in our consolidated balance sheet, to the extent it is practicable to estimate fair value for those certain instruments. The following methods and assumptions are used to estimate the fair value of each class of financial instrument, for which it is practicable to estimate that value: • Cash and cash equivalents : The carrying amount of cash and cash equivalents approximates fair value. • Restricted cash : The carrying amount of restricted cash approximates fair value. • Commercial mortgage loans : The Company determines the fair value of commercial mortgage loans by utilizing a pricing model based on discounted cash flow methodologies using discount rates, which reflect current market interest rates that would be offered for loans with similar characteristics and credit quality. Additionally, the Company may record fair value adjustments on a non-recurring basis when it has determined it necessary to record a specific impairment reserve or charge-off against a loan and the Company measures such specific reserve or charge-off using the fair value of the loan's collateral. To determine the fair value of loan collateral, the Company employs the income capitalization approach, appraised values, broker opinion of value, sale offers, letters of intention to purchase, or other valuation benchmarks, as applicable, depending upon the nature of such collateral and other relevant market factors. • Mortgage servicing rights : The Company determines the fair value of MSRs from a third-party pricing service on a recurring basis. The third-party pricing service uses common market pricing methods that include using discounted cash flow models to calculate present value, estimated net servicing income and observed market pricing for MSR purchase and sale transactions. The model considers contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. • Collateralized loan obligations : The Company determines the fair value of collateralized loan obligations by utilizing a third-party pricing service. In determining the value of a particular investment, pricing service providers may use market spreads, inventory levels, trade and bid history, as well as market insight from clients, trading desks and global research platform. • Secured term loan : The Company determines the fair value of its secured term loan based on a discounted cash flow methodology. Commercial Mortgage Loans Held-for-Investment Commercial mortgage loans held-for-investment represent floating-rate transitional loans and other commercial mortgage loans purchased 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. 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 using the effective interest method, or on a straight line basis when it approximates 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 and interest is reasonably assured under the terms of the underlying loan agreement. As of December 31, 2021, the Company did not hold any loans placed in non-accrual status. Quarterly, the Company assesses the risk factors of each loan classified as held-for-investment and assigns a risk rating based on a variety of factors, including, without limitation, debt-service coverage ratio ("DSCR"), loan-to-value ratio ("LTV"), property type, geographic and local market dynamics, physical condition, leasing and tenant profile, adherence to business plan and exit plan, maturity default risk and project sponsorship. The Company's loans are rated on a 5-point scale, from least risk to greatest risk, respectively, which ratings are described as follows: 1. Very Low Risk : exceeds expectations and is outperforming underwriting or it is very likely that the underlying loan can be refinanced easily in the period's prevailing capital market conditions 2. Low Risk : meeting or exceeding underwritten expectations 3. Moderate Risk : consistent with underwritten expectations or the sponsor may be in the early stages of executing the business plan and the loan structure appropriately mitigates additional risks 4. High Risk : potential risk of default, a loss may occur in the event of default 5. Default Risk : imminent risk of default, a loss is likely in the event of default The Company evaluates each loan rated High Risk or above as to whether it is impaired on a quarterly basis. Impaired loans are individually evaluated based on the Company's quarterly assessment of each loan and assignment of a risk rating. Impairment occurs when the Company determines that the facts and circumstances of the loan deem it probable that the Company will not be able to collect all amounts due in accordance with the contractual terms of the loan. If a loan is considered to be impaired, an allowance is recorded to reduce the carrying value of the loan through a charge to the provision for loan losses. Impairment of these loans, all of which are deemed 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. These valuations require significant judgments, which include assumptions regarding capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, actions of other lenders, and other factors deemed necessary by the Manager. Actual losses, if any, could ultimately differ from estimated losses. In addition, the Company evaluates the entire portfolio to determine whether the portfolio has any impairment that requires a valuation allowance on the remainder of the loan portfolio. As of December 31, 2021, the Company has not recognized any impairments on its loans held-for-investment. We also assessed the remainder of the portfolio, considering the absence of delinquencies and current market conditions, and, as such has not recorded any allowance for loan losses. Mortgage Servicing Rights, at Fair Value Mortgage servicing rights ("MSRs") are associated with residential mortgage loans that the Company historically purchased and subsequently sold or securitized. MSRs are held and managed at Five Oaks Acquisition Corp. ("FOAC"), the Company's taxable REIT subsidiary ("TRS"). As the owner of MSRs, the Company is entitled to receive a portion of the interest payments from the associated residential mortgage loan, and is obligated to service, directly or through a subservicer, the associated loan. MSRs are reported at fair value. Residential mortgage loans for which the Company owns the MSRs are directly serviced by two sub-servicers retained by the Company. The Company does not directly service any residential mortgage loans. MSR income is recognized at the contractually agreed upon rate, net of the costs of sub-servicers retained by the Company. If a sub-servicer with which the Company contracts were to default, an evaluation of MSR assets for impairment would be undertaken at that time. Collateralized Loan Obligations Collateralized loan obligations represent third-party liabilities of LFT CRE 2021-FL1, Ltd. as of December 31, 2021 and Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. prior to their unwind date of June 14, 2021 (the "CLOs"). The CLOs are VIEs that the Company has determined it is the primary beneficiary of and accordingly are consolidated in the Company's financial statements, excluding liabilities of the CLOs acquired by the Company that are eliminated on consolidation. The third-party obligations of the CLOs do not have any recourse to the Company as the consolidator of the CLOs. CLOs are carried at their outstanding unpaid principal balances, net of any unamortized discounts or deferred financing costs. Any premiums, discounts or deferred financing costs associated with these liabilities are amortized to interest expense using the effective interest method over the expected average life of the related obligations, or on a straight line basis when it approximates the effective interest method. In the second quarter of 2020, $624,816 in costs related to a contemplated collateralized loan transaction, that were previously deferred as "other assets" in the consolidated balance sheets were expensed as "Other operating expenses" in the statements of operations as a result of abandoning the contemplated transaction due to the then current market environment, which had been impacted by the COVID-19 pandemic. Secured Term Loan The Company and certain of its subsidiaries are party to a $47.75 million credit and guaranty agreement with the lenders referred to therein and Cortland Capital Service LLC, as administrative agent and collateral agent for the lenders (the "Secured Term Loan"). The Secured Term Loan is carried at its unpaid principal balance, net of deferred financing costs. Deferred financing costs of $1,405,133 associated with this liability are amortized to interest expense on a straight line basis when it approximates the effective interest method. Common Stock At December 31, 2021, and December 31, 2020, the Company was authorized to issue up to 450,000,000 shares of common stock, par value $0.01 per share. The Company had 24,947,883 and 24,943,383 shares of common stock issued and outstanding at December 31, 2021 and December 31, 2020, respectively. Stock Repurchase Program On December 15, 2015, the Company’s Board of Directors authorized a stock repurchase program ("Repurchase Program") to repurchase up to $10 million of the Company’s outstanding common stock. Subject to applicable securities laws, repurchase of common stock under the Repurchase Program may be made at times and in amounts as the Company deems appropriate, using available cash resources. Shares of common stock repurchased by the Company under the Repurchase Program, if any, will be canceled and, until reissued by the Company, will be deemed to be authorized but unissued shares of common stock. The Repurchase Program may be suspended or discontinued by the Company at any time and without prior notice. Preferred Stock At December 31, 2021 and December 31, 2020, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $0.01 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company's Board of Directors. On May 5, 2021, the Company issued 2,400,000 shares of 7.875% Series A Cumulative Redeemable Preferred Stock (Series A Preferred Stock"). The Company had 2,400,000 shares of preferred stock issued and outstanding at December 31, 2021 and no shares of preferred stock issued and outstanding at December 31, 2020. Our preferred stock is classified as permanent equity and carried at its liquidation preference less offering costs. See Note 12 for additional information related to our Series A Preferred Stock. Income Taxes The Company has elected to be taxed as a REIT under the Code for U.S. federal income tax purposes, commencing with the Company’s short taxable period ended December 31, 2012. A REIT is generally taxable as a U.S. C-Corporation; however, so long as the Company qualifies as a REIT it is entitled to a special deduction for dividends paid to stockholders not otherwise available to corporations. Accordingly, the Company generally will not be subject to U.S. federal income tax to the extent its distributions to stockholders equals, or exceeds, its REIT taxable income for the year. In addition, the Company must continue to meet certain REIT qualification requirements with respect to distributions, as well as certain asset, income and share ownership tests, in accordance with Sections 856 through 860 of the Code, as summarized below. In addition, the TRS is maintained to perform certain services and earn income for the Company that the Company is not permitted engage in as a REIT. To maintain its qualification as a REIT, the Company must meet certain requirements, including but not limited to the following: (i) distribute at least 90% of its REIT taxable income to its stockholders; (ii) invest at least 75% of its assets in REIT qualifying assets, with additional restrictions with respect to asset concentration risk; and (iii) earn at least 95% of its gross income from qualifying sources of income, including at least 75% from qualifying real estate and real estate related sources. Regardless of the REIT election, the Company may also be subject to certain state, local and franchise taxes. Under certain circumstances, federal income and excise taxes may be due on its undistributed taxable income. If the Company were to fail to meet these requirements, it would be subject to U.S. federal income tax as a U.S. C-Corporation, which could have a material adverse impact on its results of operations and amounts available for distributions to its stockholders. Certain activities of the Company are conducted through a TRS and therefore are taxed as a standalone U.S. C-Corporation. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The TRS is not subject to a distribution requirement with respect to its REIT owner. The TRS may retain earnings annually, resulting in an increase in the consolidated book equity of the Company and without a corresponding distribution requirement by the REIT. If the TRS generates net income, and declares dividends to the Company, such dividends will be included in its taxable income and necessitate a distribution to its stockholders in accordance with the REIT distribution requirements. The Company assesses its tax positions for all open tax years and determines whether the Company has any material unrecognized liabilities in accordance with ASC 740, Income Taxes. The Company records these liabilities to the extent the Company deems them more likely than not to be incurred. The Company's accounting policy with respect to interest and penalties is to classify these amounts as other interest expense. Earnings per Share The Company calculates basic and diluted earnings per share by dividing net income attributable to common stockholders for the period by the weighted-average shares of the Company’s common stock outstanding for that period. Diluted earnings per share takes into account the effect of dilutive instruments, such as warrants, stock options, and unvested restricted stock, but use the average share price for the period in determining the number of incremental shares that are to be added to the weighted-average number of shares outstanding. See Note 17 for details of the computation of basic and diluted earnings per share. Stock-Based Compensation The Company is required to recognize compensation costs relating to stock-based payment transactions in the consolidated financial statements. The Company accounts for share-based compensation issued to its Manager and non-management directors using the fair-value based methodology prescribed by ASC 505, Equity ("ASC 505"), or ASC 718, Share-Based Payment ("ASC 718"), as appropriate. Compensation cost related to restricted common stock issued to the Manager is initially measured at estimated fair value at the grant date, and is remeasured on subsequent dates to the extent the awards are unvested. Additionally, the compensation cost related to restricted common stock issued to the non-management directors is measured at its estimated fair value at the grant date and amortized and expensed over the vesting period. See Note 13 for details of stock-based awards issuable under the Manager Equity Plan. Comprehensive Income (Loss) Attributable to Common Stockholders For the years ended December 31, 2021 and December 31, 2020, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying consolidated financial statements. Recently Issued and/or Adopted Accounting Standards Credit Losses In June 2016, the FASB issued ASU 2016-13, which is a comprehensive amendment of credit losses on financial instruments. Currently, GAAP requires an "incurred loss" methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. The standard’s core principle is that an entity replaces the "incurred loss" impairment methodology in current GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to support credit loss estimates. For public business entities that are SEC filers, the amendment in this update was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU 2019-10 which amended the effective dates for implementation of ASU 2016-13. ASU 2019-10 defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, public business entities that are not SEC filers and all other companies, including not-for-profit companies and employee benefit plans for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is designated as a smaller reporting company and has deferred implementation of ASU 2016-13 pursuant to ASU 2019-10 and is continuing to assess the impact of this guidance. In February 2020, the FASB issued ASU 2020-02, amending SEC paragraphs in the Codification to reflect the issuance of SEC Staff Accounting Bulletin ("SAB") No. 119 related to the new credit losses standard and revised effective date of the new leases standard. SAB No. 119 provides interpretive guidance on methodologies and supporting documentation for measuring credit losses, with a focus on the documentation the staff would normally expect registrants engaged in lending transactions to prepare and maintain to support estimates of current expected credit losses for loan transactions. This new guidance is effective for fiscal years beginning after December 15, 2022 for smaller reporting companies such as the Company. The Company is assessing the impact of this guidance. Accounting for Income Taxes In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." This guidance eliminates certain exceptions to the general principles in Topic 740. This new guidance is effective for us on January 1, 2021, with early adoption permitted. The Company adopted ASU 2019-12 beginning with the first quarter of 2021, which had no impact on the Company's financial condition or results of operations. Financial Instruments In March 2020, the FASB issued ASU 2020-03 which makes improvements to financial instruments guidance, including the current expected credit losses (CECL) guidance in ASU 2016-13. Only Issue 1, of the 7 improvement issues applies to the Company, which is effective upon issuance, requires all entities to provide fair value option disclosures. MSRs are reported at fair value as a result of the fair value election, as discussed in Mortgage Servicing Rights, at Fair Value above. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 828): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The standard was issued to ease the accounting effects of reform to the London Interbank Offered Rate ("LIBOR") and other reference rates. The standard provides optional expedients and exceptions for applying GAAP to debt instruments, leases, derivatives and other contracts affected by reference rate reform. ASU 2020-04 generally considers contract modifications related to reference rate reform to be an event that does not require contract remeasurement at the modification date nor a reassessment of a previous accounting determination. The standard is effective for all entities as of March 12, 2020 through December 31, 2022 and may be elected over time as reference rate reform activities occur. We have not adopted any of the optional expedients or exceptions through December 31, 2021, but will continue to evaluate the possible adoption of any such expedients or exceptions. |
COMMERCIAL MORTGAGE LOANS HELD-
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT | 12 Months Ended |
Dec. 31, 2021 | |
Receivables [Abstract] | |
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT | COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENTThe following tables summarize certain characteristics of the Company's investments in commercial mortgage loans as of December 31, 2021 and December 31, 2020: Weighted Average Loan Type Unpaid Principal Balance Carrying Value Loan Count Floating Rate Loan % Coupon (1) Term (Years) (2) December 31, 2021 Loans held-for-investment Senior secured loans (3) $ 1,001,869,994 $ 1,001,825,294 66 100.0 % 3.9 % 3.7 $ 1,001,869,994 $ 1,001,825,294 66 100.0 % 3.9 % 3.7 Weighted Average Loan Type Unpaid Principal Balance Carrying Value Loan Count Floating Rate Loan % Coupon (1) Term (Years) (2) December 31, 2020 Loans held-for-investment Senior secured loans (3) $ 547,345,334 $ 547,345,334 40 100.0 % 5.1 % 3.1 $ 547,345,334 $ 547,345,334 40 100.0 % 5.1 % 3.1 (1) Weighted average coupon assumes applicable one-month LIBOR of 0.10% and 0.14% as of December 31, 2021 and December 31, 2020, respectively, inclusive of weighted average LIBOR floors of 0.49% and 1.64%, respectively. (2) Weighted average term assumes all extension options are exercised by the borrower; provided, however, that our loans may be repaid prior to such date. (3) As of December 31, 2021, $974,025,294 of the outstanding senior secured loans were held in VIEs and $27,800,000 of the outstanding senior secured loans were held outside of VIEs. As of December 31, 2020, $531,363,401 of the outstanding senior secured loans were held in VIEs and $15,981,933 of the outstanding senior secured loans were held outside of VIEs. Activity: For the years ended December 31, 2021 and December 31, 2020, the loan portfolio activity was as follows: Commercial Mortgage Loans Held-for-Investment Balance at December 31, 2019 $ 635,260,420 Purchases and advances 57,601,572 Principal payments (145,516,658) Balance at December 31, 2020 $ 547,345,334 Purchases and advances 983,694,326 Principal repayments (528,802,705) Accretion of purchase discount 46,088 Amortization of purchase premium (457,749) Balance at December 31, 2021 $ 1,001,825,294 Loan Risk Ratings: As further described in Note 2, the Company evaluates the commercial mortgage loan portfolio on a quarterly basis and assigns a risk rating based on a variety of factors. The following table presents the principal balance and net book value of the loan portfolio based on the Company's internal risk ratings as of December 31, 2021 and December 31, 2020: December 31, 2021 December 31, 2020 Risk Rating Number of Loans Unpaid Principal Balance Net Carrying Value Number of Loans Unpaid Principal Balance Net Carrying Value 1 — $ — — — $ — — 2 40 634,438,386 634,438,386 14 168,401,366 168,401,366 3 23 342,350,405 342,305,705 20 309,726,343 309,726,343 4 3 25,081,203 25,081,203 6 69,217,625 69,217,625 5 — — — — — — 66 1,001,869,994 1,001,825,294 40 547,345,334 547,345,334 As of December 31, 2021, the average risk rating of the commercial mortgage loan portfolio was 2.3 (Low Risk), weighted by investment carrying value, with 97.5% of commercial loans held-for-investment rated 3 (Moderate Risk) or better by the Company's Manager. As of December 31, 2020, the average risk rating of the commercial mortgage loan portfolio was 3.1 (Moderate Risk), weighted by investment carrying value, with 84.4% of commercial loans held-for-investment rated 3 (Moderate Risk) or better by the Company's Manager. The decrease in risk ratings is primarily the result of commercial mortgage loans that paid off with a risk rating of "2" of $133.6 million, a risk rating of "3" of $276.1 million and a risk rating of "4" of $17.8 million, offset by purchases of commercial mortgage loans with a risk rating of "2" of $599.0 million, a risk rating of "3" of $283.0 million and a risk rating of '4" of $0.1 million during the year ended December 31, 2021. Concentration of Credit Risk: The following tables present the geographic and property types of collateral underlying the Company's commercial mortgage loans as a percentage of the loans' carrying value as of December 31, 2021 and December 31, 2020: Loans Held-for-Investment December 31, 2021 December 31, 2020 Geography South 46.2 % 36.5 % Southwest 27.5 38.7 West 13.9 1.8 Mid-Atlantic 7.9 6.2 Midwest 4.5 16.8 Total 100.0 % 100.0 % December 31, 2021 December 31, 2020 Collateral Property Type Multifamily 92.0 % 89.5 % Self-Storage 5.2 0.8 Retail 1.7 6.4 Office 1.1 3.3 Total 100.0 % 100.0 % We did not have any impaired loans, nonaccrual loans, or loans in maturity default as of December 31, 2021 or December 31, 2020. |
USE OF SPECIAL PURPOSE ENTITIES
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES | USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES We account for CLO transactions on our consolidated balance sheet as financing facilities. Our CLOs are VIEs for which we are the primary beneficiary and are consolidated in our financial statements. The investment grade tranches are treated as secured financings, and are non-recourse to us. See Note 2 ("Summary of Significant Accounting Policies - Principles Consolidation - VIE") for further discussion. On June 14, 2021, the Company completed a CRE CLO (LFT CRE 2021-FL1, Ltd."), issuing eight tranches of CLO notes through two newly-formed wholly-owned subsidiaries totaling $903.8 million. Of the total CLO notes issued $833.8 million were investment grade notes issued to third party investors and $70 million were below investment-grade notes retained by us. In addition, a $96.25 million equity interest in the portfolio 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 also included $330.3 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 loan obligations with a face value of $1.0 billion, representing leverage of 83%. On June 14, 2021, the Company unwound Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. redeeming $388.2 million of outstanding notes which were repaid primarily from the refinancing of the remaining assets primarily within LFT 2021-FL1, Ltd., as well as cash held within Hunt CRE 2018-FL2, Ltd. and expensed $1.7 million of deferred financing costs into loss on extinguishment of debt on the consolidated statements of operations. As of this date, the Company no longer consolidates the asset and liabilities of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. The CLO we consolidate is subject to collateralization and coverage tests that are customary for this type of securitization. As of December 31, 2021, and December 31, 2020 all such collateralization and coverage tests in the CLOs we consolidate were met. If the duration of the COVID-19 pandemic continues to prolong, its impact on our borrowers and their tenants could result in a sustained deterioration in a material amount of assets and may impact these tests. The carrying values of the Company's total assets and liabilities related to LFT CRE 2021-FL1, Ltd. at December 31, 2021 and Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. at December 31, 2020 included the following VIE assets and liabilities: ASSETS December 31, 2021 December 31, 2020 Cash, cash equivalents and restricted cash $ 3,530,006 $ 57,999,396 Accrued interest receivable 3,941,695 1,955,709 Investment related receivable 22,400,000 — Loans held for investment 974,025,294 531,363,401 Total Assets $ 1,003,896,995 $ 591,318,506 LIABILITIES Accrued interest payable $ 607,892 $ 351,877 Collateralized loan obligations (1) 826,782,543 463,060,090 Total Liabilities $ 827,390,435 $ 463,411,967 Equity 176,506,560 127,906,539 Total liabilities and equity $ 1,003,896,995 $ 591,318,506 (1) The stated maturity of the collateral loan obligations per the terms of the underlying collateralized loan obligation agreement is June 14, 2039 for LFT CRE 2021-FL1, Ltd., August 15, 2034 for Hunt CRE 2017-FL1, Ltd. and August 15, 2028 for Hunt CRE 2018-FL2, Ltd. The following tables present certain loan and borrowing characteristics of LFT CRE 2021-FL1, Ltd. as of December 31, 2021 and Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd.as of December 31, 2020: As of December 31, 2021 Collateralized Loan Obligations Count Principal Value Carrying Value (1) Wtd. Avg. Coupon Collateral (loan investments) 64 974,069,994 974,025,294 L + 3.42% Financings provided 1 833,750,000 826,782,543 L + 1.43% As of December 31, 2020 Collateralized Loan Obligations Count Principal Value Carrying Value (1) Wtd. Avg. Coupon Collateral (loan investments) 40 531,363,401 531,363,401 L + 3.50% Financings provided 2 465,316,126 463,060,090 L + 1.44% (1) The carrying value for LFT CRE 2021-FL1, Ltd. is net of debt issuance costs of $6,967,457 for December 31, 2021, Hunt CRE 2017-FL1, Ltd. is net of discount of $207,767 for December 31, 2020, and the carrying value for Hunt CRE 2018-FL2, Ltd. is net of debt issuance costs of $2,048,269 for December 31, 2020. The statement of operations related to LFT 2021-FL1, Ltd., Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. at December 31, 2021 and December 31, 2020 include the following income and expense items: Statements of Operations December 31, 2021 December 31, 2020 Interest income $ 35,506,459 $ 32,831,608 Interest expense 12,178,545 12,047,300 Net interest income $ 23,327,914 $ 20,784,308 Less: Loss on extinguishment of debt $ 1,663,926 $ — General and administrative fees 308,718 675,624 Net income $ 21,355,270 $ 20,108,684 |
RESTRICTED CASH
RESTRICTED CASH | 12 Months Ended |
Dec. 31, 2021 | |
Cash and Cash Equivalents [Abstract] | |
RESTRICTED CASH | RESTRICTED CASHLFT CRE 2021-FL1, Ltd. is actively managed with an initial reinvestment period of 30 months that expires in December 2023. As loans payoff or mature, as applicable, during this reinvestment period, cash received is restricted and intended to be reinvested within LFT CRE 2021-FL1, Ltd. in accordance with the terms and conditions of its respective governing agreement. |
SECURED TERM LOAN
SECURED TERM LOAN | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
SECURED TERM LOAN | SECURED TERM LOAN On January 15, 2019, the Company, together with its FOAC and Hunt CMT Equity subsidiaries (together with the Company, the "Credit Parties"), entered into the Secured Term Loan, as amended on February 13, 2019 and July 9, 2020 and April 21, 2021 with the lenders party thereto and Cortland Capital Market Services, LLC, as administrative agent (in such capacity, the "Agent"), providing for a term facility ("Credit Agreement") to be drawn in an aggregate principal amount of $40.25 million with a maturity of 6 years. On February 14, 2019, the Company drew on the Secured Term Loan in the aggregate principal amount of $40.25 million generating net proceeds of $39.2 million. The outstanding balance of the Secured Term Loan in the table below is presented gross of deferred financing costs ($904,498 at December 31, 2021 and $693,802 at December 31, 2020). As of December 31, 2021 and December 31, 2020, the outstanding balance and total commitment under the Credit Agreement consisted of the following: December 31, 2021 December 31, 2020 Outstanding Balance Total Commitment Outstanding Balance Total Commitment Secured Term Loan $ 47,750,000 $ 47,750,000 $ 40,250,000 $ 40,250,000 Total $ 47,750,000 $ 47,750,000 $ 40,250,000 $ 40,250,000 The borrowings under the Secured Term Loan are joint and several obligations of the Credit Parties. In addition, the Credit Parties' obligations under the Secured Term Loan are secured by substantially all the assets of the Credit Parties through pledge and security documentation. Amounts advanced under the Secured Term Loan are subject to compliance with a borrowing base comprised of assets of the Credit Parties and certain of their subsidiaries, and include senior and subordinated CRE mortgage loans, preferred equity in CRE assets (directly or indirectly), CRE construction mortgage loans and certain types of equity interests (the "Eligible Assets"). Borrowings under the Secured Term Loan bear interest at a fixed rate of 7.25% for the six-year period following the initial draw-down, which is subject to step up by 0.25% for the first four months after the sixth anniversary of the borrowing of the Senior Secured Term Loan, then by 0.375% for the following four months, then by 0.50% for the last four months until maturity. In response to the continued COVID-19 pandemic, on July 9, 2020, the Company entered into the Second Amendment to the Credit and Guaranty Agreement. This amendment provides the Company with additional flexibility to effectively manage any potential borrower distress related to COVID-19 that were not originally contemplated in loan documentation. On April 21, 2021, the Company, together with its Credit Parties, entered into an amendment (the "Third Amendment") to the Credit and Guaranty Agreement. The amendment, among other things, (i) provides the Company with an incremental secured term loan in the aggregate principal amount of $7.5 million; (ii) extends the maturity date of the Secured Term Loan from February 14, 2025 to February 14, 2026; (iii) amends certain asset concentration limits and (iv) amends certain financial covenants. On May 5, 2021 the Third Amendment became effective. On August 23, 2021, the Company drew down the $7.5 million incremental secured term loan. The Credit Agreement contains affirmative and negative covenants binding the Company and its subsidiaries that are customary for credit facilities of this type, including, but not limited to: minimum asset coverage ratio; minimum unencumbered assets ratio; maximum total net leverage ratio, minimum tangible net worth; and an interest charge coverage ratio. As of December 31, 2021 and December 31, 2020, we were in compliance with these covenants. If the duration of the COVID-19 pandemic continues to prolong, its impact on our borrowers and their tenants could result in a sustained deterioration in a material amount of assets and may impact these covenants. |
MSRs
MSRs | 12 Months Ended |
Dec. 31, 2021 | |
Mortgage Servicing Rights MSR Disclosure [Abstract] | |
MSRs | MSRs As of December 31, 2021, the Company retained the servicing rights associated with an aggregate principal balance of $91,727,121 of residential mortgage loans that the Company had previously transferred to residential mortgage loan securitization trusts. The Company’s MSRs are held and managed at the Company’s TRS, and the Company employs two licensed sub-servicers to perform the related servicing activities. The following table presents the Company’s MSR activity as of the years ended December 31, 2021 and December 31, 2020: December 31, 2021 December 31, 2020 Balance at beginning of year $ 919,678 $ 2,700,207 Changes in fair value due to: Realized loss (10,910) — Changes in valuation inputs or assumptions used in valuation model 109,663 (634,824) Other changes to fair value (1) (466,434) (1,145,705) Balance at end of year $ 551,997 $ 919,678 Loans associated with MSRs (2) $ 91,727,121 $ 191,799,159 MSR values as percent of loans (3) 0.60 % 0.48 % (1) Amounts represent changes due to realization of expected cash flows and prepayment of principal of the underlying loan portfolio. (2) Amounts represent the unpaid principal balance of loans associated with MSRs outstanding at December 31, 2021 and December 31, 2020, respectively. (3) Amounts represent the carrying value of MSRs at December 31, 2021 and December 31, 2020, respectively divided by the outstanding balance of the loans associated with these MSRs. The following table presents the servicing income recorded on the Company’s consolidated statements of operations for the years ended December 31, 2021 and December 31, 2020: Year Ended December 31, 2021 Year Ended December 31, 2020 Servicing income, net $ 398,939 $ 709,565 Income from MSRs, net $ 398,939 $ 709,565 |
FAIR VALUE
FAIR VALUE | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | FAIR VALUE The following tables summarize the valuation of the Company’s assets and liabilities carried at fair value on a recurring basis within the fair value hierarchy levels as of December 31, 2021 and December 31, 2020: December 31, 2021 Quoted prices in active markets for identical assets Level 1 Significant other observable inputs Level 2 Unobservable inputs Level 3 Balance as of December 31, Assets: Mortgage servicing rights $ — $ — $ 551,997 $ 551,997 Total $ — $ — $ 551,997 $ 551,997 December 31, 2020 Quoted prices in active markets for identical assets Level 1 Significant other observable inputs Level 2 Unobservable inputs Level 3 Balance as of December 31, Assets: Mortgage servicing rights $ — $ — $ 919,678 $ 919,678 Total $ — $ — $ 919,678 $ 919,678 As of December 31, 2021 and December 31, 2020, the Company had $551,997 and $919,678, respectively, in Level 3 assets. The Company’s Level 3 assets are comprised of MSRs. For more detail about Level 3 assets, also see Notes 2 and 8. The following table provides quantitative information about the significant unobservable inputs used in the fair value measurement of the Company’s MSRs classified as Level 3 fair value assets at December 31, 2021 and December 31, 2020: As of December 31, 2021 Valuation Technique Unobservable Input Range Weighted Average Discounted cash flow Constant prepayment rate 10.8 - 29.7% 19.1 % Discount rate 12.0 % 12.0 % As of December 31, 2020 Valuation Technique Unobservable Input Range Weighted Average Discounted cash flow Constant prepayment rate 12.4 - 28.0% 21.6 % Discount rate 12.0 % 12.0 % As discussed in Note 2, GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practicable to estimate that value. The following table details the carrying amount, face amount and fair value of the financial instruments described in Note 2: December 31, 2021 Carrying Value Face Amount Fair Value Assets: Cash and cash equivalents $ 14,749,046 $ 14,749,046 $ 14,749,046 Restricted cash 3,530,006 3,530,006 3,530,006 Commercial mortgage loans held-for-investment 1,001,825,294 1,001,869,994 1,001,473,884 Total $ 1,020,104,346 $ 1,020,149,046 $ 1,019,752,936 Liabilities: Collateralized loan obligations $ 826,782,543 $ 833,750,000 $ 834,425,625 Secured term loan 46,845,502 47,750,000 50,986,154 Total $ 873,628,045 $ 881,500,000 $ 885,411,779 December 31, 2020 Carrying Value Face Amount Fair Value Assets: Cash and cash equivalents $ 11,375,960 $ 11,375,960 $ 11,375,960 Restricted cash 57,999,396 57,999,396 57,999,396 Commercial mortgage loans held-for-investment 547,345,334 547,345,334 547,134,755 Total $ 616,720,690 $ 616,720,690 $ 616,510,111 Liabilities: Collateralized loan obligations $ 463,060,090 $ 465,316,126 $ 458,094,412 Secured term loan $ 39,556,198 $ 40,250,000 $ 44,514,373 Total $ 502,616,288 $ 505,566,126 $ 502,608,785 Estimates of cash and cash equivalents and restricted cash are measured using quoted prices, or Level 1 inputs. Estimates of the fair value of collateralized loan obligations are measured using observable, quoted market prices, in active markets, or Level 2 inputs. All other fair value significant estimates are measured using unobservable inputs, or Level 3 inputs. See Note 2 for further discussion regarding fair value measurement of certain of our assets and liabilities. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Management and Incentive Fee The Company is externally managed and advised by the Manager and through January 3, 2020 by HIM, our prior manager. Pursuant to the terms of the prior management agreement in effect for the year ended December 31, 2019, the Company paid the prior manager a management fee equal to 1.5% of Stockholders' Equity per annum, calculated and payable quarterly (0.375% per quarter) in arrears. For purposes of calculating the management fee, the Company’s stockholders’ equity included the sum of the net proceeds from all issuances of the Company’s equity securities since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus the Company’s retained earnings at the end of the most recently completed calendar quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods), less any amount that the Company paid for repurchases of the Company’s common stock since inception, and excluding any unrealized gains, losses or other items that did not affect realized net income (regardless of whether such items were included in other comprehensive income or loss, or in net income). This amount was adjusted to exclude one-time events pursuant to changes in GAAP and certain non-cash items after discussions between the manager and the Company’s independent directors and approval by a majority of the Company’s independent directors. To the extent an asset impairment reduced the Company’s retained earnings at the end of any completed calendar quarter, it would reduce the management fee for such quarter. The Company’s stockholders’ equity for the purposes of calculating the management fee could be greater than the amount of stockholders’ equity shown on the consolidated financial statements. Additionally, under the terms of the prior management agreement, starting in the first full calendar quarter following January 18, 2019, the Company was also required to pay the Manager a quarterly incentive fee equal to 20% of the excess of Core Earnings (as defined in the management agreement) over the product of (i) Stockholders' Equity as of the end of such fiscal quarter, and (ii) 8% per annum. On January 3, 2020, the management agreement in effect for the year ended December 31, 2019 was terminated, and a new management agreement with the Manager became effective. Pursuant to the terms of the new management contract, the Company is required to pay the Manager an annual base management fee of 1.50% of Stockholders' Equity (as defined in the management agreement), payable quarterly (0.375% per quarter) in arrears. The definition of stockholders' equity in the new management agreement is materially unchanged from the definition in the prior management agreement. Additionally, starting in the first full calendar quarter following January 3, 2020, the Company is also required to pay the Manager a quarterly incentive fee equal to 20% of the excess of Core Earnings (as defined in the management agreement) over the product of (i) the Stockholders' Equity as of the end of such fiscal; quarter, and (ii) 8% per annum. For the year ended December 31, 2021, the Company incurred management fees of $2,909,368 (2020: $2,351,562), recorded as "Management and incentive fees" in the consolidated statement of operations, of which $796,000 (2020: $588,000) was accrued but had not been paid, included in "Fees and expenses payable to Manager" in the consolidated balance sheets. For the year ended December 31, 2021, the Company incurred incentive fees of $132,232 (2020: $172,577), recorded as "Management and incentive fees" in the consolidated statement of operations, of which $132,232 (2020: $172,577) was accrued but had not yet been paid, included in "Fees and expenses payable to Manager" in the consolidated balance sheets. Expense Reimbursement Pursuant to the management agreement, the Company is required to reimburse the Manager for operating expenses related to the Company incurred by the Manager, including accounting, auditing and tax services, technology and office facilities, operations, compliance, legal and filing fees, and miscellaneous general and administrative costs, including the cost of non-investment management personnel of the Manager who spend all or a portion of their time managing the Company’s affairs. The Manager has agreed to certain limitations on manager expense reimbursement from the Company. On March 18, 2019, the Company entered into a support agreement with the prior manager, pursuant to which, the prior manager agreed to reduce the reimbursement cap by 25% per annum (subject to such reduction not exceeding $568,000 per annum) until such time as the aggregate support provided thereunder equaled approximately $1.96 million. Pursuant to the terms of the new management agreement, the terms of the support agreement are unchanged. For the year ended December 31, 2021, the Company incurred reimbursable expenses of $2,038,130 (2020: $1,644,886) recorded as "operating expenses reimbursable to Manager" in the consolidated statement of operations, of which $724,333 (2020: $395,763) was accrued but had not yet been paid, included in "fees and expenses payable to Manager" in the consolidated balance sheets. Per the management agreement, any exit fees waived by the Company as a result of permanent financing by the Manager or any of its affiliates shall result in a reduction to reimbursed expenses by an amount equal to 50% of the amount of any such waived exit fee. For the year ended December 31, 2021, the Company waived $302,952 of reimbursable expense and for the year ended December 31, 2020, the Company waived $118,786 of reimbursable expense. Manager Equity Plan The Company has in place a Manager Equity Plan under which the Company may compensate the Manager and the Company's independent directors or consultants, or officers whom it may employ in the future. In turn, the Manager, in its sole discretion, grants such awards to its directors, officers employees or consultants. The Company is able to issue under the Manager Equity Plan up to 3.0% of the total number of issued and outstanding shares of common stock (on a fully diluted basis) at the time of each award. Stock based compensation arrangements may include incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock awards and other awards based on the Company's common stock. The following table summarizes the activity related to restricted common stock for the years ended December 31, 2021 and 2020: Year Ended December 31, 2021 2020 Shares Weighted Average Grant Date Fair Market Value Shares Weighted Average Grant Date Fair Market Value Outstanding Unvested Shares at Beginning of Period 4,500 $ 2.60 4,500 $ 3.33 Granted 4,500 4.18 4,500 2.60 Vested (4,500) 2.60 (4,500) 3.33 Outstanding Unvested Shares at End of Period 4,500 $ 4.18 4,500 $ 2.60 For the year ended December 31, 2021, the Company recognized compensation expense related to restricted common stock of $15,608 (2020: $20,292). The Company has unrecognized compensation expense of $8,555 as of December 31, 2021 (2020: $5,353) for unvested shares of restricted common stock. As of December 31, 2021, the weighted average period for which the unrecognized compensation expense will be recognized is 5.5 months. OREC Structured Finance Co, LLC dba Lument Structured Finance During the year ended December 31, 2021, (a) Hunt CRE 2018-FL2, Ltd. purchased nine loans with an aggregate unpaid principal balance of $102.7 million at par from OREC Structured Finance, LLC d/b/a Lument Structured Finance ("LSF"), an affiliate of our Manager; (b) Lument Commercial Mortgage Trust ("LCMT") purchased two loans with an aggregate unpaid principal balance of $21.2 million and twenty funded loan participations with an aggregate unpaid principal balance of $42.3 million at par from LSF and (c) LFT CRE 2021-FL1, Ltd. purchased forty-four loans with an aggregate unpaid principal balance of $700.1 million at par from LSF. During the year ended December 31, 2020, (a) Hunt CRE 2017-FL1, Ltd. purchased two loans with an aggregate unpaid principal balance of $31.9 million at par from LSF; (b) Hunt CRE 2018-FL2, Ltd. purchased two loans with an aggregate unpaid principal balance of $14.4 million at par from LSF and (c) Hunt CRE 2017-FL1, Seller, LLC funded fifty-eight loan participations with an aggregate unpaid principal balance of $11.2 million at par from LSF. OREC 2018-CRE1, Ltd. During the year ended December 31, 2021, LFT CRE 2021-FL1, Ltd. purchased nine loans with an aggregate unpaid principal balance of $112.5 million at a premium of $0.35 million from OREC 2018-CRE1, Ltd., an affiliate of our Manager. ORIX Real Estate Holdings, LLC During the year ended December 31, 2021, LFT CRE 2021-FL1, Ltd. purchased eight loans with an aggregate unpaid principal balance of $4.6 million at a premium of $0.02 million from ORIX Real Estate Holdings, LLC, an affiliate of our Manager. ORIX Real Estate Capital, LLC ORIX Real Estate Capital, LLC d/b/a Lument Capital ("OREC"), an affiliate of our Manager, was appointed the servicer and special servicer with respect to mortgage assets for LFT CRE 2021-FL1, Ltd. Lument IM Lument IM was appointed as the collateral manager with respect to LFT CRE 2021-FL1. Ltd. Lument IM has agreed to waive all its entitlements to collateral management fees for so long as Lument IM or an affiliate is the collateral manager and also the manager of Lument Finance Trust, Inc. Hunt Companies, Inc. One of the Company's directors is also Chief Executive Officer and President of Hunt Companies, Inc. ("Hunt") and is a member of the Hunt Board of Directors, with which affiliates of the Manager have a commercial business relationship. The Manager's affiliates may from time to time sell commercial mortgage loans to Hunt or various of its subsidiaries and affiliates. |
GUARANTEES
GUARANTEES | 12 Months Ended |
Dec. 31, 2021 | |
Guarantees [Abstract] | |
GUARANTEES | GUARANTEES The Company, through FOAC, is party to customary and standard loan repurchase obligations in respect of residential mortgage loans that it has sold into securitizations or to third parties, to the extent it is determined that there has been a breach of standard seller representations and warranties in respect of such loans. To date, the Company has not been required to repurchase any loan due to a claim of breached seller reps and warranties. In July 2016, the Company announced that it would no longer aggregate and securitize residential mortgage loans; however, the Company sought to capitalize on its infrastructure and knowledge to become the provider of seller eligibility review and backstop services to MAXEX. MAXEX’s wholly owned clearinghouse subsidiary, MAXEX Clearing LLC, formerly known as Central Clearing and Settlement LLC ("MAXEX Clearing LLC") functions as the central counterparty with which buyers and sellers transact, and acts as the buyer’s counterparty for each transaction. Pursuant to a Master Agreement dated June 15, 2016, as amended August 29, 2016, January 30, 2017 and June 27, 2018, among MAXEX, MAXEX Clearing LLC and FOAC (the "Master Agreement") FOAC provided seller eligibility review services under which it reviewed, approved and monitored sellers that sold loans via MAXEX Clearing LLC. Once approved, and having signed the standardized loan sale contract, the seller sold loan(s) to MAXEX Clearing LLC, and MAXEX Clearing LLC simultaneously sold loan(s) to the buyer on substantially the same terms including representations and warranties. The Master Agreement was terminated on November 28, 2018 (the "MAXEX Termination Date"). To the extent that a seller approved by FOAC prior to the MAXEX Termination Date failed 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 the backstop guarantee is the earlier of the contractual maturity of the underlying mortgage, or its earlier 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 obligation to provide further seller eligibility review and backstop guarantee services terminated on the MAXEX Termination Date. 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 $20,000,000 and (b) minimum available liquidity equal to the greater of (x) $5,000,000 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. The maximum potential amount of future payments that the Company could be required to make under the outstanding backstop guarantees, which represents the outstanding balance of all underlying mortgage loans sold by approved sellers to MAXEX Clearing LLC, was estimated to be $348.0 million and $860.5 million as of December 31, 2021 and December 31, 2020, respectively, although the Company believes this amount is not indicative of the Company's actual potential losses. Amounts payable in excess of the outstanding principal balance of the related mortgage, for example any premium paid by the loan buyer or costs associated with collecting mortgage payments, are not currently estimable. Amounts that may become payable under the backstop guarantee are normally recoverable from the related seller, as well as from any payments received on (or from the sale of property securing) the mortgage loan repurchased and, as noted above, MAXEX Clearing LLC has assumed all of FOAC's obligations in respect of its backstop guarantees. Pursuant to the Master Agreement, FOAC is required to maintain minimum available liquidity equal to the greater of (i) $5.0 million or (ii) 0.10% of the aggregate unpaid principal balance of loans backstopped by FOAC, either directly or through a credit support agreement acceptable by MAXEX. As of December 31, 2021, the Company was not aware of any circumstances expected to lead to the triggering of a backstop guarantee obligation. In addition, the Company enters into certain contracts that contain a variety of indemnification obligations, principally with the Manager, brokers and counterparties to repurchase agreements. The maximum potential future payment amount the Company could be required to pay under these indemnification |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Impact of COVID-19 As further discussed in Note 2, the full extent of the impact of COVID-19 on the global economy generally, and our business in particular, remains uncertain. As of December 31, 2021, no contingencies have been recorded on our balance sheet as a result of COVID-19, however as the global pandemic continues, it may have long-term impacts on our financial condition, results of operations and cash flows. Refer to Note 2 for further discussion of COVID-19. Unfunded Commitments As of December 31, 2021, LSF, an affiliate of the Manager, had $78.4 million of unfunded commitments related to loans held in LFT 2021-FL1, Ltd. These commitments are not reflected in the Company's consolidated balance sheets. As of December 31, 2021, LSF, an affiliate of the Manager, had $4.7 million of unfunded commitments related to loans held in LCMT. These commitments are not reflected in the Company's consolidated balance sheets. As of December 31, 2020, LSF, an affiliate of the Manager, had $5.6 million in funded commitments and $24.6 million of unfunded commitments related to loans held in Hunt CRE 2017-FL1, Ltd. that the Company could be required to purchase from LSF under the Future Funding Participation Transfer. These commitments are not reflected on the Company's consolidated balance sheets. As of December 31, 2020, LSF, an affiliate of the Manager, had $25.8 million of unfunded commitments related to loans held in Hunt CRE 2018-FL2, Ltd. These commitments are not reflected on the Company's consolidated balance sheets. Future loan fundings comprise funding for capital improvements, leasing costs, interest and carry costs, and fundings will vary depending on the progress of the business plan and cash flows at the mortgage assets. Therefore, the exact timing and amounts of such future loan fundings are uncertain and will depend on the current and future performance of the underlying mortgage assets. Due to the ongoing COVID-19 pandemic, the progress of capital improvements and leasing is anticipated to be slower than otherwise expected, and, as such the pace of future funding relating to these capital needs may be commensurately lower. |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
EQUITY | EQUITY Common Stock The Company has 450,000,000 authorized shares of common stock, par value $0.01 per share, with 24,947,883 and 24,943,383 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively. On January 3, 2020, the Company issued 1,246,719 shares of common stock to an affiliate of the Manager in a private placement at a purchase price of $4.61 per share resulting in aggregate net proceeds of $5.7 million. Stock Repurchase Program On December 15, 2015, the Company’s board of directors authorized a stock repurchase program (or the "Repurchase Program"), to repurchase up to $10 million of the Company’s outstanding common stock. Shares of the Company’s common stock may be purchased in the open market, including through block purchases, or through privately negotiated transactions, or pursuant to any trading plan that may be adopted in accordance with Rule 10b18(b)(1) of the Securities Exchange Act of 1934, as amended. The timing, manner, price and amount of any repurchases will be determined at the Company’s discretion and the program may be suspended, terminated or modified at any time for any reason. Among other factors, the Company intends to only consider repurchasing shares of the Company’s common stock when the purchase price is less than the Company’s estimate of the Company’s current net asset value per common share. Shares of common stock repurchased by the Company under the Repurchase Program, if any, will be canceled and, until reissued by the Company, will be deemed to be authorized but unissued shares of the Company’s common stock. Through December 31, 2021, the Company had repurchased 126,856 shares of common stock at a weighted average share price of $5.09. No share repurchases have been made since January 19, 2016. As of December 31, 2021, $9.4 million of common stock remained authorized for future share repurchase under the Repurchase Program. Preferred Stock At December 31, 2021 and December 31, 2020, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $0.01 per share, with 2,400,000 shares of Series A Preferred Stock issued and outstanding as of December 31, 2021, and no shares of preferred stock issued and outstanding at December 31, 2020. Voting and other rights and preferences will be determined by the Company's Board of Directors upon issuance. On May 5, 2021, LFT issued 2,400,000 shares of Series A Preferred Stock, and received net proceeds, after underwriting discounts and commissions but before offering expenses payable by the Company, of $58.1 million. The Series A Preferred Stock is redeemable, at LFT's option, at a liquidation preference price of $25.00 per share plus accrued dividends commencing on May 5, 2026. Dividends on Series A Preferred Stock are payable quarterly in arrears beginning on July 15, 2021. Distributions to stockholders For the 2021 taxable year to date, the Company has declared dividends to common stockholders totaling $8,980,832, or $0.36 per share. The following table presents cash dividends declared by the Company on its common stock for the year ended December 31, 2021: Declaration Date Record Date Payment Date Dividend Amount Cash Dividend Per Weighted Average Share March 15, 2021 March 31, 2021 April 15, 2021 $ 2,244,904 $ 0.090 June 15, 2021 June 30, 2021 July 15, 2021 $ 2,245,309 $ 0.090 September 15, 2021 September 30, 2021 October 15, 2021 $ 2,245,310 $ 0.090 December 15, 2021 December 31, 2021 January 15, 2022 $ 2,245,309 $ 0.090 The following table presents cash dividends declared by the Company on its Series A Preferred stock for the year ended December 31, 2021: Declaration Date Record Date Payment Date Dividend Amount Cash Dividend Per Weighted Average Share June 15, 2021 July 1, 2021 July 15, 2021 $ 918,750 $ 0.38281 September 15, 2021 October 1, 2021 October 15, 2021 $ 1,181,250 $ 0.49219 December 15, 2021 January 1, 2022 January 15, 2022 $ 1,181,250 $ 0.49219 Non-controlling interests |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE In accordance with ASC 260, outstanding instruments that contain rights to non-forfeitable dividends are considered participating securities. The Company is required to apply the two-class method or the treasury stock method of computing basic and diluted earnings per share when there are participating securities outstanding. The Company has determined that outstanding unvested restricted shares issued under the Manager Equity Plan are participating securities, and they are therefore included in the computation of basic and diluted earnings per share. The following tables provide additional disclosure regarding the computation for the years ended December 31, 2021 and December 31, 2020: Year Ended December 31, 2021 Year Ended December 31, 2020 Net income $ 10,527,222 $ 8,449,770 Less dividends expense: Common stock $ 8,980,832 $ 9,103,997 Preferred stock 3,112,500 15,000 12,093,332 9,118,997 Undistributed earnings (deficit) $ (1,566,110) $ (669,227) Unvested Share-Based Payment Awards Common Stock Unvested Share-Based Payment Awards Common Stock Distributed earnings $ 0.36 $ 0.36 $ 0.37 $ 0.37 Undistributed earnings (deficit) $ — $ (0.06) — (0.03) Total $ 0.36 $ 0.30 $ 0.37 $ 0.34 For the years ended December 31, 2021 2020 Basic weighted average shares of common stock outstanding 24,941,324 24,930,079 Weighted average of non-vested restricted stock 4,500 4,426 Diluted weighted average shares of common stock outstanding 24,945,824 24,934,505 |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING The Company invests in a portfolio comprised of commercial mortgage loans and other mortgage-related investments and operates as a single reporting segment. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company has elected to be treated as a REIT under federal income tax laws. As a REIT, the Company must generally distribute annually at least 90% of our taxable income, subject to certain adjustments and excluding any net capital gain, in order for U.S. federal income not to apply to our earnings that we distribute. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our net taxable income, we will be subject to U.S. federal income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less that a minimum amount specified under U.S. federal tax laws. Certain activities of the Company that produce prohibited income are conducted through a TRS, FOAC, to protect REIT election and FOAC is therefore subject to tax as a U.S. C-Corporation. To maintain our REIT election, the Company must continue to meet certain ownership, asset and income requirements set forth in the Code. As further discussed below, the Company may be subject to non-income taxes on excess amounts of assets or income that cause a failure of any of the REIT testing requirements. As of December 31, 2021 and 2020, we were in compliance with all REIT requirements. The following table presents our provision for income taxes: Year Ended December 31, 2021 2020 Deferred tax (benefit) $ 77,894 $ (476,248) Provision for income tax (benefit) $ 77,894 $ (476,248) The following is a reconciliation of our effective income tax rate as a percentage of pre-tax income to the U.S. federal statutory rate, for the years ended December 31, 2021 and 2020: Year Ended December 31, 2021 2020 U.S. federal statutory income tax 21.0 % 21.0 % REIT income not subject to federal income tax (21.4) % (24.6) % State and local income taxes, net of federal tax benefit (0.2) % (1.6) % Return to provision (0.1) % (0.8) % Effective income tax rate (0.7) % (6.0) % The differences between the Company's statutory rate and effective rate are largely determined by the amount of income subject to tax by the Company's TRS subsidiary. The Company expects that its future effective tax rate will be determined in a similar manner. As of December 31, 2021 and 2020, the Company's net deferred tax assets were $1.3 million and $1.4 million, respectively, and are included in other assets in the Company's consolidated balance sheets. The Company believes it is more likely than not that the deferred tax assets will be realized in the future. Realization of the net deferred tax assets is dependent on our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary difference. The amount of deferred tax assets considered realizable is subject to adjustment in future periods of future taxable income change. The TRS has a deferred tax asset , comprised of the following: As of December 31, 2021 As of December 31, 2020 Accumulated net operating losses of TRS $ 985,917 $ 993,683 Mortgage servicing rights $ 261,440 $ 319,048 Capitalized transaction costs $ 93,903 $ 106,423 Net non-current deferred tax asset $ 1,341,260 $ 1,419,154 At December 31, 2021, and 2020, the TRS had net operating loss carryforwards for federal income tax purposes of $3.2 million and $3.3 million, which are available to offset future taxable income and begin expiring in 2034. As of December 31, 2021, the Company has concluded that there are no material uncertain tax positions requiring recognition in the Company's consolidated financial statements. As of December 31, 2021, tax years 2018 through 2021 remain subject to examination by taxing authorities. REIT Qualification |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On February 22, 2022, the Company closed a transferable common stock rights offering. The Company issued and sold 27,277,269 shares of common stock. for gross proceeds of approximately $83.5 million On February 22, 2022, the Company, together with its Credit Parties, entered into an amendment (the "Fourth Amendment") to the Credit and Guaranty Agreement. This amendment waives the step-down provisions of the maximum total net leverage financial covenant in connection with the February 2022 rights offering. |
Schedule IV - Mortgage Loans on
Schedule IV - Mortgage Loans on Real Estate | 12 Months Ended |
Dec. 31, 2021 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract] | |
Mortgage Loans on Real Estate | Schedule IV – Mortgage Loans on Real Estate As of December 31, 2021 Type of Loan/Borrower Senior Mortgage Loans (1) Description/Location Interest (2) Payment Rates Extended Maturity Date (3) Periodic Payment Terms (4) Prior Liens (5) Unpaid Principal Balance Carrying Amount of Loans Senior Loans in excess of 3% of the carrying amount of total loans Borrower A Multifamily /VA L+4.30% 2024 I/O $ — $ 36,781,588 $ 36,781,588 Borrower B Multifamily / NJ L+4.05% 2026 I/O — 34,690,000 34,690,000 Borrower C Multifamily / GA L+3.25% 2024 I/O — 33,500,000 33,500,000 Borrower D Multifamily / TN L+3.65% 2026 I/O — 33,360,000 33,360,000 Borrower E Multifamily /FL L+2.75% 2026 I/O — 30,576,666 30,576,666 Senior Loans less than 3% of the carrying amount of total loans Senior Loan Multifamily / Diversified L+2.90% - 7.50% 2022 - 2027 I/O $ — $ 752,255,325 $ 752,272,465 Senior Loan Office / IL L+3.75% 2023 I/O — 11,748,199 11,748,199 Senior Loan Retail / TX L+4.10% 2023 I/O — 17,172,623 17,172,623 Senior Loan Self-Storage / Diversified L+3.60% - 4.75% 2024 - 2025 I/O — 51,785,593 51,723,753 Total senior loans $ — $ 1,001,869,994 $ 1,001,825,294 (1) Includes senior mortgage loans and pari passu participations in senior mortgage loans. (2) L = one-month LIBOR rate (3) Extended maturity date assumes all extension options are exercised (4) I/O = interest only (5) Represents only third party liens 1. Reconciliation of Mortgage Loans on Real Estate The following table reconciles activity regarding mortgage loans on real estate for the years ended: 2021 2020 Balance at January 1, $ 547,345,334 $ 635,260,420 Additions during period: Mortgage loans purchased 983,694,326 57,601,572 Deductions during period Mortgage loan repayments (528,802,705) (145,516,658) Accretion of purchase discount $ 46,088 $ — Amortization of purchase premium $ (457,749) $ — Balance at December 31, $ 1,001,825,294 $ 547,345,334 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These financial statements have been prepared in accordance with U.S. GAAP and are expressed in United States dollars. The consolidated financial statements of the Company include the accounts of its subsidiaries. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements of the Company include the accounts of the Company and all subsidiaries which it controls (i) through voting or similar rights or (ii) by means other than voting rights if the Company is the primary beneficiary of a variable interest entity ("VIE"). Entities which the Company does not control and entities which are VIEs in which the Company is not the primary beneficiary are accounted for under the equity method or other appropriate GAAP. All significant intercompany transactions have been eliminated on consolidation. |
VIEs | VIEs An entity is considered a VIE when any of the following applies: (1) the equity investors (if any) lack one or more essential characteristics of a controlling financial interest; (2) the equity investment at risk is not sufficient to finance that entity's activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined as the entity having both the following characteristics: (1) the power to direct activities that, when taken together, most significantly impact the VIE performance; and (2) the obligation to absorb losses and right to receive returns from the VIE that would be significant to the VIE. The Company evaluates quarterly its junior retained notes and preferred shares of LFT CRE 2021-FL1, Ltd. for potential consolidation, and prior to their unwinding in the second quarter of 2021, Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. At December 31, 2021, the Company determined it was the primary beneficiary of LFT CRE 2021-FL1, Ltd. based on its obligation to absorb losses derived from ownership of its preferred shares, and prior to the second quarter of 2021 determined it was the primary beneficiary of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. Accordingly, the Company consolidated the assets, liabilities, income and expenses of the underlying issuing entities. The Company's maximum exposure to loss from collateralized loan obligations ("CLO") was $166,250,000 and $124,046,671 at December 31, 2021 and December 31, 2020. |
Use of Estimates | Use of Estimates The financial statements have been prepared on the accrual basis of accounting in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires the Company to make a number of significant estimates. As of December 31, 2021, the novel coronavirus, or COVID-19, pandemic is ongoing. During 2020, the COVID-19 pandemic created disruption in global supply chains, increased rates of unemployment and adversely impacted many industries, including industries related to the collateral underlying certain of our loans. In 2021, the global economy has, with certain setbacks, begun reopening and wider distribution of vaccines will likely encourage greater economic activity. Nonetheless, the recovery could remain uneven, particularly given uncertainty with respect to the distribution and acceptance of the vaccines and their effectiveness with respect to new variants of the virus, including the Delta and Omicron variants which are believed to be more contagious than previous variants of the virus. We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of December 31, 2021, however uncertainty over the ultimate impact of COVID-19 on the global economy generally, and our business in particular, makes any estimates and assumptions as of December 31, 2021 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results could differ from its estimates and the differences may be material. |
Cash and Cash Equivalents and Restricted Cash | 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. |
Deferred Offering Costs | 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 | Fair Value Measurements The "Fair Value Measurements and Disclosures" Topic 820 of the FASB, or ASC 820, defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurement under GAAP. Specifically, the guidance defines fair value based on exit price, or the price that would be received upon the sale of an asset or the transfer of a liability in an orderly transaction between market participants at measurement date. ASC 820 specifies a hierarchy of valuation techniques based on the inputs used in measuring fair value. Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable market data from independent sources, while unobservable inputs reflect the Company's market assumptions. The three levels are defined as follows: • Level 1 Inputs - Quoted prices for identical instruments in active markets • Level 2 Inputs - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. • Level 3 Inputs - Instruments with primarily unobservable value drivers. Pursuant to ASC 820 we disclose fair value information about financial instruments, which are not otherwise reported at fair value in our consolidated balance sheet, to the extent it is practicable to estimate fair value for those certain instruments. The following methods and assumptions are used to estimate the fair value of each class of financial instrument, for which it is practicable to estimate that value: • Cash and cash equivalents : The carrying amount of cash and cash equivalents approximates fair value. • Restricted cash : The carrying amount of restricted cash approximates fair value. • Commercial mortgage loans : The Company determines the fair value of commercial mortgage loans by utilizing a pricing model based on discounted cash flow methodologies using discount rates, which reflect current market interest rates that would be offered for loans with similar characteristics and credit quality. Additionally, the Company may record fair value adjustments on a non-recurring basis when it has determined it necessary to record a specific impairment reserve or charge-off against a loan and the Company measures such specific reserve or charge-off using the fair value of the loan's collateral. To determine the fair value of loan collateral, the Company employs the income capitalization approach, appraised values, broker opinion of value, sale offers, letters of intention to purchase, or other valuation benchmarks, as applicable, depending upon the nature of such collateral and other relevant market factors. • Mortgage servicing rights : The Company determines the fair value of MSRs from a third-party pricing service on a recurring basis. The third-party pricing service uses common market pricing methods that include using discounted cash flow models to calculate present value, estimated net servicing income and observed market pricing for MSR purchase and sale transactions. The model considers contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. • Collateralized loan obligations : The Company determines the fair value of collateralized loan obligations by utilizing a third-party pricing service. In determining the value of a particular investment, pricing service providers may use market spreads, inventory levels, trade and bid history, as well as market insight from clients, trading desks and global research platform. • Secured term loan : The Company determines the fair value of its secured term loan based on a discounted cash flow methodology. |
Commercial Mortgage Loans Held-for-Investment | Commercial Mortgage Loans Held-for-Investment Commercial mortgage loans held-for-investment represent floating-rate transitional loans and other commercial mortgage loans purchased 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. 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 using the effective interest method, or on a straight line basis when it approximates 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 and interest is reasonably assured under the terms of the underlying loan agreement. As of December 31, 2021, the Company did not hold any loans placed in non-accrual status. Quarterly, the Company assesses the risk factors of each loan classified as held-for-investment and assigns a risk rating based on a variety of factors, including, without limitation, debt-service coverage ratio ("DSCR"), loan-to-value ratio ("LTV"), property type, geographic and local market dynamics, physical condition, leasing and tenant profile, adherence to business plan and exit plan, maturity default risk and project sponsorship. The Company's loans are rated on a 5-point scale, from least risk to greatest risk, respectively, which ratings are described as follows: 1. Very Low Risk : exceeds expectations and is outperforming underwriting or it is very likely that the underlying loan can be refinanced easily in the period's prevailing capital market conditions 2. Low Risk : meeting or exceeding underwritten expectations 3. Moderate Risk : consistent with underwritten expectations or the sponsor may be in the early stages of executing the business plan and the loan structure appropriately mitigates additional risks 4. High Risk : potential risk of default, a loss may occur in the event of default 5. Default Risk : imminent risk of default, a loss is likely in the event of default The Company evaluates each loan rated High Risk or above as to whether it is impaired on a quarterly basis. Impaired loans are individually evaluated based on the Company's quarterly assessment of each loan and assignment of a risk rating. Impairment occurs when the Company determines that the facts and circumstances of the loan deem it probable that the Company will not be able to collect all amounts due in accordance with the contractual terms of the loan. If a loan is considered to be impaired, an allowance is recorded to reduce the carrying value of the loan through a charge to the provision for loan losses. Impairment of these loans, all of which are deemed 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. These valuations require significant judgments, which include assumptions regarding capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, actions of other lenders, and other factors deemed necessary by the Manager. Actual losses, if any, could ultimately differ from estimated losses. |
Mortgage Servicing Rights, at Fair Value | Mortgage Servicing Rights, at Fair Value Mortgage servicing rights ("MSRs") are associated with residential mortgage loans that the Company historically purchased and subsequently sold or securitized. MSRs are held and managed at Five Oaks Acquisition Corp. ("FOAC"), the Company's taxable REIT subsidiary ("TRS"). As the owner of MSRs, the Company is entitled to receive a portion of the interest payments from the associated residential mortgage loan, and is obligated to service, directly or through a subservicer, the associated loan. MSRs are reported at fair value. Residential mortgage loans for which the Company owns the MSRs are directly serviced by two sub-servicers retained by the Company. The Company does not directly service any residential mortgage loans. MSR income is recognized at the contractually agreed upon rate, net of the costs of sub-servicers retained by the Company. If a sub-servicer with which the Company contracts were to default, an evaluation of MSR assets for impairment would be undertaken at that time. |
Collateralized Loan Obligations and Secured Term Loan | Collateralized Loan Obligations Collateralized loan obligations represent third-party liabilities of LFT CRE 2021-FL1, Ltd. as of December 31, 2021 and Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. prior to their unwind date of June 14, 2021 (the "CLOs"). The CLOs are VIEs that the Company has determined it is the primary beneficiary of and accordingly are consolidated in the Company's financial statements, excluding liabilities of the CLOs acquired by the Company that are eliminated on consolidation. The third-party obligations of the CLOs do not have any recourse to the Company as the consolidator of the CLOs. CLOs are carried at their outstanding unpaid principal balances, net of any unamortized discounts or deferred financing costs. Any premiums, discounts or deferred financing costs associated with these liabilities are amortized to interest expense using the effective interest method over the expected average life of the related obligations, or on a straight line basis when it approximates the effective interest method. In the second quarter of 2020, $624,816 in costs related to a contemplated collateralized loan transaction, that were previously deferred as "other assets" in the consolidated balance sheets were expensed as "Other operating expenses" in the statements of operations as a result of abandoning the contemplated transaction due to the then current market environment, which had been impacted by the COVID-19 pandemic. Secured Term Loan The Company and certain of its subsidiaries are party to a $47.75 million credit and guaranty agreement with the lenders referred to therein and Cortland Capital Service LLC, as administrative agent and collateral agent for the lenders (the "Secured Term Loan"). The Secured Term Loan is carried at its unpaid |
Common Stock, Stock Repurchase Program and Preferrd Stock | Common Stock At December 31, 2021, and December 31, 2020, the Company was authorized to issue up to 450,000,000 shares of common stock, par value $0.01 per share. The Company had 24,947,883 and 24,943,383 shares of common stock issued and outstanding at December 31, 2021 and December 31, 2020, respectively. Stock Repurchase Program On December 15, 2015, the Company’s Board of Directors authorized a stock repurchase program ("Repurchase Program") to repurchase up to $10 million of the Company’s outstanding common stock. Subject to applicable securities laws, repurchase of common stock under the Repurchase Program may be made at times and in amounts as the Company deems appropriate, using available cash resources. Shares of common stock repurchased by the Company under the Repurchase Program, if any, will be canceled and, until reissued by the Company, will be deemed to be authorized but unissued shares of common stock. The Repurchase Program may be suspended or discontinued by the Company at any time and without prior notice. Preferred Stock At December 31, 2021 and December 31, 2020, the Company was authorized to issue up to 50,000,000 shares of preferred stock, par value $0.01 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company's Board of Directors. On May 5, 2021, the Company issued 2,400,000 shares of 7.875% Series A Cumulative Redeemable Preferred Stock (Series A Preferred Stock"). The Company had 2,400,000 shares of preferred stock issued and outstanding at December 31, 2021 and no shares of preferred stock issued and outstanding at December 31, 2020. Our preferred stock is classified as permanent equity and carried at its liquidation preference less offering costs. See Note 12 for additional information related to our Series A Preferred Stock. |
Income Taxes | Income Taxes The Company has elected to be taxed as a REIT under the Code for U.S. federal income tax purposes, commencing with the Company’s short taxable period ended December 31, 2012. A REIT is generally taxable as a U.S. C-Corporation; however, so long as the Company qualifies as a REIT it is entitled to a special deduction for dividends paid to stockholders not otherwise available to corporations. Accordingly, the Company generally will not be subject to U.S. federal income tax to the extent its distributions to stockholders equals, or exceeds, its REIT taxable income for the year. In addition, the Company must continue to meet certain REIT qualification requirements with respect to distributions, as well as certain asset, income and share ownership tests, in accordance with Sections 856 through 860 of the Code, as summarized below. In addition, the TRS is maintained to perform certain services and earn income for the Company that the Company is not permitted engage in as a REIT. To maintain its qualification as a REIT, the Company must meet certain requirements, including but not limited to the following: (i) distribute at least 90% of its REIT taxable income to its stockholders; (ii) invest at least 75% of its assets in REIT qualifying assets, with additional restrictions with respect to asset concentration risk; and (iii) earn at least 95% of its gross income from qualifying sources of income, including at least 75% from qualifying real estate and real estate related sources. Regardless of the REIT election, the Company may also be subject to certain state, local and franchise taxes. Under certain circumstances, federal income and excise taxes may be due on its undistributed taxable income. If the Company were to fail to meet these requirements, it would be subject to U.S. federal income tax as a U.S. C-Corporation, which could have a material adverse impact on its results of operations and amounts available for distributions to its stockholders. Certain activities of the Company are conducted through a TRS and therefore are taxed as a standalone U.S. C-Corporation. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The TRS is not subject to a distribution requirement with respect to its REIT owner. The TRS may retain earnings annually, resulting in an increase in the consolidated book equity of the Company and without a corresponding distribution requirement by the REIT. If the TRS generates net income, and declares dividends to the Company, such dividends will be included in its taxable income and necessitate a distribution to its stockholders in accordance with the REIT distribution requirements. The Company assesses its tax positions for all open tax years and determines whether the Company has any material unrecognized liabilities in accordance with ASC 740, Income Taxes. The Company records these liabilities to the extent the Company deems them more likely than not to be incurred. The Company's accounting policy with respect to interest and penalties is to classify these amounts as other interest expense. |
Earnings per Share | Earnings per Share |
Stock-Based Compensation | Stock-Based Compensation The Company is required to recognize compensation costs relating to stock-based payment transactions in the consolidated financial statements. The Company accounts for share-based compensation issued to its Manager and non-management directors using the fair-value based methodology prescribed by ASC 505, Equity ("ASC 505"), or ASC 718, Share-Based Payment |
Comprehensive Income (Loss) Attributable to Common Stockholders | Comprehensive Income (Loss) Attributable to Common Stockholders For the years ended December 31, 2021 and December 31, 2020, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying consolidated financial statements. |
Recently Issued and/or Adopted Accounting Standards | Recently Issued and/or Adopted Accounting Standards Credit Losses In June 2016, the FASB issued ASU 2016-13, which is a comprehensive amendment of credit losses on financial instruments. Currently, GAAP requires an "incurred loss" methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. The standard’s core principle is that an entity replaces the "incurred loss" impairment methodology in current GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to support credit loss estimates. For public business entities that are SEC filers, the amendment in this update was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU 2019-10 which amended the effective dates for implementation of ASU 2016-13. ASU 2019-10 defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, public business entities that are not SEC filers and all other companies, including not-for-profit companies and employee benefit plans for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is designated as a smaller reporting company and has deferred implementation of ASU 2016-13 pursuant to ASU 2019-10 and is continuing to assess the impact of this guidance. In February 2020, the FASB issued ASU 2020-02, amending SEC paragraphs in the Codification to reflect the issuance of SEC Staff Accounting Bulletin ("SAB") No. 119 related to the new credit losses standard and revised effective date of the new leases standard. SAB No. 119 provides interpretive guidance on methodologies and supporting documentation for measuring credit losses, with a focus on the documentation the staff would normally expect registrants engaged in lending transactions to prepare and maintain to support estimates of current expected credit losses for loan transactions. This new guidance is effective for fiscal years beginning after December 15, 2022 for smaller reporting companies such as the Company. The Company is assessing the impact of this guidance. Accounting for Income Taxes In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." This guidance eliminates certain exceptions to the general principles in Topic 740. This new guidance is effective for us on January 1, 2021, with early adoption permitted. The Company adopted ASU 2019-12 beginning with the first quarter of 2021, which had no impact on the Company's financial condition or results of operations. Financial Instruments In March 2020, the FASB issued ASU 2020-03 which makes improvements to financial instruments guidance, including the current expected credit losses (CECL) guidance in ASU 2016-13. Only Issue 1, of the 7 improvement issues applies to the Company, which is effective upon issuance, requires all entities to provide fair value option disclosures. MSRs are reported at fair value as a result of the fair value election, as discussed in Mortgage Servicing Rights, at Fair Value above. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 828): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The standard was issued to ease the accounting effects of reform to the London Interbank Offered Rate ("LIBOR") and other reference rates. The standard provides optional expedients and exceptions for applying GAAP to debt instruments, leases, derivatives and other contracts affected by reference rate reform. ASU 2020-04 generally considers contract modifications related to reference rate reform to be an event that does not require contract remeasurement at the modification date nor a reassessment of a previous accounting determination. The standard is effective for all entities as of March 12, 2020 through December 31, 2022 and may be elected over time as reference rate reform activities occur. We have not adopted any of the optional expedients or exceptions through December 31, 2021, but will continue to evaluate the possible adoption of any such expedients or exceptions. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Reconciliation of Cash, Cash Equivalents and Restricted Cash | 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. December 31, 2021 December 31, 2020 Cash and cash equivalents $ 14,749,046 $ 11,375,960 Restricted cash CRE 2018-FL2, Ltd. $ — $ 57,999,396 Restricted cash CRE 2021-FL1, Ltd. $ 3,530,006 $ — Total cash, cash equivalents and restricted cash $ 18,279,052 $ 69,375,356 |
COMMERCIAL MORTGAGE LOANS HEL_2
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Receivables [Abstract] | |
Summary of Commercial Mortgage Loans | The following tables summarize certain characteristics of the Company's investments in commercial mortgage loans as of December 31, 2021 and December 31, 2020: Weighted Average Loan Type Unpaid Principal Balance Carrying Value Loan Count Floating Rate Loan % Coupon (1) Term (Years) (2) December 31, 2021 Loans held-for-investment Senior secured loans (3) $ 1,001,869,994 $ 1,001,825,294 66 100.0 % 3.9 % 3.7 $ 1,001,869,994 $ 1,001,825,294 66 100.0 % 3.9 % 3.7 Weighted Average Loan Type Unpaid Principal Balance Carrying Value Loan Count Floating Rate Loan % Coupon (1) Term (Years) (2) December 31, 2020 Loans held-for-investment Senior secured loans (3) $ 547,345,334 $ 547,345,334 40 100.0 % 5.1 % 3.1 $ 547,345,334 $ 547,345,334 40 100.0 % 5.1 % 3.1 (1) Weighted average coupon assumes applicable one-month LIBOR of 0.10% and 0.14% as of December 31, 2021 and December 31, 2020, respectively, inclusive of weighted average LIBOR floors of 0.49% and 1.64%, respectively. (2) Weighted average term assumes all extension options are exercised by the borrower; provided, however, that our loans may be repaid prior to such date. (3) As of December 31, 2021, $974,025,294 of the outstanding senior secured loans were held in VIEs and $27,800,000 of the outstanding senior secured loans were held outside of VIEs. As of December 31, 2020, $531,363,401 of the outstanding senior secured loans were held in VIEs and $15,981,933 of the outstanding senior secured loans were held outside of VIEs. Activity: For the years ended December 31, 2021 and December 31, 2020, the loan portfolio activity was as follows: Commercial Mortgage Loans Held-for-Investment Balance at December 31, 2019 $ 635,260,420 Purchases and advances 57,601,572 Principal payments (145,516,658) Balance at December 31, 2020 $ 547,345,334 Purchases and advances 983,694,326 Principal repayments (528,802,705) Accretion of purchase discount 46,088 Amortization of purchase premium (457,749) Balance at December 31, 2021 $ 1,001,825,294 |
Summary of Loan Risk Ratings | The following table presents the principal balance and net book value of the loan portfolio based on the Company's internal risk ratings as of December 31, 2021 and December 31, 2020: December 31, 2021 December 31, 2020 Risk Rating Number of Loans Unpaid Principal Balance Net Carrying Value Number of Loans Unpaid Principal Balance Net Carrying Value 1 — $ — — — $ — — 2 40 634,438,386 634,438,386 14 168,401,366 168,401,366 3 23 342,350,405 342,305,705 20 309,726,343 309,726,343 4 3 25,081,203 25,081,203 6 69,217,625 69,217,625 5 — — — — — — 66 1,001,869,994 1,001,825,294 40 547,345,334 547,345,334 |
Schedule of Geographic Concentrations | The following tables present the geographic and property types of collateral underlying the Company's commercial mortgage loans as a percentage of the loans' carrying value as of December 31, 2021 and December 31, 2020: Loans Held-for-Investment December 31, 2021 December 31, 2020 Geography South 46.2 % 36.5 % Southwest 27.5 38.7 West 13.9 1.8 Mid-Atlantic 7.9 6.2 Midwest 4.5 16.8 Total 100.0 % 100.0 % December 31, 2021 December 31, 2020 Collateral Property Type Multifamily 92.0 % 89.5 % Self-Storage 5.2 0.8 Retail 1.7 6.4 Office 1.1 3.3 Total 100.0 % 100.0 % |
USE OF SPECIAL PURPOSE ENTITI_2
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Condensed Consolidated Balance Sheets | The carrying values of the Company's total assets and liabilities related to LFT CRE 2021-FL1, Ltd. at December 31, 2021 and Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. at December 31, 2020 included the following VIE assets and liabilities: ASSETS December 31, 2021 December 31, 2020 Cash, cash equivalents and restricted cash $ 3,530,006 $ 57,999,396 Accrued interest receivable 3,941,695 1,955,709 Investment related receivable 22,400,000 — Loans held for investment 974,025,294 531,363,401 Total Assets $ 1,003,896,995 $ 591,318,506 LIABILITIES Accrued interest payable $ 607,892 $ 351,877 Collateralized loan obligations (1) 826,782,543 463,060,090 Total Liabilities $ 827,390,435 $ 463,411,967 Equity 176,506,560 127,906,539 Total liabilities and equity $ 1,003,896,995 $ 591,318,506 (1) The stated maturity of the collateral loan obligations per the terms of the underlying collateralized loan obligation agreement is June 14, 2039 for LFT CRE 2021-FL1, Ltd., August 15, 2034 for Hunt CRE 2017-FL1, Ltd. and August 15, 2028 for Hunt CRE 2018-FL2, Ltd. |
Schedule of Loan and Borrowing Characteristics | The following tables present certain loan and borrowing characteristics of LFT CRE 2021-FL1, Ltd. as of December 31, 2021 and Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd.as of December 31, 2020: As of December 31, 2021 Collateralized Loan Obligations Count Principal Value Carrying Value (1) Wtd. Avg. Coupon Collateral (loan investments) 64 974,069,994 974,025,294 L + 3.42% Financings provided 1 833,750,000 826,782,543 L + 1.43% As of December 31, 2020 Collateralized Loan Obligations Count Principal Value Carrying Value (1) Wtd. Avg. Coupon Collateral (loan investments) 40 531,363,401 531,363,401 L + 3.50% Financings provided 2 465,316,126 463,060,090 L + 1.44% (1) The carrying value for LFT CRE 2021-FL1, Ltd. is net of debt issuance costs of $6,967,457 for December 31, 2021, Hunt CRE 2017-FL1, Ltd. is net of discount of $207,767 for December 31, 2020, and the carrying value for Hunt CRE 2018-FL2, Ltd. is net of debt issuance costs of $2,048,269 for December 31, 2020. |
Schedule of Condensed Consolidated Statements of Operations | The statement of operations related to LFT 2021-FL1, Ltd., Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. at December 31, 2021 and December 31, 2020 include the following income and expense items: Statements of Operations December 31, 2021 December 31, 2020 Interest income $ 35,506,459 $ 32,831,608 Interest expense 12,178,545 12,047,300 Net interest income $ 23,327,914 $ 20,784,308 Less: Loss on extinguishment of debt $ 1,663,926 $ — General and administrative fees 308,718 675,624 Net income $ 21,355,270 $ 20,108,684 |
SECURED TERM LOAN (Tables)
SECURED TERM LOAN (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Summary of Credit Agreement | As of December 31, 2021 and December 31, 2020, the outstanding balance and total commitment under the Credit Agreement consisted of the following: December 31, 2021 December 31, 2020 Outstanding Balance Total Commitment Outstanding Balance Total Commitment Secured Term Loan $ 47,750,000 $ 47,750,000 $ 40,250,000 $ 40,250,000 Total $ 47,750,000 $ 47,750,000 $ 40,250,000 $ 40,250,000 |
MSRs (Tables)
MSRs (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Mortgage Servicing Rights MSR Disclosure [Abstract] | |
MSR Activity | The following table presents the Company’s MSR activity as of the years ended December 31, 2021 and December 31, 2020: December 31, 2021 December 31, 2020 Balance at beginning of year $ 919,678 $ 2,700,207 Changes in fair value due to: Realized loss (10,910) — Changes in valuation inputs or assumptions used in valuation model 109,663 (634,824) Other changes to fair value (1) (466,434) (1,145,705) Balance at end of year $ 551,997 $ 919,678 Loans associated with MSRs (2) $ 91,727,121 $ 191,799,159 MSR values as percent of loans (3) 0.60 % 0.48 % (1) Amounts represent changes due to realization of expected cash flows and prepayment of principal of the underlying loan portfolio. (2) Amounts represent the unpaid principal balance of loans associated with MSRs outstanding at December 31, 2021 and December 31, 2020, respectively. (3) Amounts represent the carrying value of MSRs at December 31, 2021 and December 31, 2020, respectively divided by the outstanding balance of the loans associated with these MSRs. |
Components of Servicing Income | The following table presents the servicing income recorded on the Company’s consolidated statements of operations for the years ended December 31, 2021 and December 31, 2020: Year Ended December 31, 2021 Year Ended December 31, 2020 Servicing income, net $ 398,939 $ 709,565 Income from MSRs, net $ 398,939 $ 709,565 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Valuation of Assets and Liabilities at Fair Value | The following tables summarize the valuation of the Company’s assets and liabilities carried at fair value on a recurring basis within the fair value hierarchy levels as of December 31, 2021 and December 31, 2020: December 31, 2021 Quoted prices in active markets for identical assets Level 1 Significant other observable inputs Level 2 Unobservable inputs Level 3 Balance as of December 31, Assets: Mortgage servicing rights $ — $ — $ 551,997 $ 551,997 Total $ — $ — $ 551,997 $ 551,997 December 31, 2020 Quoted prices in active markets for identical assets Level 1 Significant other observable inputs Level 2 Unobservable inputs Level 3 Balance as of December 31, Assets: Mortgage servicing rights $ — $ — $ 919,678 $ 919,678 Total $ — $ — $ 919,678 $ 919,678 |
Quantitative Information About the Significant Unobservable Inputs Used in the Fair Value Measurement of MSRs Classified as Level 3 | The following table provides quantitative information about the significant unobservable inputs used in the fair value measurement of the Company’s MSRs classified as Level 3 fair value assets at December 31, 2021 and December 31, 2020: As of December 31, 2021 Valuation Technique Unobservable Input Range Weighted Average Discounted cash flow Constant prepayment rate 10.8 - 29.7% 19.1 % Discount rate 12.0 % 12.0 % As of December 31, 2020 Valuation Technique Unobservable Input Range Weighted Average Discounted cash flow Constant prepayment rate 12.4 - 28.0% 21.6 % Discount rate 12.0 % 12.0 % |
Fair Value, by Balance Sheet Grouping | The following table details the carrying amount, face amount and fair value of the financial instruments described in Note 2: December 31, 2021 Carrying Value Face Amount Fair Value Assets: Cash and cash equivalents $ 14,749,046 $ 14,749,046 $ 14,749,046 Restricted cash 3,530,006 3,530,006 3,530,006 Commercial mortgage loans held-for-investment 1,001,825,294 1,001,869,994 1,001,473,884 Total $ 1,020,104,346 $ 1,020,149,046 $ 1,019,752,936 Liabilities: Collateralized loan obligations $ 826,782,543 $ 833,750,000 $ 834,425,625 Secured term loan 46,845,502 47,750,000 50,986,154 Total $ 873,628,045 $ 881,500,000 $ 885,411,779 December 31, 2020 Carrying Value Face Amount Fair Value Assets: Cash and cash equivalents $ 11,375,960 $ 11,375,960 $ 11,375,960 Restricted cash 57,999,396 57,999,396 57,999,396 Commercial mortgage loans held-for-investment 547,345,334 547,345,334 547,134,755 Total $ 616,720,690 $ 616,720,690 $ 616,510,111 Liabilities: Collateralized loan obligations $ 463,060,090 $ 465,316,126 $ 458,094,412 Secured term loan $ 39,556,198 $ 40,250,000 $ 44,514,373 Total $ 502,616,288 $ 505,566,126 $ 502,608,785 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Restricted Common Stock Activity | The following table summarizes the activity related to restricted common stock for the years ended December 31, 2021 and 2020: Year Ended December 31, 2021 2020 Shares Weighted Average Grant Date Fair Market Value Shares Weighted Average Grant Date Fair Market Value Outstanding Unvested Shares at Beginning of Period 4,500 $ 2.60 4,500 $ 3.33 Granted 4,500 4.18 4,500 2.60 Vested (4,500) 2.60 (4,500) 3.33 Outstanding Unvested Shares at End of Period 4,500 $ 4.18 4,500 $ 2.60 |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Cash Dividends Declared | The following table presents cash dividends declared by the Company on its common stock for the year ended December 31, 2021: Declaration Date Record Date Payment Date Dividend Amount Cash Dividend Per Weighted Average Share March 15, 2021 March 31, 2021 April 15, 2021 $ 2,244,904 $ 0.090 June 15, 2021 June 30, 2021 July 15, 2021 $ 2,245,309 $ 0.090 September 15, 2021 September 30, 2021 October 15, 2021 $ 2,245,310 $ 0.090 December 15, 2021 December 31, 2021 January 15, 2022 $ 2,245,309 $ 0.090 The following table presents cash dividends declared by the Company on its Series A Preferred stock for the year ended December 31, 2021: Declaration Date Record Date Payment Date Dividend Amount Cash Dividend Per Weighted Average Share June 15, 2021 July 1, 2021 July 15, 2021 $ 918,750 $ 0.38281 September 15, 2021 October 1, 2021 October 15, 2021 $ 1,181,250 $ 0.49219 December 15, 2021 January 1, 2022 January 15, 2022 $ 1,181,250 $ 0.49219 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | The following tables provide additional disclosure regarding the computation for the years ended December 31, 2021 and December 31, 2020: Year Ended December 31, 2021 Year Ended December 31, 2020 Net income $ 10,527,222 $ 8,449,770 Less dividends expense: Common stock $ 8,980,832 $ 9,103,997 Preferred stock 3,112,500 15,000 12,093,332 9,118,997 Undistributed earnings (deficit) $ (1,566,110) $ (669,227) Unvested Share-Based Payment Awards Common Stock Unvested Share-Based Payment Awards Common Stock Distributed earnings $ 0.36 $ 0.36 $ 0.37 $ 0.37 Undistributed earnings (deficit) $ — $ (0.06) — (0.03) Total $ 0.36 $ 0.30 $ 0.37 $ 0.34 |
Schedule of Weighted Average Number of Shares | For the years ended December 31, 2021 2020 Basic weighted average shares of common stock outstanding 24,941,324 24,930,079 Weighted average of non-vested restricted stock 4,500 4,426 Diluted weighted average shares of common stock outstanding 24,945,824 24,934,505 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provision for Income Taxes | The following table presents our provision for income taxes: Year Ended December 31, 2021 2020 Deferred tax (benefit) $ 77,894 $ (476,248) Provision for income tax (benefit) $ 77,894 $ (476,248) |
Schedule of Effective Income Tax Rate Reconciliation | The following is a reconciliation of our effective income tax rate as a percentage of pre-tax income to the U.S. federal statutory rate, for the years ended December 31, 2021 and 2020: Year Ended December 31, 2021 2020 U.S. federal statutory income tax 21.0 % 21.0 % REIT income not subject to federal income tax (21.4) % (24.6) % State and local income taxes, net of federal tax benefit (0.2) % (1.6) % Return to provision (0.1) % (0.8) % Effective income tax rate (0.7) % (6.0) % |
Schedule of Deferred Tax Assets | The TRS has a deferred tax asset , comprised of the following: As of December 31, 2021 As of December 31, 2020 Accumulated net operating losses of TRS $ 985,917 $ 993,683 Mortgage servicing rights $ 261,440 $ 319,048 Capitalized transaction costs $ 93,903 $ 106,423 Net non-current deferred tax asset $ 1,341,260 $ 1,419,154 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | May 05, 2021shares | Jun. 30, 2020USD ($) | Dec. 31, 2021USD ($)sub-servicer$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Feb. 14, 2019USD ($) | Jan. 15, 2019USD ($) | Dec. 15, 2015USD ($) |
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Nonaccrual status loans | $ | $ 0 | ||||||
Recognized impairment | $ | 0 | ||||||
Allowance for loan losses | $ | $ 0 | ||||||
Number of sub-servers | sub-servicer | 2 | ||||||
Principal amount | $ | $ 47,750,000 | $ 40,250,000 | |||||
Deferred financing costs amortized | $ | $ 1,405,133 | ||||||
Common stock, shares authorized (in shares) | shares | 450,000,000 | 450,000,000 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||||
Common stock, shares issued (in shares) | shares | 24,947,883 | 24,943,383 | |||||
Common stock, shares outstanding (in shares) | shares | 24,947,883 | 24,943,383 | |||||
Stock repurchase program, authorized amount | $ | $ 10,000,000 | ||||||
Preferred stock, shares authorized (in shares) | shares | 50,000,000 | 50,000,000 | |||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||||
Preferred stock, shares issued (in shares) | shares | 2,400,000 | 0 | |||||
Preferred stock, dividend rate (percentage) | 7.875% | 7.875% | |||||
Preferred stock, shares outstanding (in shares) | shares | 2,400,000 | 0 | |||||
Other Operating Expenses | |||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Reclassification of deferred financing costs of other assets to other operating expenses | $ | $ 624,816 | ||||||
Delayed Draw Facility | Credit Agreement | |||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Principal amount | $ | $ 47,750,000 | $ 40,250,000 | $ 40,250,000 | ||||
Redeemable Preferred Stock | |||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Preferred stock, shares authorized (in shares) | shares | 50,000,000 | 50,000,000 | |||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||||
Preferred stock, shares issued (in shares) | shares | 2,400,000 | 2,400,000 | 0 | ||||
Preferred stock, dividend rate (percentage) | 7.875% | ||||||
Preferred stock, shares outstanding (in shares) | shares | 2,400,000 | 0 | |||||
Collateralized Loan Obligations | |||||||
Debt and Equity Securities, FV-NI [Line Items] | |||||||
Maximum exposure to loss from consolidated trusts | $ | $ 166,250,000 | $ 124,046,671 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash and Cash Equivalents [Line Items] | ||||
Cash and cash equivalents | [1] | $ 14,749,046 | $ 11,375,960 | |
Restricted cash | [1] | 57,999,396 | ||
Total cash, cash equivalents and restricted cash | 18,279,052 | 69,375,356 | $ 16,011,830 | |
Hunt CRE 2018-FL2, Ltd. | ||||
Cash and Cash Equivalents [Line Items] | ||||
Restricted cash | 0 | 57,999,396 | ||
LFT CRE 2021-FL1, Ltd. | ||||
Cash and Cash Equivalents [Line Items] | ||||
Restricted cash | $ 3,530,006 | $ 0 | ||
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
COMMERCIAL MORTGAGE LOANS HEL_3
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT - Summary of Commercial Mortgage Loans (Details) | 12 Months Ended | |||
Dec. 31, 2021USD ($)mortgage_loan | Dec. 31, 2020USD ($)mortgage_loan | Dec. 31, 2019USD ($) | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
One Month LIBOR Rate (as a percent) | $ 0.0010 | $ 0.0014 | ||
Weighted average LIBOR floor rate (as a percent) | 0.0049 | 0.0164 | ||
Commercial mortgage loans held-for-investment, at amortized cost | [1] | 1,001,825,294 | 547,345,334 | |
Commercial Real Estate Portfolio Segment | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Unpaid Principal Balance | 1,001,869,994 | 547,345,334 | ||
Carrying Value | $ 1,001,825,294 | $ 547,345,334 | ||
Loan Count | mortgage_loan | 66 | 40 | ||
Weighted average, floating rate loan, percentage (as a percent) | 100.00% | 100.00% | ||
Weighted average coupon rate, percentage (as a percent) | 3.90% | 5.10% | ||
Weighted average, life (years) | 3 years 8 months 12 days | 3 years 1 month 6 days | ||
Commercial mortgage loans held-for-investment, at amortized cost | $ 1,001,825,294 | $ 547,345,334 | $ 635,260,420 | |
Outstanding senior secured loans from loan participants | 27,800,000 | 15,981,933 | ||
Commercial Real Estate Portfolio Segment | Hunt CMT | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Commercial mortgage loans held-for-investment, at amortized cost | $ 974,025,294 | $ 531,363,401 | ||
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
COMMERCIAL MORTGAGE LOANS HEL_4
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT - Loan Portfolio Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||
Beginning Balance | [1] | $ 547,345,334 | |
Purchases and advances | 983,694,326 | $ 57,601,572 | |
Principal payments | (506,402,705) | (145,516,658) | |
Accretion of purchase discount | 46,088 | 0 | |
Amortization of purchase premium | (457,749) | 0 | |
Ending Balance | [1] | 1,001,825,294 | 547,345,334 |
Commercial Real Estate Portfolio Segment | |||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||
Beginning Balance | 547,345,334 | 635,260,420 | |
Purchases and advances | 983,694,326 | 57,601,572 | |
Principal payments | (528,802,705) | (145,516,658) | |
Accretion of purchase discount | 46,088 | ||
Amortization of purchase premium | (457,749) | ||
Ending Balance | $ 1,001,825,294 | $ 547,345,334 | |
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
COMMERCIAL MORTGAGE LOANS HEL_5
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT Summary of Commercial Loan Risk Ratings (Details) | 12 Months Ended | |||
Dec. 31, 2021USD ($)mortgage_loan | Dec. 31, 2020USD ($)mortgage_loan | Dec. 31, 2019USD ($) | ||
Financing Receivable, Recorded Investment [Line Items] | ||||
Loans held for investment | [1] | $ 1,001,825,294 | $ 547,345,334 | |
Average risk rate | 2.3 | 3.1 | ||
Purchases and advances | $ 983,694,326 | $ 57,601,572 | ||
Commercial Real Estate Portfolio Segment | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Number of Loans | mortgage_loan | 66 | 40 | ||
Unpaid Principal Balance | $ 1,001,869,994 | $ 547,345,334 | ||
Loans held for investment | 1,001,825,294 | 547,345,334 | $ 635,260,420 | |
Purchases and advances | $ 983,694,326 | $ 57,601,572 | ||
Commercial Real Estate Portfolio Segment | Risk Rating, 1 | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Number of Loans | mortgage_loan | 0 | 0 | ||
Unpaid Principal Balance | $ 0 | $ 0 | ||
Loans held for investment | $ 0 | $ 0 | ||
Commercial Real Estate Portfolio Segment | Risk Rating, 2 | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Number of Loans | mortgage_loan | 40 | 14 | ||
Unpaid Principal Balance | $ 634,438,386 | $ 168,401,366 | ||
Loans held for investment | 634,438,386 | $ 168,401,366 | ||
Commercial loans that paid off | 133,600,000 | |||
Purchases and advances | $ 599,000,000 | |||
Commercial Real Estate Portfolio Segment | Risk Rating, 3 | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Number of Loans | mortgage_loan | 23 | 20 | ||
Unpaid Principal Balance | $ 342,350,405 | $ 309,726,343 | ||
Loans held for investment | $ 342,305,705 | $ 309,726,343 | ||
Average risk rating, percentage | 97.50% | 84.40% | ||
Commercial loans that paid off | $ 276,100,000 | |||
Purchases and advances | $ 283,000,000 | |||
Commercial Real Estate Portfolio Segment | Risk Rating, 4 | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Number of Loans | mortgage_loan | 3 | 6 | ||
Unpaid Principal Balance | $ 25,081,203 | $ 69,217,625 | ||
Loans held for investment | 25,081,203 | $ 69,217,625 | ||
Commercial loans that paid off | 17,800,000 | |||
Purchases and advances | $ 100,000 | |||
Commercial Real Estate Portfolio Segment | Risk Rating, 5 | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Number of Loans | mortgage_loan | 0 | 0 | ||
Unpaid Principal Balance | $ 0 | $ 0 | ||
Loans held for investment | $ 0 | $ 0 | ||
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
COMMERCIAL MORTGAGE LOANS HEL_6
COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT Summary of Concentration of Credit Risk (Details) - Commercial loans held-for-investment | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Collateral Property Type | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk (as a percentage) | 100.00% | 100.00% |
Commercial real estate portfolio segment | Geography | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk (as a percentage) | 100.00% | 100.00% |
Commercial real estate portfolio segment | Multifamily | Collateral Property Type | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk (as a percentage) | 92.00% | 89.50% |
Commercial real estate portfolio segment | Self-Storage | Collateral Property Type | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk (as a percentage) | 5.20% | 0.80% |
Commercial real estate portfolio segment | Retail | Collateral Property Type | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk (as a percentage) | 1.70% | 6.40% |
Commercial real estate portfolio segment | Office | Collateral Property Type | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk (as a percentage) | 1.10% | 3.30% |
Commercial real estate portfolio segment | South | Geography | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk (as a percentage) | 46.20% | 36.50% |
Commercial real estate portfolio segment | Southwest | Geography | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk (as a percentage) | 27.50% | 38.70% |
Commercial real estate portfolio segment | West | Geography | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk (as a percentage) | 13.90% | 1.80% |
Commercial real estate portfolio segment | Mid-Atlantic | Geography | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk (as a percentage) | 7.90% | 6.20% |
Commercial real estate portfolio segment | Midwest | Geography | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk (as a percentage) | 4.50% | 16.80% |
USE OF SPECIAL PURPOSE ENTITI_3
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES - Narrative (Details) $ in Thousands | Jun. 14, 2021USD ($)subsidiarytranche |
Variable Interest Entity [Line Items] | |
Number of newly formed subsidiaries | subsidiary | 2 |
Equity interest retained | $ 96,250 |
Proceeds from issuance of long-term debt allocated to acquire additional loan obligations | $ 330,300 |
Period to acquire additional loan obligations from closing date | 180 days |
Collateralized loan obligation leverage ratio (as a percent) | 0.83 |
Collateralized Loan Obligations - LFT CRE 2021-FL1, Ltd. | |
Variable Interest Entity [Line Items] | |
Debt instrument, number of tranches | tranche | 8 |
Debt instrument, face amount | $ 903,800 |
Proceeds from issuance of collateralized loan obligations | 1,000,000 |
Collateralized Loan Obligations - LFT CRE 2021-FL1, Ltd. - Investment Grade | |
Variable Interest Entity [Line Items] | |
Debt instrument, face amount | 833,800 |
Collateralized Loan Obligations - LFT CRE 2021-FL1, Ltd. - Below Investment Grade | |
Variable Interest Entity [Line Items] | |
Debt instrument, face amount | 70,000 |
Collateralized Loan Obligations - Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. | |
Variable Interest Entity [Line Items] | |
Outstanding notes redeemed | 388,200 |
Write off of deferred debt issuance cost | $ 1,700 |
USE OF SPECIAL PURPOSE ENTITI_4
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES - Condensed Consolidated Balance Sheets (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Variable Interest Entity [Line Items] | ||||
Cash, cash equivalents and restricted cash | $ 18,279,052 | $ 69,375,356 | $ 16,011,830 | |
Accrued interest receivable | [1] | 3,977,752 | 2,015,617 | |
Investment related receivable | [1] | 22,400,000 | 0 | |
Loans held for investment | [1] | 1,001,825,294 | 547,345,334 | |
Total assets | [1] | 1,048,923,353 | 621,489,779 | |
Accrued interest payable | [1] | 704,055 | 432,936 | |
Collateralized loan obligations, net | [1] | 826,782,543 | 463,060,090 | |
Total liabilities | [1] | 879,547,853 | 507,786,627 | |
Equity | [1] | 169,276,000 | 113,603,652 | |
Total liabilities and equity | [1] | 1,048,923,353 | 621,489,779 | |
Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. | ||||
Variable Interest Entity [Line Items] | ||||
Cash, cash equivalents and restricted cash | 3,530,006 | 57,999,396 | ||
Accrued interest receivable | 3,941,695 | 1,955,709 | ||
Investment related receivable | 0 | |||
Loans held for investment | 974,025,294 | 531,363,401 | ||
Total assets | 1,003,896,995 | 591,318,506 | ||
Accrued interest payable | 607,892 | 351,877 | ||
Collateralized loan obligations, net | 826,782,543 | 463,060,090 | ||
Total liabilities | 827,390,435 | 463,411,967 | ||
Equity | 176,506,560 | 127,906,539 | ||
Total liabilities and equity | 1,003,896,995 | $ 591,318,506 | ||
LFT CRE 2021-FL1, Ltd. | ||||
Variable Interest Entity [Line Items] | ||||
Investment related receivable | $ 22,400,000 | |||
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
USE OF SPECIAL PURPOSE ENTITI_5
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES - Summary of Loan and Borrowing Characteristics (Details) | 12 Months Ended | ||
Dec. 31, 2021USD ($)contractmortgage_loaninsturment | Dec. 31, 2020USD ($)mortgage_loancontractinsturment | ||
Variable Interest Entity [Line Items] | |||
Collateralized loan obligations, net | [1] | $ 826,782,543 | $ 463,060,090 |
Commercial Real Estate Portfolio Segment | |||
Variable Interest Entity [Line Items] | |||
Number of Loans | mortgage_loan | 66 | 40 | |
Carrying Value | $ 1,001,825,294 | $ 547,345,334 | |
Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. | |||
Variable Interest Entity [Line Items] | |||
Number of notes issued | insturment | 1 | 2 | |
Collateralized loan obligations, net | $ 826,782,543 | $ 463,060,090 | |
Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. | London Interbank Offered Rate (LIBOR) | |||
Variable Interest Entity [Line Items] | |||
Weighted average yield (as a percentage) | 3.42% | 3.50% | |
Weighted average yield (as a percentage) | 1.43% | 1.44% | |
Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. | Commercial Real Estate Portfolio Segment | |||
Variable Interest Entity [Line Items] | |||
Number of Loans | contract | 64 | 40 | |
Principal Value | |||
Variable Interest Entity [Line Items] | |||
Collateralized loan obligations, net | $ 833,750,000 | $ 465,316,126 | |
Principal Value | Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. | |||
Variable Interest Entity [Line Items] | |||
Carrying Value | 974,069,994 | 531,363,401 | |
Collateralized loan obligations, net | 833,750,000 | 465,316,126 | |
Carrying Value | |||
Variable Interest Entity [Line Items] | |||
Collateralized loan obligations, net | 826,782,543 | 463,060,090 | |
Carrying Value | Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. | |||
Variable Interest Entity [Line Items] | |||
Carrying Value | 974,025,294 | 531,363,401 | |
Collateralized loan obligations, net | 826,782,543 | 463,060,090 | |
Carrying Value | LFT CRE 2021-FL1, Ltd. | |||
Variable Interest Entity [Line Items] | |||
Debt issuance costs | $ 6,967,457 | ||
Carrying Value | Hunt CRE 2017-FL1, Ltd. | |||
Variable Interest Entity [Line Items] | |||
Debt discount | 207,767 | ||
Carrying Value | Hunt CRE 2018-FL2, Ltd. | |||
Variable Interest Entity [Line Items] | |||
Collateralized loan obligations, net | $ 2,048,269 | ||
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
USE OF SPECIAL PURPOSE ENTITI_6
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES - Condensed Consolidated Statement of Operations (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Variable Interest Entity [Line Items] | ||||
Net interest income | $ 20,678,748 | $ 18,430,514 | ||
Loss on extinguishment of debt | $ (1,663,926) | $ 0 | (1,663,926) | 0 |
General and administrative expenses | 2,879,655 | 3,518,500 | ||
Net income | 10,527,222 | 8,449,770 | ||
Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. | ||||
Variable Interest Entity [Line Items] | ||||
Interest income | 35,506,459 | 32,831,608 | ||
Interest expense | 12,178,545 | 12,047,300 | ||
Net interest income | 23,327,914 | 20,784,308 | ||
Loss on extinguishment of debt | 1,663,926 | 0 | ||
General and administrative expenses | 308,718 | 675,624 | ||
Net income | $ 21,355,270 | $ 20,108,684 |
RESTRICTED CASH (Details)
RESTRICTED CASH (Details) | 12 Months Ended |
Dec. 31, 2021 | |
LFT CRE 2021-FL1 | |
Restricted Cash and Cash Equivalents Items [Line Items] | |
Reinvestment period | 30 months |
SECURED TERM LOAN - Narrative (
SECURED TERM LOAN - Narrative (Details) - USD ($) | Aug. 23, 2021 | Jan. 15, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Apr. 21, 2021 | Feb. 14, 2019 |
Debt Instrument [Line Items] | ||||||
Principal amount | $ 47,750,000 | $ 40,250,000 | ||||
Collateralized loan obligation, discount | $ 39,200,000 | |||||
Collateralized loan obligation, deferred financing costs | 904,498 | 693,802 | ||||
Proceeds from secured term loan | 7,500,000 | $ 0 | ||||
Delayed Draw Facility | Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | $ 40,250,000 | $ 47,750,000 | $ 40,250,000 | |||
Maturity term (in years) | 6 years | |||||
Incremental increase in term loan | $ 7,500,000 | |||||
Proceeds from secured term loan | $ 7,500,000 | |||||
Delayed Draw Facility | Credit Agreement | Five year period following initial draw | ||||||
Debt Instrument [Line Items] | ||||||
Stated interest rate (as a percentage) | 7.25% | |||||
Maturity term (in years) | 6 years | |||||
Delayed Draw Facility | Credit Agreement | First four months after fifth anniversary | ||||||
Debt Instrument [Line Items] | ||||||
Weighted average yield (as a percentage) | 0.25% | |||||
Delayed Draw Facility | Credit Agreement | Second four months after fifth anniversary | ||||||
Debt Instrument [Line Items] | ||||||
Weighted average yield (as a percentage) | 0.375% | |||||
Delayed Draw Facility | Credit Agreement | Last four months until maturity | ||||||
Debt Instrument [Line Items] | ||||||
Weighted average yield (as a percentage) | 0.50% |
SECURED TERM LOAN - Summary of
SECURED TERM LOAN - Summary of Credit Agreement (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
Outstanding Balance | $ 47,750,000 | $ 40,250,000 |
Total Commitment | $ 47,750,000 | $ 40,250,000 |
MSRs - Narrative (Details)
MSRs - Narrative (Details) | 12 Months Ended | |
Dec. 31, 2021USD ($)sub-servicer | Dec. 31, 2020USD ($) | |
Mortgage Servicing Rights MSR [Line Items] | ||
Number of sub-servers | sub-servicer | 2 | |
Mortgage servicing rights | ||
Mortgage Servicing Rights MSR [Line Items] | ||
Residential mortgage loan aggregate principal balance | $ | $ 91,727,121 | $ 191,799,159 |
MSRs - MSR Activity (Details)
MSRs - MSR Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | ||
Balance at beginning of year | $ 547,345,334 | $ 635,260,420 |
Changes in fair value due to: | ||
Balance at end of year | 1,001,825,294 | 547,345,334 |
Mortgage servicing rights | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | ||
Balance at beginning of year | 919,678 | 2,700,207 |
Changes in fair value due to: | ||
Realized loss | (10,910) | 0 |
Changes in valuation inputs or assumptions used in valuation model | 109,663 | (634,824) |
Other changes to fair value | (466,434) | (1,145,705) |
Balance at end of year | 551,997 | 919,678 |
Loans associated with MSRs | $ 91,727,121 | $ 191,799,159 |
MSR values as percent of loans (as a percent) | 0.60% | 0.48% |
MSRs - Components of Servicing
MSRs - Components of Servicing Income (Details) - Mortgages - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule Of Components Of Servicing Income [Line Items] | ||
Servicing income, net | $ 398,939 | $ 709,565 |
Income from MSRs, net | $ 398,939 | $ 709,565 |
FAIR VALUE - Assets and Liabili
FAIR VALUE - Assets and Liabilities at Fair Value (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Assets: | ||
Total assets | $ 551,997 | $ 919,678 |
Quoted prices in active markets for identical assets Level 1 | ||
Assets: | ||
Total assets | 0 | 0 |
Significant other observable inputs Level 2 | ||
Assets: | ||
Total assets | 0 | 0 |
Unobservable inputs Level 3 | ||
Assets: | ||
Total assets | 551,997 | 919,678 |
Mortgage servicing rights | ||
Assets: | ||
Total assets | 551,997 | 919,678 |
Mortgage servicing rights | Quoted prices in active markets for identical assets Level 1 | ||
Assets: | ||
Total assets | 0 | 0 |
Mortgage servicing rights | Significant other observable inputs Level 2 | ||
Assets: | ||
Total assets | 0 | 0 |
Mortgage servicing rights | Unobservable inputs Level 3 | ||
Assets: | ||
Total assets | $ 551,997 | $ 919,678 |
FAIR VALUE - Narrative (Details
FAIR VALUE - Narrative (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | $ 551,997 | $ 919,678 |
Unobservable inputs Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 551,997 | 919,678 |
Mortgage servicing rights | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 551,997 | 919,678 |
Mortgage servicing rights | Unobservable inputs Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | $ 551,997 | $ 919,678 |
FAIR VALUE - Unobservable Input
FAIR VALUE - Unobservable Inputs Information (Details) - Mortgage servicing rights - Discounted cash flow - Unobservable inputs Level 3 | Dec. 31, 2021 | Dec. 31, 2020 |
Constant prepayment rate | Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Unobservable input (percent) | 0.108 | 0.124 |
Constant prepayment rate | Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Unobservable input (percent) | 0.297 | 0.280 |
Constant prepayment rate | Weighted Average | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Unobservable input (percent) | 0.191 | 0.216 |
Discount rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Unobservable input (percent) | 0.120 | 0.120 |
Discount rate | Weighted Average | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Unobservable input (percent) | 0.120 | 0.120 |
FAIR VALUE - Fair Value Informa
FAIR VALUE - Fair Value Information on Financial Instruments (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Cash and cash equivalents | [1] | $ 14,749,046 | $ 11,375,960 |
Restricted cash | [1] | 57,999,396 | |
Total assets | [1] | 1,048,923,353 | 621,489,779 |
Collateralized loan obligations, net | [1] | 826,782,543 | 463,060,090 |
Secured term loan | [1] | 46,845,502 | 39,556,198 |
Total liabilities | [1] | 879,547,853 | 507,786,627 |
Principal Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Cash and cash equivalents | 14,749,046 | 11,375,960 | |
Restricted cash | 3,530,006 | 57,999,396 | |
Commercial mortgage loans held-for-investment | 1,001,869,994 | 547,345,334 | |
Total assets | 1,020,149,046 | 616,720,690 | |
Collateralized loan obligations, net | 833,750,000 | 465,316,126 | |
Secured term loan | 47,750,000 | 40,250,000 | |
Total liabilities | 881,500,000 | 505,566,126 | |
Carrying Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Cash and cash equivalents | 11,375,960 | ||
Restricted cash | 3,530,006 | 57,999,396 | |
Commercial mortgage loans held-for-investment | 1,001,825,294 | 547,345,334 | |
Total assets | 1,020,104,346 | 616,720,690 | |
Collateralized loan obligations, net | 826,782,543 | 463,060,090 | |
Secured term loan | 46,845,502 | 39,556,198 | |
Total liabilities | 873,628,045 | 502,616,288 | |
Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Cash and cash equivalents | 14,749,046 | 11,375,960 | |
Restricted cash | 3,530,006 | 57,999,396 | |
Commercial mortgage loans held-for-investment | 1,001,473,884 | 547,134,755 | |
Total assets | 1,019,752,936 | 616,510,111 | |
Collateralized loan obligations, net | 834,425,625 | 458,094,412 | |
Secured term loan | 50,986,154 | 44,514,373 | |
Total liabilities | $ 885,411,779 | $ 502,608,785 | |
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
RELATED PARTY TRANSACTIONS - Na
RELATED PARTY TRANSACTIONS - Narrative (Details) | Mar. 18, 2019USD ($) | Dec. 31, 2021USD ($)contract | Dec. 31, 2020USD ($)mortgage_loannumberOfLoanParticipations |
Related Party Transaction [Line Items] | |||
Annual management fee (percentage) | 1.50% | ||
Quarterly management fee (percentage) | 0.375% | ||
Management fees | $ 2,909,368 | $ 2,351,562 | |
Management fee payable | 796,000 | 588,000 | |
Incentive fees | 132,232 | 172,577 | |
Incentive fees payable | 132,232 | 172,577 | |
Operating expenses reimbursable to Manager | 2,038,130 | 1,644,886 | |
Reimbursable expenses payable | $ 724,333 | 395,763 | |
Reduction to reimbursable expenses as a percentage of exit fees waived (percent) | 50.00% | ||
Reimbursable operating expense waived | $ 302,952 | 118,786 | |
Number of participation interests funded | contract | 20 | ||
Hunt CRE 2017-FL1, Ltd. | |||
Related Party Transaction [Line Items] | |||
Funded participation interests | 5,600,000 | ||
Restricted Stock Units (RSUs) | |||
Related Party Transaction [Line Items] | |||
Compensation expense | $ 15,608 | 20,292 | |
Manager Equity Plan | |||
Related Party Transaction [Line Items] | |||
Maximum shares issued, percentage of issued and outstanding shares of common stock (percentage) | 3.00% | ||
Manager Equity Plan | Restricted Stock Units (RSUs) | |||
Related Party Transaction [Line Items] | |||
Unrecognized compensation expense | $ 8,555 | $ 5,353 | |
Weighted average period for compensation expense recognition | 5 years 6 months | ||
Hunt Investment Management, LLC | |||
Related Party Transaction [Line Items] | |||
Annual management fee (percentage) | 1.50% | ||
Quarterly management fee (percentage) | 0.375% | ||
Quarterly incentive fee (percentage) | 20.00% | 20.00% | |
Hurdle rate (percentage) | 8.00% | 8.00% | |
Lument Structured Finance | Lument Commercial Mortgage Trust | |||
Related Party Transaction [Line Items] | |||
Funded participation interests | $ 42,300,000 | ||
Lument Structured Finance | Hunt CRE 2018-FL2, Ltd. | |||
Related Party Transaction [Line Items] | |||
Number of loans purchased | 2 | 2 | |
Payments to acquire finance receivables | $ 21,200,000 | ||
Unpaid Principal Balance | $ 14,400,000 | ||
Number of loans advances | numberOfLoanParticipations | 58 | ||
Origination of notes receivable from related parties | $ 11,200,000 | ||
Lument Structured Finance | Hunt CRE 2017-FL1, Ltd. | |||
Related Party Transaction [Line Items] | |||
Number of loans purchased | 9 | 2 | |
Payments to acquire finance receivables | $ 102,700,000 | ||
Unpaid Principal Balance | $ 31,900,000 | ||
Lument Structured Finance | LFT CRE 2021-FL1, Ltd. | |||
Related Party Transaction [Line Items] | |||
Number of loans purchased | contract | 44 | ||
Payments to acquire finance receivables | $ 700,100,000 | ||
OREC 2018-CRE1, Ltd. | LFT CRE 2021-FL1, Ltd. | |||
Related Party Transaction [Line Items] | |||
Number of loans purchased | contract | 9 | ||
Payments to acquire finance receivables | $ 112,500,000 | ||
Payments to acquire finance receivables, premium | $ 350,000 | ||
ORIX Real Estate Holdings, LLC | LFT CRE 2021-FL1, Ltd. | |||
Related Party Transaction [Line Items] | |||
Number of loans purchased | contract | 8 | ||
Payments to acquire finance receivables | $ 4,600,000 | ||
Payments to acquire finance receivables, premium | $ 20,000 | ||
Support Agreement | Hunt Investment Management, LLC | |||
Related Party Transaction [Line Items] | |||
Maximum reduction of expense reimbursement per annum (percent) | 25.00% | ||
Maximum expense reimbursement reduction per annum | $ 568,000 | ||
Aggregate reduction of expense reimbursement | $ 1,960,000 |
RELATED PARTY TRANSACTIONS - Un
RELATED PARTY TRANSACTIONS - Unvested Share Activity (Details) - Employee Stock Option - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Shares | ||
Outstanding Unvested Shares at Beginning of Period (in shares) | 4,500 | 4,500 |
Granted (in shares) | 4,500 | 4,500 |
Vested (in shares) | (4,500) | (4,500) |
Shares, Outstanding Unvested Shares at End of Period (in shares) | 4,500 | 4,500 |
Weighted Average Grant Date Fair Market Value | ||
Outstanding Unvested Shares at Beginning of Period (in dollars per share) | $ 2.60 | $ 3.33 |
Granted (in dollars per share) | 4.18 | 2.60 |
Vested (in dollars per share) | 2.60 | 3.33 |
Outstanding Unvested Shares at End of Period (in dollars per share) | $ 4.18 | $ 2.60 |
GUARANTEES - Narrative (Details
GUARANTEES - Narrative (Details) - USD ($) | Jun. 15, 2016 | Dec. 31, 2021 | Dec. 31, 2020 |
Backstop Guarantee | |||
Guarantor Obligations [Line Items] | |||
Representation and warranty breach, threshold period for likely occurrence | 5 years | ||
Minimum adjusted tangible net worth | $ 20,000,000 | ||
Minimum available liquidity | $ 5,000,000 | ||
Minimum available liquidity, percentage of aggregate unpaid principal balance (percentage) | 0.10% | ||
Maximum amount of estimated future payments under the backstop guarantees | $ 348,000,000 | $ 860,500,000 | |
Indemnification Agreement | |||
Guarantor Obligations [Line Items] | |||
Maximum amount of estimated future payments under the backstop guarantees | $ 0 | ||
Loan Review Services | Backstop Guarantee | |||
Guarantor Obligations [Line Items] | |||
Minimum available liquidity, percentage of aggregate unpaid principal balance (percentage) | 0.01% | ||
FOAC | Loan Review Services | Backstop Guarantee | |||
Guarantor Obligations [Line Items] | |||
Alternative backstop fee | $ 426,770 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
LFT 2021-FL1, Ltd. | ||
Loss Contingencies [Line Items] | ||
Unfunded commitments | $ 78.4 | |
LCMT | ||
Loss Contingencies [Line Items] | ||
Unfunded commitments | $ 4.7 | |
Hunt CRE 2017-FL1, Ltd. | ||
Loss Contingencies [Line Items] | ||
Funded participation interests | $ 5.6 | |
Unfunded commitments | 24.6 | |
Hunt CRE 2018-FL2, Ltd. | ||
Loss Contingencies [Line Items] | ||
Unfunded commitments | $ 25.8 |
EQUITY - Narrative (Details)
EQUITY - Narrative (Details) - USD ($) | May 05, 2021 | Jan. 03, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 15, 2015 | |
Stockholders' Equity Note [Line Items] | ||||||
Common stock, shares authorized (in shares) | 450,000,000 | 450,000,000 | ||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||
Common stock, shares issued (in shares) | 24,947,883 | 24,943,383 | ||||
Common stock, shares outstanding (in shares) | 24,947,883 | 24,943,383 | ||||
Stock repurchase program, authorized amount | $ 10,000,000 | |||||
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | ||||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||
Preferred stock, shares issued (in shares) | 2,400,000 | 0 | ||||
Preferred stock, shares outstanding (in shares) | 2,400,000 | 0 | ||||
Dividends payable | [1] | $ 3,242,809 | $ 3,242,640 | |||
Series A Preferred Stock | ||||||
Stockholders' Equity Note [Line Items] | ||||||
Preferred stock, liquidation preference (in dollars per share) | $ 25 | |||||
Redeemable Preferred Stock | ||||||
Stockholders' Equity Note [Line Items] | ||||||
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | ||||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||
Preferred stock, shares issued (in shares) | 2,400,000 | 2,400,000 | 0 | |||
Preferred stock, shares outstanding (in shares) | 2,400,000 | 0 | ||||
Proceeds from Issuance of Redeemable Preferred Stock | $ 58,100,000 | |||||
Common Stock | ||||||
Stockholders' Equity Note [Line Items] | ||||||
Issuance of common stock (in shares) | 4,500 | 1,251,219 | ||||
Dividends payable | $ 8,980,832 | |||||
Dividends payable, amount per share (in dollars per share) | $ 0.36 | |||||
Common Stock | Private Placement | ||||||
Stockholders' Equity Note [Line Items] | ||||||
Issuance of common stock (in shares) | 1,246,719 | |||||
Common stock, shares issued (in dollars per share) | $ 4.61 | |||||
Proceeds from issuance of common stock | $ 5,700,000 | |||||
Stock Repurchase Program | ||||||
Stockholders' Equity Note [Line Items] | ||||||
Stock repurchase program, authorized amount | $ 10,000,000 | |||||
Shares repurchased | 126,856 | |||||
Weighted average share price of common stock repurchased (in dollars per share) | $ 5.09 | |||||
Common stock shares repurchased (in shares) | 0 | |||||
Common stock shares repurchased (in shares) | $ 9,400,000 | |||||
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
EQUITY - Dividends Declared (De
EQUITY - Dividends Declared (Details) - USD ($) | Jan. 01, 2022 | Dec. 31, 2021 | Oct. 01, 2021 | Sep. 30, 2021 | Jul. 01, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | |
Dividends [Line Items] | ||||||||||||
Dividend Amount | [1] | $ 3,242,809 | $ 3,242,640 | |||||||||
Common Stock | ||||||||||||
Dividends [Line Items] | ||||||||||||
Dividend Amount | $ 8,980,832 | |||||||||||
Cash Dividend Per Share (in dollars per share) | $ 0.36 | |||||||||||
Distribution One | Common Stock | ||||||||||||
Dividends [Line Items] | ||||||||||||
Dividend Amount | $ 2,244,904 | |||||||||||
Cash Dividend Per Share (in dollars per share) | $ 0.090 | |||||||||||
Distribution Two | Common Stock | ||||||||||||
Dividends [Line Items] | ||||||||||||
Dividend Amount | $ 2,245,309 | |||||||||||
Cash Dividend Per Share (in dollars per share) | $ 0.090 | |||||||||||
Distribution Two | Preferred Stock | ||||||||||||
Dividends [Line Items] | ||||||||||||
Dividend Amount | $ 918,750 | |||||||||||
Cash Dividend Per Share (in dollars per share) | $ 0.38281 | |||||||||||
Distribution Three | Common Stock | ||||||||||||
Dividends [Line Items] | ||||||||||||
Dividend Amount | $ 2,245,310 | |||||||||||
Cash Dividend Per Share (in dollars per share) | $ 0.090 | |||||||||||
Distribution Three | Preferred Stock | ||||||||||||
Dividends [Line Items] | ||||||||||||
Dividend Amount | $ 1,181,250 | |||||||||||
Cash Dividend Per Share (in dollars per share) | $ 0.49219 | |||||||||||
Distribution Four | Common Stock | ||||||||||||
Dividends [Line Items] | ||||||||||||
Dividend Amount | $ 2,245,309 | |||||||||||
Cash Dividend Per Share (in dollars per share) | $ 0.090 | |||||||||||
Distribution Four | Preferred Stock | ||||||||||||
Dividends [Line Items] | ||||||||||||
Cash Dividend Per Share (in dollars per share) | $ 0.49219 | |||||||||||
Distribution Four | Preferred Stock | Subsequent Event | ||||||||||||
Dividends [Line Items] | ||||||||||||
Dividend Amount | $ 1,181,250 | |||||||||||
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
EQUITY - Non-controlling Intere
EQUITY - Non-controlling Interests (Details) | Nov. 29, 2018USD ($)shares | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||
Noncontrolling interests | [1] | $ 99,500 | $ 99,500 | |
Dividends on the HCMT preferred shares | 3,112,500 | $ 15,000 | ||
Noncontrolling interests | HCMT Preferred Shares | ||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||
Number of shares issued (in shares) | shares | 125 | |||
Noncontrolling interests | $ 99,500 | |||
Equity raised | 125,000 | |||
Non-controlling interests expenses | $ 25,500 | |||
Dividend rate percentage | 12.00% | |||
Preferred shares, redemption price as multiple of initial purchase price | 1.1 | |||
Dividends on the HCMT preferred shares | $ 15,000 | $ 15,000 | ||
[1] | Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company was the primary beneficiary of these VIEs. As of December 31, 2021 and December 31, 2020, assets of the consolidated VIEs totaled $1,003,896,995 and $591,318,506, respectively and the liabilities of consolidated VIEs totaled $827,390,435 and $463,411,967, respectively. |
EARNINGS PER SHARE - Earnings p
EARNINGS PER SHARE - Earnings per Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Net income | $ 10,527,222 | $ 8,449,770 |
Less dividends expense: | ||
Common stock dividends | 8,980,832 | 9,103,997 |
Preferred stock | 3,112,500 | 15,000 |
Dividends | 12,093,332 | 9,118,997 |
Undistributed earnings (deficit) | $ (1,566,110) | $ (669,227) |
Total (in dollars per share) | $ 0.30 | $ 0.34 |
Common Stock | ||
Less dividends expense: | ||
Distributed earnings (in dollars per share) | 0.36 | 0.37 |
Undistributed earnings (deficit) (in dollars per share) | (0.06) | (0.03) |
Total (in dollars per share) | 0.30 | 0.34 |
Unvested Share Based Payment Awards | ||
Less dividends expense: | ||
Distributed earnings (in dollars per share) | 0.36 | 0.37 |
Undistributed earnings (deficit) (in dollars per share) | 0 | 0 |
Total (in dollars per share) | $ 0.36 | $ 0.37 |
EARNINGS PER SHARE - Weighted A
EARNINGS PER SHARE - Weighted Average Number of Shares (Details) - shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Basic weighted average shares of common stock outstanding (in shares) | 24,941,324 | 24,930,079 |
Weighted average of non-vested restricted stock (in shares) | 4,500 | 4,426 |
Diluted weighted average shares of common stock outstanding (in shares) | 24,945,824 | 24,934,505 |
INCOME TAXES - Components of In
INCOME TAXES - Components of Income Tax Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Deferred tax (benefit) | $ 77,894 | $ (476,248) |
Provision for income tax (benefit) | $ 77,894 | $ (476,248) |
INCOME TAXES - Effective Income
INCOME TAXES - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal statutory income tax | 21.00% | 21.00% |
REIT income not subject to federal income tax | (21.40%) | (24.60%) |
State and local income taxes, net of federal tax benefit | (0.20%) | (1.60%) |
Return to provision | (0.10%) | (0.80%) |
Effective income tax rate | (0.70%) | (6.00%) |
INCOME TAXES - Deferred Tax Ass
INCOME TAXES - Deferred Tax Assets (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Non-current Deferred Tax Asset (Liability) | ||
Accumulated net operating losses of TRS | $ 985,917 | $ 993,683 |
Mortgage servicing rights | 261,440 | 319,048 |
Capitalized transaction costs | 93,903 | 106,423 |
Net non-current deferred tax asset | $ 1,341,260 | $ 1,419,154 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Line Items] | ||
Net deferred tax assets | $ 1,341,260 | $ 1,419,154 |
Net operating loss carryforwards | 3,200,000 | 3,300,000 |
Other Assets | ||
Income Tax Disclosure [Line Items] | ||
Net deferred tax assets | $ 1,300,000 | $ 1,400,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Feb. 22, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Subsequent Event [Line Items] | |||
Proceeds from issuance of common stock | $ 0 | $ 5,747,375 | |
Subsequent Event | Common Stock | |||
Subsequent Event [Line Items] | |||
Issuance of common stock (in shares) | 27,277,269 | ||
Proceeds from issuance of common stock | $ 83,500,000 |
Schedule IV - Mortgage Loans _2
Schedule IV - Mortgage Loans on Real Estate (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Prior Liens | $ 0 | ||
Carrying Amount of Loans | 1,001,869,994 | ||
Carrying Amount of Loans | 1,001,825,294 | $ 547,345,334 | $ 635,260,420 |
Multi-family | Illinois | Senior loan in excess of 3% | Borrower A | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Prior Liens | 0 | ||
Carrying Amount of Loans | 36,781,588 | ||
Carrying Amount of Loans | $ 36,781,588 | ||
Multi-family | Illinois | Senior loan in excess of 3% | London Interbank Offered Rate (LIBOR) | Borrower A | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Interest Payment Rates | 4.30% | ||
Multi-family | Texas | Senior loan in excess of 3% | Borrower B | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Prior Liens | $ 0 | ||
Carrying Amount of Loans | 34,690,000 | ||
Carrying Amount of Loans | 34,690,000 | ||
Multi-family | Texas | Senior loan in excess of 3% | Borrower D | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Prior Liens | 0 | ||
Carrying Amount of Loans | 33,360,000 | ||
Carrying Amount of Loans | $ 33,360,000 | ||
Multi-family | Texas | Senior loan in excess of 3% | London Interbank Offered Rate (LIBOR) | Borrower B | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Interest Payment Rates | 4.05% | ||
Multi-family | Texas | Senior loan in excess of 3% | London Interbank Offered Rate (LIBOR) | Borrower D | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Interest Payment Rates | 3.65% | ||
Multi-family | Maryland | Senior loan in excess of 3% | Borrower C | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Prior Liens | $ 0 | ||
Carrying Amount of Loans | 33,500,000 | ||
Carrying Amount of Loans | $ 33,500,000 | ||
Multi-family | Maryland | Senior loan in excess of 3% | London Interbank Offered Rate (LIBOR) | Borrower C | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Interest Payment Rates | 3.25% | ||
Multi-family | Virginia | Senior loan in excess of 3% | Borrower E | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Prior Liens | $ 0 | ||
Carrying Amount of Loans | 30,576,666 | ||
Carrying Amount of Loans | $ 30,576,666 | ||
Multi-family | Virginia | Senior loan in excess of 3% | London Interbank Offered Rate (LIBOR) | Borrower E | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Interest Payment Rates | 2.75% | ||
Multi-family | Diversified | Senior loan less than 3% | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Prior Liens | $ 0 | ||
Carrying Amount of Loans | 752,255,325 | ||
Carrying Amount of Loans | $ 752,272,465 | ||
Multi-family | Diversified | Senior loan less than 3% | Minimum | London Interbank Offered Rate (LIBOR) | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Interest Payment Rates | 2.90% | ||
Multi-family | Diversified | Senior loan less than 3% | Maximum | London Interbank Offered Rate (LIBOR) | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Interest Payment Rates | 7.50% | ||
Office | Diversified | Senior loan less than 3% | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Prior Liens | $ 0 | ||
Carrying Amount of Loans | 11,748,199 | ||
Carrying Amount of Loans | $ 11,748,199 | ||
Office | Diversified | Senior loan less than 3% | London Interbank Offered Rate (LIBOR) | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Interest Payment Rates | 3.75% | ||
Retail | Diversified | Senior loan less than 3% | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Prior Liens | $ 0 | ||
Carrying Amount of Loans | 17,172,623 | ||
Carrying Amount of Loans | $ 17,172,623 | ||
Retail | Diversified | Senior loan less than 3% | London Interbank Offered Rate (LIBOR) | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Interest Payment Rates | 4.10% | ||
Self-Storage | Virginia | Senior loan less than 3% | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Prior Liens | $ 0 | ||
Carrying Amount of Loans | 51,785,593 | ||
Carrying Amount of Loans | $ 51,723,753 | ||
Self-Storage | Virginia | Senior loan less than 3% | Minimum | London Interbank Offered Rate (LIBOR) | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Interest Payment Rates | 3.60% | ||
Self-Storage | Virginia | Senior loan less than 3% | Maximum | London Interbank Offered Rate (LIBOR) | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Interest Payment Rates | 4.75% |
Schedule IV - Reconciliation of
Schedule IV - Reconciliation of Mortgage Loans on Real Estate (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | ||
Balance at beginning of year | $ 547,345,334 | $ 635,260,420 |
Mortgage loans purchased | 983,694,326 | 57,601,572 |
Mortgage loan repayments | (528,802,705) | (145,516,658) |
Accretion of purchase discount | 46,088 | 0 |
Amortization of purchase premium | (457,749) | 0 |
Balance at end of year | $ 1,001,825,294 | $ 547,345,334 |