HCFT - Earnings call transcript Q3 2019 | Lument Finance Trust, Inc.

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Operator

Good morning, and thank you for joining the Hunt Companies Finance Trust Third Quarter 2019 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Brendan Gover with Investor Relations at Hunt Investment Management. Please go ahead.

Brendan Gover

Thank you. everyone. morning, Good joining Trust's for to Hunt discuss Thank Quarter our XXXX Finance Third Financial Companies you call Results. Torres, Interim With me Mike and Debt Briggs, CEO; Jim are Real Precilla Strategies. CFO; on the Larsen, call President; today Head Estate of Flynn, Jim we the and On press filed issued third our XX-Q details provided which on our quarter a with Thursday, SEC release, financial results.

supplemental earnings found website. be presentation on can a that provided also We our

and are forward-looking that to identify other contained expect, to forward-looking intended conference, in made call over historical everyone and to actual Jim, the the Risk risks our like cause could call XX-K. would made this risks meaning Such remind evaluate, indicate, statements statements. filed XX-Q its XX-K such the will, X-K, company's particular, on the constitute These the of materially the SEC, Securities various to statements. forward-looking XXE as information forward-looking on are anticipate, of the the results similar believes, I that statements. of to are from certain These including discussed Act intend this with differ reports in of handing those during and, and subject are Factors and Securities expressions may Act statements within based Form When words of uncertainties Section course and section XXXX. statements Before not Section and of the outlook, XXXX of XXA in in reports Form used uncertainties

in to will conference discussed of measures in to company financial to non-GAAP GAAP these be only place accordance Furthermore, these cautioned statements, most or comparable not on can be this Reconciliations with presentation the undertakes financial to substitute update the our intended call. as prepared filings information which be hereof. the measures forward-looking not of as to these financial SEC. isolation in measures of non-GAAP statements. the are a date accessed this accordance through Listeners any considered presented certain GAAP. is The in A forward-looking information of no obligation with with reliance speak undue

turn now call Jim ahead. will the Flynn. over go Please I to

James Flynn

the Good for earnings Trust morning, the XXXX. everyone. third of Thank Finance us Welcome all Thank for to you, Hunt quarter Companies Brendan. call today. joining you

per For HCFT $X.XX the share income third quarter, is net $X.X share, up $X.XX or of million quarter-over-quarter. which reported per

per shortly. results -- Briggs core per Our for $X.X share, detail the $X.XX Jim earnings million $X.XX in is more quarter-over-quarter. quarter financial our discuss quarter up were or which will

quarter, the particular, a rate be investment points to of HCFT. and million $XX above evaluation and basis opportunities activity loan that origination our acquired for continue spread mind, of With CRE Competitive spreads. and, we floating in funded pressure will in During continue patient we opportunistic of CRE weighted markets at in LIBOR. to thoughtful, XXX loans average debt

law. not intend We previously independent also are with ORIX. involving We we noted announced in of the Directors Thursday transaction Hunt members do on our our reviewing of that Form the filed Board the that and such SEC X-K further that the We'll independent disclosure the Until members just comment of transaction provided independent further. by to members otherwise visibility publicly the review approved be discuss will Board determine have Board or definitive transaction.

financial who the provide will With Briggs, results. that, over Jim turn details I'd like Jim? to to the further call on

James Briggs

your as referencing will quarterly On The well the uploaded XX-Q filed website, presentation you, investor reference. evening, on Thursday to supplemental morning, investor during supplemental has our provided we report and be we on which everyone. presentation remarks. our good Thank been and Jim, our Form webcast for a

will of earnings quarter. summary an for the the X find X Pages key third and On presentation, and you updates

in QX increase core common or including items, comprehensive compared tax was in a for and $XXX,XXX activity to $X.XX corresponding a income stockholders noncore income prepayments The attributed quarter at $X.X adjusting the these For REIT falling subsidiary. X impacted X XXXX, to by primarily $XXX,XXX to benefit a our taxable for in our related After earnings rates income right of third the $X.XX million or $X.XX was a per $X.X relative This comprehensive reported for per QX million is decline to which driven and with portfolio, represents XXXX's we core per per of third $X.XX common the quarter quarter share by share of or share. in the of $X.X $X.XX to share of legacy per value quarter and XXXX. items, million mortgage of was increase servicing line QX our share 'XX. stockholders EPS

a indication Our better provide our that view core capacity. earnings ongoing of earnings is

book per value $X.XX compared share value QX. less end in have manager a changed value as XXXX, to XXXX, was as the and per was of by first value, of book QX of QX book since X% share significantly at our Our share Since full enhanced the quarter HCFT stability than manager. we total per which has quarter of book becoming HCFT's $X.XX early

I Michael turn Larsen, and our will composition now activity. investment the details on portfolio who'll call provide to over

Michael Larsen

Thank you, Good everyone. morning, Jim.

comments. Just expanding on some earlier

third XX% high-quality the on rate funding And and loans XX these multifamily activity Our investments. $XX focus to to million. loans we loan will be last were our been to quarter majority of fundings during advances the X to we incremental in of first over And assets. the has quarter, with of related continue multifamily, continue total acquired future floating made invest anticipate mortgage loans and

multifamily. from Our overall quarter XX% loan XX% increased at portfolio to end

average initial New our a maintain new had continued loans over our reflects credit discipline. These weighted spread with average LIBOR. points XXX and loans activity LTV focus of on historical is consistent origination had we ensuring weighted basis which of XX%, a

over the million by decreasing That during rate we have basis sold of $XX average QX payoffs have interest with $X We floors and resulted performing our also to on a loans XXX At that continue on one million. -- weighted basis in on experienced our XX% success quarter out, loans loan on net participation, new floor a in these point obtaining of current loan LIBOR points a million portfolio floors and loan which $XX are above LIBOR. acquisitions.

saw work we year. continuing in pipeline loan that as we're we quarter, move on the to do strong during decline the a of the we portfolio have Although into end

Payoffs in all payoffs plan cases. the to who in resulting refinance While loans XX% permanent we our of lending their via exits driven values the LTVs year, successfully below completed reflect in amounts, and our relative the bridge business and quarter strength sale stabilized borrowers positively half well this excess loan increased and successful of the platform. first by on believe property exit were of

quarter of in end. are portfolio portfolio total an defaults the with had portfolio or rate consists million diversity. average portfolio, material $XXX for not no the delinquencies Our seen floating an of and asset quarter. XX loan balance performance loans provides of over in we've There principal The the loans size $XX which outstanding of change million, at any

financing loan plus continues an all financing financed of X CRE securitizations with LIBOR basis be fully Our cost average portfolio to with points. against is CLO portfolio term the of matched XXX and, therefore,

runs and ongoing basis. XXXX, period on has providing a with XXXX, stable, February period through us attractive that that second August of reinvestment CLO an first a has of our non-mark-to-market through runs Our reinvestment financing

CLO, transaction, new announced, plans with As we our for of are CLO market CRE execute we issuance remains believe refinancing the previously first potentially CRE attractive. to a and CLOs exploring the

With call that, I the remarks. some pass will closing Jim for to back

James Flynn

and taken the we've believe that over ways and as Thank excited remain you, are and we've to in well positioned made said improve prospects grow We that to activities. the be Mike. since for the investment about explore overall base. this company In growth summary, cycle, stage We we've progress in and we positive our on increase is continue as the outlook in the to continuing manager. company's capital for past, we the earnings

to on We company our progress. appreciate you We in your and today the interest the updating us look call. on joining forward

open ask I'd that, with call for the like operator questions. to the And to

Operator

question JMP And Instructions] Delaney [Operator Steve first today's Securities. from of comes

Steven Delaney

So [Technical good, dividend solid Difficulty].

Brendan Gover

a up question? you there. bit repeating your little Would you Steve, mind Steve? broke

Operator

Sir, this now, Nolan, your him sir? open we Nolan out -- Mr. looks is like jumped queue. the got Mr. of operator. like line is It Christopher looks It of queue. Delaney out

Christopher Nolan

Jim like color please? guys. in expanded the that, quarter. spreads it quarter, behind Any slightly investment Good Briggs, looked

Michael Larsen

X%. compression continued transactions look high-quality spreads markets on we've of average This we've the last and the in that a just still that actually is the spreads new the Mike Larson. quarter a over Because in decline really on originated, if you're loans we to to quarters, from but seen little the And credit spreads XXX good referring transactions, above originations we're that lot new the spreads during to XXX. several a in saw seeing at on still reflects over

Christopher Nolan

the Yes. targeting income a yield expense just is Actually, seem I book Mike, the looking referring value? on I I on to was the interest offline. spread at and the guess of X% management that would X% income is interest still second assets be, change. earning the what dividend, borrowings, take to of can to relative to question statement

James Flynn

the I in I we've Board's obviously, discretion. competitive look at that's as the mean think I I But at going -- think, the our we said yes, past, on set. was a take say, to

to space. competitive range in market. continue others in the we basis is deliver and within sure. the go-forward of is for goal And see what that the from is And largely think or what the I a line with you on obviously our dividend others to described goal our that's expectations

Operator

is [Operator Delaney Securities. Instructions] Our next questioner from JMP Steve

Steven Delaney

Yes.

can hear So you me?

James Flynn

welcome Yes. back. We can,

Steven Delaney

Wonderful.

all we million I'm you those piece glad, just that don't know just under Should you sold we're there some Sorry, participations note off -- the senior apologize. in a of on. I happened to your I And return? jump the time, $X Chris are boost good. quarter. did A last but was what structures Noticed type to

Michael Larsen

we performing that the You're to loan participation referring sold?

Steven Delaney

Yes.

Michael Larsen

Yes.

of loan -- participation was So a participation participation our where of the a sitting or was one controlling that is within that CLOs. a

Steven Delaney

Okay.

Michael Larsen

But in sell due our CLO. portion to issues concentration, managing concentration not a had was we opportunity to an that off in

Steven Delaney

it. Got

Okay.

and CLO actively in can was matter So it that a just you that. asset manage a of concentration particular --

try cleaning I is basically you you hear -- up it's So diversification of say. what CLO, the to the

Michael Larsen

We're just managing that, that's right.

Steven Delaney

can fourth -- at us of end pipeline you whether the you comment progress you've capacity in Can your give the here And about million September that any in CLOs the year? the the near-term made XX. utilizing in And color the through Okay. Mike, $XX quarter? of

Michael Larsen

Sure.

possible. this to quarters cash an a work stated month prior application summer, or next we under and bit to that always And year. CLOs today, after over million in hope seen which isn't in the as pipeline, deploy have quickly X a in on $XXX -- the little in as we've of So or slower year our early a unusual, pickup closing we have fully actively of in loans the with working of we're all as significant

Steven Delaney

And Okay, totally great. on, then, comment Jim, respect still your you're I if about.

James Flynn

on. am I

Steven Delaney

you to you assume there sounded role were from HREC that resources. And in I externally Okay, of we view saw this affiliate say, Or comment HREC of can't was agreement your combination that standpoint, that going doesn't company that of should because are And consider big we great. we're those be a it a has there's positive? are naturally that transferring We and stock, the there just combination where first who is a from the not just how you combination agreement, pretty I managing -- totally changes. the is management and took Is entity that just that have to in picture one business can't entity present asking scope this, managed at our scale to clients anything ORIX extent I HCFT like when if positioned though, like that. to my the challenges especially and the that to that a involved the would provisions in and and another, to looking a respect management about would in any, positive. that business imagine an respect the like, we type from that on manager. is about positive more new benefit reaction that HCFT? we

James Flynn

high at a comment I'll level.

Steven Delaney

Yes, that's all that.

James Flynn

way that to way it a describing the But are about very thinking is, I an it. appropriate about rational you and think it think, and

in a But we working HREC transaction the through today's... in for was think, are ORIX you the And rationale point scale. for I So details. out, market, and big today's as

Steven Delaney

Competitive landscape, yes.

James Flynn

Environment, scale success. in important a very is factor

right. So I think you're it about thinking

Steven Delaney

it leave know, that, I'll Well, you Great. just say there and congratulations.

done I an You guys the have, amazing past this job year over think, company. positioning

look the going with busy through you forward but holidays, I And to rewarded next year. been the pretty You've enjoy nicely those. stock up working this year. we know And to be you're with

James Flynn

Steve. Thank you,

Operator

Stanley. Greg And Morgan our next question today comes of from Bennett

Greg Bennett

coming Is level, in this On ORIX is industry? that are competitor? a the together X competitors a Jim, high

James Flynn

yes. areas, some In

the But REIT do well. compete There many -- public as of complementary the the some that certainly On activity to it's there's management another, outside HCFT, areas the -- with HCFT currently some at businesses. largely we areas they where in but complementary in one respect are but Hunt with we do. also and ORIX and

Greg Bennett

Do for hold housing -- passing that they loans a a a loan, do off? do or portfolio multifamily hold their own have they it their make when loan rehabilitation, for vehicle in own they the vehicle they

James Flynn

vehicle hold to have manage currently They them third-party vehicle. don't manage of their vehicle a these vehicles, loans. not on balance. They or external They capital do an around types

Greg Bennett

the go So contract management to ORIX. will over

James Flynn

discussion, we'll That's can't discussion Board gone has back a comment through be -- their the Board-level so once market a I that, review. I mean, Board the to on.

Operator

And there's questions. ladies no further gentlemen, and

this concludes conference today's you all session and attending today's question-and-answer thank We presentation. today's call. So for

lines, now day. have You may a disconnect your and wonderful

Lument Finance Trust (LFT) 12 Nov 192019 Q3 Earnings call transcript