LFT - Earnings call transcript Q4 2021 | Lument Finance Trust, Inc.

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Operator

Good morning and thank you for joining the Lument Finance Trust Fourth Quarter 2021 Earnings Call. Today's call is being recorded and will be made available via webcast on the company's website. I would now like to turn the call over to Charles Duddy with Investor Relations at Lument Investment Management. Please go ahead.

Charles Duddy

Thank you and good morning everyone. our full discuss year joining fourth Finance for and quarter XXXX you call Lument to Trust Thank financial results. the James Precilla on Michael Estate me call James are With Flynn, Investment Larsen, Strategies. President; Head Briggs, Torres, and CFO; of Real today CEO; which filed full release, year details Tuesday, results. a we SEC issued fourth XX-Q our On on the our with and press provided and quarter

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

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

It hereof. nor forward-looking not statements. place of the company the cautioned undue be forward-looking identify The will call. or these not these measures any of are statements, continue in currently A undertakes presentation this Furthermore, date of measures the not these the as possible certain amplified Listeners risks. or information many substitute to to Reconciliations speak the our with obligation www.sec.gov. accordance discussed measures financial these no update only now presented over future amplified in such financial of to as which on at can reliance prepared I to non-GAAP in is be to risks pandemic. predict most on of isolation by this a with intended is to turn are by uncertainties amplified COVID-XX through maybe will in Please GAAP. filings be Additionally, GAAP considered to by be to financial accessed and information all SEC the go and non-GAAP will accordance Flynn. the James ahead. comparable call with

James Flynn

the for you, morning Charlie. earnings XXXX Welcome XXXX. for Good Lument Thank of for everyone. fourth joining. you to Thank call and busy all important year a Lument the Finance Trust. was Finance Trust quarter

February X, transferable uncertain significant we've were variables several economic around like I'd with capital exacerbated XX, base. and During the asset of begin environment our first that and the such purchase and events entitled grow transaction, and January considerations to unemployment, discussing impact to to on tragic This and few interest which allowed capital by continuing COVID common XXXX Ukraine continued same Europe. months the year closed on was XXXX, rates, made loan marked XXXX. of our executed all newly we the us the a issued a and transactions by the further that the in ownership this shareholders of performance observed allow million in incremental strong company is the of as investments approximately believe at investments equity growth by institutional rights meaningfully At to investor significant our a accomplished to offering, the and of and market to time, going operating value, all a equity raise transaction portfolio. recent expense have intentionally with as which Those announced the as rights on our assets. over we scale, company provides We offering market achieving will capacity to the $XX.X resulted objectives decrease stock raising believe discount avoiding our stockholders our the dilution. capital make the price of this that in in We participate equity price in offering. transformative result to expenses target raise a efficiencies necessary expanding operating proceeds. shares stockholders purchasing this LFT to equity LFT enables at G&A a common discount structured improve appropriate anticipate gross company's to in percentage and We growth as

offering the volume increase and that our expect also stock. liquidity of trading We will common

alignment that its $XX million note in a strong and a privilege the agreement, I manager between its made external of over of an total the transaction transaction. affiliate subscription LFT demonstrates exercised interest investment and of management Finally, the

the portfolio existing of the a with As quarters, expertise assets, this centric deploy we the to looked basis. strategy to multi-family into we coming on similarly capital levered consistent intend and

of non-mark-to-market invasion the features. the the have note We I weakened to have and provides terms will historically and over CRE the to to Russian to few as seen non-recourse well as an favorable that market around and economic risks investments the believe inflation. financing last that our attractive weeks Ukraine markets broader continue we CLOs CRE due utilized uncertainties CLO finance source due

reflects per value the raise, resetting count taking account our dividend as first dividend we our AAA quarter X.XX into we'll This levels we regards the of share look these of a Series CLO beginning the to points $X.XX of deploy a issue spreads reduction basis have remain to widened which recent in common to year of basis. the for our a on a in into our XXXX. increased resulted capital as dividend, declare dividend by quarter With New XX book share our from of to and XX X.XX. of meaningfully cognizant and quarterly capital as during lever much

to is common the newly we our deploy shareholders income over fully the emphasize raised In capital dividend anticipated the to addition, on support expect and I deployed, a capped $X.XX Pivoting perspective XXXX would to capital however, record months. quarter reflects Overall, to growth. a this a fourth that as coming volume be share. drag the we net with quarterly dividend banner company's portfolio into per once of off year results, greater LFT's portfolio able like from

issuance $XXX from preferred $XX QX, invested million capital new loans, equity the billion bridge million fully raise. and the over During successful we floating rate in XXXX CLO $X deploying

that portfolio multi-family the bridge continued perform increase year-over-year. to management size has strength platform our in XXXX, credit focus lending loan As an of XX% and outstanding to well. This It year-end our of represents in principle allow and the portfolio exceeded portfolio also our important acknowledge billion. total $X to balance asset is

have December prior I forbearance of no still was calls, portfolio performing we I COVID to to any stated plan is the well our both asset to XX, standards loan nor era. granted we defaults As continue default subject a results. with during impairments, loan loan loan testament importantly, business single reflected in credit Perhaps XXX% ability on as our this a have in and forbearance. to as And our our not most execute rigorous believe the no no proactive management monetary is efforts. our experienced

represents of the share, full dividend XXX% the full ratio distributed earnings year. year For coverage total was our XXXX, for $X.XX which per

our into a shareholders. a order real provide investments debt maintain of focus to continue simple earnings and straightforward in strategy capital commercial to estate return deploying stable support a our multi-family We market with in that to

REIT, larger to it We LFT important is to scale value long-term provide a grow also which shareholders. to feel will feel we our

investors. towards these current market progress we and In discussions the months, believe and continuing new continued to We executing goals we about excited hope coming to we about business plan. investors make with are focus growth we opportunity on to the LFT as long-term continue and educate participants I'm the the offer

providers of of support and and manager and of is than the the benefits largest portfolio nationwide. investment multi-family one $XX transaction XX over nation's LFT over total of Our a people scale billion great volume servicing capital provides and than employing our The XXXX, space $XX platform in XXX greater the executing loan housing billion the this in more strategy. in investors seniors in long-term offices execution

results. three in over the have manager they've multi-family we're we to perform continued to to extremely market investments like over on that Briggs, loans provide to As of utilizing middle our our focus who strengths With our the well. years the last call I'd show financial floating turn and will continued details rate bridge to Jim

James Briggs

full during we Good investor Jim. Tuesday you'll on presentation, for well everyone. report be pages on for uploaded and earnings morning of you, our we'll the The evening, a XX-K the On our website, supplemental and our been the filed and find X to remarks. as has X presentation year. provided key Form On which investor quarter the Thank your presentation supplemental summary referencing through reference. updates annual webcast

For the of million reported which in of net per XXXX, reported stockholders income income $X.XX of result $X.X to or common fourth compares prior approximately million quarter This common to quarter or stockholders we share. to share. the favorably we net $X.XX $X.X per

of common or full our QX XXXX. approximately share or a would share we $X.XX $X.X for note included year-over-year $X.XX the For on that extinguishment the million $X.X CLOs. of I $X.XX net per million our of income debt pertaining of to of the reported compares refinance to prior to With share. regards stockholders loss or to comparison, full million like to the XXXX $X.X results year year CRE per XXXX per This

year Excluding our approximate been the per share would impact expense, full X% non-recurring have income common of this to year-over-year. increase net representing $X.XX stockholders an

$X.XX equity alluded EPS of we XXXX, QX’s highlighted calls. cash. off like our fourth to have fees, $X.X per per fees, been LFT’s $X.X payoffs the Therefore, CLO million LFT’s in which or are year EPS extension income from Jim of have earned of fee share. reported or be in represents income which distributable I'd preferred increase approximately approximately exit exit of noted earnings distributable to also to on million prior capital loan an earnings prior relative LFT $XXX,XXX as which And fees, loans the our some we $XXX or to we reported distributable exit full to when of share. during the for LFT can are calls per quarter, fully on $X.XX $X.XX and to in earnings fee associated with well. which prior on million. distributable quarters’ of penalties increase, on deploy For may the yield the we time This and fees, from entitled QX million LFT quarter and loans the part million. $X.X which have payoffs by on ability quarter, on payoffs touch million In exit loan also In maintenance $X.X earned fees structured $XXX prior and of typically cause time. pays and recognized the as loan quarter-to-quarter. the timing the variability collected loan and interest share.

Our XX. value December million. was total stockholders’ was And approximately December $XXX at equity $X.XX per our share common of book as XX

in subsequent noted his closed transferable end, the rights on Jim remarks offering. As opening announced previously year to we

As shares. issued million XX.X a increased and total result to outstanding shares company's on of transaction, this the February XX

As million, on value of book $X.XX. and total common and pro a book $XXX to $XXX common transaction to approximately per million basis approximately decline stock a value book company's equity increased increased approximately form to of the result the share total

over proceeds do of drag as As the coming deploy mentioned, months the previously and we Jim offering on anticipate this quarters. rights EPS we

as in XXXX-XX, smaller commonly losses, instruments. on referred company, to SEC, prior credit I discussed the as expected yet amendment have by recognize everyone to which losses current credit of that not is financial like a would as As to adopted remind a GAAP defined comprehensive reporting quarters, or ASC CECL we how

X, we we scheduled on loss then CECL smaller to statements financial continue model January a implement As prepare reporting to basis. are an on incurred company, Until XXXX.

consider and As our the impairments we of we not have incurred current be model to any of not loan allowance XX, recorded the in for loans do loss December any losses or under quarter. impaired

loan healthy, of impact our its our exists, COVID-XX investments. uncertainty of to properties performance portfolio current bridge our collateralize including recovery continues that the loan While and the the about mortgage remains the commercial values borrowers on

activity. will will incurred. allowance Michael the portfolio who continue Larsen, credit details evaluate call investment or on will I to losses the provide to portfolio composition turn record our impairments will for loan We as over any now and and

Michael Larsen

And Jim. you, Thank good everyone. morning,

three strong Jim to strong results continued year. by we As driven Jim the noted, were of the and of due accomplished full in the part over our quarter This was last investment months activity capital deployment raised fourth year. that last the

QX total of from with million. we investments balance acquired new $XXX outstanding of principal During affiliate manager XX an our

had multifamily XXX of at quarter acquisitions weighted for to a average average a average weighted assets. origination were a of acquisitions points basis The All LIBOR secured of weighted with fourth points and loan spread these LIBOR basis to by XX value XX%.

For represents a $XXX full the funded acquired new of million $XX significant to just year increase during loans. million XXXX. of compared the LFT and year XXXX, full That acquisitions new loan of prior

maintain very continue pipeline lending new see we of a strong We of bridge and a activity move multifamily slowdown indications we our to no into XXXX. in opportunities as

exceeding portfolio we've $XXX quarter $X in average XX The our in consisted exceeded end, is size loan This really milestone total $XX our is in which an billion. million. with million for balance. recent is an of a experience portfolio payoffs, of we that And quarter, This $X first at loans time loan line billion loan the quarters. with had a us. the loan outstanding During prior

end Our a portfolio of and at that's multifamily XXXX. overall increase XX% XX% loan multifamily year slight from year was as

self-storage, believe performance generally that on outside Our of provide our self-storage second of space. property and multifamily highest our touched middle is the important. We've that. the which type volatility asset diverse It's X% continue multifamily. least portfolio. we reflects This represents very in and focus And portfolio to industrial market concentration

multifamily, best class Market to we for We to shareholders. pricing, average middle continue class creates workforce that for estate is believe this and our believe to points. today. to average With spread of LIBOR housing asset and has points our demographics market continue investment asset basis respect basis portfolio support XXX opportunity weighted the dynamics investment for attractive real a a an LIBOR weighted and XX

exposure space a seen discussed some in for relative in office in total priority the nonbank does competition lenders the on remain a as we've to market’s As spreads over note our The combined property our to It months. Despite the market this retail competition due strong. assets quarters twenty level X% And of thirty-one bridge stabilization, increase and of remain low. last be that of is debt very our to balance a in and even prior we've very continues year-end. basis I’ll represents the of bridge decline weeks strong. to multifamily X% number basis. few the competition, slight to types on continue and twelve a combined

do weighted our and of our loan continue will that offer quality we was profile multifamily activity to investments points XX%. We we to the spread reinvested asset through with financed subject And period basis of return related has subject portfolio facility relative has calls at over will conditions. over to investments be to majority but proceeds LIBOR. CLO not be a to warehouse from one one from feel anticipate rate securitization. margin running lenders. our end, repayments of a with types reinvestment currently month not assets, warehouse XXX various multifamily repo series financing advanced on our therefore, loan December, can look just year and we LFT It other allows average or It principle The of to At any are strong We XXXX. strong supplement utilize assets to CLO multifamily. repo

multifamily pipeline call pass to opportunities, which expect very well. that last the continue the we investments Jim. year, over rate back strong our And floating of With see So market continue. lending and continued have manager the middle which strength we to our of focus years bridge we're show three overall over to these to loans the extremely to I'll we multifamily bridge last continue utilizing will in perform a

James Flynn

you, Thank Mike.

With making that time progress that about prudently to of look business and earlier, on Operator? mentioned the capital we base over to are our appreciate I in questions. our your interest. progress As to grow and capital to We to updating the feel for future LFT. turn execution long-term we great the and our excited forward be like and you our plan continue deploy I'd call continued

Operator

[Operator begin first comes Our the session. Instructions] now question-and-answer Love question Piper from We Crispin Sandler. with will

now You may ahead. go

Crispin Love

thank Good my morning and for you taking question. Thanks.

on to and of speak power earnings the seeing you the just core the quarters? was I the can also the the quarter, dividend drag what offering next portfolio grow that the for time. Lument you warrants several and the the first to So over seem I $X.XX first just the aspects of some near-term kind and from for understand earnings over But offering. the here the that key border reduction that of for reduction means

quarters curious long take of over to deploy So kind I’m just of should thoughts that how it capital? couple next and

James Flynn

Sure.

to with right obviously support there it timing not something – an look, Europe raised, higher. book with deployed don’t we And on early of reiterate, has XXXX. dividend ended we we a the further the of the disruption. went pressure, that what now look inflationary that rights part that market We hitting in crisis in and So really that almost Effectively through executed impact the the we market, fully when is just believe offering that’s believe markets the you XX do million. ideal beginnings then the at was Eastern $XX having can caused we that offering of the the

all those so And into played the of that our has obviously timing decisions. investment of

also And that stability. conditions fully and increased the earnings rights impact has where current the result per at the couple volatility move forward, in has that are issued lack what and offering of discussed. the we’ve would discount be drag what they of we’ll were impact given as on of number quarters a of next a shares market share to able feel, the we’ve but we So, – considered, deployed be drag that

will at as our with the sat expect the components things market wanting things to those be earnings those over reasonably of our we optimistic to book will think were knowing of well, decided full not power feeling All reduction at over our share we’ve We looking and price. we decision been any the we’ve at reason, and and years confident last that is able our But by that business the we do at to here. have generally our that looked that the executed latter to would the do few that those looking create people and at this and board, looked temporary dilution to been dissipate earnings what to make to and year very – able success, be that incremental least what time. part, and we plan continue prudent

to position we looking really factors, earnings term we’ve wanting prudent to for and forward and was at of to over potentially it earnings so. of But on to dividend basis the us it to and put that basis, ourselves of that as we’re and also So will you, I important all ensure do long being comfortable is shareholders in the didn’t go we’ve confident. ensure cover not view. state want with taken we create all feel investors able see and that to our to to a that relatively And a and stable think continued very how

Crispin Love

fair and kind spread of comments before equity up say that just $XX CRE are million the right for would markets CLO right of limiting appreciate now now I and on that of you you’re part it’s wide? as capital do just hold that can levered work you. putting to the Thank that on say there. transaction is Great. you And a

James Flynn

securitization the order. we’ll an time short basis it executing regardless is, conditions, anyway the mean, look, put months working get Yes. a any on agency banks of certainly the to the of through – timing on rating work with would it go unlevered The all and to of just structuring of take any I in relatively reality process investors meet with the the and –couple market and deal.

actually I market of been financing all or evaluating midst of a looking on that. there’s that in leverage stable But to all doing more the CLO issues, asset. the type and and not for options also impact and still material high us for timing in time on the provide We a that resolution to – are ours supply hopefully and couple will as that a same unattractive, don’t on Again we’re characteristics for some we’ve are be of the would we the the crisis potential got those expect of normal flow have but There’s now, deals little demand paper. standpoint, could our So, to the but wouldn’t we’re of we’ve we even past, it than through done chain things hopeful think think environment make all to side different a for deal spread. that levels wider economic to And some still transactions a a in going costs for I those things think that execute they’re they’re start I we the the rationale this resolution in environment. have from are that that to operating decision. the of get not that Europe, before under for

Crispin Love

Okay, taking appreciate my great. you you. Thank I questions.

Operator

comes question from James. Laws next with Raymond Stephen Our

ahead. You may now go

Stephen Laws

on Hi, financing CLO, you much use about – to types much kind ramp if follow on good of will other should to financing, how willing and the do some how a fully future so, there? about questions, potential deployed, be as we you previous warehouse a and ahead put think how morning. of considering of kind up think of To leverage

James Flynn

ahead as the the you warehouse had effectively and and we want go Eventually in in process through have because going putting we’re want able – the historically, loans we whether we look Stephen, we’ve go haven’t and capacity, given on place. used current we some. at need of balance been manager’s would that, to, of conditions, decide we So, warehouse kind would know, it’s haven’t to to sheet, something warehouse to the to some

– little we the banking term kind our the at max you CLO we where warehouse looking take don’t in something So a partners that of a we are talking of place. have we a you to explore it But could in that I the are we non leverage mark-to-mark basis. standpoint would wouldn’t putting to bit – put that’ll think time that in with see place. is, utilize and see match potentially at

the Again, of do and and path that to the market the putting kind of mean, as that the I to through mean a we possible. in the time minuses so, midst turmoil as think cost the comparing just in significant We’re going in market. soon CLO of the just I CLO or market. are to pluses broader of estate down and markets, I options exist don’t continue real

In fact, put going things the to risk are in It’s fundamentals be still it, overshadowing okay, geopolitical in say, matters, pin to despite that’s month, pretty are good a and hard everything. different. and other a inflation but

should we So, path. take this

any done warehouse I As whether the on we to have I think it’s be under, securitization there’s some condition. as said, work the have to just deploy we want – still quickly or in – We market capital as possible. financing

we the But some actions benefit, But some want think people that sit fighting have benefit be month. Europe look, here talks a having and outcome it well. So, few that more It and that if could the to a markets be those it's undertake It be trickle that stops if market, stability and could change. say, a reasonable anyway. the I if week overall in will, again, stable there’s I in to capital the through in environment could into if of stops quickly. put call if very imagine hard you we still we're think dying to you months. But doesn't

doing is portfolio great. Our

we've we more want the capital. to most if sort place, we is of manner in sufficient financing do in that the we in putting just sufficient ensure any we're utilize that pipeline long-term Our can. especially And than to so, place that put

Stephen Laws

those maybe lot pipeline lot business there talk does Great multifamily, competition can lending, Can a of of interest this kind going out competition for lot a of your about, you're certainly on markets. in lot talk among how of a impacting a there. is appreciate definitely you Michael, you comments repeat you, competition, about what out seeing, but or look? the

Michael Larsen

I'll loan and then feel Precilla it multifamily, floating of free jump others is it. And on these asset bridge investments. And favorite for Sure in lot market competition class There kind is in. today. touch of rate particularly the a for to

continue attractive that I what very by pipeline see strength has And that's opportunities. and to very our strong think the we a the in manager big driven picture, space. that

really in are multifamily sales our housing and types. multifamily expert XX and day plus an across spread We seniors in executing space transactions the market the housing that's leader with other platform product the in large a offices and across space every that manager

opportunity think But competition somewhat – has pricing, as products able drives been brings borrowers for the have Precilla, from and drive reflected side. us stabilized. and a – opportunities although an is add, issue and we've I clients opportunity tighter I set an to And pipeline. terms pricing. repeat that our wide So building allows that's And the investment quite continued But we in few the Where and through pricing managing creates opportunities of most that is that, on the see please larger a not loyalty being pipeline. I others, that do. a pipeline, borrowers That seen LFT platform said, if has offer of to think you it anything long-term just to relationship with.

Precilla Torres

the dissipate the that No, we over expected held of anything I to is But of year, which spread continues there was the the year. workforce some widening, to of of that. strong is have housing quarter Mike’s have middle iterating, because we obviously widening that point, past few in is spreads be very pipeline at what slight last and fourth the the anchor of weeks, if is there's the really bears I'd mentioned, pipeline. that which beginning this some what market theme say importantly that been agree Mike with of actually extremely volatility. Notably to seen But

Stephen Laws

the comments this Great. Thanks for morning.

Operator

comes with question Steve next Delaney JMP Our from Securities.

You go ahead. may now

Steve Delaney

congratulations where today's that going your how and Wondering out cash really And everyone and at is available see in successful currently capitalization financing morning, is to maximum capping where Hey, see on you with I'm FLX? size rights good portfolio with just you. the Thank offering. much sources? do

James Flynn

could the assets the So pay-offs, it's be of From little And have within size we the fully it's sounded this $XXX it – number. there it could current – where are and deployed. will the cash in that that's be deployed get plus assets. we higher be we max nature incremental or the and bit but think would million right. depending anticipated it little call on endpoint Because of do CLO, about be, what spreads, a where fully an probably somewhere the lower entity, minus. Could of but a bit total

We that's CLO. in LFT currently cash in the not have

I say the from prior to the plus cash standpoint – is, $XXX So we number have think We million the do – some some to of offering for somewhere $XXX rights that had or offering. assets. should we between cash million

Steve Delaney

press as and looking will additional over that release added XX% they cut just me then struck that the forgot a offering Jim number rights equity. being common

you what before. of XX% So had

of Mezz competition, any targeted is pref-equity you're is there. CLO on debt consideration, any or certainly multifamily up. investments, maybe that other in the uncertainty multifamily, know I as given is kind given very around Are given it sector? follow-up loans my in such where market but So much to And line you consideration ends

James Flynn

the senior Lument, some types the would right? potentially get in Frankly, we are of pace. But participate capital markets of pretty look think so portion inline could those the already. in mean, I kind yields cases consider below dramatic We going at manager, the what assets. is market I and from levered into some We again, those moving the Yeah, of with, position. a you

– are there or construction, Again, little PREF done done the opportunistically, yield in some some above. fall positions finance, some that high similar. securities in a structured They're our or a yields are that sheet we've little below some would either So the result balance some bit mass, category. we've managers’ on bit

in on investments we in in debt the So seniors lenders self number the a contemplating one where point, housing. storage. country some platform. largest on best We've of place on the put equity we mentioned to Mike have the is that other we that also entire are – depending opportunities managers’ the the capital. seniors We're of side, have to your housing

to So there's earnings said mix portfolio, I think a potentially we've bit in of little prior to add opportunities calls. that the

think assessment any are provides volatility opportunities always risk of sort the for some I profile. return of to improve what the

been We’ve – have past values volume, expect plus transaction consistent, very and a increasing the been change, been some we had in we're to I the rates. still I very rates stable extraordinary low right? interest volume five higher now see significant very we've market now but starting has It's for right? and have years. think interest

opportunity stabilize things even within for attractive more and at in participate other and our in it LFT that to again, market strategy CLO still a at still the more, beneficial. level look So we become experience think us have is in markets. I there's that expertise in some will think to as bit manager capital that generally attractive But could we still investments fit and the expect be the

Steve Delaney

comments. for thank And Understood. you the

Operator

Stewart from comes next question Jason JonesTrading. with Our

ahead. go not may You

Jason Stewart

mark-to-market thanks morning. you can Good a the create would assets the today or for there question. And are taking LFT? that Manager Briefly buy loss from for that

James Flynn

par They – – that would I least, the be not that the No. can is We've closing we there on – mean, we're if are we book daily at loans mean, I assets daily, be books. Manager's a assets. that book. have if weekly buy got from would par we're they the originate or Manager.

they're they're Precilla, we're timeframe but So if they're I originated almost, over, typically put to newly a all – all don't on want removing assets. assets

par. transferred not at they're they're – So

Precilla Torres

That's correct.

James Flynn

would transferred not they're transferred board, at the they're at par to if us to go which require par, be it – done clear. not never If we've to

Jason Stewart

Okay. of a current And at rate of the sort can – time? you share point you originations with us can run in

James Flynn

has over you X give weeks, Manager bridge of on Precilla, have specifics the been than probably in loans can closed, but that's loans has our Lument that those And have run - give been two the but billion a we've – includes year I Precilla, this you to you more That fiscal since do that LFT. rate, loans in can can half December, of that. we're total been year. new the which including that more tell going that that ends to

Precilla Torres

Right.

it'll LFT terms also fully fully deployment our I do confident terms will we confident a issuance. particular mentioned existing in of already we're we CLO, CLO with from it because conditions are we say of reinvested, rate, confident freeing it's permitting on there obviously as high a run respect fairly that market also itself, existing -if prepayments that And will do – depend did very up So capacity are that basically very can of if did in we but for CLO deployed, instance, for obviously be quickly. year the this

on and Manager of the our that the transfer confidence to production is of strong. very robustness So

Jason Stewart

$X.XX Okay. rights question pretty were I offering, dilution think to All term the book substantial not and about Board's guess thought maybe additional you was And reduction? pretty on value. I helpful. value That's a just the have on book mean, one quarter it just process to view more was dividend. longer What I or take of right. thoughtful the $X.XX the dividend you a

James Briggs

it's that with something talked Board. as a about we group Well, the

want that, There but fundamentally I lot of I higher be to this dividend. the preferred short-term offering component. biggest solution, those important the rights put raised. I price the was and that mean makes the the board of we we – that is and position reduction did we we would've with capital that back paying a sense. it's less that ourselves paying a management dividends view that's short-term mean, at the talk didn't done did to that. about considerations of right? We a with think team think – to think cover we the – was in Ideally

just hope that strategy think everyone in stock have we're factors investors see well, will that I Manager about, standpoint every member was – officer that to here. those I that and to than fully look on if you dividends. broadly, just get forward the every rights a have and of to And million we value. a then as long-term send our that shareholders to we we that going $XX our better do value fully achieve those put can Board We that from subscribe in go or basis some We've the better talked participated more than got deployed $X.XX say, the message and who receive offering. cover felt the of, that not believe come to the into

and the certainly all of important us the deployment. cover certainly we set it's strategy – but that that took delay the We saying, would just we was pressing just perhaps to it whether continue We're not I'm believe the dividend. of think into in weighing So for long-term ensuring that overall we will, decision. our market the on on, would and conditions that saying part not that discussion account

Jason Stewart

you. Right. Thank

Operator

next Blum Our from question with comes Howard UBS.

not may ahead. go You

Howard Blum

clearly that beyond rate you at sensitivity Good to morning. does of analysis out rates while of LIBOR X% supplemental the is none interest X%, of of predict flatten up sensitivity increase rates, an there In it point? the put the any a us increase or you increasing showed chart to up can is clear, direction

James Flynn

trend that rate more would actually – – if that would relates It solely be spreads. trend so there and on the up that goes general that It's if in but index would, continue, liabilities, focused So would hard right? is interest to positive, assets that index the if to you sensitivity rate, No. steady right? be, have we

legacy for those the through sensitivity, off, new assets you some So investments this burn the of part assets the are the as that on. going again, long-term platform on; assets is put our look of we we of on as but reason put

to low, extraordinarily were on put assets that have We zero. when LIBOR close was

that going today. on assets have We are

probably of bigger that at the the swings loans we set of in greater floors the impact the have dramatic time are loan. at floors that – index, greater the the the will levels reshape the because have the to So impact are the whatever change the the that our and we

the some interest So our is some sheet. side because of the asset that on muted of exist rate of that sensitivity – floors of balance

Howard Blum

larger number than other rates the were even showed in So impact. as would be words, go a you if up negative to X%,

James Flynn

No.

James Briggs

no. No,

James Flynn

It would flip.

Howard Blum

would It flip.

Okay. Thank you.

James Briggs

is to and said Yes. have current we its above general, Jim earnings. positive increases LIBOR, have increase and that have a the our positive in In negative term in floors short-term in increase an are that initial the general impact, as but short-term a rates Because impact. would of longer

Howard Blum

much. Thank you very

James Flynn

again, asset the assume be But worse now moved XX impacted, – the by or impact originated, a can you would would lot were back the very non-existent further why was shifts from the that high. it if saying not that be assets impact unless be or right. we longer, impacted that's the would that point I'm year a XX of into are The basis

would we have positive the So impact.

Howard Blum

Thank you.

Operator

Matthew from [Operator Instructions] Our next with comes question B. Riley. Howlett

go You ahead. may now

Matthew Howlett

Thanks taking good for Hi, morning. my question.

I on market First, said come it's through goal you call a needs retain interest. return CLO it of know get mid to a sort down. that the teens, to

out. right, I Is math the could income, shake could up You're to $XX to that adds the after million, capital sort it go? about to if that see Am directionally But, where in where that $XX million thinking math? income goal, wait net spreads going correctly, thinking performing one, I of fees? that's net raise am the like the management

James Flynn

Directionally. leverage mean I couple bit the a a Yes. things. probably is One be understood. little if of would than I lower think I

I be think going XX%. to it's roughly

of four profile. a, return low able in BBD it's a So one, Yes, be return like XX have that, and a get the team to kind think currently of might the – profile. bit we past, inside little we I of in to but

growth trade a just be basis. slowing that, a day you we're a if on think we're I If it, clear. suggesting that did executed to down don't for you

two, if And assumption still we're alternatives. of the had a years I our that's we're terms other we that things you not in in three chosen moving And the short execute not that's a we're in that's I forward term. from going expectation. the CLO, requires CLO decision probability CRE to think is But, we the all and least really We and loans. us about, haven't types goal as a that now. evaluate in market alternatives not are along CLO explore to way, moving explore have to forward today, something appropriate not means It's we're for a forward team, talking moving the markets but environment just; execute to last we're tool making under But think believe strategies. that but of we because, our months I financing today's the make that think, capital don't it these so by to going at not And two do we've different to the strategy. management still consider

Matthew Howlett

talk CLO sort thinking this the thinking on you way, of quarter I if sort marketing summarize conditions the understanding about per is I you I fully to of you ask it's the, of some once that that rates, – once where are mean, and market And term want about savings up happen, thinking believe to low I fully that possibly and term are loan, back guess want that the sort that. it. go the about, want feel that area to to couldn't put will $X.XX, capital's in $X.XX, that then refinancing about the areas. there core I Got is secured EPS, any of the then in that deployed, with note, reason deployed. other G&A

I over think it's X%.

comes how Just think together. picture when should about we all it earnings about, talk

James Flynn

excess raised sorry, So closer what probably balance sheet we is a the we've it's capital, because capital incremental the total offering. XXX the to on Right? in deployed rights deployed capital capital had plus

Matthew Howlett

Okay.

James Flynn

it – XXs, not, is it's a XX. it’s in it's Though, the but than closer maybe to XXX to it's mid

penalties our to the looking of we and expected that go calls do prior would, but existing to the, over will at next the right loan working or with term or So much at, on by or that, refinancing up loan that and go how favorable market yes, make to preferred will look our visit prepayments We deploy said now, so, alternatives. that by be the refinancing potential we the even lender months expect the We've that capital. the much we is. term how on earnings as think by about up XX prohibitive

be So that earnings to accretive would from an refi that, standpoint. –

been on it share basis. per well took of we So as over We've undersized management. yes, since that's part a

we is One our raising offering down a reasons, get to rights better efficiency the operational with capital continue this help. expense to of and path will we the need And, the still to level. continued

fully levels per on our go realize G&A, continue approach that at to line So or, down, of that But share competitors should growth the to larger to some trajectory should be need in benefit. at. more we are

the that So, term move ongoing investments capital fixed our return. capital – considerations. expectation as existing of is our all We with can again, the that yes, that, deliver are And the fully of step, or those the that level, we corporate deploying share ongoing increase we per long that's basis, that, view, the per accretive, hopeful. reducing refinancing $X.XX term hopefully expenses forward, something evaluation is long into share on a

Matthew Howlett

it. Got

summarize, the little to G&A said then should think the a trading expense you can preferred equity how the new much be I go it, much at that capital, preferred months down, part, current refinance your it's I a could par. above it's you mean, reopen looked bit you How XX that is excess million increase? Can looked base? trading would the you that? term ratio loan common like, equity, last with in you just and $XXX after So

James Flynn

Well, it, is incremental market, stamp bear perpetual. can attractive If do could to there's the would from have we limit. we preferred around have of capital so not leverage the raise a considerations being structure there. that – just; we stated We

to market, accretive it. for is just earning calling terms what a there's from of we So the it's rates a what standpoint. in the an market of think and not It's matter limit is whether

But earnings base deliver base us. for raise, we've any our believe, raise equity really to the So, our doing what equity base, we've important last, common to for now continuing still is years. been and we really to certainly continue but return to three

ways have market be entity will we bit is level continue and at, goal. can to we corporate attractive of refining than as market little an to what will look already more to the that continue a So the de-leverage capital. the the And have to the certainly to and we table. that one preferred on be whether that That's raise

of I first starts down; think I give quarter loan, step the or we term I'm at going quarter the XXXX. think looked on quarter the of make the put Charlie to On sense. to, think it's we second me year, first spot to But next exact to the that where it

than a now. a about from little So less year

Matthew Howlett

it. Got

it. quick real on MSR. It's a sell now Just good time last, to

haven't question. you. sold already, with you rates. now Appreciate time good it's the moving If the Thank it a

James Flynn

way market addition that to just from to more about speaking – we're entity refinancing, having lender, piece a for in something so, make the a and about attractive do to in to without Coming to discussion whether a to, to market, already of financing there's go addition thinking have that for

Matthew Howlett

you. it. Got Thank

James Briggs

point And the relative question asset at is that, although as all it with respect is, MSR where it's consider that, well, small on the portfolio, I that a to now to is options is small. say, note very very it this the we

just size. options And by that so, limited are more its the for

Matthew Howlett

Thank you.

Operator

remarks. I'd our Flyn any conference turn to session. concludes This the to back closing like for question-and-answer over Jim

James Flynn

the on reach that us provided or or strategy Thanks. our detailed questions additional and all we'll to to of for out up. free investors any all soon. joining talk we support analysts on you give today. where are you've LFT but information today. or more information Thank And more interest to appreciate our for the appreciate and questions you any follow joining. feel love the to Thank with you in talk and We'd Please any

Operator

now The presentation. conference is concluded. attending for Thank today's you

You disconnect. may now

Lument Finance Trust (LFT) 16 Mar 222021 Q4 Earnings call transcript