LFT - Earnings call transcript Q1 2022 | Lument Finance Trust, Inc.

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Operator

Good morning and thank you for joining the Lument Finance Trust First Quarter 2022 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 financial discuss results. joining first Finance for XXXX quarter you call Lument to Trust’s Thank and of With James Larsen, CFO; Flynn, on CEO; Torres, me the Michael President; call James Strategies. Estate Investment Real today are Precilla Head Briggs, our on On details SEC and which first quarter results. with issued Monday, XX-Q the press a we release, filed our provided

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

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

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

James P. Flynn

to earnings Thank you XXXX. first quarter Charlie. for everyone. for you Trust's call Welcome joining. the Good the Finance morning of Lument Thank

investment observe performance we grow to are our continue LFT. make incremental significant continuing strong base very portfolio, in the to QX, to During asset in investments

the and decrease the stockholder’s anticipate the company I'd transferable required to QX raising which by proceeds. operating like of equity company make which offering detail administrative a efficiencies, we operating our to important capital enables year-end XX.X this on approximately our the capital rights discussed earnings meet target percentage as expenses equity expanding begin This a growth general result will recapping investments the LFT of assets. is in seconds provides with closed scale First LFT our call. believe rates equity to appropriate million and in our to achieving resulted common transaction offering. XX objectives that of of in and Every on as that raise We capacity improve expense gross an

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

CLO capital. the In this points newly the of approximately the actively at and loans, $XX portfolio that on and made manager’s to leveraged our X.X% raise investments leverage to external as assets. With or as of million of investment interests economic it in to that an pipeline this increased on transaction. expect basis actively well be assets the for our XX I'd loan also and favorable we the manager describe transaction similar we have advantage utilized a is will continue CLO between beginning with recent CRE capital year the permit. going present the transaction spreads cost existing to world over we we manager the LFT volatile the four and the of that year. strong result months assuming than execute more few total CLO by raised the assets will deploy with to in believe Adjusting non-recourse the a in line the financing. working and fed assets during market line the In the are the newly existing broader U.S. It around coming cost activity forward leverage health. Finally, seeking to a There's in wider expectations and during speed to in CRE source of manager of since non-mark the and exercises as attractive activity recently XX our multifamily XXXX the of spreads clear affiliate focused acquired issue we and last we expertise likely has Portfolio the market Those size XX and provide we XX market the issues, order as the with of increasing. from We QX CLOs concerns Clearly investment new by we of Ukraine, overall the acquired demonstrated subscription the liabilities in to elevated new coming originated that characteristics. months are and financing increases a have with on hikes, weeks continue fully and markets due LFT markets million we transaction CRE as new with and our of corresponding Lument. been capital increased widened strategy believe of of increases assets deploy more or capital CRE alignment features. the the conditions mind AAA in note privilege and performance of new size and basis would and investment began invasion I significant months portfolio growing take of Russian were to have Historically an financing executing rate have finance inflation, quarter. in recent to chain over seen experienced see supply to limited

to previously count. continue reflected quarter the declared share see dividend This of for first dividend, to recent some account XXXX. quarterly expect interest of short-term we a resetting over time increased to share per rates our benefit increasing also level our raise and We the With $X.XX into dividend regards economic which provide to our LFT. of capital taking

leveraged well. strength the and multifamily basis, stable, important consistent, addition, asset that raised deploy rate would dividend and to market and have a management drag is capital we anticipated support net on work allowed leverage once the the shareholders like our Overall portfolio emphasize in In capital in to credit also forward our expect we yield run folks however income a to perform income go that the of landing on as I newly on basis. acknowledge fully continue to the the deployed bridge to to reflected on basis. common platform to short-term our that a It's

loan no no loan forbearance. our was of March loan and subject with defaults, monetary portfolio no XXst XXX% impairments, As to performing

standards we credit As still era, forbearance as a granted have rigorous single both management a during well past single testament the stated default in our to we've asset our monetary not a as proactive nor experienced COVID efforts. the

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

We we and remain growth goals about progress and as executing educate The towards will continue market investors of we coming with and business making offer are on discussions our LFTs excited participants the months opportunity continued LFT the plan. we investors. focus long-term

scale strategy. nation's strong total a The to servicing to seniors over excuse Our Jim XXXX, that loan our in $XX in With and and provides housing financial investment providers volume Briggs offices billion more multifamily in servicing largest the of benefits XXX the is over employees call portfolio, XX over of details investors manager will who results. the million and transaction in than our space, capital employing me, XX the like turn in LFT platform nationwide. of support this would on I of execution the provide one

James Briggs

summary for XX-Q be presentation well The referencing an Thank Monday presentation morning through quarter. to which for investor find during X you key everyone. report our our provided we has and Form earnings and webcast On Pages and our on supplemental a uploaded X the presentation filed your remarks. supplemental website as will Jim we updates On the been you will on quarterly investor evening of the good reference.

first to quarter stockholders $X.X we of million or The of $X.XX per common share. income net XXXX reported approximately

also per $X.XX share in the We of of decline per share. are approximately earnings quarter-over-quarter represents distributable distributable $X.XX or QX the EPS, or distributable a There $X.X is primary share. million versus reported This of few million EPS drivers these count. $X.X of first XXXX’s decline

in we Jim his by a closed transferable remarks on XXnd February opening rights mentioned offering. As on

cost as as transaction approximately XXX preferred our as shares total of company's December million XXst. to of quarter-over-quarter to from issued of inclusive XXst XX outstanding shares this by The total both to As million March a of March XX.X to the increase as offering million increased shares XXX million XXst. and million common of result equity in approximately XX.X from year-end

was shares. per We the QX during EPS date in count of share on contributed XXnd average weighted count million the decline. see XX.X share issuance February Our increase based $X.XX share

are to quarter-to-quarter. in from exit exit activity calls. fee from fees payoffs yield earnings income our therefore to payoffs was can the million loan LFT’s fees due are exit be maintenance loan typically time loans off QX also on pays the In level recognized with have loan and fees interest QX on associated income when cause LFT XXXX compared like extension cash, touch in the exit LFTs fees timing and loans time. we of collected some of X.X fee XXX,XXX variability income the highlighted to fees XXXX. as of entitled and on lower to may of would I to which payoff in prior loan which structured on fees Next

QX XXst. -- as income driven average X.X% primarily the new interest This to declined X.X% our interest rate as weighted of in decline gross on of our of from year-end due by portfolios [ph] lower Lastly, increasing was floors to acquisitions. March

distributable a of book stated declined stock common of company's and EPS EPS on drag time as to total increased the we a we to QX We the common XXX expect book share. We total proceeds XXX transaction, approximately would $X.XX share did offering value basis. on or increased loan approximately deployed book a million, to of quarter rights until able a equity such transaction. million, result to during that continue be anticipate rights pressured leveraged are per to CLO the execute offering this As approximately value distributable we last as QX per alternate financing to

I adopted loss to ASC XXXX-XX statements amendment as discussed a remind that continue a As you the a then, on like January current to on which where financial losses defined on as as have basis. implement credit or incurred company by company everyone commonly instruments to quarters comprehensive referred prepare our in scheduled CECL recognize prior yet are GAAP SEC Until to reporting as reporting we expected to an would we of financial credit is smaller XXXX. not how XX, CECL model losses smaller

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

While loan exist. our healthy, continues and the remains broader current about recovery portfolio the COVID-XX economy of performance bridge uncertainty to

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

Michael Larsen

and Jim you, morning Thank everyone. good

in year activity to and experience to continue grow. of the level a origination LFT continues robust start the portfolio this of We

as quarter XX acquired first earlier, mentioned the balance manager XXX with a During total new investments from we principal our of million.

by loans million remaining multifamily SOFR. indexed of secured these loans new of of term the indexed were acquisitions one month and million these are XXX were the XX LIBOR, assets. XX-day All

XX%. X.XX loan consisted points, acquisitions and quarter to increase the million. to loans index average We increase the spread had from quarter-end, total index of over balance end nine the weighted a XXXX. XX outstanding of a portfolio weighted basis had basis of loan applicable at and of first increase and average portfolio of first XXX% size points, represents acquired at average last an the year portfolio of payoffs X.X% was quarter-over-quarter, quarter, weighted million XXX of of and The loans of billion, floor average quarter-end despite principal XXX quarter XX% index loan a value size our during origination experienced in a the to XX a rate year. that Portfolio XX% loan at was relative as The multifamily multifamily the with

Our second our self-storage, balance X% very concentration continues basis. is asset to on office which exposure of a and remain the combined highest low And to X% type retail total represents at portfolio. principal

trends create opportunity we anticipate believe demographics, rates rising an we related focus dynamics, multifamily. is the loan our strong the to continue best middle strong continue assets for We investment support to growth investment that to the majority in attractive this asset the supply real inflationary class shareholders. believe space current rent the our asset and workforce and for environment, class Despite housing will to in estate be demand multifamily today. in of Due continue multifamily our market activity mandatory that to multifamily,

we've which with relative offer can asset multifamily. However, to has other past, said that strong profile in our spread anchor be look Due space strong. of basis debt to in quality market assets respect weighted portfolio competition XX and points to return investing in investments basis the investments in of continued index average a in multifamily we will to bridge as are supplement With multifamily our average pricing, weighted the investments, points. types a interest XXX continues to strong floor

correlation which capital to generally the volatility, the we increase origination uncertainty, see driven in spreads broader spread over have XXX a few high to on were we short-term the to to continue the markets. market in to rate continue to loan the mentioned this in increases overall movement with this rising with return the strong the interest throughout Jim widening seeing and on we trend loans points, Whereas low capital market line align up. increases remainder we to new markets occur ago, profile investment with spreads our spreads months adjustment in that loans earlier an rates. other mid and basis XXXs, of year, we're by begun in seen However, our anticipate pricing This is year. has in a seeing positive this of priced now expect the in economic

on earnings the one else would share SOFR run a year, the basis. all over We per And XX month full interest have continued our in included a pressures. curve increasing implies holding by which to sensitivity end on Page rates rate earnings as benefit meaningfully a battles rate expect of equal, the rise forward of our Fed we supplemental overall to X.X% inflationary it from distributable approximately increase Current table presentation. short-term year LFT $X.XX by

three over investments with middle With remains margin our one financed one expect pipeline basis The some XXXX, the warehouse utilizing the loans will of to advanced running we through through of of this subject repo and focus strong CLO pipeline, and calls strength to of facility we spread The floating market side attractive year closing utilize rate show as XXX Overall, to XX.XXX%. LFT X/XX, will next. have before, for We month was from continued period points bridge portfolio pass are manager lending opportunities warehouse weighted December we're our well. as we've Jim of any as through lenders. I securitization, financing extremely series perform the that we in continue. multifamily managers providing of therefore, has over CLO average LIBOR, that last assets with do repo on and noted the and loan or our years, not our not finance reinvestment call financing to net or to On continued that rate have the back remarks. currently continued in

James P. Flynn

Thanks, Mike.

in we and asset remain in. that positioned business with Future, this you the to volatility But we've plan all participate about As LFTs. quarters. we we'd confident in class still certainly market are We and updating like progress like to excited I mentioned, changes. well seen, the the future And we're believe to forward to that, future, and look market. we call the in And open we questions.

Operator

Instructions]. [Operator

Piper ahead. Our comes Crispin first Sandler. with from Love question go Please

Crispin Love

morning. Good you. Thank

the in CRE your to just of that, the more to widening. And complete to be sets XX or you some think I relatedly a you XX call, about last make facing XX XX comments and you you so that that given of right on bips mentioned widening was we're widening think that to of in months opening in bips made so to market. mentioned sure XX bips on coming remarks will XX now? have Clos then confident the the are So right bips the and to how volatility want market CLO CRE I I you XX able

James P. Flynn

others the call, fact, deal over one it's described widening there's on days yes, in XX to answer the the that And to is or our prior know, the come of first market a market in the statements and to next call. in as so. is, so we Sure, you are the terms prior or our incremental expected there's it, several to

terribly that's doesn't one reset, time, as CLO assets right. at on. individual it rises, don't get you to investors a going short-term. the know, that transparent the or have issue, to a like rate those on What less obviously, and at you market, we it's disruptive that’ So, Fed increases, at get is the when not the and in obviously surprising, look market reset least are is seen spreads that funds widening but And

the at the year further. monthly you and back, probably steady credit originated portfolio, market, deals a a characteristics of or without going look dissecting look going and that maybe a Assets hit months basis, over generally period our parameters, probably a even you if increase on bifurcate the month, and risk the deals see certainly at you for bit back have by you'd little

both there to rates and obviously up so, dual market healthy on which to the critical is a going continue of process is And here sides, for function.

bankers conversations interested and this cash and our of the of and securities. a in still security our partners in of In the there's CLO, liquidity and ton CRE terms with markets, type those rated

conversations, at those based the So healthy and fairly open. that this on will moment, I market feel confident remain

As assets, earlier, pay new the this we're financial kind is on relatively our on price off, that of are will that expect not we the but characteristic be monitor, said, again, towards something the signs a side that discovery and we'll do pricing all will those nature to facing the all I are, new all floating and And, higher rate phenomenon, that the and I all are by short-term to take debt being current I but assets us same liabilities that and certainly nature things of assets. open. -- of nature originate but price that have challenges. And increasing be meaning I product. continue point think allow market those our of those credit, the assets mentioned particularly example, as to equal CRE we being And, spreads that advantage we the in a firms book,

and clients. speed finance the our hopefully run this year off a other fully? to for Did kind advance which the terms side, answer long will financing our that level is rest I at forward our of is assets, to borrower this healthy think, over offer move market on I of that ability happening, In of stable having assets the

Crispin Love

then the for color characterize first Yeah, given to of drag know, course, a beyond you there. know, for of absent portfolio it that I earnings the CLO right little okay, is me, another your Thank you or curious a portion XQ current the was looks dividend? XQ because either here, rights earnings question, even poor least bit I quarter at just it's how one of to the and the a be power with power, And post anomaly great. CLO? precede an the a right how offering can compared so pre cash it And kind stands, likely tough now. for I'm and is the would how now

James P. Flynn

look, so we are We've increases, difficult. there said you benefit little also I I terms right, It's be we deliver relative in it, -- if Yeah, of like pretty are, core continue a there on think short-term level a to that maybe way, of that this It's no to rest we're those a time those are assume costs short-term and our it feel all know our rates we over liabilities are general side. pricing trends a rates those But for market, of rates on that if some coming not right. beyond. I of in in seen that and the entity trends. increases deliver or the earnings a and to both stable in deals if anticipated stability, obviously, mean to financial return. wider ability priced up, should mismatch meaning greater that have asset -- think be go we And short-term the up, And, you deals don't proportionate and in, right, in earnings LFT. year, the the and go assets asset confident market see manner, a relatively positive a receptiveness in seems our than in

moving of events but we're terms return feel optimistic, market that, it, able a I Ukraine we'll we towards a to peers. some we cautiously are our certainly competitive incremental looking in that disruption have think, the of without and feel of on that So, we people year how forward market, the to basis, how the that deliver significant rest be stability, type with similar reasonable consensus in about

Crispin Love

Thanks it. morning. this Thank taking my questions you. appreciate I for

James P. Flynn

you. Thank

Operator

with Raymond ahead. Laws James. Please Stephen from is go question Next

Stephen Laws

morning. good Hi,

Mike, couple different remarks a I far. guess two to question, so through looks provided the loans, in top your number the of a had XX nine, the on and last in look you've appreciate everything I so prepared covered mature so two loans a lot the of question months expect pay retail around that, on mature do thoughts to to thoughts expect only you see to just those, we those next your other those so supposed tied in any you coming Will off, fees July. loans? your and three you fees exposure Curious and extension I You extension or like to any get know

Michael Larsen

will can retail let it's Charlie we in Precilla and feel I broadly assets those But about assets. us give mentioned and Sure, or you second. you Both very percentage a identify pretty, small performing thoughts are those relatively assets speaking, that good assets, exposure. the of pretty,

don't on, answer sponsors pulling I have can I it the speak… the there know, in you loans plans here. just we Precilla, on So if of have you am you, up an and front

Charles Duddy

XX, Yeah, a supplement. in and page it is

Stephen Laws

we Speakers] number their to expect forward? pay Number --… for sure so moving it, off two [Multiple Got

Precilla Torres

say currently it And assess I'd that I'll a protected, potential purchase may, just loans and are various they points, based ability, we data said, from certainly cannot or therefore, generally borrower concerns assets. high. VOV Jimmy, to no but perspective. Again, we plans comment Jim credit be of the these I on offers, if specific whether prepayment refi as on credit say on would we be well those have very if were

Stephen Laws

the comment. Right, appreciate

James P. Flynn

bit, does. rates, sell as years, this at hot, that were doing at last of majority floating a was quickly shortage and and space was you these in the middle up, of because the pay where few market does, Yeah, people of work taking you real. you was is some XXXX-XXXX going advantage a anecdotally, a housing values it the the And look rate as you raise toward the are -- the does little I shift look the it was that couple the extraordinarily years, off business the value. if guess if reflected from asset, It can particularly probably decade, plans, the but of know, last just, in

point But they doing So, and sponsors for have went our were when the be be. somewhat they performance exactly of they thought versus think, executed where to well. going may There's exit my have planned they view, than value they work may say been were in may some I'm plan that again. their to more And Precilla's to of I kind as into prior some speculating, be may a for I'll hold but, sell they asset. maybe considering to a they to increase who have going put that's what because they money they thought to

sponsors holding asset at may fixed bridge And a so looking a to some staying be to it. bit selling moving rather rate in and the moving longer, maybe loan, financing, than the

it's I well like. and with I don't buy might a -- function in at a a I it's is happening executing people business call the as of I kind I current think price another is -- there asset one do think have in So rather don't I think thinking, I than it's market price keep the market. don't some, it or or discovery don't think a of modification to well negative, plans like that I a

So, than there. the but arguably that going I housing we have shortage rising the more specific the market, that, we market more very plan. be think feel a shortage our or don't this not might bit the impacts rates is, characteristic past real particularly one a is I still multifamily just But, country. the know we're Again, probably the might or is market markets changing do of markets to basis. portfolio. saw There across and isn't -- and in good sub just or assets see affordability that real the we've I then in the residential multifamily mean,

some reality with the there enormous that an the just are pretty and the still that is even earlier is market increase. mentioned I So And, healthy. I of there's think to need rents concerns continuing

a expect rents While I those of expenses, concerns of expect with even the because to rate some see do at increase pace and even I may a to likely shortages, a lower concerns outlined. them inflation outpace with or balance

Stephen Laws

Right.

guess that Jim, normalized one this I million number seasonal expect is a been fees, X.X always talked XQ you in so your typical follow prepared more like? middle or to it million do know million So, be, of before. it up, and of exit you these X.X quarter is is What I the quarter remarks, as right $X or a indicative in about

James P. Flynn

a to unfair It that's is little going that seasonal, it'd end be I say maybe is, think it's it bit up. where although to

I that. think, the first quarter sorry, I have

we said at colleagues, looking XX% historically, I think to One this, XX%. of just were my we've

I think I more move probably to in think quarter. to and think, XX% that we long-term that realistic, XX% saw plus year And first that's rate last annually. I average probably the elevated the a toward in started it's

Stephen Laws

thanks this Great, the morning. for comments

Operator

The from Securities. is next ahead. go Please Delaney with JMP Steve question

Steven Delaney

to Thanks. out believe like quarter is to was trying reworked of last going and years morning, second two great. is period, just it close? start with half? that's everyone. Good half Speakers]. to I that and Okay, years, [Multiple or year, would Two FLX reinvestment find your that when two I a a

James P. Flynn

XXXX, I of November believe. Yeah, reinvestment.

Steven Delaney

nice rate. nice, That's run a

that spread week that observation, model, I you points, with XXX. think I runway, plus The average Okay. basis about a my in average Great, of of we've like Arbor last guess, just And XXX something weighted nice got weighted there. for deal was ballpark.

consider see we the were something year when Friday. end, no. to know, Oh, non-CLO potential watching beyond I never that's to would little or that I'm in be comments at about that event, say all you any it XXX an FLX when an be hearing got bit, to like -- be, or I you bank that Last of a would Arbor was plus tighten maybe your two… capacity the in up you're and financing? it Thanks. is portfolio objective overall sounds your [Multiple is correct repo would that that that would you do good to back for understand whatever, I portfolio XX sort know, could a last CLO the it that additional small and you additional as another you FLX agree going out But XX. it well, not financing. build preference but grow yeah. So necessarily And would look -- with if in your And Am your like still. No, lines, ramp. go you've if with week, CLO not things market. But Speakers].

James P. Flynn

not obviously, locking so It's mark stable, it's pressure CLO period refinancing. never And months not and -- that say when you're there Steven. But consider accepting a now coming. not it seen ever bond right. deal that. still much said, at Thanks, our leverage very yes, to we're XX I There's going from we really at think to to Arbor would of the you couple is we're say least time I'm [ph] as thing -- for is But you in very one preference you Look, it's investors market. you're market is financing, do on price is you to and in pricing a before attractive. we -- would have the haven't oh, more watching certainly financing, market the use couple the going closely. It's

two So we go eliminates able a with some with largest that reinvestment of periods, the And, longer replace you're the as the warehouse completely the in half up. and structures or financing. rebuild to to see current assets able challenges market you're

in that do from vehicle great anyone the surprising think Arbor, Little a little originated deal. a kind today look reasonable -- at they it the where tighter, space it within still but a newly was I on us, vehicle. were pricing Arbor it's that's was putting was range this expecting. not that of in forward, that were there we assets I So if of

still our assets line current catching And But financing. the assets are -- with existing the to in you up your have so, finance book.

So here. still think me, it's expect want and We investors Excuse because the we use yes, strong think types a way we of We to bonds the and like these CRE overall finance the assets. best the to CLO seem appetite bond the agree still risk. there's for to market.

in of I are if somebody good continue markets and not not correlated trend? of term overall, a reinvestment that with your move the mark-to-market, should alternative spread that for assets -- has of source So all think financing. best non-recourse, rights, and a the working, until it's tells shows And, better leverage, liabilities fixed characteristics kind direction that

Steven Delaney

we We our with by agree you. it's no analysts the perspective that as think Yeah, far from preferred. question

getting follow-up it So mez thoughts Thank leave or period that. at on or a one either capital to And allocation over your small multifamily? a quick press loans just I'll you. and away may, leverage multifamily from I if of time, given equity your expertise

James Briggs

quite calls, now. They're those have allocation talked some that for obviously that of We about thought we've quarters them, But asset and that to an have have we've look, they're in of all few appreciate talked been leverage like Sure. And level question, -- would these a Steven for but on unlevered. we've them. about that at you toward those the assets. --

really a for was I have been historically, So private standpoint been purpose funds lot or institutions, compressed in ratio. in lower a debt least, options we've great of opinion high return LFT. yields somewhat the leverage mean of some our and have about those leverage it overall from lot was corporate serves and at attractive market, terribly for since available of etc. And been entity it, peers, a to vehicles, a have a of the not from liquidity talking

didn't real as really maybe that broadly. to more need historically borrowers estate commercial had So, turn much as they've and just to

probably for low lot was high at function we've just continue rates a or fees And price area are low There's digits. have starting I one of in to some to a without yields to the that's the when assets. been, we there it, I looking how think a pref not be rising, a got see It's have that. Construction think where are think right. -- hard that focus out those we to level. mez, at a a have single I on of with is With your really a in a and to mez pref the the of it, rates it more to folks opportunities rates demand expect provide touching even that room interest make those raising, senior, more sense.

the in had quite over time, or happens on the that of that next it time. some to be or for is but function two market, we've our quarter going is radar whether a So, something

Steven Delaney

Thanks for the comments.

Operator

Stewart is Jones question go from ahead. Jason with Trading. next The Please

Matthew Erdner

Erdner to Jason. given Are Hey, right guys lot fees, changed, fees this exit exit the have Matthew still you but again on year have been of about environment kind up there's I for competition. gone a you the rates that that same the is and get on loans had able a a now of still has quick question current would ago?

James P. Flynn

reasons, still our usually seen for I point -- trying a There general, really been the taken pressure a instances point fee we've so average, year. where competitive. On exit yes. fee lower was lot loans we're There get mean, typical exit. a over put stick that in we've threshold. have a to tried of to But of variety one to on last we've

I'd But fewer I will say maintain out that there. in wane competitors there's bit just some we've little to think general, maybe a little or with in exceptions. able general, because been it less bit a

Matthew Erdner

that in going you a the then you. Thanks. and on multiple forward? believe have you is strategy a still do that MSR know be, that guys follow-up Got would guys the you And

James P. Flynn

Charles, top head, not Speakers]. know That's off legacy asset of prior but took an It's we us. is. to It over management. might for your old from when forward a go the you strategy [Multiple it's... The multiple,

Operator

Ladenburg is from question go Please Nolan Christopher with Thalmann. Next ahead.

Christopher Nolan

to earlier, capital your you achieve believe In that you have was scale. Do the need to enough comments equity that scale achieve the you you capital now raise compete? mentioned Hi. to

James P. Flynn

though, the -- our for I some do growth but look asset there's and if think to terms room fully in and don't think the still order achieve size we be at peers expenses etc. Yeah. size, operating of biggest, I diversification both Broadly you speaking, scale, in of we reasonable of that have to

and bigger the grow continue to coming over have we So years. broader to plans

Christopher Nolan

Okay. raise? you another And consider then given dilutive equity would that,

James Briggs

term shareholders. rights don't mean, of the our direct thought a is existing you Obviously, I in I'd was Board where I answer get to that a to was our in offering, point think But only or would discussion to we best assume thought the was something we interest the say shareholder which with base. best make that it that did the can I long and what we think can Advisors our we have for to a interest what long we very give It can the not future we're we says decision do everything the you do I like that. benefit going would would was shareholders. in the

Christopher Nolan

fee management a to support giving dividend? the in consideration any And waiver

James Briggs

Board, Board. the with made made be It's not with but our we've that in and like any we've said, decisions discussed I team our would consultation management something here like that

Christopher Nolan

Alright, you. thank

Operator

[Operator Instructions].

Please next go Our B. from question comes with Matthew Howlett Riley. ahead.

Matthew Howlett

a be Thinking coupons and a talking maybe of teen still plus let's then LIBOR XXX low would how get in about guys. the say XXX, sense that a CLO? you return given large that Hey, equity still pursue just route the we are on mid do CLO you basis if if spread above, inside points

James P. Flynn

Yeah.

level, see what to return up. teens right the I'd now like pushing profile of terms low in is move we're it I that at So think for.

bogey. think but goal I it asset that's our and spreads, can with our

and we kind on the capital size, deals of whether In But the also somewhere be at to in now XXX of terms it'd where the utilize of just the XXX and looking likely range. rate. the are advanced depending expectations, all

Matthew Howlett

think we of Okay, high you when term dividend guess you core cost the got loan I have? talk I consider And refinancing that loan, first think then you. sort you about the in being similar we targets? your of question talking over to the your about dividend range up to to EPS ROEs the rate term we're X% that that hit can the range Second, power I XX% company, time core is if earnings and about XX% ROE, peers. about expect the to and would run Put get

James P. Flynn

Yeah. I -- value our certain and that I think has relative to mean with look, the during book I declined, -- market XXXX. obviously think

grow to is That's yield on obviously price. the hope overall our yield of stock reflective a So basis. the market

described as against there's to sorry, it, of sense. that typically So But I'm a are my book internally what that you've I I we're pull deliver. of able think we measuring push thought. in lost makes train there terms and

question. piece other The part your of

Matthew Howlett

on loan, percentage? term that the On

James P. Flynn

The and lockout protections terms prepayment the got term it's said or some built this, in for think are loan fees. is we of I lender in that

the cost continuing call understand They our I we're think So are with us where relative it where like was on fairly the be that measure that. that point. that a prior with I able little refinance it's But worked profile. to that over on lender, and over another has several refinance they've to but or that. a declining negotiations to timing. we because and things our time, and is call lender some next they at form market to evaluate like been another or it in the and we've obviously or hoping something the quarters worked current regularly The market and high penalty prepayment that beyond risk with to mentioned, this and modified obviously monitor dependent bit

Matthew Howlett

I'm think loan today, think is term you for where is you market just to the Do market X% the X% around caliber? curious your today

James P. Flynn

very I in you maybe moved actively number few probably think to hard that recent it's volatility, is talking or to Things put lower on been be got capital it's low right little you're I I that's right. a how that need low quarters -- out we quickly cost have it's say to guess where think the does that but the folks from to talking, regularly the at it market the where about make folks a might we start But that's so bit but thumb it, the in little where about be your of in a If to past. to talking order markets, work. bit realistically the mean, make are now about is. end with sense. It's or I prepayment a it's

Matthew Howlett

could it's it on and to just up get well be done to the be substantial on in savings -- Okay, there preferred this time CLO? more the focus that thoughts would or just any market substantial obviously want point

James P. Flynn

the I that I and to want focus now done. CLO on get Right to want

as on preferred markets, the like cost want evaluate. mentioned That's explore. term at we what equity we to the preferred. grow to looks loan. certainly to But of going need the But look we're common and to depending something we to that obviously You continue really want

Matthew Howlett

lot. Thanks a

James P. Flynn

Thank you.

Operator

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

James P. Flynn

to forward with thank interest want a the or and good follow-up day. a look to continued questions. please Have of just over me Appreciate everyone, you lot I speaking team coming to good here. the Obviously support and the quarters.

Operator

presentation. now Thank has for today’s concluded. conference The attending you

disconnect. now may You

Lument Finance Trust (LFT) 10 May 222022 Q1 Earnings call transcript