Lument Finance Trust (NYSE:LFT) held its first-quarter earnings conference call on Friday. Below is the complete transcript from the call.
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View the webcast at https://app.webinar.net/a9jkw89JQ1r
Summary
Lument Finance Trust Inc reported a GAAP net loss of $0.02 per share and distributable earnings of $0.02 per share for Q1 2026.
The company declared a quarterly dividend of $0.04 per share, consistent with previous quarters.
Net interest income improved to $5.7 million, driven by leverage and cost of funds improvements.
The company foreclosed on one loan asset and sold a San Antonio REO property for $12.4 million.
Management emphasized a cautious approach to capital allocation, focusing on asset resolution and selective capital deployment.
The future financial recovery is heavily tied to leveraging capital markets and securitization strategies.
The portfolio’s credit performance remained stable, with disciplined reserve management.
76% of the portfolio’s loans are risk rated at 3 or better, with 93% collateralized by multifamily properties.
Management plans to file the 10Q with the SEC post-call and maintains a strategic focus on resolving legacy assets.
Full Transcript
OPERATOR
Good afternoon and thank you for joining the Lument Finance Trust Inc first quarter 2026 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 Andrew Tsang with Investor Relations at Lumen Investment Management. Please go ahead. Good afternoon everyone. Thank you for joining our call to discuss Lument Finance Trust Inc’s first quarter 2026 financial results. With me on the call today are Jim Flynn, our CEO, Jim Briggs, our CFO, Greg Talbert, our President and Zach Halpern, our Portfolio Manager. This morning we issued a press release to provide details on our recent financial results. We also provided a supplemental earnings presentation which can be found on our website. We intend to file our 10Q with the Securities and Exchange Commission this afternoon after market close. Before handing the call over to Jim Flynn. I’d like to remind everyone that certain statements made during the course of this call are not based on historical information and may const forward looking statements within the meaning of section 27A of the securities act of 1933 and section 21E of the securities Exchange act of 1934. Such forward looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statement. These risks and uncertainties are discussed in the Company’s reports filed with the Securities and Exchange Commission, in particular the risk factors sections of our Form 10K and Form 10Qs. It is not possible to predict or identify all such risks and listeners are cautioned not to place undue reliance on these forward looking statements. The Company also undertakes no obligation to update any of these forward looking statements further. Certain non GAAP financial measures will be discussed on this conference call. A presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non GAAP financial measures to the most comparable measures prepared in accordance with GAAP can be accessed through our filings with the Securities and Exchange Commission. For the first quarter of 2026 we reported a GAAP net loss of $0.02 and true earnings of $0.02 per share of common stock. In March we declared quarterly dividend of $0.04 per common share with respect to the first quarter in line with the prior quarterly dividend. I will now turn the call over to Jim Flynn. Please go ahead.
Jim Flynn (Chief Executive Officer)
Thank you, Andrew. Good afternoon everyone. Welcome to the Lumen Finance Trust earnings call for the first quarter of 2026. We appreciate everyone joining us today. Looking at the market economic conditions in the US continuing to remain fundamentally stable although uncertainty continues to outweigh momentum. While the Federal Reserve has shifted toward a more accommodative stance, the pace and extent of any future rate cuts remain data dependent, including inflation, labor market conditions and broader financial stability.
Jim Flynn (Chief Executive Officer)
Geopolitical uncertainty continues to weigh on investment environment, reinforcing a cautious approach to capital allocation within multifamily operating fundamentals are gradually stabilizing as the sectors move through the later stages of an elevated supply cycle. Construction starts have declined sharply, setting the stage for a meaningful reduction in new supply through 26 and 27. Rent growth remains modest at the national level, but improving performance in supply constrained markets.
Jim Flynn (Chief Executive Officer)
There is some continued pressure in high delivery regions to continue to work through long term demand. Drivers for rental housing remain intact. Portability constraints, limited for sale inventory and elevated single family mortgage rates continue to support renter demand. Longer term interest rates remain a central constraint. Although short term rates have declined from peak levels. Elevated long term rates continue to anchor cap rates, pressure asset values and limit access to attractively priced permanent financing. As a result, financing conditions have become more functional but still remain Selective liquidity across securitization markets, warehouse facilities and select balance sheet lenders has improved, supporting refinancing activity for well capitalized assets with strong sponsors. The creclo market remains a critical source of liquidity with issuance continuing into 2026amid strong investor demand for floating rate exposure.
Jim Flynn (Chief Executive Officer)
The asset management side Portfolio management continues to be a central focus of our strategy. We remain closely engaged with borrowers across the portfolio and are actively managing our REO portfolio to protect shareholders capital and long term values. During the quarter, overall portfolio credit performance remained relatively stable. We continue to take a disciplined approach to reserve management, increasing reserves on certain legacy positions to reflect revised expectations and prevailing market conditions. In terms of activity and liquidity, we continue to execute on our intended financing strategy as discussed on the prior quarter’s call. This past February we redeemed the remaining debt outstanding under LMF 2023.
Jim Flynn (Chief Executive Officer)
1 and refinance the collateral through our warehouse facilities as well. As amended our secured corporate loan, extending the maturity to 2030 and upsizing to 50 million. We have been carefully managing liquidity and are selectively redeploying investable capital within Fl3. During Q1 we generated 47 million of aggregate payoffs and used reinvestment principal proceeds to acquire two new multifamily loan assets for 47 million and a 1 million minority participation related to an existing loan asset. We ended the quarter with unrestricted cash of approximately 21 million. Combined with our available warehouse capacity and ability to reinvest FL3’s capital over the course of its 30 month reinvestment period, we believe our liquidity position remains appropriate to support portfolio management, asset resolution and select capital deployment. Our priorities remain making progress on resolving legacy assets and thoughtfully redeploying investable capital into attractive new loan asset opportunities. While credit markets have become more constructive, the recovery across commercial real estate remains uneven. Performance differentiation by asset quality, location, sponsorship and …
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