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USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES
 9 Months Ended
Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES
We account for CLO transactions on our consolidated balance sheet as financing facilities. Our CLOs are VIEs for which we are the primary beneficiary and are consolidated in our financial statements. The investment grade tranches are treated as secured financings, and are non-recourse to us. See Note 2 ("Summary of Significant Accounting Policies - Principles Consolidation - VIE") for further discussion.

On June 14, 2021, the Company completed a CRE CLO ("LFT CRE 2021-FL1, Ltd."), issuing eight tranches of CLO notes through two newly-formed wholly-owned subsidiaries totaling $903.8 million. Of the total CLO notes issued $833.8 million were investment grade notes issued to third party investors and $70 million were below investment-grade notes retained by us. In addition, a $96.25 million equity interest in the portfolio was retained by us. The financing has an initial two-and-a-half year reinvestment period that allows principal proceeds of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture. Thereafter, the outstanding debt balance will be reduced as loans are repaid. Initially, the proceeds of the issuance of the securities also included $330.3 million for the purpose of acquiring additional loan obligations or a period of up to 180 days from the CLO closing date, resulting in the issuer owning loan obligations with a face value of $1.0 billion, representing leverage of 83%.

On June 14, 2021, the Company unwound Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. redeeming $388.2 million of outstanding notes which were repaid primarily from the refinancing of the remaining assets primarily within LFT 2021-FL1, Ltd., as well as cash held within Hunt CRE 2018-FL2, and expensed $1.7 million of deferred financing costs into loss on extinguishment of debt on the consolidated statements of operations. As of this date, the Company no longer consolidates the assets and liabilities as of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd.
The CLO we consolidate is subject to collateralization and coverage tests that are customary for these types of securitizations. As of September 30, 2022 and December 31, 2021 all such collateralization and coverage tests in the CLO we consolidate were met. If the duration of the COVID-19 pandemic continues to prolong, its impact on our borrowers and their tenants could result in a sustained deterioration in a material amount of assets and may impact these tests.

The carrying values of the Company's total assets and liabilities related to LFT CRE 2021-FL1, Ltd. at September 30, 2022 and December 31, 2021 included the following VIE assets and liabilities:

ASSETSSeptember 30, 2022December 31, 2021
Cash, cash equivalents and restricted cash$28,222,095 $3,530,006 
Accrued interest receivable3,912,849 3,941,695 
Investment related receivable— 22,400,000 
Loans held for investment, net of allowance for loan losses971,905,743 974,025,294 
Total Assets$1,004,040,687 $1,003,896,995 
LIABILITIES
Accrued interest payable$1,575,598 $607,892 
Collateralized loan obligations(1)
828,673,313 826,782,543 
Total Liabilities$830,248,911 $827,390,435 
Equity173,791,776 176,506,560 
Total liabilities and equity$1,004,040,687 $1,003,896,995 

(1)     The stated maturity of the collateral loan obligations per the terms of the underlying collateralized loan obligation agreement is June 14, 2039 for LFT CRE 2021-FL1, Ltd.

The following tables present certain loan and borrowing characteristics of LFT CRE 2021-FL1, Ltd. as of September 30, 2022 and December 31, 2021:
As of September 30, 2022
Collateralized Loan ObligationsCountPrincipal Value
Carrying Value(1)
Wtd. Avg. Coupon(2)
Collateral (loan investments)64$971,881,150 $971,905,743 
6.01%
Financing provided1833,750,000 828,673,313 
4.25%

As of December 31, 2021
Collateralized Loan ObligationsCountPrincipal Value
Carrying Value(1)
Wtd. Avg. Coupon(2)
Collateral (loan investments)64$974,069,994 $974,025,294 
3.93%
Financing provided1833,750,000 826,782,543 
1.54%

(1)     The carrying value for LFT CRE 2021-FL1, Ltd. is net of debt issuance costs of $5,076,687 and $6,967,457 for September 30, 2022 and December 31, 2021, respectively.
(2)    Weighted average coupon for loan investments assumes applicable one-month LIBOR of 2.66% and 0.10% and 30-day Term Secured Overnight Financing Rate ("SOFR") of 2.60% and 0.00% as of September 30, 2022 and December 31, 2021, respectively, inclusive of weighted average interest rate floors of 0.26% and 0.49%, and spreads of 3.36% and 3.42%, respectively. As of September 30, 2022, 86.5% of the investments by total investment exposure earned a floating rate indexed to one-month USD LIBOR and 13.5% of the investments by total investment exposure earned a floating rate indexed to 30-day Term SOFR. As of December 31, 2021, 100% of the investments by total investment exposure earned a floating rate indexed to one-month LIBOR. Weighted coupon for the financing assumes applicable one-month LIBOR of 2.82% and 0.11% as of September 30, 2022 and December 31, 2021 and spreads of 1.43% for September 30, 2022 and December 31, 2021

The statement of operations related to LFT CRE 2021-FL1, Ltd., Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. for the three and nine months ended September 30, 2022 and September 30, 2021 include the following income and expense items:

Statements of OperationsThree Months Ended September 30, 2022Three Months Ended September 30, 2021
Interest income$13,907,856 $9,412,072 
Interest expense(8,317,893)(3,891,093)
Net interest income$5,589,963 $5,520,979 
Provision for loan losses351,914 
General and administrative fees(145,418)(118,804)
Net income$5,796,459 $5,402,175 
Statements of OperationsNine Months Ended September 30, 2022Nine Months Ended
September 30, 20201
Interest income$35,454,425 $24,543,893 
Interest expense(17,607,021)(8,288,278)
Net interest income$17,847,404 $16,255,615 
Loss on extinguishment of debt— (1,663,926)
Provision for loan losses— — 
General and administrative fees(469,785)(147,604)
Net income$17,377,619 $14,444,085