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USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES
 3 Months Ended
Mar. 31, 2025
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 and secured financings on our consolidated balance sheet as financing facilities. The issuing entities for our CLOs and secured financings 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 the 2021-FL1 CLO, 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, which expired in December 2023, that allowed 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 for a period up to 180 days from the 2021-FL1 CLO closing date, resulting in the issuer owning loan obligations with a face value of $1.0 billion, representing leverage of 83%.

On July 12, 2023, the Company entered into and closed a matched-term, non-recourse collateralized commercial real estate financing (the "LMF 2023-1 Financing"), secured by $386.4 million of first lien floating-rate multifamily mortgage assets and is not subject to margin calls or additional collateralization requirements. In connection with the LMF 2023-1 Financing, approximately $270.4 million of an investment-grade rated senior secured floating rate loan was provided by a private lender and approximately $47.3 million of investment-grade rated notes (collectively, the "Senior Debt") were issued and sold to an affiliate of LFT's external manager, Lument IM. A consolidated subsidiary of LFT retained the subordinate interests in the issuing vehicle of approximately $68.6 million. The Senior Debt has an initial weighted average spread of approximately 314 basis points over 30-day term SOFR, excluding fees and transaction costs. The Senior Debt matures on the payment date in July 2032, unless it is repaid or redeemed sooner in accordance with its terms. The financing has an initial two-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. In March 2025, as permitted by the LMF 2023-1 Financing Indenture, and as directed by Lument IM, a $32.9 million payment was made on the Class A Loans utilizing loan repayment proceeds in the LMF 2023-1 Financing, reducing the principal balance of such loans to $237.5 million.
The 2021-FL1 CLO and LMF 2023-1 Financing are subject to collateralization and coverage tests that are customary for these types of securitizations. As of March 31, 2025 and December 31, 2024, all such collateralization and coverage tests in the 2021-FL1 CLO and LMF 2023-1 Financing were met.

The carrying values of the Company's total assets and liabilities related to the 2021-FL1 CLO and LMF 2023-1 Financing at March 31, 2025 and December 31, 2024, included the following VIE assets and liabilities:



ASSETSMarch 31, 2025December 31, 2024
Cash, cash equivalents and restricted cash$1,002,278 $2,391,042 
Accrued interest receivable5,562,308 5,861,355 
Loans held for investment, net of allowance for credit losses989,668,838 1,049,886,009 
Total Assets$996,233,424 $1,058,138,406 
LIABILITIES
Accrued interest payable$2,407,387 $2,611,416 
Collateralized loan obligations and secured financings(1)
772,285,071 828,390,189 
Total Liabilities$774,692,458 $831,001,605 
Equity221,540,966 227,136,801 
Total liabilities and equity$996,233,424 $1,058,138,406 

(1)     The stated maturity of the collateral loan obligations per the terms of the underlying collateralized loan obligation agreement is June 14, 2039 for the 2021-FL1 CLO and the stated maturity of the secured financing per the terms of the underlying indenture is July 20, 2032.

The following tables present certain loan and borrowing characteristics of the 2021-F1 CLO and LMF 2023-1 Financing as of March 31, 2025 and December 31, 2024:

As of March 31, 2025
Collateralized Loan Obligations/FinancingsCountPrincipal Value
Carrying Value(1)
Wtd. Avg. Coupon(2)
Collateral (loan investments)61$1,010,888,938 $989,668,838 
7.86%
Financing provided2$774,342,955 $772,285,071 
6.58%

As of December 31, 2024
Collateralized Loan Obligations/FinancingsCountPrincipal Value
Carrying Value(1)
Wtd. Avg. Coupon(2)
Collateral (loan investments)65$1,065,563,646 $1,049,886,009 
8.08%
Financing provided2$830,698,696 $828,390,189 
6.66%

(1)     The carrying value of the collateral is net of unaccreted purchase discounts of $3,076,726 and $3,577,207 and allowance for credit loss of $17,060,194 and $11,320,220 as of March 31, 2025 and December 31, 2024, respectively. The carrying value for LMF 2023-1 Financing is net of debt issuance costs of $2,057,885 and 2,308,507 for March 31, 2025 and December 31, 2024, respectively.
(2)    Weighted average coupon for loan investments assumes applicable 30-day term SOFR of 4.31% and 4.51% as of March 31, 2025 and December 31, 2024, respectively, inclusive of weighted average interest rate floors of 0.94% and 0.63%, and spreads of 3.55% and 3.53%, respectively. Weighted average coupon for the financings assumes applicable 30-day term SOFR of 4.32% and 4.40% as of March 31, 2025 and December 31, 2024, respectively and spreads of 2.26% for March 31, 2025 and December 31, 2024, respectively.

The statement of operations related to the 2021-FL1 CLO and LMF 2023-1 Financing for the three months ended March 31, 2025 and March 31, 2024 include the following income and expense items:
Statements of OperationsThree Months Ended March 31, 2025Three Months Ended March 31, 2024
Interest income$20,485,198 $31,380,934 
Interest expense(13,636,474)(21,511,754)
     Net interest income$6,848,724 $9,869,180 
Less:
Provision for credit losses(5,739,974)(1,757,456)
General and administrative fees(183,564)(246,746)
     Net (loss) income$925,186 $7,864,978