REAL ESTATE OWNED

9 Months Ended

Sep. 30, 2025

A summary of our REO assets is as follows:


	September 30, 2025		December 31, 2024
Real estate owned, held-for-investment
Land	$	5,877,407	$	—
Building	43,864,456		—
Less: Accumulated depreciation and amortization	(483,562)		—
Total	$	49,258,301	$	—

Real estate owned, held-for-sale
Real estate owned, held-for-sale	$	8,871,841	$	—
Total	$	8,871,841	$	—

At September 30, 2025, our REO assets were comprised of four multifamily properties held within 2021-FL1 CLO and LMF 2023-1 Financing.

During the nine months ended September 30, 2025, Lument Real Estate Capital, LLC ("LREC"), as special servicer for 2021-FL1 CLO foreclosed on two multifamily bridge loans with aggregate net carrying value of $39.5 million, net of specific CECL reserves of $2.4 million, with ownership and deed to the property being taken by a newly formed subsidiary of 2021-FL1 CLO. Additionally, LREC, as special servicer for LMF 2023-1 Financing foreclosed on two multifamily bridge loans with aggregate net carrying value of $19.9 million, net of specific CECL reserves of $0.7 million, with ownership and deed to the property being taken by a newly formed subsidiary of LMF 2023-1 Financing.

The fair value of the underlying collateral is determined using the income approach, market approach, or a combination thereof. The significant unobservable input for the income capitalization approach is the overall capitalization rate assumption, used in the direct capitalization method, which ranged from 6.25%-7.40%. The significant unobservable input used for the market approach is the price per unit from an appraisal or broker opinion of value.

At September 30, 2025, our REO properties had a weighted average occupancy rate of approximately 73.5%.

We recorded depreciation and amortization expense related to the REO assets of $0.3 million and $0.5 million for the three and nine months ended September 30, 2025, respectively, recorded as "net income (expense) from real estate owned operations" in the consolidated statement of operations. Additionally, we recorded operating income of $1.6 million for the three and nine months ended September 30, 2025, respectively, recorded as ""net income (expense) from real estate owned operations" and operating expense of $1.4 million for the three and nine months ended September 30, 2025, respectively, recorded as "net income (expense) from real estate owned operations" in the consolidated statement of operations.