Lument Finance Trust, Inc.

Good morning, and thank you for joining the Lumen Finance Trust fourth quarter 2021 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 Lumen Investment Management. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining our call to discuss Lumen Finance Trust fourth quarter and full year 2021 financial results. With me on the call today are James Flynn, CEO, Michael Larson, President, James Briggs, CFO, and Priscilla Torres, Head of Real Estate Investment Strategies. On Tuesday, we filed our 10K with the SEC and issued a press release which provided details on our fourth quarter and full year results. We also provided a supplemental earnings presentation which can be found on our website. Before handing the call over to Jim, I would like to remind everyone that certain statements made during the course of this call are not based on historical information and may constitute 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. When used in this conference, words such as outlook, evaluate, indicate, believes, will, anticipate, expects, intends, and other similar expressions are intended to identify forward-looking statements. 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 statements. These risks and uncertainties are discussed in the company's reports filed with the SEC, including its reports on Form 8-K, 10-Q, and 10-K, and in particular, the risk factor section of our Form 10-K. Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by or in the future may be amplified by the COVID-19 pandemic. It is not possible to predict or identify all such risks. Listeners are cautioned not to place undue reliance on these forward looking statements which speak only as of the day care of. The company undertakes no obligation to update any of these forward looking statements. Furthermore, certain non-GAAP financial measures will be discussed on this call. The presentation of this information is not intended to be considered in isolation nor as a substitute to 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 SEC at www.sec.gov. I will now turn the call over to James Flynn. Please go ahead.

Thank you, Charlie. Good morning, everyone. Welcome to the Lumen Finance Trust earnings call for the fourth quarter of 2021. Thank you all for joining. 2021 was a busy and important year for Lumen Finance Trust. During the year and over the first few months of 2022, we've executed several significant capital transactions that have allowed us to meaningfully grow our equity capital and institutional investor base. At the same time, we made significant incremental investments and observed continued strong performance in our loan portfolio. Those were all accomplished in an environment marked with uncertain economic considerations around interest rates, unemployment, asset values, all exacerbated by the continuing impact of variables such as COVID and the tragic events going on in Ukraine and Europe. I'd like to begin by discussing our recent transferable rights offering, which was announced on January 7th, 2022, and closed on February 22nd, 2022. This transaction, which entitled shareholders to purchase newly issued common stock in LFT at a discount to the market price, resulted in the company raising approximately 83.5 million of gross common equity proceeds. We believe this is a transformative transaction that provides LFT with the growth capital necessary to further our objectives of achieving appropriate operating scale, expanding our capacity to make investments in target assets. We intentionally structured the equity raise as a rights offering to allow stockholders to participate in the company's growth by purchasing shares at a discount to the market price and avoiding ownership dilution. We believe this raise enables the company to improve operating expense efficiencies and we anticipate that G&A expenses as a percentage of stockholders' equity will decrease as a result of this offering. We also expect that the offering will increase liquidity and trading volume of our common stock. Finally, I note that the transaction demonstrates a strong alignment of interest between LFT and its external manager, Lumen. An affiliate of the manager exercised its oversubscription privilege and made a total investment of $40 million in the transaction. As we look to the coming quarters, we intend to deploy this capital into the portfolio of multifamily-centric assets consistent with the existing strategy and expertise on a similarly levered basis. We have historically utilized CRE CLOs to finance our investments and continue to believe that the CRE CLO market provides an attractive financing source due to favorable economic terms as well as non-recourse, non-mark-to-market features. I will note that we have seen the broader markets weaken over the last few weeks due to the risks and uncertainties around the Russian invasion of Ukraine and inflation. The new issue of AAA CRE CLO spreads have widened by as much as 30 to 40 basis points since the beginning of the year, and we will remain cognizant of these levels as we look to deploy our capital on a levered basis. With regards to our dividend, We declare a quarterly common dividend of $0.06 per share for the first quarter of 2022. This dividend reflects a resetting of our dividend, taking into account our recent capital raise, which meaningfully increased our share count during the quarter and resulted in a reduction in book value from $4.37 to $3.65. In addition, this dividend reflects the anticipated drag on net income into common shareholders as we deploy the newly raised capital over the coming months. Overall, however, I would like to emphasize that once our capital is fully deployed, we expect to be able to support a greater quarterly dividend than $0.06 per share. Pivoting to the company's 2021 results, LFT's fourth quarter tapped off a banner year from a portfolio perspective with record volume and portfolio growth. During Q4, we invested over $300 million in new floating rate bridge loans, fully deploying the capital from 2021's successful $1 billion CLO issuance and the $60 million preferred equity raise. As of year end 2021, our total loan portfolio outstanding principal balance exceeded $1 billion. This represents an 83% increase in portfolio size year over year. It is also important to acknowledge that our focus in multifamily bridge lending and the strength of our credit and asset management platform has continued to allow the portfolio to perform well. As of December 31st, our loan portfolio was 100% performing with no loan impairments, no loan defaults, and no loans subject to forbearance. As stated in prior calls, we still have not granted a single forbearance, nor have we experienced any monetary default during the COVID era. And I believe this is a testament to both our rigorous credit standards as well as our proactive asset management efforts. Perhaps most importantly, our ability to continue to execute on the business plan is reflected in our results. For the full year of 2021, our total distributable earnings was 39 cents per share, which represents 108% dividend coverage ratio for the full year. We continue to maintain a simple and straightforward strategy of deploying our capital into commercial real estate debt investments with a focus in multifamily in order to provide stable earnings that support market return to our shareholders. We also feel it is important to grow LFT to a larger scale REIT, which we feel will provide long-term value to our shareholders. We are continuing to make progress towards these goals, and I'm excited about the continued growth as we focus on executing the business plan. In the coming months, we hope to continue discussions with current and new investors to educate market participants about LFT and the long-term opportunity we believe we offer investors. Our manager is one of the nation's largest capital providers in the multifamily and seniors housing space, executing over $17 billion in total transaction volume in 2021, servicing a greater than $50 billion loan portfolio, and employing over 600 people in more than 30 offices nationwide. The scale of this platform benefits the investors of LFT and provides great support in the execution of our long-term investment strategy. As we've continued to show over the last three years, We're utilizing the strengths of our manager to focus our investments in middle market, multifamily, floating rate bridge loans, and they've continued to perform extremely well. With that, I'd like to turn the call over to Jim Briggs, who will provide details on our financial results.