Lument Finance Trust, Inc.

Good morning, and thank you for joining the Lumen Finance Trust third quarter 2023 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 floor over to Andrew Tsang 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 third quarter 2023 financial results. With me on the call today are James Flynn, CEO, James Briggs, CFO, James Henson, President, and Zachary Halpern, Senior Director of Portfolio Management. Yesterday, on Monday, November the 13th, we filed our 10Q with the SEC and issued a press release to provide details on our third quarter results. We also provided a supplemental earnings presentation, which can be found on our website. 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 they 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 call, words like outlook, evaluate, indicate, believes, will, anticipates, expects, contends, 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 statement. These risks and uncertainties are discussed in the company's reports filed with the SEC, including its reports on Forms 8-K, 10-Q, and 10-K, and in particular the risk factors section of our Form 10-K. 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 date hereof. The company undertakes no obligation to update any of these forward-looking statements. Furthermore, certain non-GAAP financial measures will be discussed on this conference call. Presentation of this information is not intended to be considered in isolation, nor is a substitute for financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures, as the most comparable measures compared in accordance with GAAP, can be accessed through our filings with the SEC at www.sec.gov. For the third quarter, we reported GAAP net income of $0.10 per share, while distributable earnings were $0.11 per share. In October, we paid a dividend of $0.07 per share with respect to the third quarter, which represented approximately a 17% quarter-over-quarter increase. I will now turn over the call to Jim Flynn. Please go ahead.

Thank you, Andrew. Good morning, everyone. Welcome to the Lumen Finance Trust earnings call for the third quarter of 2023. We appreciate everyone joining today. The macroeconomic environment continues to be a challenging one. A mild recession beginning in the first half of 2024 remains a possible outcome as higher for longer rate environment seems to be the consensus economic forecast. Given the surprising resiliency of the labor market, consumption continues to outpace incomes and government spending and interest cost concerns. As we await the impact of the recent and dramatic monetary policy tightening to fully work its way through the system, we are also faced with heightened geopolitical uncertainty, further muddling the near-term outlook. Given the interest rate volatility, multifamily and other commercial real estate property types continue to trade thinly. Overall, U.S. commercial real estate investment sales volume was down greater than 50% year-over-year in Q3. Despite deceleration of rent growth and widening of year-over-year cap rates, multifamily continues to be the preferred sector and is supported by strong fundamentals. While deliveries are elevated in certain markets this year and next, Muted new construction starts suggest limited supply in the medium term, which is supportive of higher asset values as we move forward. Demand for multifamily continues to be driven by historic homeownership affordability gap, with prices of single-family homes remaining high, and residential mortgage rates currently north of 7%. Given these positive signs in the long term, LFT remains committed to its investment roots in seeking middle market multifamily investment opportunities that are accretive to the earnings and long-term shareholder value. The CRE CLO market continues to see significant dysfunction, with only two managed CRE CLO transactions priced during the third quarter and year-to-date. Issuance volumes through October are down 66% year-over-year from an already the press prior year. Given the uncertainty in the capital markets, we are proud to have successfully executed on July 12th, a 386 million floating rate mortgage portfolio financing transaction that we will subsequently reference as LMF 2023-1. In connection with LMF 2023-1 transaction, 270 million of an investment grade rated senior secured floating rate loan was placed with a private lender and approximately 47 million of investment grade notes were issued and sold to an affiliate of our external manager. LFT retained 67 million of subordinate notes in that transaction. The outstanding liabilities of this financing transaction have an initial weighted average spread of 314 basis points over 30-day term SOFR, excluding fees and transaction costs. The initial collateral pool consisted of 25 first lien floating rate mortgage loans secured by 32 multifamily properties located across the United States. The majority of the collateral was acquired from an affiliate of the manager at an aggregate discount to par of approximately 1.5%. The weighted average spread of the initial collateral was approximately 365 basis points over 30-day term SOFR, which we estimate works out to an effective spread on the initial collateral pool north of 425 basis points. LMF 2023-1 provides for a 24-month reinvestment period that allows principal proceeds from repayments of the mortgage assets to be reinvested in qualified replacement mortgage assets subject to certain conditions. Confirmation of this financing allowed the company to increase its investment capacity to approximately $1.4 billion at a relatively attractive incremental cost of capital. With the closing of LMF 2023-1, Coupled with our CRE CILO debt previously issued in 2021 and outstanding corporate term loan which matures in 2026, the company currently maintains an attractively priced and long-dated liabilities profile that positions us well as we enter an uncertain part of the market cycle. LLT's investment strategy of acquiring floating rate mortgage asset positions positions it well for a higher-for-longer rate environment. We believe the company consistently differentiates itself from its peer group through its continued focus on middle market multifamily credit opportunities, its culture of active asset management, and its strong sponsorship from the broader Oryx platform. With that, I'd like to turn the call over to Jim Briggs, who will provide us details on our financial results. Jim?