# Lument Finance Trust, Inc. (LFT) Informational only - not investment advice. CIK: 0001547546 SIC: 6798 Real Estate Investment Trusts SIC breadcrumb: [Finance, Insurance, And Real Estate](/division/H/) > [Holding And Other Investment Offices](/major-group/67/) > [SIC 6798 Real Estate Investment Trusts](/industry/6798/) Latest 10-K filed: 2026-03-23 SEC page: https://www.sec.gov/edgar/browse/?CIK=1547546 Filing source: https://www.sec.gov/Archives/edgar/data/1547546/000154754626000005/hcft-20251231.htm ## At a glance FY2025 · period end 2025-12-31 · filed 2026-03-23 · accession 0001547546-26-000005 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001547546.json | Metric | Value | FY | Provenance | | --- | ---: | ---: | --- | | Revenue | 25,113,203 USD | 2025 | verified | | Net income | -2,745,309 USD | 2025 | verified | | Assets | 1,215,980,159 USD | 2025 | verified | | Net margin | -10.93% | 2025 | computed | | Revenue YoY | -39.28% | 2025 | computed | | ROE | -1.25% | 2025 | computed | Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Net margin = net income ÷ revenue. Revenue YoY = FY2025 revenue ÷ FY2024 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity. No market price, no rating, no forecast on this site. Not investment advice. ### Peer percentile fingerprint | Ratio | LFT | Peer median | Percentile | N | | --- | ---: | ---: | ---: | ---: | | Net margin | -10.9% | 16.8% | 12 | 149 | | Revenue growth | -39.3% | 3.7% | 1 | 149 | | ROE | -1.3% | 5.7% | 18 | 151 | | ROA | -0.2% | 1.5% | 21 | 155 | | Liabilities / equity | 4.55 | 1.48 | 80 | 151 | Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC industry 6798 Real Estate Investment Trusts, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking. ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 25113203 | USD | 2025 | 2026-03-23 | | Net income | -2745309 | USD | 2025 | 2026-03-23 | | Assets | 1215980159 | USD | 2025 | 2026-03-23 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-23. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001547546.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2013 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | | | 23,588,344 | 20,139,551 | 17,400,715 | 15,413,842 | 18,430,514 | 20,678,748 | 23,874,804 | 34,392,996 | 41,356,609 | 25,113,203 | | Net income | | | -10,426,645 | 4,706,961 | -5,471,462 | 6,248,890 | 8,449,770 | 10,527,222 | 9,863,660 | 19,714,496 | 22,649,190 | -2,745,309 | | Diluted EPS | -1.12 | | | | | | 0.34 | 0.30 | 0.11 | 0.29 | 0.34 | -0.14 | | Operating cash flow | | 2,063,476 | 2,341,010 | | 12,272,408 | 7,282,343 | 12,219,209 | 13,846,947 | 16,289,054 | 24,738,341 | 27,129,666 | 10,098,533 | | Dividends paid | | | 29,898,918 | 11,904,005 | 5,156,936 | 6,632,546 | 7,638,270 | 9,978,162 | 11,646,557 | 13,057,788 | 15,680,803 | 18,313,583 | | Assets | | | 2,299,601,203 | 2,612,541,116 | 679,352,035 | 657,901,998 | 621,489,779 | 1,048,923,353 | 1,127,965,537 | 1,446,932,447 | 1,128,594,378 | 1,215,980,159 | | Liabilities | | | 2,157,134,338 | 2,466,749,839 | 529,148,697 | 549,257,286 | 507,786,627 | 879,547,853 | 884,964,040 | 1,206,140,067 | 890,695,346 | 996,893,441 | | Stockholders' equity | | | 142,466,865 | 145,791,277 | 150,103,838 | 108,545,212 | 113,603,652 | 169,276,000 | 242,901,997 | 240,692,880 | 237,799,532 | 218,987,218 | | Cash and cash equivalents | | | 27,534,374 | 34,347,339 | 7,882,862 | 10,942,115 | 11,375,960 | 14,749,046 | 43,858,515 | 51,247,063 | 69,173,444 | 23,112,995 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2013 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net margin | | | -44.20% | 23.37% | -31.44% | 40.54% | 45.85% | 50.91% | 41.31% | 57.32% | 54.77% | -10.93% | | Return on equity | | | -7.32% | 3.23% | -3.65% | 5.76% | 7.44% | 6.22% | 4.06% | 8.19% | 9.52% | -1.25% | | Return on assets | | | -0.45% | 0.18% | -0.81% | 0.95% | 1.36% | 1.00% | 0.87% | 1.36% | 2.01% | -0.23% | | Liabilities / equity | | | 15.14 | 16.92 | 3.53 | 5.06 | 4.47 | 5.20 | 3.64 | 5.01 | 3.75 | 4.55 | ## As-reported value updates 1 tracked difference above grepcent's stated thresholds were found between the earliest XBRL-filed value and the value currently on file for the same fiscal period. Ledger: /company/LFT/revisions/ ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-08-13. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001547546.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2022-Q3 | 2022-09-30 | | | 0.01 | reported discrete quarter | | 2023-Q1 | 2023-03-31 | | | 0.09 | reported discrete quarter | | 2023-Q2 | 2023-06-30 | | | 0.03 | reported discrete quarter | | 2023-Q3 | 2023-09-30 | 9,544,365 | 5,174,685 | 0.10 | reported discrete quarter | | 2023-Q4 | 2023-12-31 | 9,093,283 | 3,828,893 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q1 | 2024-03-31 | 12,992,557 | 5,795,183 | 0.11 | reported discrete quarter | | 2024-Q2 | 2024-06-30 | 9,522,927 | 3,413,445 | 0.07 | reported discrete quarter | | 2024-Q3 | 2024-09-30 | 9,484,463 | 5,095,684 | 0.10 | reported discrete quarter | | 2024-Q4 | 2024-12-31 | 9,356,662 | 3,604,878 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2025-03-31 | 7,734,534 | -1,707,526 | -0.03 | reported discrete quarter | | 2025-Q2 | 2025-06-30 | 6,960,779 | 2,505,731 | 0.05 | reported discrete quarter | | 2025-Q3 | 2025-09-30 | 5,051,462 | 658,597 | 0.01 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 5,366,428 | -8,942,111 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 5,696,678 | -978,375 | -0.02 | reported discrete quarter | | 2026-Q2 | 2026-06-30 | 4,502,730 | -9,197,948 | -0.18 | reported discrete quarter | ## Filed narrative (10-K & 10-Q) ## Business Verbatim Item 1 Business section from LFT's latest 10-K: [/company/LFT/business/](/company/LFT/business/). ## Risk Factors Verbatim Item 1A Risk Factors from LFT's latest 10-K: [/company/LFT/risk-factors/](/company/LFT/risk-factors/). ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1547546/000154754626000017/oaks-20260630.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high Filing date: 2026-08-13 Report date: 2026-06-30 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In this Quarterly Report on Form 10-Q, or this "report," we refer to Lument Finance Trust as "we," "us," or "our," unless we specifically state otherwise or the context indicates otherwise. We refer to our external manager, Lument Investment Management, as our "Manager" or "Lument IM". The following discussion should be read in conjunction with our consolidated financial statements and the accompanying notes to our financial statements which are included in Item 1 of this report, as well as information contained in our Annual Report on Form 10-K for the year ended December 31, 2025, or our 2025 10-K, filed with the Securities and Exchange Commission, or SEC, on March 23, 2026. Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements intended to qualify for the safe harbor contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended. Forward-looking statements are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. In addition, our management may from time to time make oral forward-looking statements. You can identify forward-looking statements by use of words such as "believe," "expect," "anticipate," "estimate," "project," "plan," "continue," "intend," "should," "may," "will," "seek," "would," "could" or the negative of these words and phrases or similar words and phrases, or by discussions of strategy, plans or intentions. Statements regarding the following subjects, among others, may be forward-looking: statements regarding the Company's plans, intentions, expectations, objectives or ability to regain compliance with the NYSE's continued listing standards, including a potential reverse stock split and intention to consider alternatives to cure the NYSE continued listing requirement deficiency, the return on equity; the yield on investments; the ability to borrow to finance assets; and risks associated with investing in real estate assets, including changes in business conditions, changes in interest rates or inflation and any resulting effect on our borrowers or liquidity, and the general economy. Forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us on the date of this quarterly report. Actual results may differ from expectations, estimates and projections. Readers are cautioned not to place undue reliance on forward-looking statements in this quarterly report and should consider carefully the risk factors described in Part I, Item IA "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2025 in evaluating these forward-looking statements. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. It is not possible to predict or identify all such risks. Additional information concerning these and other risk factors are contained in our 2025 10-K, which is available on the Securities and Exchange Commission's website at www.sec.gov. Overview  We are a Maryland corporation that is focused on investing in, originating, financing and managing a portfolio of CRE debt investments. In January 2020, we entered into a series of transactions with subsidiaries of ORIX USA, a diversified financial company with the ability to provide investment capital and asset management services to clients in the corporate, real estate and municipal finance sectors. We entered into a new management agreement with Lument IM, while another affiliate of ORIX USA purchased an ownership stake of approximately 5.0% through a privately placed stock issuance. On February 22, 2022, the affiliate purchased an additional 13,071,895 shares of common stock from the transferable common stock rights offering, increasing its beneficial ownership in the Company to approximately 27.4%. These transactions have enhanced the scale of LFT and are expected to generate shareholder value through leveraging ORIX USA's expansive originations, asset management and servicing platform. Lument IM is an affiliate of Lument, a nationally recognized leader in multifamily and seniors housing and health care finance. The Company leverages Lument's broad platform and significant expertise when originating and underwriting investments. We invest primarily in transitional floating rate CRE mortgage loans with an emphasis on middle market multifamily assets. We may also invest in other CRE-related investments including mezzanine loans, preferred equity, commercial mortgage-backed securities, fixed rate loans, construction loans and other CRE debt instruments. We finance our current investments in transitional multifamily and other CRE loans through CRE CLOs and other forms of secured financing agreements. Our primary sources of income are net interest from our investment portfolio and non-interest income from our mortgage loan-related activities. Net interest income represents the interest income we earn on investments less the expense of funding these investments. Our investments typically have the following characteristics: •Sponsors with experience in particular real estate sectors and geographic markets; •Located in U.S. markets with multiple demand drivers, such as growth in employment and household formation; •Fully funded principal balance greater than $5 million and generally less than $75 million; •Loan to Value ratio up to 85% of as-is value and up to 75% of as stabilized value; •Floating rate loans tied to one-month term SOFR, and/or an applicable replacement index in the future; and •Three-year term with two one-year extension options. We believe that our current investment strategy provides significant opportunities to achieve attractive risk-adjusted returns for our stockholders over time. However, to capitalize on the investment opportunities at different points in the economic and real estate investment cycle, we may modify or expand our investment strategy. We believe that the flexibility of our strategy, which is supported by significant CRE experience of Lument's investment team, and the extensive resources of ORIX USA, will allow us to take advantage of changing market conditions to maximize risk-adjusted returns to our stockholders. We have elected to be taxed as a REIT and comply with the provisions of the Internal Revenue Code with respect thereto. Accordingly, we are generally not subject to federal income tax on our REIT taxable income that we currently distribute to our stockholders so long as we maintain our qualification as a REIT. Our continued qualification as a REIT depends on our ability to meet, on a continuing basis, various complex requirements under the Internal Revenue Code relating to, among other things, the source of our gross income, the composition and values of our assets, our distribution levels and the concentration of ownership of our capital stock. Even if we maintain our qualification as a REIT, we may become subject to some federal, state and local taxes on our income generated in our wholly owned TRS, Five Oaks Acquisition Corp. ("FOAC"). Recent Developments 26 2025 was marked by significant volatility in global markets, driven by international trade policy and tariff-related developments, geopolitical uncertainty, political and regulatory developments, elevated interest rates and persistent inflationary pressures. Collectively, these factors contributed to challenging conditions across commercial real estate markets, including lower transaction activity, constrained capital availability and pressure on property values in certain sectors. Despite these challenges, capital markets generally adapted to a higher-for-longer interest rate environment, and improvements in financing market conditions supported greater availability of debt capital for commercial real estate investments. Thus far, 2026 has continued to be characterized by uncertainty and market volatility related to international trade policy, geopolitical developments and the future path of monetary policy. While benchmark interest rates have declined form their recent peaks, interest rates remain elevated relative to historical levels, uncertainty persists regarding the timing and magnitude of any future policy actions. As a result, market participants continue to evaluate the potential impact of evolving economic conditions, capital market dynamics and policy developments on commercial real estate fundamentals and financing markets. We continue to closely monitor these factors, as they may affect borrower performance, loan acquisition and origination activity, liquidity, financing and our capital allocation decisions. On July 24, 2026, we received notice (the “Notice”) from the New York Stock Exchange (the “NYSE”) that we are not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our common stock was less than $1.00 over a consecutive 30 trading-day period. The Notice is a notice of deficiency, not delisting, does not currently impact the listing and trading of our common stock on the NYSE. We may regain compliance at any time during the six-month cure period following receipt of the Notice if, on the last trading day of any calendar month during the cure period, our common stock has a closing share price of at least $1.00 and an average closing share price of at least $1.00 over the 30 trading-day period ending on such date. In accordance with NYSE rules, on August 7, 2026, we notified the NYSE of our intent to regain compliance with the minimum share price requirement through a 1-for-10 reverse stock split, which is currently expected to become effective at 5:00 pm Eastern Time on September 9, 2026. The reverse stock split is expected to reduce the number of issued and outstanding shares of the Company’s common stock from approximately 52.5 million shares to approximately 5.2 million shares. No fractional shares will be issued in connection with the reverse stock split. Stockholders who would otherwise be entitled to receive a fractional share as a result of the reverse stock split will receive cash in lieu of such fractional share. The Company reserves the right to abandon or delay the reverse stock split. Our common stock will continue to be listed and traded on the NYSE during the cure period, subject to our continued compliance with the NYSE's other continued listing standards. There can be no assurance that we will be able to achieve compliance with NYSE's minimum share price requirement within the required time frame. Second Quarter 2026 Summary Operating Results •Net loss attributable to common stockholders of $9.2 million, or $0.18 per share of common stock •Distributable Loss of $5.3 million, or $0.10 per share of common stock •On June 12, 2026, the Company announced its second quarter common dividend of $0.04 per share of common stock •On June 12, 2026, the Company announced its second quarter preferred dividend of $0.49219 per share of Series A Preferred Stock •Book value of common stock as of June 30, 2026 was $144.7 million, or $2.76 per share of common stock Investment Activity •We acquired or originated, as applicable, four loans with an initial unpaid principal balance of $67.0 million and a weighted average interest rate of 30-day term SOFR plus 3.0% and three funded advances with an initial unpaid principal balance of $24.0 million and a weighted average interest rate of 30-day term SOFR plus 3.7% •Experienced $184.0 million in loan payoffs •$991.7 million senior loan portfolio is 100% floating rate with an [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A (excerpt) Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/1547546/000154754626000005/hcft-20251231.htm Complete FY 2025 MD&A: /company/LFT/mda/fy2025/ Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Filing date: 2026-03-23 Report date: 2025-12-31 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our consolidated financial statements and the accompanying notes included in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that reflect our current expectations, estimates, forecasts and projections. Overview  We are a Maryland corporation that is focused on investing in, originating, financing and managing a portfolio of CRE debt investments. In January 2020, we entered into a series of transactions with subsidiaries of ORIX USA, a diversified financial company with the ability to provide investment capital and asset management services to clients in the corporate, real estate and municipal finance sectors. We entered into a new Management Agreement with Lument IM, while another affiliate of ORIX USA purchased an ownership stake of approximately 5.0% through a privately placed stock issuance. On February 22, 2022, the affiliate purchased an additional 13,071,895 shares of common stock from the transferable common stock rights offering, increasing its beneficial ownership in the Company to approximately 27.4%. These transactions have enhanced the scale of LFT and are expected to generate stockholder value through leveraging ORIX USA's expansive originations, asset management and servicing platform. Lument IM is an affiliate of Lument, a nationally recognized leader in multifamily and seniors housing and health care finance. The Company leverages Lument's broad platform and significant expertise when originating and underwriting investments. We invest primarily in transitional floating rate CRE mortgage loans with an emphasis on middle market multifamily assets. We may also invest in other CRE-related investments including mezzanine loans, preferred equity, commercial mortgage-backed securities, fixed rate loans, construction loans and other CRE debt instruments. We finance our current investments in transitional multifamily and other CRE loans through CRE CLOs and other forms of secured financing agreements. Our primary sources of income are net interest from our investment portfolio and non-interest income from our mortgage loan-related activities. Net interest income represents the interest income we earn on investments less the expense of funding these investments. Our investments typically have the following characteristics: •Sponsors with experience in particular real estate sectors and geographic markets; •Located in U.S. markets with multiple demand drivers, such as growth in employment and household formation; •Fully funded principal balance greater than $5 million and generally less than $75 million; •Loan to Value ratio up to 85% of as-is value and up to 75% of as stabilized value; •Floating rate loans tied to one-month term SOFR, and/or in the future potentially other index replacement; and •Three-year term with two one-year extension options. We believe that our current investment strategy provides significant opportunities to achieve attractive risk-adjusted returns for our stockholders over time. However, to capitalize on the investment opportunities at different points in the economic and real estate investment cycle, we may modify or expand our investment strategy. We believe that the flexibility of our strategy, which is supported by significant CRE experience of Lument's investment team, and the extensive resources of ORIX USA, will allow us to take advantage of changing market conditions to maximize risk-adjusted returns to our stockholders. We have elected to be taxed as a REIT and comply with the provisions of the Internal Revenue Code with respect thereto. Accordingly, we are generally not subject to federal income tax on our REIT taxable income that we currently distribute to our stockholders so long as we maintain our qualification as a REIT. Our continued qualification as a REIT depends on our ability to meet, on a continuing basis, various complex requirements under the Internal Revenue Code relating to, among other things, the source of our gross income, the composition and values of our assets, our distribution levels and the concentration of ownership of our capital stock. Even if we maintain our qualification as a REIT, we may become subject to some federal, state and local taxes on our income generated in our wholly owned TRS, Five Oaks Acquisition Corp. ("FOAC"). Recent Developments 2025 was marked by significant volatility in global markets, driven by tariffs and international trade policy and disputes, political and regulatory uncertainty, geopolitical conditions, elevated interest rates, and inflation. Collectively, these market dynamics have posed challenges to commercial real estate values and transaction activity. However, the Federal Reserve decreased interest rates in 2024 and 2025, which has contributed to an improvement in the cost and availability of debt. Thus far, 2026 has been marked by additional policy-driven uncertainty and market volatility, including with respect to international trade policy and geopolitical conditions. The Federal Reserve recently held interest rates steady for the first time since July 2025. While some officials have expressed support for additional decreases in interest rates in 2026, other officials have expressed opposition to additional decreases. As a result, significant uncertainty exists with respect to the timing, direction and extent of any future interest rate changes, in addition to uncertainty related to international trade policy, the political and regulatory environment, geopolitical events, and inflation. Our continued monitoring of these and other conditions will continue to inform our loan origination volumes, liquidity, and capital allocation in 2026. 2025 Highlights Operating Results •Net loss attributable to common stockholders of $7.5 million, or $0.14 per share of common stock •Distributable Earnings of $7.6 million, or $0.14 per share of common stock •Declared aggregate quarterly common dividends of $11.5 million, or $0.22 per share of common stock. The fourth quarter dividend of $0.04 per share of common stock produced an annualized yield of 11.3% on our closing stock price as of December 31, 2025 •Book value of common stock as of December 31, 2025 was $159.0 million, or $3.03 per share of book value of common stock 34 Investment Activity •We acquired sixteen loans with an initial unpaid principal balance of $359.5 million and a weighted average interest rate of 30-day term SOFR plus 2.97%, nine funded advances with an initial unpaid principal balance of $30.8 million and a weighted average interest rate of 30-day term SOFR plus 3.62% and we originated four loans with an unpaid principal balance of $13.7 million and a weighted average interest rate of 30-day term SOFR plus 3.14% •Experienced $266.6 million in loan payoffs and transitioned $62.6 million of loans with unpaid principal balance at time of foreclosure to real estate owned •$1.1 billion senior loan portfolio is 100% floating rate with an average spread to 30-day term SOFR of 3.33%, excluding unamortized purchase discounts of $1.7 million and deferred loan fees of $0.8 million as of December 31, 2025 •Multifamily assets represent 92.7% of loan portfolio Portfolio Financing •Non-mark-to-market financing is $800.0 million with an average spread to 30-day term SOFR of 2.24% as of December 31, 2025, representing 80% of our secured financings •Redeemed the 2021-FL1 CLO •Entered into a new $450 million uncommitted master repurchase agreement •Entered into a new $50 million term lending agreement for financing of non-performing loans and REO •Entered into and closed a $663.8 million managed CRE CLO with a 30-month reinvestment period providing $585.0 million of non-mark-to-market financing equating to an 88.12% advance rate, at a weighted average cost of capital of 30-day term SOFR plus 1.91% before transaction costs. Factors Impacting Our Operating Results Market conditions.  The results of our operations are and will continue to be affected by a number of factors and primarily depend on, among other things, the level of our net interest income, the market value of our assets and the supply of, and demand for, our target assets in the marketplace. Our net interest income will vary primarily as a result of changes in market interest rates and prepayment speeds, and by the ability of the borrowers underlying our commercial mortgage loans to continue making payments in accordance with the contractual terms of their loans, which may be impacted by unanticipated credit events experienced by such borrowers. During the year ended December 31, 2025, we foreclosed on four multifamily properties as result of the borrowers' inability to make payments, reducing our interest income accordingly. Interest rates vary according to the type of investment, conditions in the financial markets, competition and other factors, none of which can be predicted with any certainty. Our operating results will also be affected by general U.S. real estate fundamentals and the overall U.S. economic environment. In particular, our strategy is influenced by the specific characteristics of the underlying real estate markets, including prepayment rates, credit market conditions and interest rates. This year has been characterized by significant volatility in global markets, driven by investor concerns over inflation, rising interest rates, slowing economic growth, increased tariffs, trade tensions, geopolitical uncertainty and political and regulatory uncertainties. Changes in market interest rates.  Generally, our business model is such that rising interest rates will increase our net interest income, while declining interest rates will decrease our net interest income. As of December 31, 2025, 99.9% of our investments by total investment exposure earned a floating rate of interest, of which 100.0% were indexed to 30-day term SOFR, and all of our collateralized loan obligations and secured financings were indexed to 30-day term SOFR, and as a result we are less sensitive to variability in our net interest income resulting from interest rate changes. As of December 31, 2025, 100.0% of the loans in our commercial mortgage loan portfolio are structured with SOFR floors with a weighted average SOFR floor of 2.18%, of which 18.8% had an interest rate floor greater than the current spot interest rate. When interest rates are above our average interest rate floor, an increase in interest rates will increase our interest income. Alternatively, when interest rates are below our average interest rate floor, an increase in interest rates will decrease our net interest income until such time as interest rates rise above our average interest rate floor. Although our Manager is currently originating loans with SOFR floors, there can be no assurance that we will continue to obtain SOFR floors on future originations or acquisitions. Similarly, net interest income is also impacted by the spread in our commercial mortgage loan portfolio. As of December 31, 2025, the weighted average spread of our commercial loan portfolio was 3.33%, but there is no assurance that these spreads will be maintained as market environments fluctuate. After a prolonged period of rising interest rates, the Federal Reserve began lowering interest rates in September 18, 2024 by 0.50% and on each of November 7, 2024 and December 18, 2024, respectively, the Federal Reserve lowered interest rates by 0.25%. Additionally, on each of September 17, 2025, October 29, 2025 and December 10, 2025, respectively, the U.S. Federal Reserve lowered the federal funds rate by 0.25% to a current target range of 3.50% - 3.75%. Interest rates to remain elevated, and the timing, direction and extent of any future interest rate changes remain uncertain. In addition to the risk related [Excerpt truncated for page length; the complete text is on the linked full-MD&A page.] Read the full FY 2025 MD&A: /company/LFT/mda/fy2025/ All MD&A years: /company/LFT/mda/ ## MD&A history Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page. - [FY 2024 MD&A](/company/LFT/mda/fy2024/): filed 2025-03-19; accession 0001628280-25-013886 (https://www.sec.gov/Archives/edgar/data/1547546/000162828025013886/hcft-20241231.htm) - [FY 2023 MD&A](/company/LFT/mda/fy2023/): filed 2024-03-15; accession 0001628280-24-011505 (https://www.sec.gov/Archives/edgar/data/1547546/000162828024011505/hcft-20231231.htm) - [FY 2022 MD&A](/company/LFT/mda/fy2022/): filed 2023-03-23; accession 0001628280-23-009060 (https://www.sec.gov/Archives/edgar/data/1547546/000162828023009060/hcft-20221231.htm) - [FY 2021 MD&A](/company/LFT/mda/fy2021/): filed 2022-03-15; accession 0001628280-22-006285 (https://www.sec.gov/Archives/edgar/data/1547546/000162828022006285/hcft-20211231.htm) ## Macro cross-references Indicators mapped to this company's SIC classification (industry 6798 Real Estate Investment Trusts) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim. - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate Macro-to-micro threads including this sector: [Interest rates & the Fed](/thread/interest-rates-fed/), [Money & trade](/thread/money-trade/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/). All macro indicators: /indicators/ ## For LLMs & downloads Markdown twin: /company/LFT.md · JSON record: /company/LFT.json · verified financials: /company/LFT/financials.json / /company/LFT/financials.csv · machine TOC for the whole site: /llms.txt