LUMENT FINANCE TRUST, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

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, OREC
Investment Management, LLC doing business as Lument Investment Management, as
our "Manager" or "Lument IM".

The following discussion should be read in conjunction with our condensed
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,
2021, or our 2021 10-K, filed with the Securities and Exchange Commission, or
SEC, on March 15, 2022.

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: 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
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, 2021 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.
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.
Additional information concerning these and other risk factors are contained in
our 2021 10-K which is available on the Securities and Exchange Commission's
website at www.sec.gov.

Overview

We are a Maryland company that focuses on investing, financing and managing a portfolio of commercial real estate (“CRE”) investments.

In January 2020, we entered into a series of transactions with subsidiaries of
ORIX Corporation USA ("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 a subsidiary of Lument, a nationally recognized leader in financing multifamily and senior housing. The firm relies on Lument’s extensive platform and considerable 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 primarily through match term non-recourse CRE collateralized
loan obligations ("CLO"). We may utilize warehouse repurchase agreements or
other forms of financing in the future. 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 generally 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, previously to one-month U.S.
denominated LIBOR, and/or in the future potentially any 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 the 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 taxable REIT subsidiary, Five Oaks Acquisition
Corp. ("FOAC").

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RECENT DEVELOPMENTS

As the COVID-19 pandemic has evolved from its emergence in early 2020, so has
its global impact. In response to COVID-19, the United States and numerous other
countries declared national emergencies, which has led to large scale
quarantines as well as restrictions to business deemed non-essential. Although
more normalized activities have resumed, we are not in a position to estimate
the ultimate impact COVID-19 and its variants will have on our business and the
economy as a whole. We cannot predict the potential impact related to both known
and unknown risks, including future quarantines, closures and other restrictions
resulting from the pandemic.

The effects of the COVID-19 pandemic did not significantly impact our operating
results for the three months ended March 31, 2022. However, the prolonged
duration and impact of the COVID-19 pandemic could materially disrupt our
business operations and negatively impact our business, financial performance
and operating results for the year ending December 31, 2022 and potentially
longer.

Summary of the first quarter of 2022

•Acquired nine loans with an initial unpaid principal balance of $119.2 million
with a weighted average interest rate of one-month U.S. LIBOR plus 3.26% and a
weighted average LIBOR floor of 0.09%.
•Acquired five loans with an initial unpaid principal balance of $65.8 million
with a weighted average interest rate of 30-day term SOFR plus 3.65% and a
weighted average SOFR floor of 0.06%.
•On February 22, 2022, the Company closed a transferable common stock rights
offering. The Company issued and sold 27,277,269 shares of common stock for
gross proceeds of approximately $83.5 million.
•On February 22, 2022, the Company, together with its Credit Parties, entered
into an amendment (the "Fourth Amendment") to the Credit and Guaranty Agreement.
This amendment amends the maximum total net leverage financial covenant.
•On March 15, 2022, the Company announced its first quarter common dividend of
$0.06 per share of common stock, in line with the previous quarter.
•On March 15, 2022, the Company announced its first quarter preferred dividend
of $0.49219 per share of Series A Preferred Stock.

Factors Affecting Our Results of Operations

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, such as the ongoing COVID-19 pandemic. 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, and have most recently been impacted by the ongoing COVID-19
pandemic. Our operating results will also be affected by general U.S. real
estate fundamentals and the overall U.S. economic environment, including the
pace and degree of recovery from the ongoing COVID-19 pandemic. In particular,
our strategy is influenced by the specific characteristics of the underlying
real estate markets, including prepayment rates, credit market conditions and
interest rate levels.

 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 March 31, 2022,
99.9% of our investments by total investment exposure earned a floating rate of
interest, of which 93.9% were indexed to one-month LIBOR and 6.1% were indexed
to 30-day term SOFR, and all of our collateralized loan obligations were indexed
to one-month LIBOR, and as a result we are less sensitive to variability in our
net interest income resulting from interest rate changes. Our net interest
income currently benefits from LIBOR/SOFR floors in our commercial loan
portfolio, with a weighted average LIBOR floor of 0.28% and a weighted average
SOFR floor of 0.06% as of March 31, 2022. As of March 31, 2022, 99.0% of the
loans in our commercial mortgage loan portfolio are structured with LIBOR/SOFR
floors, 13.8% of which had a 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 LIBOR floors on future
acquisitions. Similarly, net interest income is also impacted by the spread in
our commercial mortgage loan portfolio As of March 31, 2022, the weighted
average spread of our commercial loan portfolio was 3.36%, but there is no
assurance that these spreads will be maintained as market environments
fluctuate. Current market conditions have reflected a widening trend in
commercial mortgage loan credit spreads which provide a benefit to interest
income.

In addition to the risk related to fluctuations in cash flows associated with
movements in interest rates, there is also the risk of non-performance on
floating rate assets. In the case of significant increase in interest rates, the
additional debt service payments due from our borrowers may strain the operating
cash flows of the real estate assets underlying our mortgages and/or impact
their ability to be refinanced at such higher interest rates, potentially,
contribute to non-performance or, in severe cases, default.

On November 30, 2020, the ICE Benchmark Administration ("IBA"), with the support
of the United States Federal Reserve and United Kingdom's Financial Conduct
Authority ("FCA"), announced plans to consult on ceasing publication of LIBOR on
December 31, 2021 for only the one week and two month LIBOR tenors, and on June
30, 2023 for all other LIBOR tenors. While this announcement extends the
transition period to June 2023, the United States Federal Reserve concurrently
issued a statement advising banks to stop new LIBOR issuances by the end of
2021. As of January 1, 2022, our Manager is only originating loans based on
30-day term SOFR, however, our Manager continues to have one-month LIBOR based
loans in its pipeline assets available for investment. On March 5, 2021, the FCA
confirmed that all LIBOR settings will either cease to be provided by any
administrator or no longer be representative: (a) immediately after December 31,
2021, in the case of the one week and two month U.S. dollar settings; and (b)
immediately after June 30, 2023, in the case of the remaining U.S. dollar
settings. The Alternative Reference Rate Committee ("ARRC"), a committee
convened by the Federal Reserve that includes major market participants, has
proposed an alternative rate to replace U.S. Dollar LIBOR: SOFR. On July 29,
2021 the ARRC ratified term rates for the one-, three- and six-month tenors
based on SOFR futures traded. This announcement is expected to expedite the
transition from LIBOR to SOFR. The outcome of these reforms is uncertain and any
changes in the methods by which LIBOR is determined or regulatory activity
related to LIBOR's phase-out could cause LIBOR to perform differently than in
the past.

As of March 31, 2022, 93.9% of our commercial mortgage loans by principal
balance and 100% of our collateralized loan obligations bear interest related to
one-month U.S. LIBOR. All of these arrangements provide procedures for
determining an alternative base rate in the event that LIBOR is discontinued.
Regardless, there can be no assurances as to what alternative base rates may be
and whether such base rate will be more or less favorable than LIBOR and any
other unforeseen impacts of the discontinuation of LIBOR. We are monitoring the
developments with respect to the phasing out of LIBOR and are working
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with our lenders and borrowers to minimize the impact of any LIBOR transition on
our financial condition and results of operations, but can provide no assurances
regarding the impact of the discontinuation of LIBOR.

Credit risk.  Our commercial mortgage loans and other investments are also
subject to credit risk. The performance and value of our loans and other
investments depend upon the sponsor's ability to operate properties that serve
as our collateral so that they produce cash flows adequate to pay interest and
principal due to us. To monitor this risk, the Manager's asset management team
reviews our portfolio and maintains regular contact with borrowers, co-lenders
and local market experts to monitor the performance of the underlying
collateral, anticipate borrower, property and market issues and, to the extent
necessary or appropriate, enforce our rights as lender. The market values of
commercial mortgage assets are subject to volatility and may be adversely
affected by a number of factors, including, but not limited to, national,
regional and local economic conditions (which may be adversely affected by
industry slowdowns and other factors); local real estate conditions; changes or
continued weakness in specific industry segments; construction quality, age and
design; demographic factors; and retroactive changes to building or similar
codes. In addition, decreases in property values reduce the value of the
collateral and potential proceeds available to a borrower to repay the
underlying loans, which could also cause us to suffer losses. As of March 31,
2022, 100% of the commercial mortgage loans in our portfolio were current as to
principal and interest. Additionally, we have reviewed the loans designated as
High Risk for impairment. Impairment of these loans, which are collateral
dependent, is measured by comparing the estimated fair value of the underlying
collateral, less costs to sell, to the book value of the respective loan. As of
March 31, 2022, the Company has not recognized any impairments on its loan
portfolio. However, due to the continued widespread impact of the COVID-19
pandemic we consider there to be heightened credit risk associated with our
commercial mortgage loan portfolio. Uncertainty about the severity and duration
of the economic impact of the COVID-19 pandemic, as exacerbated by events
related to virus strains, persist and potential exists for the credit risk of
our portfolio to heighten further. We can provide no assurances that our
borrowers will remain current as to principal and interest, or that we will not
enter into forbearance agreements or loan modifications in order to protect the
value of our commercial mortgage loan assets. Should that occur, it could have a
material negative impact on our results of operations.

Liquidity and financing markets. Liquidity is a measurement of our ability to
meet potential cash requirements, including ongoing commitments to pay
dividends, fund investments and repay borrowings and other general business
needs. Our primary sources of liquidity have been proceeds of common or
preferred stock issuances, net proceeds from corporate debt obligations, net
cash provided by operating activities and other financing arrangements. We
finance our commercial mortgage loans primarily with collateralized loan
obligations, the maturities of which are matched to the maturities of the loans,
and which are not subject to margin calls or additional collateralization
requirements. However, to the extent that we seek to invest in additional
commercial mortgage loans outside of our CLO, we will in part be dependent on
our ability to issue additional collateralized loan obligations, to secure
alternative financing facilities or to raise additional common or preferred
equity.

Prepayment speeds.  Prepayment risk is the risk that principal will be repaid at
a different rate than anticipated, causing the return on certain investments to
be less than expected. As we receive prepayments of principal on our assets, any
premiums paid on such assets are amortized against interest income. In general,
an increase in prepayment rates accelerates the amortization of purchase
premiums, thereby reducing the interest income earned on the assets. Conversely,
discounts on such assets are accreted into interest income. In general, an
increase in prepayment rates accelerates the accretion of purchase discounts,
thereby increasing the interest earned on the assets. With the exception of nine
loans acquired with an initial aggregate unpaid principal balance of $117.0
million with an aggregate purchase premium of $538,146 and aggregate purchase
discount of $171,186, all of our commercial mortgage loans were acquired at par.
As of March 31, 2022, our aggregate unamortized purchase premium was $45,349 and
our aggregate unamortized purchase discount was $100,572, and accordingly we do
not believe this to be a material risk for us at present. Additionally, we are
subject to prepayment risk associated with the terms of our collateralized loan
obligations. Due to the generally short-term nature of transitional
floating-rate commercial mortgage loans, our CLOs include a reinvestment period
during which principal repayments and prepayments on our commercial mortgage
loans may be reinvested in similar assets, subject to meeting certain
eligibility criteria. The reinvestment period for LFT CRE 2021-FL1 remains in
place through December 2023. While the interest-rate spreads of our
collateralized loan obligations are fixed until they are repaid, the terms,
including spreads, of newly originated loans are subject to uncertainty based on
a variety of factors, including market and competitive conditions, which remain
uncertain and volatile in light of the COVID-19 pandemic. To the extent that
such conditions result in lower spreads on the assets in which we reinvest, we
may be subject to a reduction in interest income in the future. However, our
loan agreements provide for prepayment penalties which are intended to offset
any potential reduction in future interest income.

Changes in market value of our assets.  We account for our commercial mortgage
loans at amortized cost. As such, our earnings will generally not be directly
impacted by changes in the market values of these loans. However, if a loan is
considered to be impaired as a result of adverse credit performance, an
allowance is recorded to reduce the carrying value through a charge to the
provision for loan losses. Impairment is measured by comparing the estimated
fair value of the underlying collateral, less costs to sell, to the book value
of the respective loan. Provisions for loan losses will directly impact our
earnings. Given the widespread impact of the COVID-19 pandemic, we consider
there to be a heightened credit risk associated with our commercial mortgage
loan portfolio.

 Governmental actions. Since 2008, when both Fannie Mae and Freddie Mac were
placed under the conservatorship of the U.S. government, there have been a
number of proposals to reform the U.S. housing finance system in general, and
Fannie Mae and Freddie Mac in particular. We anticipate debate on residential
housing and mortgage reform to continue through 2022 and beyond, but a deep
divide persists between factions in Congress and as such it remains unclear what
shape any reform would take and what impact, if any, reform would have on
mortgage REITs.

Managing our business during COVID-19

As of March 13, 2020, our Manager, and its affiliates, implemented a work from
home, or WFH, policy for employees in all locations. On October 1, 2021, our
Manager began reopening offices on a limited basis with certain staff returning
to the office on a staggered partial schedule. As of April 1, 2022, all of our
offices have reopened with with continued flexible work arrangements. Our
Manager's highly experienced senior team and dedicated employees have been and
continue to be fully operational during this ongoing disruption and are
continuing to execute on all investment management, asset management, servicing,
portfolio monitoring, financial reporting and related control activities. Our
Manager's and affiliates employees are in constant communication to ensure
timely coordination and early identification of issues. We continue to engage in
ongoing active dialogue with the borrowers in our commercial mortgage loan
portfolio to understand what is taking place at the properties collateralizing
our investments.

Considering the current economic environment caused by COVID-19 we are mindful
of constraints on landlord enforcement rights and continue to monitor the impact
of fiscal stimulus on our loan portfolio. From September 4, 2020, through August
26, 2021, when the Centers for Disease Control ("CDC") Agency Order was
overturned by the U.S. Supreme Court, residential landlords and those with
similar eviction rights could not evict "covered persons" for nonpayment of rent
in any U.S. state or territory. Covered persons (a) use best efforts to obtain
government assistance; (b) make less than $99,000 or $198,000 jointly; (c) have
suffered loss of income or extraordinary medical expenses; (d) use of best
efforts to make partial payments; and (e) have no other housing options. In the
last month before the Supreme Court lifted the order, the moratorium added to
the definition of "covered persons" to include (f) the individual
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resides in a U.S. county experiencing substantial or high rates of community
transmission levels of SARS-COV-2 as defined by CDC. As a result of the national
restriction, multifamily apartments borrowers had less ability to address
nonpayment of tenants, which in turn may have negatively impacted a property's
cash flow coverage of the debt service of their loans. Additionally, due to
COVID-19, there have been potential challenges facing third-party providers,
such as appraisers, environmental and engineering consultants we rely on to make
new investments which may make it more difficult to make these investments.
Currently, despite the Supreme Court having lifted the CSC order, individual
states and localities continue to maintain limited evictions restrictions. New
York, Washington D.C., Massachusetts, Minnesota, New Mexico, Oregon and Nevada
all have some form of limited or prohibited residential evictions while the
tenant applies for rental assistance. California has local eviction moratoriums
that may extend beyond that in different municipalities, but not statewide.

Key financial measures and indicators

As a real estate investment trust, we believe the key financial measures and
indicators for our business are earnings per share, dividends declared,
Distributable Earnings, and book value per share of common stock. For the three
months ended March 31, 2022, we recorded earnings per share of $0.05, declared a
quarterly dividend of $0.06 per share, and reported $0.05 per share of
Distributable Earnings. In addition, our book value per share of common stock
was $3.62.

As described in more detail below, distributable income is a measure that is not prepared in accordance with generally accepted accounting principles in The United States of America, or GAAP, which helps us assess our performance by excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily representative of our current loan portfolio and operations. In addition, distributable earnings is a performance measure that we take into account when declaring our dividends.

Earnings per share and dividends declared

The following table shows the calculation of basic and diluted net earnings per share and declared dividends per share:

Three months completed

                                                                       March 31, 2022           March 31, 2021
Net income(1)                                                        $     1,769,841          $     2,804,935
Weighted-average shares outstanding, basic and diluted                    36,464,952               24,943,383
Net income per share, basic and diluted                              $          0.05          $          0.11
Dividends declared per share                                         $      

$0.06 0.09

(1) Represents net income attributable to Lument Finance Trust, Inc.

distributable profit

Distributable Earnings is a non-GAAP financial measure, which we define as GAAP
net income (loss) attributable to holders of common stock, or, without
duplication, owners of our subsidiaries, computed in accordance with GAAP,
including realized losses not otherwise included in GAAP net income (loss) and
excluding (i) non-cash equity compensation, (ii) depreciation and amortization,
(iii) any unrealized gains or losses or other similar non-cash items that are
included in net income for that applicable reporting period, regardless of
whether such items are included in other comprehensive income (loss) or net
income (loss), and (iv) one-time events pursuant to changes in GAAP and certain
material non-cash income or expense items after discussions with the Company's
board of directors and approved by a majority of the Company's independent
directors.

While Distributable Earnings excludes the impact of any unrealized provisions
for credit losses, any loan losses are charged off and realized through
Distributable Earnings when deemed non-recoverable. Non-recoverability is
determined (i) upon the resolution of a loan (i.e. when the loan is repaid,
fully or partially, or in the case of foreclosures, when the underlying asset is
sold), or (ii) with respect to any amount due under any loan, when such amount
is determined to be non-collectible.

We believe that Distributable Earnings provides meaningful information to
consider in addition to our net income (loss) and cash flows from operating
activities determined in accordance with GAAP. We believe Distributable Earnings
is a useful financial metric for existing and potential future holders of our
common stock as historically, over time, Distributable Earnings has been a
strong indicator of our dividends per share. As a REIT, we generally must
distribute annually at least 90% of our taxable income, subject to certain
adjustments, and therefore we believe our dividends are one of the principal
reasons stockholders may invest in our common stock. Refer to Note 15 to our
consolidated financial statements for further discussion of our distribution
requirements as a REIT. Furthermore, Distributable Earnings help us to evaluate
our performance excluding the effects of certain transactions and GAAP
adjustments that we believe are not necessarily indicative of our current loan
portfolio and operations, and is a performance metric we consider when declaring
our dividends.

Distributable Earnings does not represent net income (loss) or cash generated
from operating activities and should not be considered as an alternative to GAAP
net income (loss), or an indication of GAAP cash flows from operations, a
measure of our liquidity, or an indication of funds available for our cash
needs. In addition, our methodology for calculating Distributable Earnings may
differ from the methodologies employed by other companies to calculate the same
or similar performance measures, and accordingly, our reported Distributable
Earnings may not be comparable to the Distributable Earnings reported by other
companies.

The following table provides a reconciliation of distributable earnings to GAAP net income:

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Three months completed

                                                                      March 31, 2022           March 31, 2021
Net income attributable to common stockholders                      $     1,769,841          $     2,804,935
Unrealized (gain) loss on mortgage servicing rights                        (147,382)                  20,455

Recognized compensation expense related to restricted common shares

                                                                         4,638                    2,885
Adjustment for income taxes                                                  51,665                   14,713
Distributable Earnings                                              $     1,678,762          $     2,842,988
Weighted-average shares outstanding, basic and diluted                   36,464,952               24,943,383
Distributable Earnings per share, basic and diluted                 $       

$0.05 0.11

Book value per common share

The following table calculates our book value per common share:

                                                                    March 31, 2022           December 31, 2021
Total stockholders' equity                                         $  

248 981 343 $169,276,000
Fewer preferred shares (preferred liquidation of $25.00 per share)

                                                                (60,000,000)                (60,000,000)
Total common stockholders' equity                                     188,981,343                 109,276,000
Shares of common stock issued and outstanding at period end            52,225,152                  24,947,883
Book value per share of common stock                               $         3.62          $             4.38



As of March 31, 2022, our common stockholders' equity was $189.0 million, and
our book value per share of common stock was $3.62 on a basic and fully diluted
basis. Our equity increased by $79.7 million compared to our equity as of
December 31, 2021 primarily as a result of the closing of the transferable
common stock rights offering on February 22, 2022 generating net proceeds of
approximately $81.1 million partially offset by $1.2 million in distributions
greater than net income the quarter.

Investment portfolio

Commercial Mortgages

As of March 31, 2022, we have determined that we are the primary beneficiary of
LFT CRE 2021-FL1, Ltd. based on our obligation to absorb losses derived from
ownership of our residual interests. Accordingly, the Company consolidated the
assets, liabilities, income and expenses of the underlying issuing entities,
collateralized loan obligations.

The following table details our lending activity by outstanding principal balance:

                                         Commercial Mortgage Loans Held-for-Investment
Balance at December 31, 2021            $                               1,001,825,294
Purchases and fundings                                                    184,992,167
Proceeds from principal repayments                                       

(109,356,365)

Accretion of purchase discount                                              

100,572

Amortization of purchase premium                                              (45,349)
Balance at March 31, 2022               $                               1,077,516,319



The following table details the overall statistics of our loan portfolio in
March 31, 2022 and December 31, 2021:

                                                                                                                                              Weighted Average
                                                                                                                                                                          Remaining
                                           Unpaid Principal                                                            Floating Rate                                         Term
             Loan Type                          Balance               Carrying Value            Loan Count                Loan %                 Coupon(1)                (Years)(2)
March 31, 2022
Loans held-for-investment
Senior secured loans(3)                   $  1,077,505,797          $ 1,077,516,319                   71                      100.0  %                   3.8  %                     3.9
                                          $  1,077,505,797          $ 1,077,516,319                   71                      100.0  %                   3.8  %                     3.9







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                                                                                                                                            Weighted Average
                                                                                                                                                                        Remaining
                                         Unpaid Principal                                                            Floating Rate                                         Term
            Loan Type                         Balance               Carrying Value            Loan Count                Loan %                 Coupon(1)                (Years)(2)
December 31, 2021
Loans held-for-investment
Senior secured loans(3)                 $  1,001,869,994          $ 1,001,825,294                   66                      100.0  %                   3.9  %                     3.7
                                        $  1,001,869,994          $ 1,001,825,294                   66                      100.0  %                   3.9  %                     3.7




(1)  Weighted average coupon assumes applicable one-month LIBOR of 0.29% and
0.10% and 30-day Term SOFR of 0.24% and 0.00% as of March 31, 2022 and
December 31, 2021, respectively, inclusive of weighted average interest rate
floors of 0.27% and 0.49%, respectively. As of March 31, 2022, 93.9% of the
investments by total investment exposure earned a floating rate indexed to
one-month USD LIBOR and 6.1% of the investments by total investment exposure
earned a floating rate indexed to 30-day Term SOFR. As of December 31, 2021,
100% of the investments by total investment exposure earned a floating rate
indexed to one-month LIBOR
(2)  Weighted average remaining term assumes all extension options are exercised
by the borrower, provided, however, that our loans may be repaid prior to such
date.
(3)  As of March 31, 2022, $998,667,789 of the outstanding senior secured loans
were held in VIEs and $78,848,530 of the outstanding senior secured loans were
held outside of VIEs. As of December 31, 2021, $974,025,294 of the outstanding
senior secured loans were held in VIEs and $27,800,000 of the outstanding senior
secured loans were held outside VIEs.

The table below presents additional information relating to the Company’s portfolio as at March 31, 2022:

                                                                      Total Loan             Current                                                                                             Max Remaining
Loan #          Form of Investment         Origination Date           Commitment(1)          Principal Amount       Location                         Property Type            Coupon             Term (Years)            LTV(2)
    1            Senior secured               December 16, 2021       $  54,455,784          $  51,375,000           Daytona, FL                      Multi-Family            1mL + 3.1                        4.8             71.7  %
    2            Senior secured               November 22, 2019       $  39,500,000          $  36,781,588           Virginia Beach, VA               Multi-Family            1mL + 3.2                        2.8             77.1  %
    3            Senior secured                   June 28, 2021       $  39,263,000          $  34,690,000           Barrington, NJ                   Multi-Family            1mL + 3.1                        4.3             78.1  %
    4            Senior secured                November 2, 2021       $  33,500,000          $  33,500,000           Warner Robbins, GA               Multi-Family            1mL + 3.0                        2.7             51.4  %
    5            Senior secured                    June 8, 2021       $  35,877,500          $  33,360,000           Chattanooga, TN                  Multi-Family            1mL + 3.7                        4.3             79.8  %
    6            Senior secured                    June 8, 2021       $  32,500,000          $  30,576,666           Miami, FL                        Multi-Family            1mL + 3.2                        4.3             74.3  %
    7            Senior secured                   June 30, 2021       $  32,250,000          $  28,650,000           Porter, TX                       Multi-Family            1mL + 3.3                        4.3             71.6  %
    8            Senior secured                    May 20, 2021       $  33,000,000          $  27,803,800           Marietta, GA                     Multi-Family            1mL + 3.1                        4.3             77.0  %
    9            Senior secured                  April 22, 2021       $  27,750,000          $  27,750,000           Los Angeles, CA                  Multi-Family            1mL + 3.3                        0.7             55.0  %
   10            Senior secured                    June 7, 2021       $  29,400,000          $  26,400,000           San Antonio, TX                  Multi-Family            1mL + 3.4                        4.3             80.0  %
   11            Senior secured                 August 26, 2021       $  27,268,000          $  24,832,000           Clarkston, GA                    Multi-Family            1mL + 3.5                        4.4             79.0  %
   12            Senior secured               November 15, 2021       $  26,003,000          $  24,330,000           El Paso, TX                      Multi-Family            1mL + 3.1                        4.8             76.0  %
   13            Senior secured                October 18, 2021       $  28,250,000          $  23,348,000           Cherry Hill, NJ                  Multi-Family            1mL + 3.0                        4.7             72.4  %
   14            Senior secured                 August 26, 2021       $  23,370,000          $  21,957,240           Union City, GA                   Multi-Family            1mL + 3.4                        4.5             70.4  %
   15            Senior secured               November 16, 2021       $  21,975,000          $  20,960,000           Dallas, TX                       Multi-Family            1mL + 3.2                        4.8             73.5  %
   16            Senior secured                 August 31, 2021       $  21,750,000          $  20,700,000           Houston, TX                      Multi-Family            1mL + 3.3                        4.5             74.2  %
   17            Senior secured                October 29, 2021       $  20,500,000          $  20,500,000           Knoxville, TN                    Multi-Family            1mL + 3.8                        4.7             70.0  %
   18            Senior secured                   June 30, 2021       $  21,968,000          $  20,188,700           Jacksonville, FL                 Multi-Family            1mL + 3.5                        4.3             77.1  %
   19            Senior secured                October 13, 2017       $  20,000,000          $  19,648,818           Seattle, WA                      Self Storage            1mL + 3.6                        2.7             46.5  %
   20            Senior secured                November 5, 2021       $  20,965,000          $  19,200,000           Orlando, FL                      Multi-Family            1mL + 3.0                        4.7             78.1  %


                                       25
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  21           Senior secured            February 11, 2022       $ 20,165,000          $ 18,599,480           Tampa, FL                     Multi-Family           1mS + 3.6                  5.0          78.0  %
  22           Senior secured            November 23, 2021       $ 19,925,000          $ 18,400,000           Orange, NJ                    Multi-Family           1mL + 3.2                  4.8          78.0  %
  23           Senior secured             October 12, 2021       $ 17,500,000          $ 17,500,000           Atlanta, GA                   Multi-Family           1mL + 3.2                  2.6          42.9  %
  24           Senior secured                 July 8, 2021       $ 17,000,000          $ 17,000,000           Knoxville, TN                 Multi-Family           1mL + 4.0                  4.4          69.7  %
  25           Senior secured            December 28, 2018       $ 24,123,000          $ 16,672,623           Austin, TX                    Retail                 1mL + 4.1                  0.8          60.5  %
  26           Senior secured           September 30, 2021       $ 17,583,000          $ 16,663,000           Hanahan, SC                   Multi-Family           1mL + 3.2                  4.6          76.4  %
  27           Senior secured             February 1, 2022       $ 16,160,000          $ 15,400,000           San Antonio, TX               Multi-Family           1mS + 3.5                  4.9          79.8  %
  28           Senior secured            February 22, 2022       $ 19,241,527          $ 15,000,000           Philadelphia, PA              Multi-Family           1mS + 3.8                  5.0          80.0  %
  29           Senior secured               April 12, 2021       $ 17,000,000          $ 15,000,000           Cedar Park, TX                Multi-Family           1mL + 3.8                  4.2          66.7  %
  30           Senior secured             December 2, 2021       $ 16,250,000          $ 14,857,637           Colorado Springs, CO          Multi-Family           1mL + 3.0                  4.8          72.5  %
  31           Senior secured             October 11, 2019       $ 17,000,000          $ 14,500,000           Pompano Beach, FL             Self Storage           1mL + 3.8                  2.6          75.0  %
  32           Senior secured             December 1, 2021       $ 16,071,800          $ 14,080,000           Horn Lake, MS                 Multi-Family           1mL + 3.3                  4.8          75.7  %
  33           Senior secured             November 3, 2021       $ 13,870,000          $ 13,720,000           Louisville, KY                Multi-Family           1mL + 3.4                  4.7          75.4  %
  34           Senior secured             October 14, 2021       $ 13,440,000          $ 13,440,000           Bridgeton, NJ                 Multi-Family           1mL + 3.3                  1.2          70.0  %
  35           Senior secured                 May 28, 2021       $ 13,675,000          $ 13,332,734           Houston, TX                   Multi-Family           1mL + 3.4                  2.3          73.8  %
  36           Senior secured                 May 12, 2021       $ 13,930,000          $ 13,026,000           Fort Worth, TX                Multi-Family           1mL + 3.4                  4.3          74.9  %
  37           Senior secured              August 16, 2021       $ 15,886,000          $ 12,750,000           Columbus, OH                  Multi-Family           1mL + 3.7                  4.5          75.0  %
  38           Senior secured               March 12, 2021       $ 13,703,000          $ 12,375,000           Mesa, AZ                      Multi-Family           1mL + 3.6                  4.1          75.0  %
  39           Senior secured              October 1, 2021       $ 13,775,000          $ 12,100,000           East Nashville, TN            Multi-Family           1mL + 3.4                  4.6          79.1  %
  40           Senior secured                July 23, 2018       $ 16,200,000          $ 11,748,199           Chicago, IL                   Office                 1mL + 3.8                  1.2          72.7  %
  41           Senior secured             October 28, 2021       $ 12,250,000          $ 11,202,535           Tampa, FL                     Multi-Family           1mL + 3.0                  4.7          75.7  %
  42           Senior secured           September 30, 2021       $ 11,300,000          $ 10,795,000           Clearfield, UT                Multi-Family           1mL + 3.2                  4.6          68.0  %
  43           Senior secured               April 23, 2021       $ 11,600,000          $ 10,497,000           Tualatin, OR                  Multi-Family           1mL + 3.2                  4.2          73.9  %
  44           Senior secured            December 29, 2021       $ 11,000,000          $ 10,239,800           Phoenix, AZ                   Multi-Family           1mL + 3.7                  4.8          75.9  %
  45           Senior secured             December 2, 2021       $  9,975,000          $  9,975,000           Tomball, TX                   Multi-Family           1mL + 3.4                  4.8          68.5  %
  46           Senior secured            November 23, 2021       $ 10,706,000          $  9,856,000           Atlanta, GA                   Multi-Family           1mL + 3.4                  4.8          79.5  %
  47           Senior secured               March 26, 2021       $  9,623,000          $  9,623,000           Alhambra, CA                  Multi-Family           1mL + 3.3                  0.6          49.0  %
  48           Senior secured             January 14, 2022       $ 10,234,000          $  9,609,250           Houston, TX                   Multi-Family           1mS + 3.6                  4.9          78.8  %
  49           Senior secured             October 21, 2021       $ 11,500,000          $  9,100,000           Madison, TN                   Multi-Family           1mL + 3.2                  4.7          68.4  %
  50           Senior secured            November 30, 2021       $ 11,276,000          $  8,400,000           Lindenwood, NJ                Multi-Family           1mL + 3.6                  4.8          76.4  %
  51           Senior secured                 May 12, 2021       $  8,950,000          $  8,220,000           Lakeland, FL                  Multi-Family           1mL + 3.4                  4.3          76.8  %
  52           Senior secured                April 7, 2021       $ 10,152,000          $  7,963,794           Phoenix, AZ                   Multi-Family           1mL + 3.6                  4.2          69.5  %
  53           Senior secured             October 29, 2021       $  9,000,000          $  7,934,000           Riverside, MO                 Multi-Family           1mL + 3.4                  4.7          76.6  %


                                       26
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  54           Senior secured               March 12, 2018       $  9,112,000          $ 7,912,000           Waco, TX                     Multi-Family           1mL + 4.8                  1.1          72.9  %
  55           Senior secured            November 16, 2021       $  7,680,000          $ 7,680,000           Cape Coral, FL               Multi-Family           1mL + 3.3                  2.8          79.2  %
  56           Senior secured             October 27, 2021       $  9,300,000          $ 7,624,400           Ambler, PA                   Multi-Family           1mL + 3.3                  4.7          79.9  %
  57           Senior secured               March 19, 2021       $  8,348,000          $ 7,513,000           Glendora, CA                 Multi-Family           1mL + 3.6                  4.1          72.2  %
  58           Senior secured           September 28, 2021       $  8,125,000          $ 7,286,000           Chicago, IL                  Multi-Family           1mL + 3.7                  4.6          75.9  %
  59           Senior secured            February 18, 2022       $  7,800,000          $ 7,200,000           Drexel Hills, PA             Multi-Family           1mS + 4.0                  5.0          78.1  %
  60           Senior secured            December 30, 2021       $  7,000,000          $ 7,000,000           New Haven, CT                Multi-Family           1mL + 3.5                  1.3          59.8  %
  61           Senior secured               March 31, 2021       $  8,432,000          $ 6,893,000           Tucson, AZ                   Multi-Family           1mL + 3.6                  4.1          72.8  %
  62           Senior secured                 July 1, 2021       $  7,285,000          $ 6,290,000           Harker Heights, TX           Multi-Family           1mL + 3.6                  4.3          72.3  %
  63           Senior secured              August 28, 2019       $  6,250,000          $ 6,054,427           Austin, TX                   Multi-Family           1mL + 3.3                  2.5          69.9  %
  64           Senior secured                 May 21, 2021       $  7,172,000          $ 5,994,000           Youngtown, AZ                Multi-Family           1mL + 3.7                  4.3          71.4  %
  65           Senior secured             October 26, 2021       $  6,807,000          $ 5,812,000           Indianapolis, IN             Multi-Family           1mL + 3.9                  4.7          77.1  %
  66           Senior secured                June 10, 2019       $  6,000,000          $ 5,295,605           San Antonio, TX              Multi-Family           1mL + 2.9                  2.3          62.9  %
  67           Senior secured               April 30, 2021       $  5,472,000          $ 5,285,500           Daytona Beach, FL            Multi-Family           1mL + 3.7                  4.2          77.4  %
  68           Senior secured                July 14, 2021       $  6,048,000          $ 5,248,000           Birmingham, AL               Multi-Family           1mL + 3.7                  4.4          71.7  %
  69           Senior secured            November 19, 2021       $  6,453,000          $ 5,040,000           Huntsville, AL               Multi-Family           1mL + 3.8                  4.8          78.8  %
  70           Senior secured            November 30, 2018       $  4,446,000          $ 4,446,000           Anderson, SC                 Multi-Family           1mL + 3.3                  0.7          53.7  %
  71           Senior secured            December 28, 2021       $ 52,800,000          $ 2,800,000           Houston, TX                  Multi-Family           1mL + 3.2                  4.8          71.2  %



(1)  See Note 11 Commitments and Contingencies to our condensed consolidated
financial statements for further discussion of unfunded commitments.
(2)  LTV as of the date the loan was originated by a Hunt/ORIX affiliate and is
calculated after giving effect to capex and earn-out reserves, if applicable.
LTV has not been updated for any subsequent draws or loan modifications and is
not reflective of any changes in value, which may have occurred subsequent to
the origination date.

Our loan portfolio is 100% performing, with no loan impairments, monetary defaults or unearned loans from March 31, 2022.

We maintain strong relationships with our borrowers and utilized those
relationships to address potential impacts of the COVID-19 pandemic on loans
secured by properties experiencing cash flow pressure. All of our loans are
current with respect to principal and interest, however, some of our borrowers
have expressed concern on delays in the implementation of business plans due to
the prolonged impact of the COVID-19 pandemic. Accordingly, we will continue to
engage in discussions with them to work towards the maximization of cash flows
and values of our commercial mortgage loan assets should these difficulties
arise.

We have not entered into any forbearance agreements or loan modifications to
date. However, due to the continued economic impact of the COVID-19 pandemic we
consider there to be heightened credit risk associated with our commercial
mortgage loan portfolio. As such, we can provide no assurances that our
borrowers will remain current as to principal and interest, or that we will not
enter into any forbearance agreements or loan modifications in order to protect
the value of our commercial mortgage loan assets.

As discussed in Note 2 to our consolidated financial statements, our Manager
performs a quarterly review of our loan portfolio, assesses the performance of
each loan, and assigns a risk rating between "1" and "5," from less risk to
greater risk. The weighted average risk rating of our total loan exposure was
2.1 and 2.3 as of March 31, 2022 and December 31, 2021, respectively. The
decrease in average risk rating is primarily the result of commercial mortgage
loans that paid off with a risk rating of "2" of $32.3 million, a risk rating of
"3" of $69.0 million and a risk rating of "4" of $8.0 million, offset by the
purchase of commercial mortgage loans with a risk rating of "2" of
$185.0 million during the three months ended March 31, 2022. Additionally, $47.9
million of loans with a risk rating of "2" transitioned to a risk rating of "3",
$96.2 million of loans with a risk rating of "3" transitioned to a risk rating
of "2" and $12.8 million of loans transitioned from a risk rating of "3" to a
risk rating of "4". The following table presents the principal balance and net
book value based on our internal risk ratings:
                                       27

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                                               March 31, 2022
 Risk Rating       Number of Loans      Unpaid Principal Balance       Net Carrying Value
      1                    -           $                       -      $                 -
      2                   56                         835,421,563              835,397,037
      3                   12                         212,290,430              212,325,478
      4                    3                          29,793,804               29,793,804
      5                    -                                   -                        -
                          71           $           1,077,505,797      $     1,077,516,319


Secured Loan Obligations

We may seek to enhance returns on our commercial mortgage loan investments
through securitizations, or CLOs, if available, as well as the utilization of
warehouse repurchase agreement financing. To the extent available, we intend to
securitize the senior portion of some of our loans, while retaining the
subordinate securities in our investment portfolio. The securitizations of this
senior portion will be accounted for as either a "sale" or as a "financing." If
they are accounted for as a sale, the loan will be removed from the balance
sheet and if they are accounted for as a financing the loans will be classified
as "commercial mortgage loans held-for-investment" in our consolidated balance
sheets, depending on the structure of the securitization. As of March 31, 2022,
the carrying amounts and outstanding principal balances of our collateralized
loan obligations were $827.4 million and $833.8 million, respectively. See Note
4 to our condensed consolidated financial statements included in this Quarterly
Report on Form 10-Q for additional terms and details of our CLOs.

FOAC and our residential mortgage business

In June 2013, we established FOAC as a Taxable REIT Subsidiary, or TRS, to
increase the range of our investments in mortgage-related assets. Until August
1, 2016, FOAC aggregated mortgage loans primarily for sale into securitization
transactions, with the expectation that we would purchase the subordinated
tranches issued by the related securitization trusts, and that these would
represent high quality credit investments for our portfolio. Residential
mortgage loans for which FOAC owns the MSRs continue to be directly serviced by
one or more licensed sub-servicers since FOAC does not directly service any
residential mortgage loans.
As noted earlier, we previously determined to cease the aggregation of prime
jumbo loans for the foreseeable future, and therefore no longer maintain
warehouse financing to acquire prime jumbo loans. We do not expect the previous
changes to our mortgage loan business strategy to impact the existing MSRs that
we own, or the securitizations we have sponsored to date.

Pursuant to a Master Agreement dated June 15, 2016, as amended on August 29,
2016, January 30, 2017 and June 27, 2018, among MAXEX, LLC ("MAXEX"), MAXEX
Clearing LLC, MAXEX's wholly-owned clearinghouse subsidiary and FOAC, FOAC
provided seller eligibility review services under which it reviewed, approved
and monitored sellers that sold loans via MAXEX Clearing LLC. To the extent that
a seller approved by FOAC failed to honor its obligations to repurchase a loan
based on an arbitration finding that it breached its representations and
warranties, FOAC was obligated to backstop the seller's repurchase obligation.
The term of such backstop guarantee was the earlier of the contractual maturity
of the underlying mortgage and its repayment in full. However, the incidence of
claims for breaches of representations and warranties over time is considered
unlikely to occur more than five years from the sale of a mortgage. FOAC's
obligations to provide such seller eligibility review and backstop guarantee
services terminated on November 28, 2018. Pursuant to an Assumption Agreement
dated December 31, 2018, among MAXEX Clearing LLC and FOAC, MAXEX Clearing LLC
assumed all of FOAC's obligations under its backstop guarantees and agreed to
indemnify and hold FOAC harmless against any losses, liabilities, costs,
expenses and obligations under the backstop guarantee. FOAC paid MAXEX Clearing
LLC, as the replacement backstop provider, a fee of $426,770 (the "Alternative
Backstop Fee"). MAXEX Clearing LLC represented to FOAC in the Assumption
Agreement that it (i) is rated at least "A" (or equivalent) by at least one
nationally recognized statistical rating agency or (ii) has (a) adjusted
tangible net worth of at least $20.0 million and (b) minimum available liquidity
equal to the greater of (x) $5.0 million and (y) 0.1% multiplied by the
scheduled unpaid principal balance of each outstanding loan covered by the
backstop guarantees. MAXEX's chief financial officer is required to certify
ongoing compliance by MAXEX Clearing LLC with the aforementioned criteria on a
quarterly basis and if MAXEX Clearing LLC fails to satisfy such criteria, MAXEX
Clearing LLC is required to deposit into an escrow account FOAC's benefit an
amount equal to the greater of (A) the unamortized Alternative Backstop Fee for
each outstanding loan covered by the backstop guarantee and (B) the product of
0.01% multiplied by the scheduled unpaid principal balance of each outstanding
loan covered by the backstop guarantees. See Note 10 to our condensed
consolidated financial statements included in this Quarterly Report on form 10-Q
for a further description of MAXEX.

Significant Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP,
which requires the use of estimates and assumptions that involve the exercise of
judgment and use of assumptions as to future uncertainties. Accounting estimates
and assumptions discussed in this section are those that we consider to be the
most critical to understanding our financial statements because they involve
significant judgments and uncertainties that could affect our reported assets
and liabilities, as well as our reported revenues and expenses. All of these
estimates reflect our best judgments about current, and for some estimates,
future economic and market conditions and their effects based on information
available as of the date of the financial statements. If conditions change from
those expected, it is possible that the judgments and estimates described below
could change, which may result in a change in our interest income recognition,
allowance for loan losses, future impairment of our investments, and valuation
of our investment portfolio, among other effects. We believe that the following
accounting policies are among the most important to the portrayal of our
financial condition and results of operations and require the most difficult,
subjective or complex judgments.

Commercial mortgages held for investment

Quarterly, the Company assesses the risk factors of each loan classified as
held-for-investment and assigns a risk rating based on a variety of factors,
including, without limitation, debt-service coverage ratio ("DSCR"),
loan-to-value ratio ("LTV"), property type, geographic and local market
dynamics, physical condition, leasing and tenant profile, adherence to business
plan and exit plan, maturity default risk and project sponsorship. The Company's
loans are rated on a 5-point scale, from least risk to greatest risk,
respectively, which ratings are described as follows:
                                       28

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1.Very Low Risk: exceeds expectations and is outperforming underwriting or it is
very likely that the underlying loan can be refinanced easily in the period's
prevailing capital market conditions
2.Low Risk: meeting or exceeding underwritten expectations
3.Moderate Risk: consistent with underwritten expectations or the sponsor may be
in the early stages of executing the business plan and the loan structure
appropriately mitigates additional risks
4.High Risk: potential risk of default, a loss may occur in the event of default
5.Default Risk: imminent risk of default, a loss is likely in the event of
default

The Company evaluates each loan rated High Risk or above as to whether it is
impaired on a quarterly basis. Impairment occurs when the Company determines
that the facts and circumstances of the loan deem it probable that the Company
will not be able to collect all amounts due in accordance with the contractual
terms of the loan. If a loan is considered to be impaired, an allowance is
recorded to reduce the carrying value of the loan through a charge to the
provision for loan losses. Impairment of these loans, which are collateral
dependent, is measured by comparing the estimated fair value of the underlying
collateral, less costs to sell, to the book value of the respective loan. These
valuations require significant judgments, which include assumptions regarding
capitalization rates, leasing, creditworthiness of major tenants, occupancy
rates, availability of financing, exit plan, actions of other lenders, and other
factors deemed necessary by the Manager. Actual losses, if any, could ultimately
differ from estimated losses.

In addition, the Company evaluates the entire portfolio to determine whether the
portfolio has any impairment that requires a valuation allowance on the
remainder of the loan portfolio. As of March 31, 2022, the Company has not
recognized any impairments on its loans held-for-investment. We also assessed
the remainder of the portfolio, considering the absence of delinquencies and
current market conditions, and, have not recorded any allowance for loan losses.

Capital allocation

The following tables present our capital allocated by type of investment to
March 31, 2022 and December 31, 2021:

This information represents non-GAAP financial measures within the meaning of
Item 10(e) of Regulation S-K, as promulgated by the SEC. We believe that this
non-GAAP information enhances the ability of investors to better understand the
capital necessary to support each income-earning asset category, and thus our
ability to generate operating earnings. While we believe that the non-GAAP
information included in this report provides supplemental information to assist
investors in analyzing our portfolio, these measures are not in accordance with
GAAP, and they should not be considered a substitute for, or superior to, our
financial information calculated in accordance with GAAP.

                                                                                     March 31, 2022
                                                 Commercial Mortgage                            Unrestricted
                                                        Loans                  MSRs               Cash(1)                 Total(2)
Carrying Value                                   $  1,077,516,319          

$699,379 $45,846,521 $1,124,062,219
Secured Loan Obligations

                      (827,405,880)                 -                      -             (827,405,880)
Other(3)                                                1,997,600                  -             (4,132,529)              (2,134,929)
Restricted Cash                                         1,342,733                  -                      -                1,342,733
Capital Allocated                                $    253,450,772          $ 699,379          $  41,713,992          $   295,864,143
% Capital                                                    85.7  %             0.2  %                14.1  %                 100.0  %



                                                                              December 31, 2021
                                            Commercial Mortgage                            Unrestricted
                                                   Loans                  MSRs               Cash(1)                 Total(2)
Carrying Value                              $  1,001,825,294          $ 

551,997 $14,749,046 $1,017,126,337
Secured Loan Obligations

                 (826,782,543)                 -                      -             (826,782,543)
Other(3)                                          25,769,860                  -             (3,422,658)              22,347,202
Restricted Cash                                    3,530,006                  -                      -                3,530,006
Capital Allocated                           $    204,342,617          $ 551,997          $  11,326,388          $   216,221,002
% Capital                                               94.5  %             0.3  %                 5.2  %                 100.0  %



(1)Includes cash and cash equivalents.
(2)Includes the carrying value of our Secured Term Loan.
(3)Includes principal and interest receivable, investment related receivable,
prepaid and other assets, interest payable, dividend payable and accrued
expenses and other liabilities.

Operating results

As of March 31, 2022, we consolidated the assets and liabilities of one CRE CLO,
LFT CRE 2021-FL1, Ltd. Additionally, although the COVID-19 pandemic did not
significantly impact our operating results for the period ended March 31, 2022,
should the pandemic and resulting economic deterioration persist, we expect it
may affect our business, financial condition, results of operations and cash
flows going forward, including but not limited to, interest income, credit
losses and commercial mortgage loan reinvestment, in ways that may vary widely
depending on the duration and magnitude of the COVID-19 pandemic and ensuing
economic turmoil, as well as numerous factors, many of which are outside of our
control.

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Further in May 2021, we issued 2,400,000 shares of 7.875% Series A Cumulative
Redeemable Preferred Stock resulting in net proceeds (after underwriting
discount and commission but before operating expenses) of $58.1 million. On
August 23, 2021, the Incremental Secured Term Loan of $7.5 million provided for
in the Third Amendment to the Credit and Guaranty Agreement was funded.
Additionally, in February 2022, we issued 27,277,269 shares of common stock
resulting in net proceeds of $81.1 million. We believe that Lument IM and its
affiliates continue to identify attractive CRE lending opportunities which we
expect will allow us to deploy our capital base into assets that are consistent
with our investment strategy. The deployment of these proceeds into our target
assets may take time and as such, may result in a temporary decline in net
interest income. Additionally, as a result of the Series A Preferred Stock and
common stock issuances, Stockholders Equity as calculated per our management
agreement will increase, resulting in increased management fees, changes to the
core earnings hurdle over which incentive fees are due and payable to our
Manager and increase to the reimbursable expense cap.

The table below presents our income statement information for the three months ended March 31, 2022 and March 31, 2021respectively:

                                                                             Three Months            Three Months
                                                                            Ended March 31,        Ended March 31,
                                                                                 2022                    2021
                                                                              (unaudited)            (unaudited)
Revenues:
Interest income:
Commercial mortgage loans held-for-investment                              $   10,009,064          $   7,470,117
Cash and cash equivalents                                                           4,855                  4,300
Interest expense:
Collateralized loan obligations                                                (4,004,238)            (2,185,242)
Secured Term Loan                                                                (922,643)              (771,865)
Net interest income                                                             5,087,038              4,517,310
Other income (loss):
Unrealized gain (loss) on mortgage servicing rights                               147,382                (20,455)
Servicing income, net                                                              67,181                124,156
Total other income (loss)                                                         214,563                103,701
Expenses:
Management and incentive fees                                                     924,617                720,999
General and administrative expenses                                               852,732                680,314
Operating expenses reimbursable to Manager                                        390,710                312,454
Other operating expenses                                                           76,190                 34,753
Compensation expense                                                               50,888                 49,135
Total expenses                                                                  2,295,137              1,797,655
Net income before provision for income taxes                                    3,006,464              2,823,356
Benefit from (provision for) income taxes                                         (51,665)               (14,713)
Net income                                                                      2,954,799              2,808,643
Dividends accrued to preferred stockholders                                    (1,184,958)                (3,708)
Net income attributable to common stockholders                             $    1,769,841          $   2,804,935
Earnings per share:
Net income attributable to common stockholders (basic and diluted)         $    1,769,841          $   2,804,935
Weighted average number of shares of common stock outstanding                  36,464,952             24,943,383
Basic and diluted income per share                                         $         0.05          $        0.11
Dividends declared per share of common stock                               $         0.06          $        0.09





Net Income Summary

For the three months ended March 31, 2022, our net income attributable to common
stockholders was $1,769,841, or $0.05 basic and diluted net income per average
share, compared with net income of $2,804,935, or $0.11 basic and diluted net
income per average share, for the three months ended March 31, 2021.  The
principal drivers of this net income decline were an increase in total expenses
from $1,797,655 for the three months ended March 31, 2021 to $2,295,137 for the
three months ended March 31, 2022 and an increase in accrued preferred dividends
of $3,708 for the three months ended March 31, 2021 to $1,184,958 for the three
months ended March 31, 2022, which more than offset an increase in net interest
income from $4,517,310 for the three months ended March 31, 2021 to $5,087,038
for the three months ended March 31, 2022 and an increase in total other income
from $103,701 for the three months ended March 31, 2021 to $214,563 for the
three months ended March 31, 2022.

Net interest income

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For the three months ended March 31, 2022 and the three months ended March 31,
2021, our net interest income was $5,087,038 and $4,517,310, respectively. The
increase was primarily due to (i) a $469.8 million increase in weighted-average
principal of our loan portfolio; (ii) a 4bps increase in weighted-average
floating rate of our loan portfolio and (iii) a 3bps decrease in weighted
average spread for our CLO liabilities. This was offset by (i) a $388.1 million
increase in weighted-average principal balance of our CLO liabilities; (ii) a
decrease in exit/extension fees of $233 thousand for our loan portfolio; (iii) a
decrease of 124bps in weighted-average LIBOR/SOFR floors on our loan portfolio
for the three months ended March 31, 2021 compared to the corresponding period
in 2020; (iv) a 14bps decrease in weighted-average spread on the loan portfolio
for the three months ended March 31, 2022 compared to the corresponding period
in 2020, (v) a 6bps increase in weighted-average LIBOR for our CLO liabilities
and (vi) an increase of $205 thousand in amortized debt issuance costs.

Other income (losses)

For the three months ended March 31, 2022, our other income was $214,563. This
gain was driven by net servicing income of 67,181 and net unrealized gains on
mortgage servicing rights of $147,382 as a result of increased interest rates in
the period.

For the three months ended March 31, 2021, our other income was $103,701. This
gain was driven by net servicing income of $124,156, which more than offset the
impact of net unrealized losses on mortgage servicing rights of $20,455..

The period-over-period increase in other income is primarily due to the change in unrealized gain on mortgage servicing fees due to higher interest rates in the period which reduced the CPR of the management portfolio.

Expenses

For the three months ended March 31, 2022, we incurred management and incentive
fees of $924,617 representing amounts payable to our Manager under our
management agreement. We also incurred operating expenses of $1,370,520, of
which $390,710 was payable to our Manager and $979,810 was payable directly by
us.

For the three months ended March 31, 2021we incurred management fees of
$720,999 representing amounts payable to our manager under our management agreement. We also incurred operating expenses of $1,076,656 whose $312,454
was payable to our manager and $764,202 was payable directly by us.

The period-over-period increase in operating expenses primarily reflects an increase in management, accounting, administrative, audit and professional fees and expense reimbursement.

Impairment

We review each loan classified as held-for-investment for impairment on a
quarterly basis. For the three months ended March 31, 2022 and the three months
ended March 31, 2021, the Company has not recognized any impairments on its
loans held-for-investment and therefore has not recorded any allowance for loan
losses.

Income tax expense (benefit)

For the three months ended March 31, 2022, the Company recognized a provision
for income taxes of $51,665 and for the three months ended March 31, 2021, the
Company recognized a provision for income taxes in the amount of $14,713. The
period-over-period increase in tax expense primarily reflects the change in
gross deferred revenue at FOAC due to the change in unrealized gain on mortgage
servicing rights.

Cash and capital resources

Liquidity is a measurement of our ability to meet potential cash requirements,
including ongoing commitments to pay dividends, fund investments, comply with
margin requirements, if any, and repay borrowings and other general business
needs. Our primary sources of liquidity have been met with net proceeds of
common or preferred stock issuance, net proceeds from debt offerings and net
cash provided by operating activities. We have added to our liquidity position
in February 2022, by completing a transferable common stock rights offering
issuing and selling 27,277,269 shares of common stock for net proceeds of
approximately $81.1 million and in May 2021 by issuing 2,400,000 shares of
7.875% Series A Cumulative Redeemable Preferred Stock resulting in net proceeds
(after underwriting discount and commission but before operating expense) of
$58.1 million. We finance our commercial mortgage loans primarily with match
term collateralized loan obligations, which are not subject to margin calls or
additional collateralization requirements. On June 14, 2021, we closed LFT CRE
2021-FL1 issuing eight tranches of CLO notes 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. On August 23, 2021 we drew an additional $7.5 million of our Secured Term
Loan pursuant to the Third Amendment. As of March 31, 2022, our balance sheet
included $47.8 million of a secured term loan and $833.8 million in
collateralized loan financing, gross of discounts and debt issuance costs. Our
secured term loan matures in January 2026 and our collateralized loan financing
is term-matched and matures in 2039 or later. However, to the extent that we
seek to invest in additional commercial mortgage loans, we will in part be
dependent on our ability to issue additional collateralized loan obligations to
secure alternative financing facilities or to raise additional common or
preferred equity.

If we were required to liquidate all or a portion of our portfolio quickly, we
may realize significantly less than the value at which we previously recorded
our assets, particularly in a financial market that has been significantly
disrupted and less liquid as a result of the ongoing COVID-19 pandemic. Assets
that are illiquid are more difficult to finance, and to the extent that we use
leverage to finance assets that become illiquid, we may lose that leverage or
have it reduced if such leverage is, at least in part, dependent on the market
value of our assets. Assets tend to become less liquid during times of financial
stress, which is often the time that liquidity is most needed. As a result, our
ability to sell assets or vary our portfolio in response to changes in economic
and other conditions may be limited by liquidity constraints, which could
adversely affect our results of operations and financial condition. We seek to
limit our exposure to illiquidity risk to the extent possible, by ensuring that
the collateralized loan obligations that we use to finance our commercial
mortgage loans are not subject to margin calls or other limitations that are
dependent on the market value of the related loan collateral.

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We intend to continue to maintain a level of liquidity in relation to our assets
that enables us to meet reasonably anticipated investment requirements and
unforeseen business needs but that also allows us to be substantially invested
in our target assets. We may misjudge the appropriate amount of our liquidity by
maintaining excessive liquidity, which would lower our investment returns, or by
maintaining insufficient liquidity, which would force us to liquidate assets
into unfavorable market conditions and harm our operating results. As of
March 31, 2022, we had unrestricted cash and cash equivalents of $45.8 million,
compared to $14.7 million as of December 31, 2021.

As of March 31, 2022, we had $47.8 million in outstanding principal under our
Senior Secured Term Loan, with a borrowing rate of 7.25%. As of March 31, 2022,
the ratio of our recourse debt to equity was 0.2:1.

As of March 31, 2022, we consolidated the assets and liabilities of LFT CRE
2021-FL1, Ltd. The assets of the trust are restricted and can only be used to
fulfill their respective obligations, and accordingly the obligations of the
trust, which we classify as collateralized loan obligations, do not have any
recourse to us as the consolidator of the trust. As of March 31, 2022, the
carrying value of these non-recourse liabilities aggregated to $827.4 million.
As of March 31, 2022, our total debt to equity ratio was 3.5:1 on a GAAP basis.

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