During the six months ended June 30, 2026, Lument Real Estate Capital, LLC ("LREC"), as servicer for LCMT Warehouse, LLC and LCMT NPL Warehouse, LLC, indirect wholly owned subsidiaries of the Company, foreclosed on two multifamily bridge loans located in Colorado Springs, CO and Arlington, TX, with an aggregate net carrying value of $25.2 million, net of specific reserves of $7.5 million, with ownership and deed to the properties being taken by newly formed subsidiaries of the Company.

During the year ended December 31, 2025, LREC, as special servicer for 2021-FL1 CLO foreclosed on two multifamily bridge loans located in San Antonio, TX with an aggregate net carrying value of $39.5 million, net of specific CECL reserves of $2.4 million, with ownership and deed to the properties being taken by newly formed subsidiaries of the Company. Additionally, LREC, as special servicer for LMF 2023-1 Financing foreclosed on two multifamily bridge loans located in Houston, TX and San Antonio, TX with an aggregate net carrying value of $19.9 million, net of specific CECL reserves of $0.7 million, with ownership and deed to the properties being taken by newly formed subsidiaries of the Company.

The fair value of the REO at the time of foreclosure was determined using the income approach, market approach, or a combination thereof. The significant unobservable input for the income capitalization approach is the overall capitalization rate assumption, used in the direct capitalization method, which was 4.98% - 7.40%. The significant unobservable input used for the market approach is the price per unit from an appraisal or broker opinion of value.

On May 4, 2026, the Company sold one of the properties located in San Antonio, TX held by a subsidiary of the Company to a third party for $12.2 million and recognized a $0.1 million gain on the sale of the property. The recognized gain on the sale of the property was included within realized "Gain on sale of real estate owned" in the Company's consolidated statements of operations.

On December 22, 2025, the Company sold one of the properties located in San Antonio, TX held by a subsidiary of the Company to a third party for $8.2 million and recognized a $0.5 million realized loss on the sale of the property. The realized loss on the sale of the property was included within realized loss on real estate owned in the Company's consolidated statements of operations on Form 10-K for the year ended December 31, 2025.

At June 30, 2026 and December 31, 2025, our REO assets were comprised of four and three multifamily properties, respectively, held within various subsidiaries of the Company. A summary of our REO assets is as follows:


	June 30, 2026		December 31, 2025
Real estate owned, held-for-investment
Land	$	5,928,515	$	4,278,272
Building	45,797,882		22,907,888
Less: Accumulated depreciation	(1,001,428)		(347,150)
Total	$	50,724,969	$	26,839,010

Real estate owned, held-for-sale
Real estate owned, held-for-sale	$	10,877,081	$	24,099,072
Total	$	10,877,081	$	24,099,072

At June 30, 2026 and December 31, 2025, our REO properties had a weighted average occupancy rate of approximately 66.7% and 69.1%, respectively.

We recorded depreciation and amortization expense related to the REO assets of $0.4 million and $0.7 million for the three months and six months ended June 30, 2026, respectively, recorded as "net income (expense) from real estate owned operations" in the consolidated statement of operations. Additionally, we recorded operating income of $1.7 million and $3.4 million and operating expense of $1.6 million and $3.0 million for the three months and six months ended June 30, 2026, respectively, recorded as "Net income (expense) from real estate owned operations" in the consolidated statement of operations.